As filed with the Securities and Exchange Commission on September 27, 2019
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________
Form F-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_______________
BROOGE HOLDINGS LIMITED
(Exact Name of Registrant as Specified in Its Charter)
_______________
Cayman Islands |
6770 |
Not Applicable |
||||||
(State or Other Jurisdiction of
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(Primary Standard Industrial
|
(I.R.S. Employer
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c/o Twelve Seas Investment Company
135 East 57th Street, 18th Floor
New York, NY 10022
(917) 208-6200
(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)
Puglisi & Associates
850 Library Avenue, Suite 204
Newark, DE 19715
(302) 738-6680
(Name, address, including zip code, and telephone number, including area code, of agent for service)
_______________
Copies to:
Stuart Neuhauser, Esq.
|
Michael Johns
|
Robert Matlin, Esq.
|
_______________
Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after this Registration Statement becomes effective and all other conditions to the Business Combination contemplated by the Business Combination Agreement described in the included proxy statement/prospectus have been satisfied or waived.
If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. £
If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:
Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer) £
Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer) £
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933.
Emerging growth company S
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, 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 7(a)(2)(B) of the Securities Act. £
† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
CALCULATION OF REGISTRATION FEE
Title of each Class of Security to be registered |
Amount to be
|
Proposed
|
Proposed
|
Amount of
|
|||||||
Ordinary Shares(3)(7) |
26,779,000 |
$ |
10.22 |
$ |
273,681,380 |
$ |
33,170.20 |
||||
Warrants(4)(7) |
21,229,000 |
$ |
0.26 |
$ |
5,519,540 |
$ |
668.97 |
||||
Ordinary Shares issuable on exercise of Warrants(5)(7) |
21,229,000 |
$ |
11.50 |
$ |
(8) |
|
0 |
||||
Ordinary Shares issuable on exchange of Rights(6)(7) |
2,122,900 |
$ |
10.22 |
$ |
21,696,038 |
$ |
2,629.56 |
||||
Total |
71,359,900 |
|
|
$ |
36,468.73 |
____________
(1) All securities being registered will be issued by Brooge Holdings Limited, a Cayman Islands exempted company (“Pubco”). In connection with the Business Combination described in the enclosed proxy statement/prospectus, (a) Brooge Merger Sub Limited (“Merger Sub”), a newly incorporated Cayman Islands exempted company and a subsidiary of Pubco, will be merged with Twelve Seas Investment Company, a publicly traded Cayman Islands exempted company (“Twelve Seas”), and all of the outstanding ordinary shares, Warrants and Rights of Twelve Seas will be converted into securities of Pubco, and (b) the existing shareholders of Brooge Petroleum And Gas Investment Company FZE, a company formed under the laws of the Fujairah Free Zone, UAE (“BPGIC”), will exchange 100% of the outstanding ordinary shares of BPGIC for Ordinary Shares of Pubco.
(2) Based on the market prices on September 19, 2019 of the ordinary shares, Warrants and Rights of Twelve Seas (the company to which the Registrant will succeed after the transactions described in this registration statement and the enclosed proxy statement/prospectus).
(3) Consists of Ordinary Shares issuable in exchange for outstanding ordinary shares, par value $.0001 per share, of Twelve Seas, including ordinary shares included in outstanding Units of Twelve Seas, each Unit consisting of one ordinary share, one Warrant to purchase one ordinary share and one Right entitling the holder to receive one-tenth (1/10) of one ordinary share, and 375,000 ordinary shares issued to EarlyBirdCapital, Inc. Upon the Business Combination described in this registration statement and the enclosed proxy statement/prospectus, all Units will be separated into their component securities, and all Rights will be exchanged for Ordinary Shares of Pubco.
(4) Consists of warrants issuable in exchange for outstanding Warrants of Twelve Seas, including Warrants included in outstanding Units of Twelve Seas, which includes Warrants included in outstanding Units purchased by the founders of Twelve Seas (“Founders”).
(5) Consists of Ordinary Shares issuable upon exercise of warrants. Each warrant will entitle the warrant holder to purchase one Ordinary Share at a price of $11.50 per share (subject to adjustment).
(6) Consists of Ordinary Shares issuable pursuant to the mandatory exchange of Rights upon the effectiveness of the Business Combination described in this registration statement and the enclosed proxy statement/prospectus, including Rights included in outstanding Units of Twelve Seas, and Rights included in outstanding Units purchased by the Founders. The Registrant will not receive any consideration in connection with such exchange.
(7) Pursuant to Rule 416(a), there are also being registered an indeterminable number of additional securities as may be issued to prevent dilution resulting from stock splits, stock dividends or similar transactions.
(8) No separate registration fee required pursuant to Rule 457(g) under the Securities Act of 1933, as amended.
The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
PRELIMINARY PROXY STATEMENT
SUBJECT TO COMPLETION, DATED SEPTEMBER
TWELVE SEAS INVESTMENT COMPANY
135 East 57th Street, 18th Floor
New York, New York 10022
NOTICE OF EXTRAORDINARY GENERAL MEETING
TO BE HELD ON [ ], 2019
TO THE SHAREHOLDERS OF TWELVE SEAS INVESTMENT COMPANY:
NOTICE IS HEREBY GIVEN that an Extraordinary General Meeting of Twelve Seas Investment Company, a Cayman Islands exempted company (“Twelve Seas”), will be held at 10:00 a.m. eastern time, on [ ], 2019, at the offices of Ellenoff Grossman & Schole LLP, 1345 Avenue of the Americas, 11th Floor, New York, NY 10105. You are cordially invited to attend the meeting, which will be held for the following purposes:
(1) to consider and vote upon a proposal to approve the Business Combination Agreement, dated as of April 15, 2019 (the “Business Combination Agreement”), by and among Twelve Seas, Brooge Holdings Limited, a Cayman Islands exempted company (“Pubco”), Brooge Merger Sub Limited, a Cayman Islands exempted company and a wholly owned subsidiary of Pubco (“Merger Sub”), Brooge Petroleum And Gas Investment Company FZE, a company formed under the laws of the Fujairah Free Zone, UAE (“BPGIC”) and the shareholder of BPGIC who has become a party thereto (the “Seller”), which, among other things, provides for (a) the Merger of Twelve Seas with Merger Sub, with Twelve Seas surviving the Merger and the shareholders of Twelve Seas becoming shareholders of Pubco, which will become a new public company, and (b) upon the effectiveness of such Merger, the exchange of 100% of the outstanding ordinary shares of BPGIC by the shareholders of BPGIC for Ordinary Shares of Pubco and (c) adoption of the amended and restated memorandum and articles of association, and to approve the Business Combination contemplated by such agreement — we refer to this proposal as the “Business Combination Proposal” and a copy of the Business Combination Agreement and a copy of the amended and restated memorandum and articles of association of Pubco are attached to the accompanying proxy statement/prospectus as Annex A and Annex B, respectively;
(2) to consider and vote upon a proposal to approve the Merger of Twelve Seas with Merger Sub — we refer to this proposal as the “Merger Proposal” ;
(3) to approve, for purposes of complying with applicable NASDAQ Stock Market LLC listing rules, the issuance of more than 20% of Twelve Seas’ issued and outstanding ordinary shares in financing transactions in connection with the proposed Business Combination — we refer to this as the “Share Issuance Proposal”; and
(4) to consider and vote upon a proposal to adjourn the meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the meeting, Twelve Seas is not authorized to consummate the Business Combination — we refer to this proposal as the “Adjournment Proposal.”
These items of business are described in the attached proxy statement/prospectus, which we encourage you to read in its entirety before voting. Only holders of record of Twelve Seas ordinary shares at the close of business on [ ]. 2019 are entitled to notice of the meeting and to vote and have their votes counted at the meeting and any adjournments of the meeting.
After careful consideration, Twelve Seas’ board of directors has determined that the Business Combination Proposal, the Merger Proposal, the Share Issuance Proposal and the Adjournment Proposal are fair to and in the best interests of Twelve Seas and its shareholders and unanimously recommends that you vote or give instruction to vote “FOR” the Business Combination Proposal, “FOR” the Merger Proposal, “FOR” the Share Issuance Proposal and “FOR” the Adjournment Proposal, if presented.
Under the Business Combination Agreement, the approvals of the Business Combination Proposal and the Merger Proposal are conditions to the consummation of the Business Combination. If the Business Combination Proposal or the
Merger Proposal are not approved by Twelve Seas’ shareholders, the Business Combination will not be consummated. The approval of the Business Combination Proposal is a condition to the submission of the other proposals included herein for shareholder approval.
All Twelve Seas shareholders are cordially invited to attend the meeting in person. To ensure your representation at the meeting, however, you are urged to complete, sign, date and return the enclosed proxy card as soon as possible. If you are a shareholder of record of ordinary shares of Twelve Seas, you may also cast your vote in person at the meeting. If your shares are held in an account at a brokerage firm or bank, you must instruct your broker or bank on how to vote your shares or, if you wish to attend the meeting and vote in person, obtain a proxy from your broker or bank. If you do not vote or do not instruct your broker or bank how to vote, it will have no effect on the Business Combination Proposal, the Merger Proposal, or the Share Issuance Proposal.
A complete list of Twelve Seas shareholders of record entitled to vote at the special meeting will be available for ten (10) days before the meeting at the principal executive offices of Twelve Seas for inspection by shareholders during ordinary business hours for any purpose germane to the meeting.
Your vote is important regardless of the number of shares you own. Whether you plan to attend the meeting or not, please sign, date and return the enclosed proxy card as soon as possible in the envelope provided. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted.
Thank you for your participation. We look forward to your continued support.
By Order of the Board of Directors
____________________________
Neil Richardson
Chairman
IF YOU RETURN YOUR PROXY CARD WITHOUT AN INDICATION OF HOW YOU WISH TO VOTE, YOUR SHARES WILL BE VOTED IN FAVOR OF EACH OF THE PROPOSALS. TO EXERCISE YOUR REDEMPTION RIGHTS, YOU MUST DEMAND THAT TWELVE SEAS CONVERT YOUR SHARES INTO CASH NO LATER THAN 5:00 P.M. EASTERN TIME ON [ ], 2019 (TWO (2) BUSINESS DAYS PRIOR TO THE EXTRAORDINARY GENERAL MEETING) BY (A) (i) CHECKING THE BOX ON THE PROXY CARD, OR (ii) DELIVERING A CONVERSION NOTICE TO TWELVE SEAS’ TRANSFER AGENT AND (B) TENDERING YOUR STOCK TO TWELVE SEAS’ TRANSFER AGENT. YOU MAY TENDER YOUR STOCK BY EITHER DELIVERING YOUR STOCK CERTIFICATE TO THE TRANSFER AGENT OR BY DELIVERING YOUR SHARES ELECTRONICALLY USING THE DEPOSITORY TRUST COMPANY’S DWAC (DEPOSIT WITHDRAWAL AT CUSTODIAN) SYSTEM. WHETHER OR NOT, OR HOW, YOU VOTE ON THE BUSINESS COMBINATION PROPOSAL, WILL NOT AFFECT YOUR ELIGIBILITY FOR EXERCISING REDEMPTION RIGHTS. IF THE BUSINESS COMBINATION IS NOT COMPLETED, THEN THESE SHARES WILL NOT BE CONVERTED INTO CASH AT THIS TIME IN CONNECTION WITH THE BUSINESS COMBINATION. IF YOU HOLD THE SHARES IN “STREET NAME”, YOU WILL NEED TO INSTRUCT THE ACCOUNT EXECUTIVE AT YOUR BANK OR BROKER TO WITHDRAW THE SHARES FROM YOUR ACCOUNT IN ORDER TO EXERCISE YOUR REDEMPTION RIGHTS. SEE “EXTRAORDINARY GENERAL MEETING OF TWELVE SEAS SHAREHOLDERS — REDEMPTION RIGHTS” FOR MORE SPECIFIC INSTRUCTIONS.
This proxy statement/prospectus is dated ________, 2019 and is first being mailed to Twelve Seas Investment Company shareholders on or about ________, 2019.
The information in this proxy statement/prospectus is not complete and may be changed. We may not issue these securities until the registration statement filed with the Securities and Exchange Commissions, of which this proxy statement/prospectus is a part, is declared effective. This proxy statement/prospectus does not constitute an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED SEPTEMBER 27, 2019
PROXY STATEMENT FOR EXTRAORDINARY GENERAL MEETING OF
TWELVE SEAS INVESTMENT COMPANY
PROSPECTUS FOR UP TO 28,901,900 ORDINARY SHARES, 21,229,000 WARRANTS AND 21,229,000 ORDINARY SHARES ISSUABLE UPON EXERCISE OF WARRANTS OF
BROOGE HOLDINGS LIMITED
The board of directors of Twelve Seas Investment Company, a Cayman Islands exempted company (“Twelve Seas”) has unanimously approved the Business Combination Agreement, dated as of April 15, 2019 (the “Business Combination Agreement”), by and among Twelve Seas, Brooge Holdings Limited, a Cayman Islands exempted company (“Pubco”), Brooge Merger Sub Limited, a Cayman Islands exempted company and a wholly owned subsidiary of Pubco (“Merger Sub”), Brooge Petroleum And Gas Investment Company FZE, a company formed under the laws of the Fujairah Free Zone, UAE (“BPGIC”) and the shareholder of BPGIC who has become a party thereto (the “Seller”), which, among other things, provides for (i) the Merger of Merger Sub with Twelve Seas, with Twelve Seas surviving the Merger and the security holders of Twelve Seas becoming security holders of Pubco, (ii) upon the effectiveness of such Merger, the exchange of 100% of the outstanding ordinary shares of BPGIC by the Seller for Ordinary Shares of Pubco (collectively, the “Business Combination”) and (iii) the adoption of Pubco’s amended and restated memorandum and articles of association. As a result of and upon consummation of the Business Combination, each of Twelve Seas and BPGIC will become a wholly owned subsidiary of Pubco, as described in this proxy statement/prospectus and Pubco will become a new public company owned by the prior shareholders of Twelve Seas and the prior shareholders of BPGIC.
Pursuant to the Business Combination Agreement, upon the consummation of the Business Combination (i) each outstanding ordinary share of Twelve Seas will be converted into one Ordinary Share of Pubco, (ii) each outstanding Warrant of Twelve Seas will be converted into one warrant of Pubco that entitles the holder thereof to purchase one Ordinary Share of Pubco in lieu of one ordinary share of Twelve Seas and otherwise upon substantially the same terms and conditions, and (iii) each outstanding Right of Twelve Seas will be exchanged for one-tenth of an Ordinary Share of Pubco. Accordingly, this proxy statement/prospectus covers the issuance by Pubco of an aggregate of 28,901,900 Ordinary Shares, 21,229,000 warrants and 21,229,000 Ordinary Shares issuable upon exercise of warrants.
As a result of the Business Combination, Pubco will become a new public company and each of Twelve Seas and BPGIC will become a wholly-owned subsidiary of Pubco. The former security holders of Twelve Seas and BPGIC will become security holders of Pubco. As a result of the Business Combination, assuming that no shareholders of Twelve Seas elect to convert their Public Shares into cash in connection therewith as permitted by Twelve Seas’ amended and restated memorandum and articles of association, and the Seller does not elect to receive any portion of the consideration in cash, the Seller and the former Twelve Seas shareholders will own approximately 78.2% and 21.8%, respectively, of the Ordinary Shares of Pubco to be outstanding immediately after the Business Combination; provided that such numbers also include 0.7% of the Pubco Ordinary Shares otherwise issuable to the Initial Shareholders (as defined below) of Twelve Seas, which will be held in escrow and subject to forfeiture until Pubco satisfies certain milestones, and 15.6% of the Pubco Ordinary Shares otherwise issuable to the Seller at the Closing of the Business Combination, which will be held in escrow and subject to forfeiture until Pubco satisfies certain milestones (the “Escrow Shares”). If 20.2 million Twelve Seas Public Shares (the maximum number of Twelve Seas Public Shares that can be redeemed, such that at least $5,000,001 is available from the trust account after giving effect to payments that Twelve Seas would be required to make to converting shareholders which meets the net tangible assets requirement in order to consummate the Business Combination) are converted into cash, such percentages will be approximately 92.9% and 7.1%, respectively. If 7.6 million Twelve Seas Public Shares (the maximum number of Twelve Seas Public Shares that can be redeemed, such that at least $125,000,000 of net cash of Twelve Seas and Pubco is available at closing after giving effect to payments that Twelve Seas would be required to make to converting shareholders and the proceeds of any private placement) are converted into cash, such percentages will be approximately 83.1% and 16.9%, respectively.
Proposals to approve the Business Combination Agreement and the other matters discussed in this proxy statement/prospectus will be presented at the Extraordinary General Meeting of Twelve Seas scheduled to be held on [ ], 2019.
Twelve Seas’ Units, ordinary shares, Warrants and Rights are currently listed on The NASDAQ Capital Market under the symbols “BROGU,” “BROG,” “BROGW” and “BROGR,” respectively. Pubco will apply for listing, to be effective at the time of the Business Combination, of its Ordinary Shares and warrants on NASDAQ under the same symbols, “BROG” and “BROGW,” respectively. Pubco will not have units or rights traded following consummation of the Business Combination.
Each of Twelve Seas and Pubco is an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 and has elected to comply with certain reduced public company reporting requirements.
This proxy statement/prospectus provides you with detailed information about the Business Combination and other matters to be considered at the Extraordinary General Meeting of Twelve Seas. We encourage you to carefully read this entire document and the documents incorporated by reference. You should also carefully consider the risk factors described in “Risk Factors.”
These securities have not been approved or disapproved by the Securities and Exchange Commission (the “SEC”) or any state securities commission nor has the SEC or any state securities commission passed upon the accuracy or adequacy of this proxy statement/prospectus. Any representation to the contrary is a criminal offense.
This proxy statement/prospectus is dated _____, 2019, and is first being mailed to Twelve Seas security holders on or about _______, 2019.
TABLE OF CONTENTS
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63 |
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128 |
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138 |
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BPGIC’S MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
167 |
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191 |
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196 |
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199 |
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203 |
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F-1 |
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ANNEXES |
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A-1 |
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Annex B: Amended and Restated Memorandum and Articles of Association of Brooge Holdings Limited |
B-1 |
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Annex C: Form of Proxy for Twelve Seas Investment Company Extraordinary General Meeting |
C-1 |
i
ABOUT THIS PROXY STATEMENT/PROSPECTUS
This document, which forms part of a registration statement on Form F-4 filed with the SEC by Pubco (File No. 333-[ ]), constitutes a prospectus of Pubco under Section 5 of the U.S. Securities Act of 1933, as amended, or the Securities Act, with respect to the Pubco Ordinary Shares to be issued to Twelve Seas shareholders and holders of Rights, the warrants to acquire Pubco Ordinary Shares to be issued to Twelve Seas Warrant holders and the Pubco Ordinary Shares underlying such warrants, if the Business Combination described herein is consummated. This document also constitutes a notice of meeting and a proxy statement under Section 14(a) of the U.S. Securities Exchange Act of 1934, as amended, or the Exchange Act, with respect to the Extraordinary General Meeting of Twelve Seas at which Twelve Seas shareholders will be asked to consider and vote upon a proposal to approve the Business Combination by the approval and adoption of the Business Combination Agreement, among other matters.
CONVENTIONS WHICH APPLY TO THIS PROXY STATEMENT/PROSPECTUS
In this proxy statement/prospectus, unless otherwise specified or the context otherwise requires:
“$,” “US$” and “U.S. dollar” each refers to the United States dollar; and
“AED,” “DH” and “Arab Emirate Dirham” each refers to the Arab Emirate Dirham, the official currency of the United Arab Emirates.
IMPORTANT INFORMATION ABOUT IFRS AND NON-IFRS FINANCIAL MEASURES
BPGIC’s financial statements are prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board and referred to in this proxy statement/prospectus as “IFRS.” BPGIC’s interim financial statements are prepared in accordance with “IAS 34 : Interim Financial Reporting” as issued by the International Accounting Standards Board. BPGIC refers in various places within this proxy statement/prospectus to EBITDA, Adjusted EBITDA, and Adjusted EBITDA margin which are non-IFRS measures that are calculated as earnings before interest, tax and depreciation and amortization, earnings before interest, tax and depreciation and amortization adjusted for selected items that BPGIC’s management believes impact the comparability of financial results between reporting periods respectively, and Adjusted EBITDA as a percentage of revenue and more fully explained in “BPGIC’s Management’s Discussion and Analysis of Financial Condition and Results of Operations of BPGIC — Certain Non-IFRS Measures.” The presentation of this non-IFRS information is not meant to be considered in isolation or as a substitute for BPGIC’s financial results prepared in accordance with IFRS.
INDUSTRY AND MARKET DATA
In this proxy statement/prospectus, BPGIC relies on and refers to industry data, information and statistics regarding the markets in which it competes from research as well as from publicly available information, industry and general publications and research and studies conducted by third parties such as data by IHS Markit. BPGIC has supplemented this information where necessary with its own internal estimates and information obtained from discussions with BPGIC customers, taking into account publicly available information about other industry participants and BPGIC management’s best view as to information that is not publicly available. This information appears in “BPGIC’s Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Market Opportunity,” “Business of BPGIC” and other sections of this proxy statement/prospectus. BPGIC has taken such care as it considers reasonable in the extraction and reproduction of information from such data from third-party sources.
Industry publications, research, studies and forecasts generally state that the information they contain has been obtained from sources believed to be reliable, but that the accuracy and completeness of such information is not guaranteed. Forecasts and other forward-looking information obtained from these sources are subject to the same qualifications and uncertainties as the other forward-looking statements in this proxy statement/prospectus. These forecasts and forward-looking information are subject to uncertainty and risk due to a variety of factors, including those described under “Risk Factors.” These and other factors could cause results to differ materially from those expressed in the forecasts or estimates from independent third parties and us.
ii
IHS Markit reports, data and information referenced herein (the “IHS Markit Materials”) are the copyrighted property of IHS Markit Ltd. and its subsidiaries (“IHS Markit”). The IHS Markit Materials are from sources considered reliable; however, the accuracy and completeness thereof are not warranted, nor are the opinions and analyses published by IHS Markit representations of fact. The IHS Markit Materials speak as of the original publication date thereof and are subject to change without notice. IHS Markit and other trademarks appearing in the IHS Markit Materials are the property of IHS Markit or their respective owners.
The IHS data used in the IHS Markit materials is from a June 2018 study and has not been updated since then. Forecasts are inherently uncertain because of events or combinations of events that cannot reasonably be foreseen including the actions of government, individuals, third parties and competitors. The IHS Markit Materials speak as of the original publication date thereof (and not as of the date of this document). The information and opinions expressed in the IHS Markit Materials are subject to change without notice and IHS Markit has no duty or responsibility to update the IHS Markit Materials.
The IHS Markit Materials were commissioned by BPGIC and/or an affiliate of BPGIC.
iii
Unless otherwise stated or unless the context otherwise requires, the terms the “Company” and “BPGIC” refer to Brooge Petroleum And Gas Investment Company FZE, a company formed under the laws of the Fujairah Free Zone, UAE, and the term “Twelve Seas” refers to Twelve Seas Investment Company, a Cayman Islands exempted company. “Pubco” refers to Brooge Holdings Limited, a newly formed Cayman Islands exempted company.
In this document:
“Adjournment Proposal” means a proposal to adjourn the Meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the Meeting, there are not sufficient votes to approve the Business Combination Proposal and the Merger Proposal.
“Amended and Restated Memorandum and Articles of Association” means the amended and restated memorandum and articles of association of Brooge Holdings Limited to be adopted prior to consummation of the Business Combination in the form attached hereto as Annex B.
“ASMA Capital” means ASMA Capital B.S.C.(c).
“Audex” means Audex PTE Ltd.
“BPGIC” means Brooge Petroleum And Gas Investment Company FZE.
“BPGIC Terminal” means the terminal that BPGIC is developing on land located in close proximity to the Port of Fujairah’s berth connection points.
“BPGIC Terminal Land Lease” means the land lease dated as of March 10, 2013, by and between Fujairah Municipality and BPGIC, as amended by the novation agreement, dated September 1, 2014, by and among Fujairah Municipality, BPGIC and FOIZ.
“broker non-vote” means the failure of a Twelve Seas shareholder, who holds his or her shares in “street name” through a broker or other nominee, to give voting instructions to such broker or other nominee.
“Business Combination Agreement” means the Business Combination Agreement, dated as of April 15, 2019, as may be amended, by and among Twelve Seas, Merger Sub, Pubco, BPGIC and the Seller, and attached hereto as Annex A.
“Business Combination” or “Transactions” means the Merger and the Share Exchange, and other transactions contemplated by the Business Combination Agreement.
“Business Combination Proposal” means a proposal to approve the Business Combination Agreement and the Transactions.
“Closing” means the closing of the Transactions.
“Closing Net Cash” has the meaning given to that term in the Business Combination Agreement.
“Code” means the Internal Revenue Code of 1986, as amended.
“Companies Law” means the Companies Law (2018 Revision) of the Cayman Islands.
“Constitutional Documents” means the formation documents of any of the entities listed herein, including the memorandum and articles of association, as they may be amended.
“DWT” means deadweight tonnage.
“EPC” means engineering, procurement and construction.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“FAB” means First Abu Dhabi Bank PJSC.
“Financing Facilities” means, collectively, the Phase I Financing Facilities and the Phase II Financing Facility.
“FOIZ” means the Fujairah Oil Industry Zone.
1
“Founder Shares” means ordinary shares of Twelve Seas, 5,175,000 of which are currently outstanding and were issued to the Initial Shareholders prior to the Initial Public Offering of Twelve Seas, of which the Initial Shareholders have agreed to forfeit 1,035,000 at the Closing.
“Fujairah Municipality” means the local government organization in Fujairah, UAE specializing in municipal urban and rural municipal affairs.
“IFRS” refers to International Financial Reporting Standards as issued by the International Accounting Standards Board (IASB).
“Initial Public Offering” means the initial public offering of Units of Twelve Seas, consummated on June 22, 2018.
“Initial Shareholders” means the holders of Founder Shares.
“JOBS Act” means the Jumpstart Our Business Startups Act.
“Meeting” means the Extraordinary General Meeting of Twelve Seas, to be held on [ ], 2019 at 10:00 a.m. Eastern Time, at the offices of Ellenoff Grossman & Schole LLP, at 1345 Avenue of the Americas, 11th Floor, New York, New York 10105.
“MENA” means Middle East and North Africa.
“Merger” means the merger of Merger Sub with Twelve Seas, with Twelve Seas surviving such merger, prior security holders of Twelve Seas receiving securities of Pubco, and Twelve Seas becoming a wholly owned subsidiary of Pubco.
“Merger Proposal” means a proposal to approve the Merger.
“Merger Sub” means Brooge Merger Sub Limited, a Cayman Islands exempted company.
“MUC” means MUC Oil & Gas Engineering Consultancy, LLC.
“NASDAQ” means the NASDAQ Stock Market LLC.
“Ordinary Resolution” means a resolution passed by the affirmative vote of a simple majority of the shareholders of Twelve Seas as, being entitled to do so, vote in person or, where proxies are allowed, by proxy at the Meeting.
“Ordinary Shares” means the ordinary shares, par value $0.0001 per share, of Pubco, unless otherwise specified.
“Phase I” means the first phase of the BPGIC Terminal consisting of 14 oil storage tanks with an aggregate geometric oil storage capacity of approximately 0.399 million m3 and related infrastructure.
“Phase I Admin Building Facility” means the secured Shari’a comliant financing arrangement of USD 11.1 million entered into by BPGIC with FAB to fund a portion of the construction costs of Phase I.
“Phase I Construction Facilities” means, collectively, the Phase I Admin Building Facility and the Phase I Construction Facility.
“Phase I Construction Facility” means the secured Shari’a compliant financing arrangement of USD 84.6 million entered into by BPGIC with FAB to fund a portion of the construction costs of Phase I.
“Phase I Customer Agreement” means the four-year lease and offtake agreement for the Phase I facility with the Phase I & II Customer.
“Phase II Customer Agreement” means the five-year lease and offtake agreement for the Phase II facility with the Phase I & II Customer.
“Phase I & II Customer” means Al Brooge International Advisory LLC.
“Phase I End User” means the international energy trading company that currently occupies the Phase I facility as a sublessee of the Phase I & II Customer.
“Phase II End User” means the international commodities trading company which is expected to occupy the Phase II facility upon its completion as a sublessee of the Phase I & II Customer.
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“Phase I End User Agreement” means the five-year lease and service agreement, dated December 12, 2017, originally by and between BPGIC and the Phase I End User, and as novated, by and between the Phase I & II Customer and the Phase I End User to lease all fourteen oil storage tanks in Phase I.
“Phase II End User Agreement” means the five-year lease and service agreement, originally by and between BPGIC and the Phase II End User, and as novated, by and between the Phase I & II Customer and the Phase II End User to lease all eight oil storage tanks in Phase II.
“Phase I Financing Facilities” means, collectively, the Phase I Admin Building Facility, the Phase I Construction Facility and the Phase I Short Term Financing Facility.
“Phase II” means the second phase of the BPGIC Terminal which is expected to consist of 8 oil storage tanks with an aggregate geometric oil storage capacity of approximately 0.601 million m3 and related infrastructure.
“Phase II Financing Facility” means the secured Shari’a compliant financing arrangement of USD 95.3 million entered into by BPGIC with FAB to fund a portion of the capital expenditures in respect of Phase II.
“Phase I Internal Manifold” means the internal manifold that connects the 14 oil storage tanks of Phase I.
“Phase II Internal Manifold” means the internal manifold that will connect the 8 oil storage tanks of Phase II.
“Phase I Short Term Financing Facility” means the Shari’a compliant financing arrangement of USD 3.5 million entered into by BPGIC with FAB to settle certain amounts due under the Phase I Construction Facilities.
“Port of Fujairah” or “Port” means the port of Fujairah
“Principal Customers” means, collectively, the Phase I & II Customer and Sahara.
“Principal Customer Agreements” means the Phase I Customer Agreement, the Phase II Customer Agreement, and the Refinery and Services Agreement.
“Private Placement Units” means the Units sold by Twelve Seas privately to the Sponsor simultaneously with the consummation of the Initial Public Offering.
“proxy statement/prospectus” means the proxy statement/prospectus included in the Registration Statement on Form F-4 (Registration No. 333-[ ]) filed with the SEC.
“Pubco” means Brooge Holdings Limited, a Cayman Islands exempted company.
“Public Shareholders” means the holders of Public Shares.
“Public Shares” means ordinary shares of Twelve Seas issued as part of the Units sold in the Initial Public Offering.
“Public Warrants” means the Warrants included in the Units sold in the Initial Public Offering, each of which is exercisable for one ordinary share of Twelve Seas, in accordance with its terms.
“Redemption” means the right of the holders of Twelve Seas ordinary shares to have their shares redeemed in accordance with the procedures set forth in this proxy statement/prospectus.
“Refinery and Services Agreement” means the five-year refinery and services agreement with Sahara.
“Rights” means the rights included in the Units sold in the Initial Public Offering and simultaneous private placements, each of which is exercisable for one-tenth (1/10) of one ordinary share of Twelve Seas, in accordance with its terms.
“Sahara” means Sahara Energy Resources DMCC, a company incorporated under the laws of the United Arab Emirates.
“Sahara Refinery” means the modular refinery to be installed at the BPGIC Terminal by Sahara which is expected to have an initial production capacity of 24,000 b/d.
“SEC” means the U.S. Securities and Exchange Commission.
“Seller” means the shareholder of BPGIC named as a seller party to the Business Combination Agreement.
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“Senior Management” and “Senior Managers” refer to those persons named as officers of BPGIC, and following the consummation of the Business Combination, of Pubco, in the section titled “Management of Pubco Following Business Combination”.
“Share Exchange” means the exchange of 100% of the ordinary shares of BPGIC for Ordinary Shares of Pubco.
“Share Issuance Proposal” means a proposal to approve, for purposes of complying with applicable NASDAQ Stock Market LLC listing rules, the issuance of more than 20% of Twelve Seas’ issued and outstanding ordinary shares in financing transactions in connection with the Business Combination.
“Special Resolution” means a resolution passed by the affirmative vote of a majority of at least two-thirds of the shareholders of Twelve Seas as, being entitled to do so, vote in person or, where proxies are allowed, by proxy at the Meeting, of which notice specifying the intention to propose the resolution as a “special resolution” has been duly given.
“Sponsor” means Twelve Seas Sponsor I LLC, a Delaware limited liability company.
“Strait of Hormuz” or “Strait” means the strait of Hormuz.
“Trust Account” means the trust account that holds a portion of the proceeds of the Initial Public Offering and the concurrent sale of the Private Placement Units.
“Twelve Seas” or “Purchaser” means Twelve Seas Investment Company, a Cayman Islands exempted company.
“Units” means units issued in the Initial Public Offering, each consisting of one ordinary share of Twelve Seas, one Warrant and one Right.
“UAE” means the United Arab Emirates.
“U.S.” means the United States of America.
“U.S. dollar,” “US$” and “$” mean the legal currency of the United States.
“U.S. GAAP” means United States generally accepted accounting principles.
“VLCC” means very large crude carrier.
“Warrant” means a warrant to purchase ordinary shares of Twelve Seas issued in the Initial Public Offering and simultaneous private placements. Each warrant entitles the holder thereof to purchase one ordinary share of Twelve Seas at a price of $11.50 per share.
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SUMMARY OF THE MATERIAL TERMS OF THE BUSINESS COMBINATION
The parties to the Business Combination Agreement are Twelve Seas Investment Company (“Twelve Seas”), Brooge Merger Sub Limited (“Merger Sub”), Brooge Holdings Limited (“Pubco”), Brooge Petroleum And Gas Investment Company FZE (“BPGIC”), and the shareholder of BPGIC named as Seller therein (the “Seller”). Pursuant to the Business Combination Agreement, (1) Merger Sub will merge with Twelve Seas, with Twelve Seas surviving the merger, and each of the former security holders of Twelve Seas receiving securities of Pubco (the “Merger”) and (2) the outstanding ordinary shares of BPGIC will be exchanged by the Seller for Ordinary Shares of Pubco (the “Share Exchange” and together with the Merger and the other transactions contemplated by the Business Combination Agreement, the “Business Combination”). See the sections in this summary entitled “The Business Combination Proposal” and “The Merger Proposal.”
BPGIC is an oil storage and service provider strategically located in the Port of Fujairah in the emirate of Fujairah in the UAE. BPGIC’s vision is to develop an oil storage business that differentiates itself from competitors by providing its customers with fast order processing times, excellent customer service and high accuracy blending services with low oil losses. BPGIC has a 60-year lease of land for its operations located in close proximity to the Port of Fujairah’s berth connection points and is initially developing the BPGIC Terminal in two phases. The first phase commenced operations on January 18, 2018 and the second phase is currently under construction. BPGIC is led by an experienced management team with over 30 years of experience in the oil storage terminal industry. See the section entitled “Business of BPGIC.”
Under the Business Combination Agreement, upon the consummation of the Merger, each Unit shall be automatically detached and the holder thereof shall be deemed to hold one ordinary share of Twelve Seas, one Warrant of Twelve Seas, and one Right of Twelve Seas. Each ordinary share of Twelve Seas will be exchanged for one Ordinary Share of Pubco, except that Public Shareholders shall be entitled to elect instead to receive a pro rata portion of Twelve Seas’ Trust Account, as provided in Twelve Seas’ Constitutional Documents. Additionally, each outstanding Twelve Seas Warrant will be exchanged for a warrant of Pubco that will entitle the holder to purchase one Ordinary Share of Pubco in lieu of one ordinary share of Twelve Seas and otherwise on substantially the same terms and conditions as the Twelve Seas Warrants.
Under the Business Combination Agreement, upon consummation of the Share Exchange, the Seller will be entitled to receive 100,000,000 Ordinary Shares of Pubco (subject to BPGIC’s election for the Seller to have the option to receive a portion of the consideration as cash, not to exceed 40% of the Closing Net Cash (as that term is defined in the Business Combination Agreement, attached to this proxy statement/prospectus as Annex A) in lieu of receiving Pubco Ordinary Shares) (as so reduced, the “Exchange Shares”)); provided that 20,000,000 of the Exchange Shares otherwise issuable to the Seller at the Closing (the “Escrow Shares”) will be set aside in escrow. For a detailed discussion on calculation of the number of Pubco shares to be received by holders of BPGIC securities in connection with the Business Combination, please see the section titled “The Business Combination Proposal — The Business Combination Agreement and Related Agreements.” Issuance of Pubco securities in connection with the Share Exchange with the Seller is exempt from registration under the Securities Act in reliance upon Section 4(a)(2) thereof because, among other things, the issuances are contractual obligations pursuant to a privately negotiated transaction and the Seller executed a Joinder to the Business Combination Agreement and therefore is already contractually bound. The Seller is not a U.S. persons and the issuance of the securities of Pubco to such persons would be extraterritorial and within the scope of the exemption from registration codified as Regulation S promulgated under the Securities Act.
Pursuant to the Business Combination Agreement, prior to the consummation of the Business Combination, the board of directors and shareholders of Pubco will amend and restate Pubco’s memorandum and articles of association. The Amended and Restated Memorandum and Articles of Association of Pubco differ from Twelve Seas’ amended and restated memorandum and articles of association in multiple aspects, including: (i) the name of the new public entity will be “Brooge Holdings Limited” as opposed to “Twelve Seas Investment Company”; (ii) Pubco will have 450,000,000 authorized Ordinary Shares and 50,000,000 authorized preferred shares, as opposed to Twelve Seas having 200,000,000 authorized ordinary shares and 2,000,000 authorized preferred shares; (iii) Pubco’s corporate existence is perpetual as opposed to Twelve Seas’ corporate existence terminating if a business combination is not consummated by Twelve Seas within a specified period of time; and (iv) Pubco’s charter does not include the various provisions applicable only to special purpose acquisition corporations that Twelve Seas’ amended and restated memorandum and articles of association contains.
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In addition to voting on the Business Combination, the shareholders of Twelve Seas will consider and vote upon (i) the proposal to merge Twelve Seas with Merger Sub — we refer to this proposal as the “Merger Proposal”, and (ii) the proposal to approve, for purposes of complying with applicable NASDAQ Stock Market LLC listing rules, the issuance of more than 20% of Twelve Seas’ issued and outstanding ordinary shares in financing transactions in connection with the Business Combination — we refer to this proposal as the “Share Issuance Proposal.” See the sections entitled “The Merger Proposal,” and “The Share Issuance Proposal.”
The Business Combination Agreement may be terminated under certain customary and limited circumstances at any time prior the Closing, including, among other reasons: (i) by mutual written consent of Twelve Seas and BPGIC; (ii) by either Twelve Seas or BPGIC if the Closing has not occurred on or prior to December 22, 2019; (iii) by either Twelve Seas or BPGIC if a governmental authority of competent jurisdiction shall have issued an order or taken any other action permanently restraining, enjoining or otherwise prohibiting the Transactions, and such order or other action has become final and non-appealable; (iv) by BPGIC for Twelve Seas’ uncured breach of the Business Combination Agreement, such that the related Closing condition would not be met; (v) by Twelve Seas for the uncured breach of the Business Combination Agreement by BPGIC, Pubco, Merger Sub or any Seller, such that the related Closing condition would not be met; (vi) by Twelve Seas if there has been a “Material Adverse Effect” with respect to BPGIC since the date of the Business Combination Agreement which is uncured and continuing; (vii) by BPGIC if there has been a “Material Adverse Effect” with respect to Twelve Seas since the date of the Business Combination Agreement which is uncured and continuing; (viii) by either Twelve Seas or BPGIC if Twelve Seas holds its shareholder meeting to approve the Business Combination Agreement and the Transactions and such approval is not obtained. See the section entitled “The Business Combination Proposal — The Business Combination Agreement and Related Agreements — Termination.”
After the Business Combination, the directors of Pubco will be Dr. Yousef Alassaf, Abu Bakar Chowdhury, Nicolaas Paardenkooper, Saleh Yammout, Sa’eb El-Zein, and Dr. Simon Madgwick, who will be designated by BPGIC. After the Merger, Messrs. Sa’eb El-Zein, Dr. Simon Madgwick, and Abu Bakar Chowdhury will be considered independent directors under the rules of NASDAQ. See the section entitled “Management of Pubco Following the Business Combination.”
Upon completion of the Business Combination, the current officers of BPGIC will remain officers of BPGIC and will become officers of Pubco, holding the equivalent positions as those held with BPGIC. These officers are Nicolaas Paardenkooper, Saleh Yammout, and Lina S. Saheb. Each of these persons is currently an executive officer of BPGIC. Upon completion of the Business Combination, Faisal Selim will become the Chief Marketing Officer of BPGIC and Pubco. See the section entitled “Management of Pubco Following the Business Combination.”
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QUESTIONS AND ANSWERS ABOUT THE PROPOSALS
Q. Why am I receiving this proxy statement/prospectus? |
A. Twelve Seas and BPGIC have agreed to a business combination under the terms of the Business Combination Agreement, dated as of April 15, 2019, that is described in this proxy statement/prospectus and to approve the Business Combination contemplated by the Business Combination Agreement. This agreement is referred to as the “Business Combination Agreement.” The Business Combination Agreement provides for, among other things, (a) the Merger of Merger Sub with Twelve Seas, with Twelve Seas surviving the Merger, and each of the current shareholders of Twelve Seas receiving securities of Pubco, which we call the “Merger,” (b) the exchange of 100% of the ordinary shares of BPGIC by the Seller for Ordinary Shares of Pubco, which we call the “Share Exchange,” and (c) the adoption of Pubco’s Amended and Restated Memorandum and Articles of Association. This proxy statement/prospectus and its annexes contain important information about the proposed Business Combination and the other matters to be acted upon at the Meeting. You should read this proxy statement/prospectus and its annexes carefully and in their entirety. |
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Q. What is being voted on at the Meeting? |
A. Twelve Seas’ shareholders are being asked to vote to approve the Business Combination Agreement and transactions contemplated thereby, including the Merger. See the sections entitled “The Business Combination Proposal” and “The Merger Proposal.” |
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In addition to the foregoing proposals, the shareholders are also asked to consider and vote upon a proposal to approve, for purposes of complying with applicable NASDAQ Stock Market LLC listing rules, the issuance of more than 20% of Twelve Seas’ issued and outstanding ordinary shares in financing transactions in connection with the proposed Business Combination. See the section entitled “The Share Issuance Proposal.” |
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The shareholders may also be asked to consider and vote upon a proposal to adjourn the Meeting to a later date or dates to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the Meeting, Twelve Seas would not have been authorized to consummate the Business Combination. See the section entitled “The Adjournment Proposal.” |
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Twelve Seas will hold the Meeting to consider and vote upon these proposals. This proxy statement/prospectus contains important information about the proposed Business Combination and the other matters to be acted upon at the Meeting. Shareholders should read it carefully. |
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The vote of shareholders is important. Shareholders are encouraged to vote as soon as possible after carefully reviewing this proxy statement/prospectus. |
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Q. Why is Twelve Seas proposing the Business Combination? |
A. Twelve Seas was organized to effect a merger, capital stock exchange, asset acquisition or other similar business combination with one or more businesses or entities. |
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Twelve Seas completed its Initial Public Offering of Units on June 22, 2018, with each Unit consisting of one ordinary share, one Warrant to purchase one ordinary share at a price of $11.50 and one Right, each entitling the holder thereof to receive one—tenth (1/10) of one ordinary share of Twelve Seas upon Twelve Seas’ completion of its initial business combination and also closed on the sale of the Units subject to overallotment on June 28, 2018, raising total gross proceeds of $207,000,000. Since the Initial Public Offering, Twelve Seas’ activity has been limited to the evaluation of business combination candidates. |
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Twelve Seas was permitted to choose a target business in any industry or geographic region that it felt provided its shareholders with the greatest opportunity to participate in a company with significant growth potential. Accordingly, it regularly analyzed investment opportunities that were in various sectors and geographic regions in an effort to locate the best potential business combination opportunity for its shareholders. |
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BPGIC operates in the oil storage and service business in the Emirate of Fujairah within the United Arab Emirates. Based on its due diligence investigations of BPGIC and the industry in which it operates, including the financial and other information provided by BPGIC in the course of their negotiations, Twelve Seas believes that BPGIC has an appealing growth profile and a compelling valuation. As a result, Twelve Seas believes that a business combination with BPGIC will provide Twelve Seas shareholders with an opportunity to participate in a company with significant growth potential. See the section entitled “The Business Combination Proposal — Twelve Seas’ Board of Directors’ Reasons for Approval of the Business Combination.” |
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Q. Why is Twelve Seas providing shareholders with the opportunity to vote on the Business Combination? |
A. Under its amended and restated memorandum and articles of association, Twelve Seas must provide all holders of its Public Shares with the opportunity to have their Public Shares redeemed upon the consummation of Twelve Seas’ initial business combination either in conjunction with a tender offer or in conjunction with a shareholder vote. For business and other reasons, Twelve Seas has elected to provide its shareholders with the opportunity to have their Public Shares redeemed in connection with a shareholder vote rather than a tender offer. Therefore, Twelve Seas is seeking to obtain the approval of its shareholders of the Business Combination Proposal in order to allow its Public Shareholders to effectuate Redemptions of their Public Shares in connection with the Closing of the Business Combination. |
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Q. Are the proposals conditioned on one another? |
A. Unless the Business Combination Proposal is approved, the Merger Proposal, and the Share Issuance Proposal will not be presented to the shareholders of Twelve Seas at the Meeting. The Adjournment Proposal is not conditioned on the approval of any other proposal set forth in this proxy statement/prospectus. It is important for you to note that in the event that the Business Combination Proposal and the Merger Proposal do not receive the requisite vote for approval, then Twelve Seas will not consummate the Business Combination. If Twelve Seas does not consummate the Business Combination and fails to complete an initial business combination by December 22, 2019, Twelve Seas will be required to dissolve and liquidate its trust account by returning the then remaining funds in such account to its Public Shareholders. |
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Q. What will happen in the Business Combination? |
A. At the Closing, Merger Sub will merge with Twelve Seas, with Twelve Seas surviving such Merger. Upon consummation of the Merger, Twelve Seas will become a wholly-owned subsidiary of Pubco and security holders of Twelve Seas securities will exchange their Twelve Seas securities for securities of Pubco. In particular, (i) each outstanding ordinary share of Twelve Seas will be converted into one Ordinary Share of Pubco, (ii) each outstanding Warrant of Twelve Seas will be converted into one warrant of Pubco that entitles the holder thereof to purchase one Ordinary Share of Pubco in lieu of one ordinary share of Twelve Seas, and (iii) each outstanding Right of Twelve Seas will be exchanged for one-tenth of an Ordinary Share of Pubco. In connection with the Share Exchange, the shareholder of BPGIC will exchange its BPGIC shares for Ordinary Shares of Pubco, as a result of which, BPGIC will become a wholly-owned subsidiary of Pubco. The cash held in the Trust Account and the proceeds from the financing transactions in connection with the Business Combination will be used by Pubco for working capital and general corporate purposes following the consummation of the Business Combination. A copy of the Business Combination Agreement is attached to this proxy statement/prospectus as Annex A. For Pubco’s organizational structure chart upon consummation of the Business Combination, please see “The Business Combination Agreement — Transaction and Organizational Structures Prior to and Following Consummation of the Business Combination.” |
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Q. What conditions must be satisfied to complete the Business Combination? |
A. There are a number of closing conditions to the Business Combination, including, but not limited to, the following: |
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• the approval of the Business Combination Agreement and the transactions contemplated thereby and related matters by the requisite vote of Twelve Seas’ shareholders; |
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• expiration of any waiting period under applicable antitrust laws; |
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• receipt of requisite regulatory approvals and specified third party consents; |
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• no law or order preventing or prohibiting the transactions contemplated by the Business Combination Agreement; |
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• no pending litigation to enjoin or restrict the consummation of the Business Combination; |
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• Twelve Seas having at least $5,000,001 in net tangible assets upon the consummation of the Business Combination, after giving effect to Public Shareholders’ exercise of their Redemption rights and including the proceeds of any private placement investment; |
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• Closing Net Cash of at least $125,000,000 of Pubco and Twelve Seas; |
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• the election or appointment of members to Pubco’s board of directors as described herein; |
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• the amendment by the shareholders of Pubco of Pubco’s amended and restatement memorandum and articles of Association in form and substance reasonably acceptable to Pubco, BPGIC and Twelve Seas; |
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• the effectiveness of this registration statement; and |
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• receipt of reasonably satisfactory evidence that Pubco qualifies as a foreign private issuer pursuant to Rule 3b-4 of the Exchange Act. |
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For a summary of all of the conditions that must be satisfied or waived prior to completion of the Business Combination, see the section entitled “The Business Combination Proposal — Business Combination Agreement and Related Agreements.” |
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Q. Did the Twelve Seas board obtain a third-party valuation or fairness opinion in determining whether or not to proceed with the Business Combination? |
A. Twelve Seas’ board of directors did not obtain a third-party valuation or fairness opinion in connection with their determination to approve the Business Combination with BPGIC. The officers and directors of Twelve Seas have substantial experience in evaluating the operating and financial merits of companies from a wide range of industries and concluded that their experience and backgrounds, together with the experience and sector expertise of Twelve Seas’ financial advisors, enabled them to make the necessary analyses and determinations regarding the Business Combination with BPGIC. In addition, Twelve Seas’ officers and directors and its advisors have substantial experience with mergers and acquisitions. Accordingly, investors will be relying solely on the judgment of Twelve Seas’ board of directors in valuing BPGIC’s business, and assuming the risk that the board of directors may not have properly valued such business. |
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Q. How many votes do I have at the Meeting? |
A. Twelve Seas shareholders are entitled to one vote at the Meeting for each ordinary share of Twelve Seas held of record as of [ ], 2019, the record date for the Meeting (the “Record Date”). As of the close of business on the Record Date, there were 26,779,000 ordinary shares of Twelve Seas outstanding. |
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Q. What vote is required to approve the proposals presented at the Meeting? |
A. The approval of each of the Business Combination Proposal, the Share Issuance Proposal and the Adjournment Proposal requires an Ordinary Resolution. The approval of the Merger Proposal requires a Special Resolution. Assuming a quorum is established, a shareholder’s failure to vote by proxy or to vote in person at the Meeting will have no effect on the foregoing proposals. Abstentions and broker non-votes, while considered present for the purposes of establishing a quorum, are not treated as votes cast and will have no effect on any of the proposals. Twelve Seas’ Sponsor, directors and officers have agreed to vote their shares in favor of the Business Combination Proposal and the Merger Proposal. As of the date of this proxy statement/prospectus, Twelve Seas’ Sponsor, directors and officers beneficially owned an aggregate of 5,704,000 ordinary shares of Twelve Seas. |
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Q. What constitutes a quorum at the Meeting? |
A. Holders of a majority in voting power of Twelve Seas ordinary shares issued and outstanding and entitled to vote at the Meeting constitute a quorum. In the absence of a quorum, the chairman of the Meeting has the power to adjourn the Meeting. As of the Record Date, 13,389,501 ordinary shares of Twelve Seas would be required to achieve a quorum. |
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Q. How do the insiders of Twelve Seas intend to vote on the proposals? |
A. Twelve Seas’ Sponsor, officers and directors beneficially own and are entitled to vote an aggregate of approximately 21.3% of the outstanding ordinary shares of Twelve Seas. These parties have agreed to vote their securities in favor of the Business Combination Proposal and the Merger Proposal. Twelve Seas’ Sponsor, officers and directors have also indicated that they intend to vote their shares in favor of all other proposals being presented at the Meeting. |
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Q. Do I have Redemption rights? |
A. Pursuant to Twelve Seas’ amended and restated memorandum and articles of association, holders of Public Shares may elect to have their shares redeemed for cash at the applicable Redemption price per share calculated in accordance with Twelve Seas’ charter. As of the date of this proxy statement/prospectus, based on funds in the Trust Account of approximately $212.5 million, this would have amounted to approximately $10.27 per share. If a holder exercises its Redemption rights, then such holder will be exchanging its ordinary shares of Twelve Seas for cash. Such a holder will be entitled to receive cash for its Public Shares only if it properly demands Redemption and delivers its shares (either physically or electronically) to Twelve Seas’ transfer agent prior to the Meeting. See the section titled “Extraordinary General Meeting of Twelve Seas Shareholders — Redemption Rights” for the procedures to be followed if you wish to redeem your shares for cash. |
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Q. Will how I vote affect my ability to exercise Redemption rights? |
A. No. You may exercise your Redemption rights whether or not you are a holder of ordinary shares of Twelve Seas on the Record Date (so long as you are a holder at the time of exercise), or whether you are a holder and vote your ordinary shares of Twelve Seas on the Business Combination Proposal (for or against) or any other proposal described by this proxy statement/prospectus. As a result, the Business Agreement can be approved by shareholders who will redeem their shares and no longer remain shareholders, leaving shareholders who choose not to redeem their shares holding shares in a company with a potentially less liquid trading market, fewer shareholders, potentially less cash and the potential inability to meet the listing standards of NASDAQ. |
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Q. How do I exercise my Redemption rights? |
A. If you are a holder of Public Shares and wish to exercise your Redemption rights, you must demand that Twelve Seas convert your shares into cash no later than 5:00 p.m. Eastern Time on [ ], 2019 (two (2) business days prior to the vote on the Business Combination Proposal) by (A) (i) checking the box on the proxy card, or (ii) submitting your request in writing to Mark Zimkind of Continental Stock Transfer & Trust Company, at the address listed at the end of this section and (B) delivering your stock to Twelve Seas’ transfer agent physically or electronically using The Depository Trust Company’s DWAC (Deposit Withdrawal at Custodian) System. If you hold the shares in “street name”, you will have to coordinate with your broker to have your shares certificated or delivered electronically. Certificates that have not been tendered (either physically or electronically) in accordance with these procedures will not be converted into cash. There is a nominal cost associated with this tendering process and the act of certificating the shares or delivering them through the DWAC system. The transfer agent will typically charge the tendering broker $45 and it would be up to the broker whether or not to pass this cost on to the converting shareholder. |
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Any holder of Public Shares (whether or not they are a holder on the Record Date) will be entitled to demand that his shares be converted for a full pro rata portion of the amount then in the Trust Account (which was $[ ] million, or $[ ] per share, as of [ ], 2019, the Record Date). Such amount, less any owed but unpaid taxes on the funds in the Trust Account, will be paid promptly upon consummation of the Business Combination. There are currently no owed but unpaid income taxes on the funds in the Trust Account. However, under Cayman Islands law, the proceeds held in the Trust Account could be subject to claims which could take priority over those of Twelve Seas’ Public Shareholders exercising Redemption rights, regardless of whether such holders vote for or against the Business Combination Proposal. Therefore, the per-share distribution from the Trust Account in such a situation may be less than originally anticipated due to such claims. Your vote on any proposal will have no impact on the amount you will receive upon exercise of your Redemption rights. |
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If you wish to exercise your Redemption rights but initially do not check the box on the proxy card providing for the exercise of your Redemption rights and do not send a written request to Twelve Seas to exercise your Redemption rights, you may request that Twelve Seas send you another proxy card on which you may indicate your intended vote or your intention to exercise your Redemption rights. You may make such request by contacting Twelve Seas at the phone number or address listed at the end of this section. |
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Any request for Redemption, once made by a holder of Public Shares, may be withdrawn at any time up to the time the vote is taken with respect to the Business Combination Proposal at the Meeting. If you deliver your shares for Redemption to Twelve Seas’ transfer agent and later decide prior to the Meeting not to elect conversion, you may request that Twelve Seas’ transfer agent return the shares (physically or electronically). You may make such request by contacting Twelve Seas’ transfer agent at the phone number or address listed at the end of this section. |
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Any corrected or changed proxy card or written demand of Redemption rights must be received by Twelve Seas’ secretary prior to the vote taken on the Business Combination Proposal at the Meeting. No demand for Redemption will be honored unless the holder’s shares have been delivered (either physically or electronically) to Twelve Seas’ transfer agent at least two (2) business days prior to the vote at the Meeting. |
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If a holder of Public Shares properly makes a demand for Redemption as described above, then, if the Business Combination is consummated, Twelve Seas will convert these shares into a pro rata portion of funds deposited in the Trust Account. If you exercise your Redemption rights, then you will be exchanging your ordinary shares of Twelve Seas for cash and will not be entitled to Pubco Ordinary Shares with respect to your ordinary shares of Twelve Seas upon consummation of the Business Combination. If the Business Combination is not approved or completed for any reason, then holders of Public Shares who elected to exercise their Redemption rights would not be entitled to convert their shares for the applicable pro rata share of the Trust Account. In such case, Twelve Seas will promptly return any shares delivered by public holders and such holders may only share in the assets of the Trust Account upon the liquidation of Twelve Seas. This may result in holders receiving less than they would have received if the Business Combination was completed and they exercised Redemption rights in connection therewith due to potential claims of creditors. |
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If you are a holder of Public Shares and you exercise your Redemption rights, it will not result in the loss of any Twelve Seas Warrants and Rights that you may hold. Your Warrants will become exercisable to purchase one Ordinary Share of Pubco in lieu of one ordinary share of Twelve Seas for a purchase price of $11.50 upon consummation of the Business Combination and your Rights will automatically be converted into one-tenth of an Ordinary Share of Pubco upon the consummation of the Business Combination. |
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Q. If I am a Warrant or Right holder, can I exercise Redemption rights with respect to my Warrants or Rights? |
A. No. The holders of Warrants and Rights have no Redemption rights with respect to such securities. |
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Q. If I am a Unit holder, can I exercise Redemption rights with respect to my Units? |
A. No. Holders of outstanding Units must separate the underlying ordinary shares, Warrants and Rights prior to exercising Redemption rights with respect to the Public Shares. |
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If you hold Units registered in your own name, you must deliver the certificate for such Units to Continental Stock Transfer & Trust Company, Twelve Seas’ transfer agent, with written instructions to separate such Units into Public Shares, Rights and Warrants. This must be completed far enough in advance to permit the mailing of the Public Share certificates back to you so that you may then exercise your Redemption rights upon the separation of the Public Shares from the Units. See “How do I exercise my Redemption rights?” above. The address of Continental Stock Transfer & Trust Company is listed under the question “Who can help answer my questions?” below. |
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If a broker, dealer, commercial bank, trust company or other nominee holds your Units, you must instruct such nominee to separate your Units. Your nominee must send written instructions by facsimile to Continental Stock Transfer & Trust Company, Twelve Seas’ transfer agent. Such written instructions must include the number of Units to be split and the nominee holding such Units. Your nominee must also initiate electronically, using DTC’s deposit withdrawal at custodian (DWAC) system, a withdrawal of the relevant Units and a deposit of an equal number of Public Shares, Rights and Warrants. This must be completed far enough in advance to permit your nominee to exercise your Redemption rights upon the separation of the Public Shares from the Units. While this is typically done electronically the same business day, you should allow at least one full business day to accomplish the separation. If you fail to cause your Public Shares to be separated in a timely manner, you will likely not be able to exercise your Redemption rights. |
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Q. Do I have appraisal rights if I object to the proposed Business Combination? |
A. Neither Twelve Seas Unit holders, Warrant holders or Rights holders have appraisal rights in connection with the Business Combination under the Companies Law. Twelve Seas shareholders are entitled to give notice to Twelve Seas prior to the Meeting that they wish to dissent to the Business Combination to the effect of which would be that such dissenting shareholders would be entitled to the payment of fair market value of his or her shares of Twelve Seas if they follow the procedures set out in the Companies Law. It is Twelve Seas’ view that such fair market value would equal the amount which Twelve Seas shareholders would obtain if they exercise their Redemption rights as described herein. |
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Q. I am a Twelve Seas Warrant holder. Why am I receiving this proxy statement/prospectus? |
A. As a holder of Twelve Seas Warrants, you will be entitled to purchase one Ordinary Share of Pubco in lieu of one ordinary share of Twelve Seas at a purchase price of $11.50 upon consummation of the Business Combination. This proxy statement/prospectus includes important information about Pubco and the business of Pubco and its subsidiaries following consummation of the Business Combination. Since holders of Twelve Seas Warrants will become holders of warrants of Pubco and may become holders of Pubco Ordinary Shares upon consummation of the Business Combination, we urge you to read the information contained in this proxy statement/prospectus carefully. |
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Q. What happens to the funds deposited in the Trust Account after consummation of the Business Combination? |
A. Of the net proceeds of Twelve Seas’ Initial Public Offering (including underwriters’ exercise of over-allotment option) and simultaneous private placements, a total of $207,000,000 was placed in the trust account immediately following the Initial Public Offering. After consummation of the Business Combination, the funds in the Trust Account will be used by Purchaser to pay holders of the Public Shares who exercise Redemption rights, to pay fees and expenses incurred in connection with the Business Combination with BPGIC (including fees of an aggregate of approximately $7.245 million to certain underwriters and finders in connection with the Business Combination), and to repay any loans owed by Twelve Seas to Sponsor. Any remaining funds will be paid to BPGIC (or as otherwise designated in writing by BPGIC to Twelve Seas prior to the Closing) and used for working capital and general corporate purposes of Pubco and/or BPGIC. |
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Q. What happens if a substantial number of Public Shareholders vote in favor of the Business Combination Proposal and exercise their Redemption rights? |
A. Unlike some other blank check companies which require Public Shareholders to vote against a business combination in order to exercise their Redemption rights, Twelve Seas’ Public Shareholders may vote in favor of the Business Combination and exercise their Redemption rights. Accordingly, the Business Combination may be consummated even though the funds available from the Trust Account and the number of Public Shareholders are substantially reduced as a result of Redemption by Public Shareholders. However, the Business Combination will not be consummated if, upon the consummation of the Business Combination, Twelve Seas does not have at least $5,000,001 net tangible assets after giving effect to payment of amounts that Twelve Seas will be required to pay to redeeming shareholders upon consummation of the Business Combination and the proceeds from any private placement investment, and Closing Net Cash of $125 million of Pubco and Twelve Seas at Closing. As a result, based on the current expected Twelve Seas cash, expenses and liabilities at Closing, holders of no more than 7.6 million Public Shares of Twelve Seas (or approximately 36.7% of the total outstanding ordinary shares of Twelve Seas) could seek Redemption of their shares without triggering BPGIC’s right to terminate the Business Combination Agreement. Also, with fewer public shares and public shareholders, the trading market for Pubco’s Ordinary Shares may be less liquid than the market for Twelve Seas’ ordinary shares were prior to the Merger and Pubco may not be able to meet the listing standards for NASDAQ or another national securities exchange. In addition, with fewer funds available from the Trust Account, the working capital infusion from the Trust Account into BPGIC’s business will be reduced. |
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Q. What happens if the Business Combination is not consummated? |
A. If Twelve Seas does not complete the Business Combination with BPGIC or another business combination by December 22, 2019, Twelve Seas must redeem 100% of the outstanding Public Shares, at a per-share price, payable in cash, equal to an amount then held in the Trust Account (currently anticipated to be approximately $[ ] per share as of [ ], 2019, the anticipated closing date). |
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Q. When do you expect the Business Combination to be completed? |
A. It is currently anticipated that the Business Combination will be consummated promptly following the Twelve Seas meeting which is set for [ ], 2019; however, such meeting could be adjourned, as described above. For a description of the conditions for the completion of the Business Combination, see the section entitled “The Business Combination Agreement — Conditions to the Closing of the Business Combination.” |
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Q. What do I need to do now? |
A. Twelve Seas urges you to read carefully and consider the information contained in this proxy statement/prospectus, including the annexes, and to consider how the Business Combination will affect you as a shareholder and/or Warrant holder of Twelve Seas. Shareholders should then vote as soon as possible in accordance with the instructions provided in this proxy statement/prospectus and on the enclosed proxy card. |
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Q. How do I vote? |
A. If you are a holder of record of ordinary shares of Twelve Seas on the Record Date, you may vote in person at the Meeting or by submitting a proxy for the Meeting. You may submit your proxy by completing, signing, dating and returning the enclosed proxy card in the accompanying pre-addressed postage paid envelope. If you hold your shares in “street name,” which means your shares are held of record by a broker, bank or nominee, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted. In this regard, you must provide the broker, bank or nominee with instructions on how to vote your shares or, if you wish to attend the Meeting and vote in person, obtain a proxy from your broker, bank or nominee. |
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Q. If my shares are held in “street name,” will my broker, bank or nominee automatically vote my shares for me? |
A. As disclosed in this proxy statement/prospectus, your broker, bank or nominee cannot vote your shares on the Business Combination Proposal or the Merger Proposal unless you provide instructions on how to vote in accordance with the information and procedures provided to you by your broker, bank or nominee. Your broker, bank or nominee can vote your shares on the Share Issuance Proposal without instructions. |
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Q. May I change my vote after I have mailed my signed proxy card? |
A. Yes. Shareholders may send a later-dated, signed proxy card to Twelve Seas’ secretary at the address set forth below so that it is received by Twelve Seas’ Chief Executive Officer prior to the vote at the Meeting or attend the Meeting in person and vote. Shareholders also may revoke their proxy by sending a notice of revocation to Twelve Seas’ Chief Executive Officer, which must be received by Twelve Seas’ Chief Executive Officer prior to the vote at the Meeting. |
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Q. What happens if I fail to take any action with respect to the Meeting? |
A. If you fail to take any action with respect to the Meeting and the Business Combination is approved by shareholders and consummated, you will become a shareholder and/or warrant holder of Pubco. If you fail to take any action with respect to the Meeting and the Business Combination is not approved, you will continue to be a shareholder and/or Warrant holder of Twelve Seas. |
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Q. What should I do with my shares and/or warrants certificates? |
A. Twelve Seas Warrant holders should not submit their Warrant certificates now and those shareholders who do not elect to have their Twelve Seas shares converted into the pro rata share of the trust account should not submit their share certificates now. After the consummation of the Business Combination, Pubco’s transfer agent will send instructions to Twelve Seas security holders regarding the exchange of their Twelve Seas securities for Pubco securities. Twelve Seas shareholders who exercise their Redemption rights must deliver their stock certificates to Twelve Seas’ transfer agent (either physically or electronically) at least two (2) business days prior to the vote at the Meeting. |
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Q. What should I do if I receive more than one set of voting materials? |
A. Shareholders may receive more than one set of voting materials, including multiple copies of this proxy statement/prospectus and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a holder of record and your shares are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction card that you receive in order to cast a vote with respect to all of your Twelve Seas shares. |
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Q. Who can help answer my questions? |
A. If you have questions about the Business Combination or if you need additional copies of the proxy statement/prospectus or the enclosed proxy card you should contact: |
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Stephen N. Cannon
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Or: |
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[ ] |
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You may also obtain additional information about Twelve Seas from documents filed with the SEC by following the instructions in the section entitled “Where You Can Find More Information.” If you are a holder of Public Shares and you intend to seek Redemption of your shares, you will need to deliver your stock (either physically or electronically) to Twelve Seas’ transfer agent at the address below at least two (2) business days prior to the vote at the Meeting. If you have questions regarding the certification of your position or delivery of your stock, please contact: |
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Mr. Mark Zimkind
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SUMMARY OF THE PROXY STATEMENT/PROSPECTUS
This summary highlights selected information from this proxy statement/prospectus and does not contain all of the information that is important to you. To better understand the proposals to be submitted for a vote at the Meeting, including the Business Combination Proposal, you should read this entire document carefully, including the Business Combination Agreement attached as Annex A to this proxy statement/prospectus. The Business Combination Agreement is the legal document that governs the Merger and Share Exchange and the other transactions that will be undertaken in connection with the Business Combination. It is also described in detail in this proxy statement/prospectus in the section entitled “The Business Combination Agreement.”
The Parties
Twelve Seas
Twelve Seas is a blank check company formed in order to effect a merger, capital stock exchange, asset acquisition or other similar business combination with one or more businesses or entities. Twelve Seas was incorporated under the laws of the Cayman Islands on November 30, 2017.
On June 22, 2018, Twelve Seas closed its Initial Public Offering of 18,000,000 Units, with each Unit consisting of one ordinary share, one Warrant to purchase one ordinary share at a purchase price of $11.50 following consummation of an initial business combination and one Right entitling the holder thereof to receive one-tenth (1/10) of one ordinary share upon the consummation of an initial business combination. On June 28, 2018, Twelve Seas consummated the sale of an additional 2,700,000 Units which were subject to an over-allotment option granted to the underwriters of its Initial Public Offering. The Units from the Initial Public Offering (including the over-allotment option) were sold at an offering price of $10.00 per Unit, generating total gross proceeds of $207,000,000. Simultaneously with the consummation of the Initial Public Offering and the exercise of the underwriters’ over-allotment option, Twelve Seas consummated the private sale of 529,000 Units to its Initial Shareholders, in each case at $10.00 per Unit for an aggregate purchase price of $5,290,000. A total of $207,000,000 was deposited into the Trust Account and the remaining proceeds became available to be used as working capital to provide for business, legal and accounting due diligence on prospective business combinations and continuing general and administrative expenses. The Initial Public Offering was conducted pursuant to a registration statement on Form S-1 (Reg. No. 333-225352) that became effective on June 19, 2018. As of the date of this proxy statement/prospectus, there was approximately $212.5 million held in the trust account.
After consummation of the Business Combination, the funds in the Trust Account will be used by Purchaser to pay holders of the Public Shares who exercise Redemption rights, to pay fees and expenses incurred in connection with the Business Combination with BPGIC (including fees of an aggregate of approximately $7.245 million to certain underwriters and finders in connection with the Business Combination), and to repay any loans owed by Twelve Seas to Sponsor. Any remaining funds will be paid to BPGIC (or as otherwise designated in writing by BPGIC to Twelve Seas prior to the Closing) and used for working capital and general corporate purposes of Pubco and/or BPGIC.
EarlyBirdCapital, Inc. (“EBC”), in its role as investment banker to Twelve Seas, has provided Twelve Seas with advice and assistance in reviewing potential targets with which to consummate a business combination and arranging meetings with and preparing materials for investors in connection with the consummation of the Business Combination, as well as providing general advice with respect to special purpose acquisition company transactions.
Twelve Seas Units, ordinary shares, Warrants and Rights are listed on NASDAQ under the symbols “BROGU,” “BROG,” “BROGW,” and “BROGR,” respectively.
The mailing address of Twelve Seas’ principal executive office is 135 East. 57th Street, 18th Floor, New York, New York. After the consummation of the Business Combination, it will become a wholly-owned subsidiary of Pubco.
Pubco
Pubco was incorporated on April 12, 2019 solely for the purpose of effectuating the Business Combination described herein. Pubco was incorporated under the laws of the Cayman Islands as an exempted company. Pubco owns no material assets and does not operate any business.
Prior to the consummation of the Business Combination, the sole director and shareholder of Pubco is Meclomen Maramot.
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The mailing address of Pubco’s registered office is PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands. After the consummation of the Business Combination, its principal executive office will be that of BPGIC, located at P.O. Box 50170, Fujairah, UAE and its telephone number is +971 2 633 3149.
BPGIC
BPGIC is an oil storage and service provider strategically located in the Port of Fujairah in the emirate of Fujairah in the UAE. BPGIC’s vision is to develop an oil storage business that differentiates itself from competitors by providing its customers with fast order processing times, excellent customer service and high accuracy blending services with low oil losses. BPGIC has a 60-year lease of land for its operations located in close proximity to the Port of Fujairah’s berth connection points and is initially developing its terminal in two phases. The first phase commenced operations on January 18, 2018 and the second phase is currently under construction.
The mailing address of BPGIC’s principal executive office is P.O. Box 50170, Fujairah, UAE and its telephone number is +971 2 633 3149.
Merger Sub
Merger Sub was incorporated on April 12, 2019 solely for the purpose of effectuating the Business Combination described herein. Merger Sub was incorporated under the laws of the Cayman Islands as an exempted company. Merger Sub owns no material assets and does not operate any business.
Prior to the consummation of the Business Combination, the sole director of Merger Sub is Meclomen Maramot, and the sole shareholder of Merger Sub is Pubco.
The mailing address of Merger Sub’s registered office is PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands. After the consummation of the Business Combination, its principal executive office will be that of BPGIC, located at P.O. Box 50170, Fujairah, UAE and its telephone number is +971 2 633 3149.
Seller
Seller is a holding company formed under the laws of England and Wales that owns 100% of the outstanding equity interests of BPGIC.
The mailing address of Seller’s principal executive office is P.O. Box 50170, Fujairah, UAE and its telephone number is +971 2 633 3149.
The Business Combination Proposal
The Business Combination Agreement provides for a business combination transaction by means of (i) the Merger of Twelve Seas with Merger Sub, with Twelve Seas surviving and each of the former security holders of Twelve Seas receiving securities of Pubco, with Pubco becoming a new public company and (ii) the exchange of 100% of the outstanding ordinary shares of BPGIC by Seller for Ordinary Shares of Pubco.
On April 15, 2019, Twelve Seas entered into the Business Combination Agreement with Pubco, Merger Sub, BPGIC and the shareholders of BPGIC who would become parties thereto.
On May 10, 2019, the sole shareholder of BPGIC became party to the Business Combination Agreement by execution of a Joinder thereto.
Pursuant to the Business Combination Agreement, subject to the terms and conditions set forth therein, at the Closing of the Transactions contemplated by the Business Combination Agreement, Twelve Seas will merge with Merger Sub, with Twelve Seas continuing as the surviving entity and with holders of Twelve Seas securities receiving securities of Pubco, and Pubco will acquire all of the issued and outstanding ordinary shares of BPGIC from the Seller in exchange for Ordinary Shares of Pubco, with BPGIC becoming a wholly-owned subsidiary of Pubco (the “Share Exchange”).
The total consideration to be paid by Pubco to the Seller for the purchased shares will be 100,000,000 Pubco Ordinary Shares, subject to reduction to the extent that an election is made by BPGIC for the Seller to have the option to receive a portion of the consideration in cash, and the Seller elects to do so (as so reduced, the “Exchange Shares”); provided that 20,000,000 of the Exchange Shares otherwise issuable to the Seller at the Closing will be set aside
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in escrow until released upon the satisfaction of certain financial milestones and share price targets. For a detailed discussion on calculation of the number of Pubco shares to be received by holders of BPGIC securities in connection with the Business Combination, please see the section titled “The Business Combination Proposal — The Business Combination Agreement and Related Agreements.”
In addition to the approval of the Business Combination Proposal, unless waived by the parties to the Business Combination Agreement, in accordance with applicable law, the Closing of the Business Combination is subject to a number of conditions set forth in the Business Combination Agreement including, among others, receipt of the requisite shareholder approval contemplated by this proxy statement/prospectus. For more information about the closing conditions to the Business Combination, see the section titled “Business Combination Proposal — Conditions to Closing of the Business Combination.”
Pursuant to the Business Combination Agreement, prior to the consummation of the Business Combination, the board of directors and shareholders of Pubco will amend and restate Pubco’s memorandum and articles of association. The Amended and Restated Memorandum and Articles of Association will differ from Twelve Seas’ amended and restated memorandum and articles of association in multiple aspects, including: (i) the name of the new public entity will be “Brooge Holdings Limited” as opposed to “Twelve Seas Investment Company”; (ii) Pubco will have 450,000,000 authorized Ordinary Shares and 50,000,000 authorized preferred shares, as opposed to Twelve Seas having 200,000,000 authorized ordinary shares and 2,000,000 authorized preferred shares; (iii) Pubco’s corporate existence will be perpetual as opposed to Twelve Seas’ corporate existence terminating if a business combination is not consummated by Twelve Seas within a specified period of time; and (iv) Pubco’s Constitutional Documents do not include the various provisions applicable only to special purpose acquisition companies that Twelve Seas’ amended and restated memorandum and articles of association contains. For more information about Pubco’s Amended and Restated Memorandum and Articles of Association, please see the section entitled “The Business Combination Proposal — Pubco’s Amended and Restated Memorandum and Articles of Association” and a copy of the Amended and Restated Memorandum and Articles of Association of Pubco is attached hereto as Annex B.
The Merger Proposal
As part of the Business Combination, the shareholders of Twelve Seas will vote on the Merger of Twelve Seas with Merger Sub, with Twelve Seas being the surviving company and all the undertaking, property and liabilities of Merger Sub vest in Twelve Seas by virtue of such Merger pursuant to the Companies Law and the [“plan of merger” contained in the Business Combination Agreement]. See the section titled “The Merger Proposal.”
The Share Issuance Proposal
NASDAQ listing rules require that its listed companies obtain shareholder approval for issuances of securities in excess of 20% of its issued and outstanding voting stock prior to the issuance. In connection with the approval of the Business Combination Proposal, Twelve Seas’ shareholders will be asked to consider and vote upon a proposal to approve, for purposes of complying with applicable NASDAQ listing rules, the issuance of securities in excess of 20% of Twelve Seas’ issued and outstanding ordinary shares. Please see the section entitled “The Share Issuance Proposal.”
The Adjournment Proposal
If, based on the tabulated vote, there are not sufficient votes at the time of the Meeting to authorize Twelve Seas to consummate the Business Combination (because the Business Combination Proposal and the Merger Proposal are not approved or Twelve Seas would have less than $5,000,001 of net tangible assets immediately prior to Closing after taking into account the holders of the Public Shares that have properly elected to redeem their Public Shares or Pubco and Twelve Seas would have less than $125,000,000 of Closing Net Cash at Closing), Twelve Seas’ board of directors may submit a proposal to adjourn the Meeting to a later date or dates, if necessary, to permit further solicitation of proxies. Please see the section entitled “The Adjournment Proposal.”
Twelve Seas Initial Shareholders
As of [ ], 2019, the Record Date for the Meeting, Twelve Seas’ Initial Shareholders, including its Sponsor, beneficially owned and are entitled to vote an aggregate of 5,175,000 Founder Shares that were issued prior to Twelve Seas’ Initial Public Offering. The Sponsor also purchased an aggregate of 529,000 Private Placement Units simultaneously with the consummation of the Initial Public Offering. The Founder Shares and shares underlying the
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Private Placement Units currently constitute approximately 21.3% of the outstanding ordinary shares of Twelve Seas. The Initial Shareholders have agreed to forfeit 1,035,000 Founder Shares at the Closing.
In connection with the Initial Public Offering, each of Twelve Seas’ Sponsor, officers and directors agreed to vote the Founder Shares, the shares included in the Private Placement Units, as well as any ordinary shares acquired in the aftermarket, in favor of the Business Combination Proposal. Twelve Seas’ Sponsor, officers and directors have also indicated that they intend to vote their shares in favor of all other proposals being presented at the Meeting. The Founder Shares and shares included in the Private Placement Units have no Redemption rights in the event of a business combination and will be worthless if no business combination is effected by Twelve Seas. In connection with the Initial Public Offering, the Twelve Seas Initial Shareholders entered into an escrow agreement pursuant to which their Founder Shares are held in escrow and may not be transferred (subject to limited exceptions) until with respect to 50% of the Founder Shares, the earlier of one year after the date of the consummation of an initial business combination and the date on which the closing price of Twelve Seas’ ordinary shares exceeds $12.50 per share for any 20 trading days within a 30-trading day period following the consummation of an initial business combination and, with respect to the remaining 50% of the Founder Shares, one year after the date of the consummation of an initial business combination, or earlier in each case if, subsequent to Twelve Seas’ initial business combination, it consummates a subsequent liquidation, merger, stock exchange or other similar transaction which results in all of its shareholders having the right to exchange their ordinary shares for cash, securities or other property (which escrow arrangements will be transferred to Pubco at the Closing of the Business Combination).
Date, Time and Place of the Extraordinary General Meeting of Twelve Seas
The Meeting will be held at 10:00 a.m., Eastern time, on [ ], 2019, at the offices of Ellenoff Grossman & Schole LLP, Twelve Seas’ counsel, at 1345 Avenue of the Americas, 11th Floor, New York, NY 10105, to consider and vote upon the Business Combination Proposal, the Merger Proposal, the Share Issuance Proposal and/or if necessary, the Adjournment Proposal to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the Meeting, Twelve Seas is not authorized to consummate the Business Combination.
Voting Power; Record Date
Shareholders will be entitled to vote or direct votes to be cast at the Meeting if they owned ordinary shares of Twelve Seas at the close of business on [ ], 2019, which is the Record Date for the Meeting. Shareholders will have one vote for each ordinary share of Twelve Seas owned at the close of business on the Record Date. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted. Twelve Seas Warrants and Rights do not have voting rights. On the Record Date, there were 26,779,000 ordinary shares outstanding, of which 20,700,000 were Public Shares with the rest being held by the Twelve Seas Initial Shareholders and EBC.
Quorum and Vote of Twelve Seas Shareholders
A quorum of Twelve Seas shareholders is necessary to hold a valid meeting. A quorum will be present at the Twelve Seas meeting if the holders of a majority of the outstanding shares entitled to vote at the Meeting are represented in person or by proxy. Abstentions and broker non-votes, while considered present for the purposes of establishing a quorum, are not treated as votes cast and will have no effect on any of the proposals. The Twelve Seas Initial Shareholders hold approximately 21.3% of the outstanding ordinary shares of Twelve Seas. Such shares, as well as any ordinary shares acquired in the aftermarket by the Initial Shareholders, will be voted in favor of the proposals presented at the Meeting. The proposals presented at the Meeting will require the following votes:
• Pursuant to Twelve Seas’ amended and restated memorandum and articles of association, the approval of the Business Combination Proposal will require an “Ordinary Resolution” as a matter of Cayman Islands law. There are currently 26,779,000 ordinary shares of Twelve Seas outstanding, of which 20,700,000 are Public Shares.
• Pursuant to Twelve Seas’ amended and restated memorandum and articles of association, the approval of the Merger Proposal will require a “Special Resolution” as a matter of Cayman Islands law.
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• The approval of the Share Issuance Proposal will require an “Ordinary Resolution” as a matter of Cayman Islands law.
• The approval of the Adjournment Proposal will require an “Ordinary Resolution” as a matter of Cayman Islands law.
Abstentions and broker non-votes, while considered present for the purposes of establishing a quorum, are not treated as votes cast and will have no effect on the Business Combination Proposal, the Merger Proposal, the Share Issuance Proposal and the Adjournment Proposal (if presented).
In addition, if the Business Combination Proposal is not approved, the other proposals (other than the Adjournment Proposal) will not be presented to the shareholders for a vote.
Redemption Rights
Pursuant to Twelve Seas’ amended and restated memorandum and articles of association, a holder of Public Shares may demand that Twelve Seas convert such shares into cash if the Business Combination is consummated. Holders of Public Shares (whether or not they are holders on the Record Date) will be entitled to receive cash for these shares only if they demand that Twelve Seas convert their shares into cash no later than 5:00 p.m. Eastern Time on [ ], 2019 (two (2) business days prior to the vote at the Meeting) by (A) (i) checking the box on the proxy card, or (ii) by submitting their request in writing to Mark Zimkind of Continental Stock Transfer & Trust Company and (B) delivering their stock to Twelve Seas’ transfer agent physically or electronically using the Depository Trust Company’s DWAC (Deposit Withdrawal at Custodian) System. If the Business Combination is not completed, these shares will not be converted into cash at this time in connection with the Business Combination. In such case, Twelve Seas will promptly return any shares delivered by public holders for Redemption and such holders may only share in the assets of the Trust Account upon the liquidation of Twelve Seas. This may result in holders receiving less than they would have received if the Business Combination was completed and they had exercised their Redemption rights in connection therewith due to potential claims of creditors. If a holder of Public Shares properly demands Redemption, Twelve Seas will convert each Public Share into a full pro rata portion of the Trust Account, calculated as of two business days prior to the anticipated consummation of the Business Combination. As of [ ], 2019, the Record Date, this would amount to approximately $[ ] per share. If a holder of Public Shares exercises its Redemption rights, then it will be exchanging its ordinary shares of Twelve Seas for cash and will no longer own the shares. See the section entitled “Extraordinary General Meeting of Twelve Seas Shareholders — Redemption Rights” for a detailed description of the procedures to be followed if you wish to convert your shares into cash.
The Business Combination will not be consummated if Twelve Seas will have net tangible assets of less than $5,000,001 after taking into account holders that have properly demanded Redemption of their Public Shares, upon the consummation of the Business Combination, into cash and the proceeds of any private placement. BPGIC, Pubco, Merger Sub and the Seller are not obligated to consummate the transaction if Pubco and Twelve Seas will have Closing Net Cash of less than $125,000,000 as of the Closing, taking into account Redemptions of Public Shares and the proceeds of any private placement.
Holders of Twelve Seas Warrants and Rights will not have Redemption rights with respect to such securities.
Appraisal Rights
Holders of Twelve Seas Units, Warrants and Rights do not have appraisal rights in connection with the Business Combination under the Companies Law. Twelve Seas shareholders are entitled to give notice to Twelve Seas prior to the Meeting that they wish to dissent to the Business Combination, the effect of which would be that such dissenting shareholders would be entitled to the payment of fair market value of his or her shares of Twelve Seas if they follow the procedures set out in the Companies Law. It is Twelve Seas’ view that such fair market value would equal the amount which Twelve Seas shareholders would obtain if they exercise their Redemption rights as described herein.
Proxy Solicitation
Proxies may be solicited by mail, telephone or in person. Twelve Seas has engaged [ ] to assist in the solicitation of proxies.
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If a shareholder grants a proxy, it may still vote its shares in person if it revokes its proxy before the Meeting. A shareholder may also change its vote by submitting a later-dated proxy as described in the section entitled “Extraordinary General Meeting of Twelve Seas Shareholders — Revoking Your Proxy.”
Interests of Twelve Seas’ Directors and Officers in the Business Combination
When you consider the recommendation of Twelve Seas’ board of directors in favor of approval of the Business Combination Proposal, you should keep in mind that Twelve Seas’ Initial Shareholders, including its directors and executive officers, have interests in such proposal that are different from, or in addition to, your interests as a shareholder, Warrant holder or Rights holder. These interests include, among other things:
• If the Business Combination with BPGIC or another business combination is not consummated by December 22, 2019, Twelve Seas will cease all operations except for the purpose of winding up, redeeming 100% of the outstanding Public Shares for cash and, subject to the approval of its remaining shareholders and its board of directors, dissolving and liquidating. In such event, the 5,175,000 Founder Shares held by Twelve Seas’ Initial Shareholders, including its directors and officers, which were acquired for an aggregate purchase price of $25,000 prior to Twelve Seas’ Initial Public Offering, would be worthless because Twelve Seas’ Initial Shareholders are not entitled to participate in any Redemption or distribution with respect to such shares. As part of the Business Combination, Twelve Seas’ Initial Shareholders agreed to forfeit 1,035,000 Founder Shares, which would be cancelled. As a result, Twelve Seas’ Initial Shareholders would retain 4,140,000 Founder Shares. Such shares had an aggregate market value of approximately $42.3 million based upon the closing price of $10.22 per share on NASDAQ on September 19, 2019.
• Twelve Seas’ Initial Shareholders purchased an aggregate of 529,000 Private Placement Units from Twelve Seas for an aggregate purchase price of $5,290,000 (or $10.00 per Unit). These purchases took place on a private placement basis simultaneously with the consummation of the Initial Public Offering and over-allotment option. All of the proceeds Twelve Seas received from these purchases were placed in the Trust Account. Such Units had an aggregate market value of $5.7 million based upon the closing price of $10.77 per Unit on NASDAQ on September 19, 2019. The purchasers of the Private Placement Units waived the right to participate in any Redemption or liquidation distribution with respect to such Private Placement Units. Accordingly, the Twelve Seas shares, Warrants and Rights underlying the Private Placement Units will become worthless if Twelve Seas does not consummate a business combination by December 22, 2019 (as will the Twelve Seas Warrants and Rights held by Public Shareholders).
• The total market value of the Twelve Seas’ directors’ current equity ownership in Twelve Seas ordinary shares and Units, based on the closing price of $10.22 per ordinary share and $10.77 per Unit on the NASDAQ as of September 19, 2019, is approximately $1.0 million.
• If Twelve Seas is unable to complete a business combination within the required time period, the Initial Shareholders will be liable to ensure that the proceeds in the Trust Account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by Twelve Seas for services rendered or contracted for or products sold to Twelve Seas, but only if such a vendor or target business has not executed a waiver.
• Twelve Seas’ Initial Shareholders, including its officers and directors, and their affiliates are entitled to reimbursement of out-of-pocket expenses incurred by them in connection with certain activities on Twelve Seas’ behalf, such as identifying and investigating possible business targets and business combinations. However, if Twelve Seas fails to consummate a business combination within the required period, they will not have any claim against the Trust Account for reimbursement. Accordingly, Twelve Seas may not be able to reimburse these expenses if the Business Combination with BPGIC or another business combination is not completed by December 22, 2019. As of the date of this proxy statement/prospectus, there are no unpaid reimbursable expenses.
• Since its inception, the Sponsor has made loans from time to time to Twelve Seas to fund certain capital requirements. As of the date of this proxy statement/prospectus, an aggregate of $500,000 principal amount of these loans is outstanding. These loans are evidenced by non-interest bearing notes that are convertible at the Sponsor’s election upon the consummation of an initial business combination into Units of Twelve Seas, at a price of $10.00 per Unit.
21
At any time prior to the Meeting, during a period when they are not then aware of any material nonpublic information regarding Twelve Seas or its securities, the Twelve Seas Initial Shareholders, or BPGIC’s shareholders and/or their respective affiliates may purchase shares from institutional and other investors who vote, or indicate an intention to vote, against the Business Combination Proposal or the Merger Proposal, or execute agreements to purchase such shares from such investors in the future, or they may enter into transactions with such investors and others to provide them with incentives to acquire ordinary shares of Twelve Seas or vote their shares in favor of the Business Combination Proposal and the Merger Proposal. The purpose of such share purchases and other transactions would be to increase the likelihood of satisfaction of the requirements that the shareholders of Twelve Seas approve the Business Combination Proposal and the Merger Proposal, when it appears that such requirements would otherwise not be met. While the exact nature of any such incentives has not been determined as of the date of this proxy statement/prospectus, they might include, without limitation, arrangements to protect such investors or holders against potential loss in value of the shares, including the granting of put options and the transfer to such investors or holders of shares or Warrants owned by the Twelve Seas Initial Shareholders for nominal value.
Entering into any such arrangements may have a depressive effect on Twelve Seas’ ordinary shares. For example, as a result of these arrangements, an investor or holder may have to effectively purchase shares at a price lower than market and may therefore be more likely to sell the shares he owns, either prior to or immediately after the Meeting.
If such transactions are effected, the consequence could be to cause the Business Combination to be approved in circumstances where such approval could not otherwise be obtained. Purchases of shares by the persons described above would allow them to exert more influence over the approval of the Business Combination Proposal and other proposals to be presented at the Meeting and would likely increase the chances that such proposals would be approved. Moreover, any such purchases may make it more likely that Twelve Seas will have in excess of the required amount of net assets and Closing Net Cash available to consummate the Business Combination as described above.
As of the date of this proxy statement/prospectus, there have been no such discussions and no agreements to such effect have been entered into with any such investor or holder. Twelve Seas will file a Current Report on Form 8-K to disclose any arrangements entered into or significant purchases made by any of the aforementioned persons that would affect the vote on the Business Combination Proposal, the Merger Proposal or the satisfaction of any closing conditions. Any such report will include descriptions of any arrangements entered into or significant purchases by any of the aforementioned persons.
Recommendation to Shareholders
Twelve Seas’ board of directors believes that the Business Combination Proposal and the other proposals to be presented at the Meeting are fair to and in the best interest of Twelve Seas’ shareholders and unanimously recommends that its shareholders vote “FOR” the Business Combination Proposal, “FOR” the Merger Proposal, “FOR” the Share Issuance Proposal, and, if presented, “FOR” the Adjournment Proposal.
Conditions to the Closing of the Business Combination
The obligations of each party to consummate the Business Combination are subject to the satisfaction or waiver of customary conditions and Closing deliverables, including (1) the Registration Statement having been declared and remaining effective, (2) Twelve Seas’ shareholders having approved each of the proposals (except the Adjournment Proposal) set forth herein at the Meeting in accordance with the Registration Statement, (3) receipt by BPGIC and its shareholders of all requisite material consents to consummate the Transactions, including consents and approval of shareholders, any governmental authorities and third parties, including ASMA Capital; (4) the consents required to be obtained or made from any third party (other than a governmental authority) in order to consummate the transactions contemplated by the Business Combination Agreement, that are set forth in a schedule thereto, shall have been obtained or made; (5) expiration of any waiting period under applicable antitrust laws; (6) receipt with respect to Twelve Seas, Pubco and Merger Sub of requisite consents from governmental authorities to consummate the Transactions (7) there shall be no pending action brought by a third party non-affiliate to enjoin or otherwise restrict the consummation of the Closing, (8) upon the Closing, after giving effect to the completion of Twelve Seas’ Redemption of its Public Shareholders and any private placement financing, Twelve Seas shall have net tangible assets of at least $5,000,001, (9) the parties’ respective representations and warranties shall be true and correct as of the closing date (subject to certain materiality qualifiers), (10) each of the parties shall have performed in all material respects all of its obligations and complied in all material respects with all of its agreements and covenants under the Business Combination Agreement
22
to be performed or complied with by it on or prior to the Closing Date, (11) no event having occurred since the date of the Business Combination Agreement resulting in a material adverse effect upon the business, assets, liabilities, results of operations, prospects or condition of the other party and its subsidiaries, taken as a whole, or the other party’s ability to consummate the transactions contemplated by the Business Combination Agreement and ancillary documents on a timely basis (subject in each case to customary exceptions) (a “Material Adverse Effect”), which is continuing and uncured, and (12) the Closing Net Cash must be at least $125 million. The obligation of Twelve Seas, to consummate the Transactions is also subject to the satisfaction or waiver or certain additional conditions, including the receipt of certain employment agreements, terminations of certain agreements and resignations of Twelve Seas officers and directors prior to Closing. In addition, each party shall have received duly executed copies of the various related agreements (as described below) in the forms attached to the Business Combination Agreement.
Anticipated Accounting Treatment
The Business Combination will be accounted for as a reverse merger in accordance with International Financial Reporting Standards as adopted by the International Accounting Standards Board (“IFRS”). Under this method of accounting, Twelve Seas will be treated as the “acquired” company for financial reporting purposes. This determination was primarily based on the following factors: (i) BPGIC’s existing operations will comprise the ongoing operations of the combined company, (ii) BPGIC’s senior management will comprise the senior management of the combined company, and (iii) the former owners and management of BPGIC will have control of the board of directors after the Business Combination by virtue of being able to appoint a majority of the directors of the combined company. In accordance with guidance applicable to these circumstances, the Business Combination will be treated as the equivalent of BPGIC issuing shares for the net assets of Twelve Seas, accompanied by a recapitalization. The net assets of Twelve Seas will be stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Business Combination will be those of BPGIC.
Regulatory Matters
The Business Combination Agreement and the transactions contemplated by the Business Combination Agreement are not subject to any additional federal or state regulatory requirement or approval, except for filings with the Registrar of Companies of the Cayman Islands necessary to effectuate the transactions contemplated by the Business Combination Agreement.
Risk Factors
In evaluating the proposals to be presented at the Meeting, a shareholder should carefully read this proxy statement/prospectus and especially consider the factors discussed in the section entitled “Risk Factors.”
23
SELECTED HISTORICAL FINANCIAL INFORMATION
In this section, references to “BPGIC” are intended to refer to Brooge Petroleum And Gas Investment Company FZE, unless the context clearly indicates otherwise.
Twelve Seas
Twelve Seas is providing the following selected historical financial information to assist you in your analysis of the financial aspects of the Business Combination.
Twelve Seas’ balance sheet data as of June 30, 2019 and statement of operations data for the six months ended June 30, 2019 are derived from Twelve Seas’ unaudited financial statements included elsewhere in this proxy statement/prospectus. Twelve Seas’ balance sheet data as of December 31, 2018 and statement of operations data for the fiscal year ended December 31, 2018 are derived from Twelve Seas’ audited financial statements included elsewhere in this proxy statement/prospectus. The financial statements of Twelve Seas are stated in US dollars (US$).
The information in this section is only a summary and should be read in conjunction with each of Twelve Seas’ financial statements and related notes and “Other Information Related to Twelve Seas — Twelve Seas’ Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained elsewhere herein. The historical results included below and elsewhere in this proxy statement/prospectus are not indicative of the future performance of Twelve Seas.
Selected Financial Information — Twelve Seas
BALANCE SHEETS
December 31 |
June 30
|
||||||
2017 |
2018 |
||||||
(USD) |
(USD) |
(USD) |
|||||
Assets |
|
||||||
Cash |
1,500 |
|
252,927 |
66,596 |
|||
Prepaid assets |
— |
|
15,000 |
35,694 |
|||
Deferred offering costs |
173,437 |
|
— |
— |
|||
Total Current Assets |
174,937 |
|
267,927 |
102,290 |
|||
|
|||||||
Cash and securities held in Trust Account |
— |
|
209,228,292 |
211,727,689 |
|||
Total assets |
174,937 |
|
209,496,219 |
211,829,979 |
|||
|
|||||||
Liabilities and Shareholders’ Equity |
|
||||||
Accounts payable and accrued expense |
131,950 |
|
65,603 |
75,347 |
|||
Deferred legal fees |
— |
|
29,613 |
359,952 |
|||
Due to related parties |
— |
|
124,293 |
57,692 |
|||
Due to Sponsor |
46,500 |
|
— |
400,000 |
|||
Total current liabilities |
178,450 |
|
219,509 |
892,991 |
|||
|
|||||||
Commitments |
|
||||||
Ordinary shares subject to possible redemption |
— |
|
204,276,700 |
205,936,980 |
|||
|
|||||||
Shareholders’ Equity (Deficit): |
|
||||||
Preferred shares |
— |
|
— |
— |
|||
Ordinary shares |
431 |
|
635 |
618 |
|||
Additional paid-in capital |
24,569 |
|
3,194,541 |
1,534,278 |
|||
Accumulated earnings (deficit) |
(28,513 |
) |
1,804,834 |
3,465,112 |
|||
Total shareholders’ equity (deficit) |
(3,513 |
) |
5,000,010 |
5,000,008 |
|||
Total Liabilities and Shareholders’ Equity |
174,937 |
|
209,496,219 |
211,829,979 |
24
STATEMENTS OF OPERATIONS
Year ended December 31
|
Six months ended
|
|||||
2018
|
2019
|
|||||
(USD) |
(USD) |
(USD) |
||||
Formation and operating costs |
394,961 |
7,198 |
839,119 |
|||
Loss from operations |
394,961 |
7,198 |
839,119 |
|||
Other income |
||||||
Dividend income |
— |
— |
882,925 |
|||
Interest income |
2,228,308 |
42,422 |
1,616,472 |
|||
Total other income |
2,228,308 |
42,422 |
2,499,397 |
|||
Net income |
1,833,347 |
35,224 |
1,660,278 |
STATEMENTS OF CASH FLOWS
Year ended December 31
|
Six months ended
|
||||||||
2018
|
2019
|
||||||||
(USD) |
(USD) |
(USD) |
|||||||
Cash Flows from Operating Activities: |
|
|
|
||||||
Net income |
1,833,347 |
|
35,224 |
|
1,660,278 |
|
|||
Adjustments to reconcile net income (loss) to net cash used in operating activities: |
|
|
|
||||||
Interest earned on investment held in Trust Account |
(2,228,307 |
) |
(42,422 |
) |
154,618 |
|
|||
Changes in current assets and current liabilities: |
|
|
|
||||||
Prepaid assets |
(15,000 |
) |
(35,000 |
) |
(20,694 |
) |
|||
Accounts payable and accrued expense |
71,703 |
|
(20,619 |
) |
9,744 |
|
|||
Deferred fees |
— |
|
— |
|
330,339 |
|
|||
Due to related parties |
123,071 |
|
3,000 |
|
(66,601 |
) |
|||
Net cash used in operating activires |
(215,186 |
) |
(59,817 |
) |
2,067,684 |
|
|||
|
|
|
|||||||
Cash Flows from Investing Activities: |
|
|
|
||||||
Proceeds from sale and redemption of investment held in Trust Account |
209,072,253 |
|
— |
|
209,072,910 |
|
|||
Purchase of investment held in Trust Account |
(416,072,238 |
) |
(206,999,990 |
) |
(211,726,925 |
) |
|||
Net cash used in investing activities |
(206,999,985 |
) |
(206,999,990 |
) |
(2,654,015 |
) |
|||
|
|
|
|||||||
Cash Flows from Financing Activities: |
|
|
|
||||||
Proceeds from sale of ordinary shares to Initial Shareholders |
— |
|
— |
|
— |
|
|||
Proceeds from initial public offering, net of underwriters’ discount |
203,400,000 |
|
203,400,000 |
|
— |
|
|||
Proceeds from private placement |
4,750,000 |
|
4,750,000 |
|
— |
|
|||
Proceeds from Sponsor loan |
253,500 |
|
253,500 |
|
400,000 |
|
|||
Repayment of Sponsor loan |
(300,000 |
) |
(300,000 |
) |
— |
|
|||
Payments of offering costs |
(636,902 |
) |
(581,043 |
) |
— |
|
|||
Net cash provided by financing activities |
207,466,598 |
|
207,522,457 |
|
400,000 |
|
|||
|
|
|
|||||||
Net Increase in Cash |
251,427 |
|
462,650 |
|
(186,331 |
) |
|||
Cash – Beginning |
1,500 |
|
1,500 |
|
252,927 |
|
|||
Cash – Ending |
252,927 |
|
464,150 |
|
66,596 |
|
25
BPGIC
BPGIC’s statement of financial position as of June 30, 2019, statements of comprehensive income for the six months ended June 30, 2018 and 2019, statements of changes in equity for the six months ended June 30, 2018 and 2019, and statements of cash flows for the six months ended June 30, 2018 and 2019 are derived from BPGIC’s unaudited interim condensed financial statements included elsewhere in this proxy statement/prospectus.
BPGIC’s statements of financial position as of December 31, 2017 and 2018, statements of comprehensive income for the years ended December 31, 2017 and 2018, statements of changes in equity for the years ended December 31, 2017 and 2018, and statements of cash flows for the years ended December 31, 2017 and 2018 are derived from BPGIC’s audited financial statements included elsewhere in this proxy statement/prospectus.
The financial statements of BPGIC are stated in United States dollars ($).
The information in this section is only a summary and should be read in conjunction with each of BPGIC’s financial statements and related notes and “BPGIC’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained elsewhere herein. The historical results included below and elsewhere in this proxy statement/prospectus are not indicative of the future performance of BPGIC.
STATEMENT OF COMPREHENSIVE INCOME
Year ended December 31 |
6-month period ended June 30 |
|||||||||||
2017
|
2018 |
2018 |
2019 |
|||||||||
(USD) |
(USD) |
(USD) |
(USD) |
|||||||||
Revenue |
89,593 |
|
35,839,268 |
|
13,796,112 |
|
22,042,687 |
|
||||
Direct costs |
(2,295,809 |
) |
(9,607,360 |
) |
(4,765,900 |
) |
(4,955,436 |
) |
||||
Gross (loss) profit |
(2,206,216 |
) |
26,231,908 |
|
9,030,212 |
|
17,087,251 |
|
||||
General and administrative
|
(574,266 |
) |
(2,029,260 |
) |
(1,048,846 |
) |
(1,236,507 |
) |
||||
Finance costs |
(966,926 |
) |
(6,951,923 |
) |
(3,318,895 |
) |
(3,412,843 |
) |
||||
Change in fair value of derivative financial instruments |
— |
|
(1,190,073 |
) |
— |
|
(484,603 |
) |
||||
(Loss) profit and total comprehensive (loss) income for the year/period |
(3,747,408 |
) |
16,060,652 |
|
4,662,471 |
|
11,953,298 |
|
26
STATEMENT OF FINANCIAL POSITION
As December 31 |
As at June 30 |
||||||
2017
|
2018 |
2019 |
|||||
(USD) |
(USD) |
(USD) |
|||||
ASSETS |
|
||||||
Non-current assets |
|
||||||
Property, plant and equipment |
195,438,871 |
|
197,629,114 |
205,919,914 |
|||
Advances to contractors |
231,571 |
|
— |
29,377,827 |
|||
195,670,442 |
|
197,629,114 |
235,297,741 |
||||
Current assets |
|
||||||
Inventories |
176,651 |
|
147,090 |
175,030 |
|||
Trade and other receivables |
— |
|
2,123,077 |
4,613,412 |
|||
Bank balances and cash |
284,055 |
|
37,351 |
6,731,829 |
|||
460,706 |
|
2,307,518 |
11,520,271 |
||||
Total Assets |
196,131,148 |
|
199,936,632 |
246,818,012 |
|||
EQUITY AND LIABILITIES |
|
||||||
Equity |
|
||||||
Share capital |
1,361,285 |
|
1,361,285 |
1,361,285 |
|||
Owners’ accounts |
70,421,436 |
|
47,717,763 |
80,363,942 |
|||
General Reserve |
— |
|
680,643 |
680,643 |
|||
(Accumulated losses) retained earnings |
(4,161,767 |
) |
11,218,242 |
23,171,540 |
|||
Total Equity |
67,620,954 |
|
60,977,933 |
105,577,410 |
|||
Non-current liabilities |
|
||||||
Provisions |
651 |
|
6,267 |
9,485 |
|||
Lease liability |
27,599,475 |
|
28,108,801 |
28,163,824 |
|||
Other liabilities |
— |
|
— |
— |
|||
27,600,126 |
|
28,115,068 |
28,173,309 |
||||
|
|||||||
Current liabilities |
|
||||||
Bank overdraft |
— |
|
3,745,048 |
— |
|||
Accounts payable, accruals and other payables |
4,675,117 |
|
9,003,798 |
16,497,132 |
|||
Term loans |
94,163,751 |
|
94,792,088 |
92,559,028 |
|||
Derivative financial instruments |
— |
|
1,190,073 |
1,674,676 |
|||
Lease liability |
2,071,200 |
|
2,112,624 |
2,336,457 |
|||
100,910,068 |
|
110,843,631 |
113,067,293 |
||||
Total Liabilities |
128,510,194 |
|
138,958,699 |
141,240,602 |
|||
TOTAL EQUITY AND LIABILITIES |
196,131,148 |
|
199,936,632 |
246,818,012 |
27
STATEMENT OF CHANGES IN EQUITY
Share capital |
Owners’ accounts |
General Reserve |
Retained earnings (accumulated losses) |
Total |
|||||||||
(USD) |
(USD) |
(USD) |
(USD) |
(USD) |
|||||||||
Balance at January 1, 2017 (Restated) |
1,361,285 |
57,039,100 |
|
— |
(414,359 |
) |
57,986,026 |
|
|||||
Net contribution from the owners (Restated) |
— |
13,382,336 |
|
— |
— |
|
13,382,336 |
|
|||||
Total comprehensive loss for the year (Restated) |
— |
— |
|
— |
(3,747,408 |
) |
(3,747,408 |
) |
|||||
Balance at December 31, 2017 (Restated) |
1,361,285 |
70,421,436 |
|
— |
(4,161,767 |
) |
67,620,954 |
|
|||||
Balance at January 1, 2018 (Restated) |
1,361,285 |
70,421,436 |
|
— |
(4,161,767 |
) |
67,620,954 |
|
|||||
Net distribution to the owners |
— |
(22,703,673 |
) |
— |
— |
|
(22,703,673 |
) |
|||||
Total comprehensive income for the year |
— |
— |
|
— |
16,060,652 |
|
16,060,652 |
|
|||||
Transfer to General Reserve |
— |
— |
|
680,643 |
(680,643 |
) |
— |
|
|||||
Balance at December 31 2018 |
1,361,285 |
47,717,763 |
|
680,643 |
11,218,242 |
|
60,977,933 |
|
|||||
Balance at January 1, 2018 |
1,361,285 |
70,421,436 |
|
— |
(4,161,767 |
)1 |
67,620,954 |
|
|||||
Net distribution to the owners |
— |
(7,284,725 |
) |
— |
— |
|
(7,284,725 |
) |
|||||
Total comprehensive income for the period |
— |
— |
|
— |
4,662,471 |
|
4,662,471 |
|
|||||
Balance at June 30, 2018 |
1,361,285 |
63,136,711 |
|
|
500,704 |
|
64,998,700 |
|
|||||
Balance at January 1, 2019 |
1,361,285 |
47,717,763 |
|
680,643 |
11,218,242 |
|
60,977,933 |
|
|||||
Net contribution from the owners |
— |
32,646,179 |
|
— |
— |
|
32,646,179 |
|
|||||
Total comprehensive income for the period |
— |
— |
|
— |
11,953,298 |
|
11,953,298 |
|
|||||
Balance at June 30, 2019 |
1,361,285 |
80,363,942 |
|
680,643 |
23,171,540 |
|
105,577,410 |
|
28
STATEMENT OF CASH FLOWS
Year ended December 31 |
6-month period ended June 30 |
|||||||||||
2017
|
2018 |
2018 |
2019 |
|||||||||
(USD) |
(USD) |
(USD) |
(USD) |
|||||||||
Operating activities |
|
|
|
|
||||||||
(Loss) profit for the year / period |
(3,747,408 |
) |
16,060,652 |
|
4,662,471 |
|
11,953,298 |
|
||||
Adjustments to reconcile net (loss) profit with net cash (used in) provided by operating activities: |
|
|
|
|
||||||||
Depreciation charge |
692,528 |
|
5,716,063 |
|
2,876,873 |
|
2,899,881 |
|
||||
Finance costs |
966,926 |
|
6,951,923 |
|
3,318,895 |
|
3,412,843 |
|
||||
Net changes in fair value of derivative financial instruments |
— |
|
1,190,073 |
|
— |
|
484,603 |
|
||||
Working capital changes: |
|
|
|
|
||||||||
(Increase) decrease in
|
(176,651 |
) |
29,561 |
|
24,904 |
|
(27,940 |
) |
||||
Increase in trade and other receivables |
(618,700 |
) |
(2,123,077 |
) |
(1,741,489 |
) |
(2,490,335 |
) |
||||
Increase in provisions |
365 |
|
5,616 |
|
175 |
|
3,218 |
|
||||
Increase (decrease) in accounts payable, accruals and other payables |
630,023 |
|
65,910 |
|
(116,313 |
) |
3,306,754 |
|
||||
Net cash flows (used in) from operating activities |
(2,252,917 |
) |
27,896,721 |
|
9,025,516 |
|
19,542,322 |
|
||||
Investing activity |
|
|
|
|
||||||||
Purchase of property, plant and equipment |
(21,924,553 |
) |
(271,403 |
) |
(119,200 |
) |
(8,869,454 |
) |
||||
Advances paid to contractors |
— |
|
— |
|
— |
|
(29,377,827 |
) |
||||
Net cash flows used in investing activity |
(21,924,553 |
) |
(271,403 |
) |
(119,200 |
) |
(38,247,281 |
) |
||||
Financing activities |
|
|
|
|
||||||||
Proceeds from term loans |
16,700,441 |
|
4,038,024 |
|
550,445 |
|
— |
|
||||
Repayment of term loans |
— |
|
(3,487,876 |
) |
— |
|
(2,272,589 |
) |
||||
Interest paid on term loans |
(3,429,143 |
) |
(7,195,581 |
) |
— |
|
(140,077 |
) |
||||
Payment of transaction costs on term loans |
(111,081 |
) |
— |
|
— |
|
— |
|
||||
Net contribution from (distribution to) owners |
11,158,842 |
|
(24,971,637 |
) |
(8,418,673 |
) |
31,557,151 |
|
||||
Net cash flows from (used in) financing activities |
24,319,059 |
|
(31,617,070 |
) |
(7,868,228 |
) |
29,144,485 |
|
||||
Increase (decrease) in cash and cash equivalents |
141,589 |
|
(3,991,752 |
) |
1,038,088 |
|
10,439,526 |
|
||||
Cash and cash equivalents at the beginning of the year / period |
142,466 |
|
284,055 |
|
284,055 |
|
(3,707,697 |
) |
||||
Cash and cash equivalents at the end of the year / period |
284,055 |
|
(3,707,697 |
) |
1,322,143 |
|
6,731,829 |
|
29
SELECTED UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS
Twelve Seas is providing the following selected unaudited pro forma condensed combined financial information to aid you in your analysis of the financial aspects of the transactions.
The following selected unaudited pro forma condensed combined statement of position combines the unaudited historical balance sheet of Twelve Seas at June 30, 2019, the unaudited interim condensed historical statement of financial position of BPGIC as of June 30, 2019, and the audited consolidated historical statement of financial position of Pubco as of June 30, 2019, giving effect to the transactions as if they had been consummated as of June 30, 2019.
The following selected unaudited pro forma condensed combined statement of profit or loss for the six months ended June 30, 2019 combines the unaudited statement of comprehensive income of BPGIC for the six months ended June 30, 2019, the audited consolidated statement of comprehensive income of Pubco for the period from its inception on April 12, 2019 to June 30, 2019, and the unaudited statement of operations of Twelve Seas for the six months ended June 30, 2019, giving effect to the transactions as if they had occurred as of the earliest period presented.
The following selected unaudited pro forma condensed combined statement of profit or loss for the year ended December 31, 2018 combines the audited statement of comprehensive income of BPGIC for the year ended December 31, 2018 with the audited statement of operations of Twelve Seas for the year ended December 31, 2018, giving effect to the transactions as if they had occurred as of the earliest period presented.
The selected unaudited pro forma condensed combined financial information has been prepared assuming four alternative levels of private investments and redemption of ordinary shares of Twelve Seas into cash:
• Assuming $150 million private investment and no redemption of shares: This presentation assumes that no Twelve Seas’ stockholders exercise redemption rights with respect to their common stock upon consummation of the Transactions and $150 million cash is raised through private investment;
• Assuming no private investment and no redemption of shares: This presentation assumes that no Twelve Seas’ stockholders exercise redemption rights with respect to their common stock upon consummation of the Transactions and no private investment;
• Assuming no private investment but partial redemption of shares: This presentation assumes that Twelve Seas’ stockholders exercise their redemption rights with respect to 7,536,835 shares of common stock upon consummation of the Transactions at a redemption price of $10.23 per share. The maximum redemption amount is derived on the basis that the combined entity will be required to have net cash of $125 million following the Transactions, after giving effect to payments to redeeming stockholders; and
• Assuming $150 million private investment and maximum redemption of shares: This presentation assumes that all of the Twelve Seas’ stockholders exercise redemption rights with respect to their common stock upon consummation of the Transactions at a redemption price of $10.23 per share and $150 million cash are raised through private investment. The maximum redemption amount is derived on the basis that the combined entity will be required to have $5,000,001 minimum net tangible assets following the Transactions, after giving effect to payments to redeeming stockholders.
The historical financial information has been adjusted to give effect to the expected events that are related and/or directly attributable to the transactions, are factually supportable and are expected to have a continuing impact on the combined results. The adjustments presented in the selected unaudited pro forma condensed combined financial statements have been identified and presented to provide relevant information necessary for an understanding of the combined company upon consummation of the transactions.
The historical financial statements of Twelve Seas have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”). The historical financial statements of BPGIC and Pubco have been prepared in accordance with International Financial Reporting Standards (“IFRS”), as adopted by the International Accounting Standards Board. The historical financial information of Twelve Seas has been adjusted to give effect to the differences between US GAAP and IFRS as issued by the IASB for the purposes of the selected unaudited pro forma condensed combined financial information. No adjustments were required to convert Twelve Seas’ financial statements from US GAAP to IFRS for purposes of the selected unaudited pro forma condensed combined financial information, except to classify Twelve Seas’ ordinary shares subject to Redemption as non-current liabilities under IFRS.
30
The historical financial information of Twelve Seas was derived from the historical audited financial statements of Twelve Seas for the fiscal year ended December 31, 2018 and the historical unaudited financial statements of Twelve Seas for the six months ended June 30, 2019, which are included elsewhere in this proxy statement/prospectus.
The historical financial information of BPGIC was derived from the historical audited financial statements of BPGIC for the year ended December 31, 2018 and the historical unaudited interim condensed financial statements of BPGIC for the six months ended June 30, 2019, included elsewhere in this proxy statement/prospectus.
The historical financial information of Pubco was derived from the historical audited consolidated financial statements of Pubco for the period from inception on April 12, 2019 to June 30, 2019, included elsewhere in this proxy statement/prospectus.
This information should be read together with Twelve Seas’, BPGIC’s, and Pubco’s financial statements and related notes, “Other Information Related to Twelve Seas — Twelve Seas’ Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “BPGIC’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other financial information included elsewhere in this proxy statement/prospectus.
The selected unaudited pro forma condensed combined financial information is presented for illustrative purposes only. Such information is only a summary and should be read in conjunction with the section titled “Unaudited Pro Forma Condensed Combined Financial Information.” The financial results may have been different had the companies always been combined. You should not rely on the selected unaudited pro forma condensed combined financial information as being indicative of the historical results that would have been achieved had the companies always been combined or the future results that the combined company will experience.
Selected Unaudited Pro Forma Financial Information
(dollars in thousands except share and per share amounts)
BPGIC |
Twelve Seas |
Pubco |
Pro Forma
|
Pro Forma
|
Pro Forma
|
Pro Forma
|
|||||||||
Balance Sheet Data – As of June 30, 2019 |
|
||||||||||||||
Total current assets |
11,520,271 |
102,290 |
— |
|
358,462,259 |
213,712,259 |
136,622,561 |
152,525,279 |
|||||||
Total assets |
246,818,012 |
211,829,979 |
— |
|
593,760,000 |
449,010,000 |
371,920,302 |
387,823,020 |
|||||||
Total current liabilities |
113,067,293 |
892,991 |
128,098 |
|
113,195,391 |
113,195,391 |
113,195,391 |
113,195,391 |
|||||||
Total liabilities |
141,240,602 |
206,829,971 |
128,098 |
|
141,368,700 |
141,368,700 |
141,368,700 |
141,368,700 |
|||||||
Total shareholders’ equity |
105,577,410 |
5,000,008 |
(128,098 |
) |
452,391,300 |
307,641,300 |
230,551,602 |
246,454,320 |
|||||||
Statement of Operations
|
|
||||||||||||||
Revenue |
22,042,687 |
— |
— |
|
22,042,687 |
22,042,687 |
22,042,687 |
22,042,687 |
|||||||
Net income (loss) |
11,953,298 |
1,660,278 |
(128,098 |
) |
12,581,251 |
12,581,251 |
12,581,251 |
12,581,251 |
|||||||
Net income (loss) per share – basic and diluted |
— |
0.06 |
(128,098.00 |
) |
0.10 |
0.12 |
0.13 |
0.12 |
|||||||
Statement of Operations
|
|
||||||||||||||
Revenue |
35,839,268 |
— |
— |
|
35,839,268 |
35,839,268 |
35,839,268 |
35,839,268 |
|||||||
Net income |
16,060,652 |
1,833,347 |
— |
|
15,720,013 |
15,720,013 |
15,720,013 |
15,720,013 |
|||||||
Net income per share – basic and diluted |
— |
0.11 |
— |
|
0.14 |
0.16 |
0.17 |
0.16 |
31
COMPARATIVE SHARE INFORMATION
The following table sets forth the per share data of Twelve Seas on a stand-alone basis and the unaudited pro forma condensed combined per share data for the six months ended June 30, 2019 after giving effect to the Business Combination based upon the following four scenarios (all scenarios below assumes the 40% cash option is not elected and a minimum of $125 million cash is maintained at closing): scenario 1 assuming $150 million private investment and no redemption of shares, scenario 2 assuming no private investment and no redemption of shares, scenario 3 assuming $125 million minimum cash, no private investment but partial redemption of shares, and scenario 4 assuming $125 million minimum cash, $150 million private investment and maximum redemption of shares.
The pro forma book value per share information was computed as if the Business Combination had been completed on June 30, 2019. The pro forma earnings information for the six months ended June 30, 2019 was computed as if the Business Combination had been completed on January 1, 2019.
The historical book value per share is computed by dividing total common shareholders’ equity by the number of shares of common stock outstanding at the end of the period. The pro forma combined book value per share is computed by dividing total pro forma common shareholders’ equity by the pro forma number of shares of common stock outstanding at the end of the period. The pro forma earnings per share of the combined company is computed by dividing the pro forma income available to the combined company’s common shareholders by the pro forma weighted-average number of shares outstanding over the period.
You should read the information in the following table in conjunction with the selected historical financial information summary included elsewhere in this proxy statement/prospectus, and the historical financial statements of Twelve Seas, BPGIC, and Pubco, and related notes that are included elsewhere in this proxy statement/prospectus. The unaudited Twelve Seas, BPGIC, and Pubco pro forma combined per share information is derived from, and should be read in conjunction with, the unaudited pro forma condensed combined financial statements and related notes included elsewhere in this proxy statement/prospectus.
The unaudited pro forma combined earnings per share information below does not purport to represent the earnings per share which would have occurred had the companies been combined during the periods presented, nor earnings per share for any future date or period. The unaudited pro forma combined book value per share information below does not purport to represent what the value of Twelve Seas, BPGIC, and Pubco would have been had the companies been combined during the periods presented.
Six Months Ended June 30, 2019 |
BPGIC |
Twelve Seas |
Pubco |
Pro Forma
|
Pro Forma
|
Pro Forma
|
Pro Forma
|
|||||||||||||||
Net income |
$ |
11,953,298 |
$ |
1,660,278 |
$ |
(128,098 |
) |
$ |
12,581,251 |
$ |
12,581,251 |
$ |
12,581,251 |
$ |
12,581,251 |
|||||||
Stockholders’ equity |
|
105,577,40 |
|
5,000,008 |
|
(128,098 |
) |
|
452,391,300 |
|
307,641,300 |
|
230,551,602 |
|
246,454,320 |
|||||||
Weighted
average shares outstanding – basic
|
|
— |
|
26,729,000 |
|
1 |
|
|
121,319,400 |
|
106,319,400 |
|
98,610,430 |
|
100,725,702 |
|||||||
Basic and diluted income per share |
|
— |
|
0.06 |
|
(128,098.00 |
) |
|
0.10 |
|
0.12 |
|
0.13 |
|
0.12 |
|||||||
Book value per share as of June 30, 2019 |
|
— |
|
0.19 |
|
(128,098.00 |
) |
|
3.73 |
|
2.89 |
|
2.34 |
|
2.45 |
32
CAPITALIZATION
The following table sets forth the capitalization on an unaudited, historical basis of each of Twelve Seas, BPGIC, and Pubco as of June 30, 2019 after giving effect to the Business Combination, assuming (i) that no holders of Twelve Seas Ordinary Shares exercise their redemption rights and $150 million in private investment is raised; (ii) no holders of Twelve Seas Ordinary Shares exercise their redemption rights and no amount of private investment is raised; (iii) there is a partial exercise of redemption rights and $125 million is raised in private investment; and (iv) the maximum number of holders of Twelve Seas Ordinary Shares exercise their redemption rights and $125 million in private investment is raised.
Historical |
As Adjusted |
|||||||||||||||||||||
As of June 30, 2019 |
BPGIC |
Twelve Seas |
Pubco |
Pro Forma
|
Pro Forma
|
Pro Forma
|
Pro Forma
|
|||||||||||||||
Bank balances and cash |
$ |
6,731,829 |
$ |
66,596 |
$ |
— |
|
$ |
353,638,123 |
$ |
208,888,123 |
$ |
131,798,425 |
$ |
147,701,143 |
|||||||
Restricted cash and cash equivalents held in trust account |
|
— |
|
211,727,689 |
|
— |
|
|
— |
|
— |
|
— |
|
— |
|||||||
Term loans |
|
92,559,028 |
|
— |
|
— |
|
|
92,559,028 |
|
92,559,028 |
|
92,559,028 |
|
92,559,028 |
|||||||
Ordinary shares, subject to possible redemption |
|
— |
|
205,936,980 |
|
— |
|
|
— |
|
— |
|
— |
|
— |
|||||||
Total equity |
|
105,577,410 |
|
5,000,008 |
|
(128,098 |
) |
|
452,391,300 |
|
307,641,300 |
|
230,551,602 |
|
246,454,320 |
|||||||
Total capitalization |
$ |
198,136,438 |
$ |
210,936,988 |
$ |
(128,098 |
) |
$ |
544,950,328 |
$ |
400,200,328 |
$ |
323,110,630 |
$ |
339,013,348 |
33
Shareholders should carefully consider the following risk factors, together with all of the other information included in this proxy statement/prospectus, before they decide whether to vote or instruct their vote to be cast to approve the proposals described in this proxy statement/prospectus.
Risks Relating to the Business Combination
The fact that BPGIC is a private company and all of its operations is conducted outside of the United States limits Twelve Seas’ access to all information that may be relevant to the Business Combination. This may result in a business combination that is not as profitable as Twelve Seas expects.
By definition, limited public information exists about private companies and companies that operate outside of the United States, and Twelve Seas has been required to make decisions on whether to pursue the Business Combination on the basis of information that may be more limited than a similar company operating within the United States, which may result in a business combination with a company that is not as profitable as Twelve Seas expected, if at all.
Twelve Seas has a limited ability to assess the management of BPGIC’s business and, as a result, cannot assure you that BPGIC’s management has all the skills, experience, qualifications or abilities to manage a public company.
Twelve Seas’ ability to assess BPGIC’s business’s management may be limited due to a lack of time, resources or information. Twelve Seas’ assessment of the capabilities of BPGIC’s management with respect to a public company, therefore, may prove to be incomplete or incorrect and BPGIC management may lack the skills, qualifications or abilities that Twelve Seas believed BPGIC management had, and the operations and profitability of Pubco or BPGIC post-Business Combination could be negatively impacted. Accordingly, any shareholders who choose to remain shareholders following the Business Combination could suffer a reduction in the value of their shares. Such shareholders are unlikely to have a remedy for such reduction in value unless they are able to claim successfully that the reduction was due to the breach by Twelve Seas’ officers or directors of a duty of care or other fiduciary duty owed to them, or if they are able to successfully bring a private claim under securities laws that the proxy statement materials relating to the Business Combination contained an actionable material misstatement or material omission.
BPGIC operates in an industry sector which is outside of Twelve Seas’ management’s area of expertise.
Although Twelve Seas’ management has endeavored to evaluate the risks inherent in the Business Combination, there is no assurance that Twelve Seas has adequately ascertained or assessed all of the significant risks of BPGIC’s business or industry. There is no assurance that an investment in securities in Twelve Seas will not ultimately prove to be less favorable to investors than a direct investment, if an opportunity were available, in BPGIC. Twelve Seas management’s expertise may not be directly applicable to the evaluation or operation of BPGIC’s business, and the information contained in this proxy statement/prospectus regarding the areas of Twelve Seas management’s expertise would not be relevant to an understanding of BPGIC.
Twelve Seas’ Sponsor, officers and directors have agreed to vote their shares in favor of the Business Combination, regardless of how Twelve Seas’ Public Shareholders vote.
In connection with the Business Combination, Twelve Seas’ Sponsor, officers and directors have agreed to vote their Founder Shares and all ordinary shares acquired by the Sponsor, officers and directors during or after its Initial Public Offering in favor of the Business Combination. Currently, Twelve Seas’ Sponsor, officers and directors collectively own approximately [21.3]% of its outstanding ordinary shares of Twelve Seas. Accordingly, it is more likely that the necessary shareholder approval will be received than would be the case if Twelve Seas’ Sponsor, officers and directors agreed to vote their shares in accordance with the majority of the votes cast by Twelve Seas’ Public Shareholders.
Twelve Seas may not be able to complete the Business Combination or any other business combination within the prescribed time frame, in which case Twelve Seas would cease all operations except for the purpose of winding up and Twelve Seas would redeem Twelve Seas’ Public Shares and liquidate.
Twelve Seas must complete an initial business combination by December 22, 2019. Twelve Seas may not be able to consummate the Business Combination or any other business combination by such date. If Twelve Seas has not completed any initial business combination by such date, it will: (i) cease all operations except for the purpose of
34
winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest (which interest shall be net of taxes payable) divided by the number of then issued and outstanding Public Shares, which Redemption will completely extinguish Public Shareholders’ rights as shareholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such Redemption, subject to the approval of Twelve Seas remaining shareholders and board of directors, dissolve and liquidate, subject in each case to Twelve Seas’ obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law.
Subsequent to our completion of the Business Combination, we may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on our financial condition, results of operations and stock price post-Business Combination, which could cause you to lose some or all of your investment.
Even though we have conducted due diligence on BPGIC, we cannot assure you that this diligence will surface all material issues that may be present, that it would be possible to uncover all material issues through a customary amount of due diligence, or that factors outside of our, Pubco’s or BPGIC’s control will not later arise. As a result of these factors, we may be forced to later write-down or write-off assets, restructure our operations, or incur impairment or other charges that could result in reporting losses. Even if our due diligence successfully identifies certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with our preliminary risk analysis. The fact that we report charges of this nature could contribute to negative market perceptions about our securities post-Business Combination. Accordingly, any shareholders who choose to remain shareholders following the Business Combination could suffer a reduction in the value of their shares. Such shareholders are unlikely to have a remedy for such reduction in value unless they are able to claim successfully that the reduction was due to the breach by Twelve Seas officers or directors of a duty of care or other fiduciary duty owed to them, or if they are able to successfully bring a private claim under securities laws that this proxy statement/prospectus contained an actionable material misstatement or material omission.
Twelve Seas did not obtain an opinion from an independent investment banking or accounting firm, and consequently, you have no assurance from an independent source that the price Twelve Seas is paying for the business is fair to Twelve Seas from a financial point of view.
Twelve Seas is not required to obtain an opinion from an independent investment banking or accounting firm that the price Twelve Seas is paying for the Business Combination is fair to Twelve Seas from a financial point of view. Twelve Seas’ board of directors did not obtain a third-party valuation or fairness opinion in connection with its determination to approve the Business Combination. Its officers and directors have substantial experience in evaluating the operating and financial merits of companies from a wide range of industries and have concluded that their experience and backgrounds, together with the experience and sector expertise of its financial advisors enabled them to make the necessary analyses and determinations regarding the Business Combination with BPGIC. In addition, Twelve Seas’ officers and directors and its advisors have substantial experience with mergers and acquisitions. Accordingly, investors will be relying solely on the judgment of Twelve Seas’ board of directors in valuing BPGIC’s business, and assuming the risk that the board of directors may not have properly valued such business.
The grant and future exercise of registration rights may adversely affect the market price of Twelve Seas ordinary shares and Ordinary Shares of Pubco upon consummation of the Business Combination.
Pursuant to the existing registration rights agreement with Twelve Seas’ Sponsor and the registration rights agreement to be entered into in connection with the Business Combination and which are described elsewhere in this proxy statement/prospectus, Twelve Seas’ Sponsor and the Seller can demand that Pubco register their registrable securities under certain circumstances and will also have piggyback registration rights for these securities in connection with certain registrations of securities that Pubco undertakes. Following the consummation of the Business Combination, Pubco intends to file and maintain an effective registration statement under the Securities Act covering such securities.
The registration of these securities will permit the public resale of such securities. The registration and availability of such a significant number of securities for trading in the public market may have an adverse effect on the market price of Pubco’s Ordinary Shares post-Business Combination.
35
Sales of a substantial number of Pubco securities in the public market following the Business Combination could adversely affect the market price of our Ordinary Shares.
4,140,000 of the 5,175,000 Founder Shares and 529,000 Units that Twelve Seas’ Initial Shareholders currently hold will be exchangeable for Ordinary Shares and warrants of Pubco and continue to be held by Twelve Seas’ Initial Shareholders following the Business Combination. Such Pubco securities will be subject to a one year lock up restriction following the Closing, subject to the possible early release of 50% of such shares in the event the closing price of the Ordinary Shares exceeds $12.50 for 20 trading days during any 30 trading day period. Assuming the Initial Shareholders own the same number of shares at closing as they do on the date hereof, 1,552,500 of such Founder Shares will be placed in escrow and subject to forfeiture on the terms and conditions of the Founder Share Letter (defined below). After the lock-up period expires, these Ordinary Shares will become eligible for future sale in the public market. As and if the milestones in the Founder Share Letter are satisfied, portions of the escrowed shares will be released to the Initial Shareholders and will become eligible for future sale in the public market. Sales of a significant number of these Ordinary Shares of Pubco in the public market, or the perception that such sales could occur, could reduce the market price of Ordinary Shares of Pubco.
If the Adjournment Proposal is not approved, and an insufficient number of votes have been obtained to authorize the consummation of the Business Combination, Twelve Seas’ board of directors will not have the ability to adjourn the Meeting to a later date in order to solicit further votes, and, therefore, the Business Combination will not be approved.
Twelve Seas’ board of directors is seeking approval to adjourn the Meeting to a later date or dates if, at the Meeting, based upon the tabulated votes, there are insufficient votes to approve the consummation of the Business Combination. If the Adjournment Proposal is not approved, Twelve Seas’ board will not have the ability to adjourn the Meeting to a later date and, therefore, will not have more time to solicit votes to approve the consummation of the Business Combination. In such event, the Business Combination would not be completed.
Risks Relating to Redemptions and Certain Outstanding Securities of Twelve Seas
The ability of Twelve Seas’ Public Shareholders to redeem their shares for cash may make Twelve Seas’ financial condition unattractive to BPGIC, which may affect BPGIC’s ability to close the Business Combination.
Pursuant to the Business Combination Agreement, Twelve Seas would need to have net tangible assets of at least $5,000,001 in the Trust Account after giving effect to the Redemption and any private placement investment as a closing condition to the Business Combination. Further, BPGIC, Pubco, Merger Sub and the Seller are not obligated to consummate the transaction if Pubco and Twelve Seas will have Closing Net Cash of less than $125,000,000 as of the Closing after giving effect to the Redemptions of Public Shares and the proceeds of any private placement. Therefore, Twelve Seas will need to reserve a portion of the cash in the Trust Account to meet such requirements, or, if such amounts are not available after taking into account all Redemptions, arrange for third party debt or equity financing. Raising additional third party financing may involve dilutive equity issuances or the incurrence of indebtedness at higher than desirable levels. If too many Public Shareholders exercise their Redemption rights, Twelve Seas would not be able to meet such closing condition and, as a result, would not be able to proceed with the Business Combination unless this condition is waived. Furthermore, in no event will Twelve Seas redeem its Public Shares in an amount that would cause Twelve Seas’ net tangible assets to be less than $5,000,001 upon consummation of the Business Combination, or any greater net tangible asset or cash requirement which may be contained in the agreement. Consequently, if accepting all properly submitted Redemption requests would cause Twelve Seas’ net tangible assets to be less than $5,000,001, Twelve Seas would not proceed with the Business Combination and may instead search for an alternate business combination.
The ability of Twelve Seas’ Public Shareholders to exercise Redemption rights with respect to a large number of Twelve Seas’ shares could increase the probability that the Business Combination would be unsuccessful and that you would have to wait for liquidation in order to redeem your stock.
The Business Combination Agreement requires Twelve Seas to have net tangible assets of at least $5,000,001 upon the Closing after taking into account any redemptions and private placement investments. Further, BPGIC, Pubco, Merger Sub and the Seller are not obligated to consummate the transaction if Pubco and Twelve Seas will have Closing Net Cash of less than $125,000,000 as of the Closing after giving effect to the Redemptions of Public Shares and the
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proceeds of any private placement. Therefore the probability that the Business Combination will be unsuccessful is increased by the amount of shareholder Redemptions. If the Business Combination is unsuccessful and Twelve Seas is not able to consummate another business combination before December 22, 2019, Twelve Seas’ Public Shareholders will not receive their pro rata portion of the Trust Account until Twelve Seas liquidates the Trust Account. If Twelve Seas Public Shareholders are in need of immediate liquidity, they could attempt to sell their stock in the open market; however, at such time Twelve Seas’ stock may trade at a discount to the pro rata amount per share in the Trust Account. In either situation, Twelve Seas Public Shareholders may suffer a material loss on their investment or lose the benefit of funds expected in connection with Twelve Seas’ Redemption until Twelve Seas liquidates or they are able to sell their stock in the open market.
You will not have any rights or interests in funds from the Trust Account, except under certain limited circumstances. To liquidate your investment, therefore, you may be forced to sell your Public Shares, Warrants or Rights, potentially at a loss.
Twelve Seas’ Public Shareholders will be entitled to receive funds from the Trust Account only upon the earlier to occur of: (i) Twelve Seas’ completion of the Business Combination, and then only in connection with those ordinary shares of Twelve Seas that such shareholder properly elected to redeem, subject to the limitations described herein, and (ii) the Redemption of Twelve Seas’ Public Shares if Twelve Seas is unable to complete its business combination by December 22, 2019, subject to applicable law and as further described herein. In addition, if Twelve Seas plans to redeem its Public Shares if Twelve Seas is unable to complete a business combination by December 22, 2019, for any reason, compliance with Cayman Islands law may require that Twelve Seas submits a plan of dissolution to Twelve Seas’ then-existing shareholders for approval prior to the distribution of the proceeds held in Twelve Seas’ Trust Account. In that case, Public Shareholders may be forced to wait beyond December 22, 2019, before they receive funds from the Trust Account. In no other circumstances will a Public Shareholder have any right or interest of any kind in the Trust Account. Accordingly, to liquidate your investment, you may be forced to sell your Public Shares, Warrants or Rights, potentially at a loss.
If Twelve Seas shareholders fail to properly demand Redemption rights, they will not be entitled to convert their ordinary shares of Twelve Seas into a pro rata portion of the Trust Account.
Twelve Seas shareholders holding Public Shares may demand that Twelve Seas convert their shares into a pro rata portion of the Trust Account, calculated as of two business days prior to the anticipated consummation of the Business Combination. Twelve Seas shareholders who seek to exercise this Redemption right must deliver their shares (either physically or electronically) to Twelve Seas’ transfer agent prior to the vote at the Meeting. Any Twelve Seas shareholder who fails to properly demand Redemption rights will not be entitled to convert his or her shares into a pro rata portion of the Trust Account for Redemption of his shares. See the section entitled “Extraordinary General Meeting of Twelve Seas Shareholders — Redemption Rights” for the procedures to be followed if you wish to convert your shares to cash.
NASDAQ may not list Pubco’s securities on its exchange, which could limit investors’ ability to make transactions in Pubco’s securities and subject Pubco to additional trading restrictions.
Pubco intends to apply to have its securities listed on NASDAQ upon consummation of the Business Combination. Pubco will be required to meet the initial listing requirements to be listed. Pubco may not be able to meet those initial listing requirements. Even if Pubco’s securities are so listed, Pubco may be unable to maintain the listing of its securities in the future.
If Pubco fails to meet the initial listing requirements and NASDAQ does not list its securities on its exchange, or if Pubco is unable to maintain the listing of its securities on NASDAQ, Pubco could face significant material adverse consequences, including:
• a limited availability of market quotations for its securities;
• a less liquid market for its securities;
• a limited amount of news and analyst coverage for the company; and
• a decreased ability to issue additional securities or obtain additional financing in the future.
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Twelve Seas’ current directors and executive officers beneficially own ordinary shares of Twelve Seas, Warrants and Rights that will be worthless, and have incurred reimbursable expenses that may not be reimbursed or repaid if the Business Combination is not approved. Such interests may have influenced their decision to approve the Business Combination with BPGIC.
Twelve Seas’ officers and directors and/or their affiliates beneficially own or have a pecuniary interest in Founder Shares and Private Placement Units that they purchased prior to, or simultaneously with, the Initial Public Offering. Twelve Seas’ executive officers and directors and their affiliates have no Redemption rights with respect to these securities in the event a business combination is not effected in the required time period. Therefore, if the Business Combination with BPGIC or another business combination is not approved within the required time period, such securities held by such persons will be worthless. Such securities had an aggregate market value of approximately $1 million based upon the closing prices of the shares and Units on NASDAQ on September 19, 2019. Furthermore, Twelve Seas’ officers and directors and their affiliates are entitled to reimbursement of out-of-pocket expenses incurred by them in connection with certain activities on Twelve Seas’ behalf, such as identifying and investigating possible business targets and business combinations. These expenses will be repaid upon completion of the Business Combination with BPGIC. However, if Twelve Seas fails to consummate the Business Combination, they will not have any claim against the Trust Account for repayment or reimbursement. Accordingly, Twelve Seas may not be able to repay or reimburse these amounts if the Business Combination is not completed. See the section entitled “The Business Combination Proposal — Interests of Twelve Seas’ Directors and Officers in the Business Combination.”
These financial interests may have influenced the decision of Twelve Seas’ directors to approve the Business Combination with BPGIC and to continue to pursue such Business Combination. In considering the recommendations of Twelve Seas’ board of directors to vote for the Business Combination Proposal and other proposals, its shareholders should consider these interests.
Twelve Seas’ executive officers are liable to ensure that proceeds of the trust are not reduced by vendor claims in the event the Business Combination is not consummated. Such liability may have influenced their decision to approve the Business Combination with BPGIC.
If the Business Combination with BPGIC or another business combination is not consummated by Twelve Seas within the required time period, Twelve Seas’ executive officers will be personally liable to ensure that the proceeds in the Trust Account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by Twelve Seas for services rendered or contracted for or products sold to Twelve Seas, but only if such a vendor or target business has not executed a waiver agreement. If Twelve Seas consummates a business combination, on the other hand, Twelve Seas will be liable for all such claims. Neither Twelve Seas nor the executive officers have any reason to believe that the executive officers will not be able to fulfill their indemnity obligations to Twelve Seas. See the section entitled “Other Information Related to Twelve Seas — Financial Condition and Liquidity” for further information.
These personal obligations of the executive officers may have influenced Twelve Seas’ board of director’s decision to approve the Business Combination with BPGIC and to continue to pursue such Business Combination. In considering the recommendations of Twelve Seas’ board of directors to vote for the Business Combination Proposal and other proposals, Twelve Seas’ shareholders should consider these interests.
The exercise of Twelve Seas’ directors’ and officers’ discretion in agreeing to changes or waivers in the terms of the Business Combination may result in a conflict of interest when determining whether such changes to the terms of the Business Combination or waivers of conditions are appropriate and in Twelve Seas’ shareholders’ best interest.
In the period leading up to the Closing of the Business Combination, events may occur that, pursuant to the Business Combination Agreement, would require Twelve Seas to agree to amend the Business Combination Agreement, to consent to certain actions taken by BPGIC or to waive rights that Twelve Seas is entitled to under the Business Combination Agreement. Such events have arisen and could continue to arise because of changes in the course of BPGIC’s business, a request by BPGIC to undertake actions that would otherwise be prohibited by the terms of the Business Combination Agreement or the occurrence of other events that would have a material adverse effect on BPGIC’s business and would entitle Twelve Seas to terminate the Business Combination Agreement. In any of such circumstances, it would be at Twelve Seas’ discretion, acting through its board of directors, to grant its consent or waive those rights. The existence of the financial and personal interests of the directors described in the preceding
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risk factors may result in a conflict of interest on the part of one or more of the directors between what he or they may believe is best for Twelve Seas and what he or they may believe is best for himself or themselves in determining whether or not to take the requested action. As of the date of this proxy statement/prospectus, Twelve Seas does not believe there will be any changes or waivers that Twelve Seas’ directors and officers would be likely to make after shareholder approval of the Business Combination Proposal has been obtained. While certain changes could be made without further shareholder approval, Twelve Seas will circulate a new or amended proxy statement/prospectus and resolicit Twelve Seas’ shareholders if changes to the terms of the transaction that would have a material impact on its shareholders are required prior to the vote on the Business Combination Proposal.
If Twelve Seas is unable to complete the Business Combination with BPGIC or another business combination by December 22, 2019, Twelve Seas will cease all operations except for the purpose of winding up, redeeming 100% of the outstanding Public Shares and, subject to the approval of its remaining shareholders and its board of directors, dissolving and liquidating. In such event, third parties may bring claims against Twelve Seas and, as a result, the proceeds held in the Trust Account could be reduced and the per-share liquidation price received by shareholders could be less than $10.00 per share.
Under the terms of Twelve Seas’ amended and restated memorandum and articles of association, Twelve Seas must complete the Business Combination with BPGIC or another business combination by December 22, 2019, or Twelve Seas must cease all operations except for the purpose of winding up, redeeming 100% of the outstanding Public Shares and, subject to the approval of its remaining shareholders and its board of directors, dissolving and liquidating. In such event, third parties may bring claims against Twelve Seas. Although Twelve Seas has obtained waiver agreements from certain vendors and service providers it has engaged and owes money to, and the prospective target businesses it has negotiated with, whereby such parties have waived any right, title, interest or claim of any kind they may have in or to any monies held in the Trust Account, there is no guarantee that they or other vendors who did not execute such waivers will not seek recourse against the Trust Account notwithstanding such agreements. Furthermore, there is no guarantee that a court will uphold the validity of such agreements. Accordingly, the proceeds held in the Trust Account could be subject to claims which could take priority over those of Twelve Seas’ Public Shareholders. If Twelve Seas is unable to complete a business combination within the required time period, the executive officers have agreed they will be personally liable to ensure that the proceeds in the Trust Account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by Twelve Seas for services rendered or contracted for or products sold to Twelve Seas, but only if such a vendor or prospective target business does not execute such a waiver. However, they may not be able to meet such obligation. Therefore, the per-share distribution from the Trust Account in such a situation may be less than $10.00 due to such claims.
Additionally, if Twelve Seas is forced to file a bankruptcy case or an involuntary bankruptcy case is filed against it which is not dismissed, or if Twelve Seas otherwise enters compulsory or court supervised liquidation, the proceeds held in the Trust Account could be subject to applicable bankruptcy law, and may be included in its bankruptcy estate and subject to the claims of third parties with priority over the claims of its shareholders. To the extent any bankruptcy claims deplete the Trust Account, Twelve Seas may not be able to return to its Public Shareholders at least $10.00 per share.
Twelve Seas’ shareholders may be held liable for claims by third parties against Twelve Seas to the extent of distributions received by them.
If Twelve Seas is unable to complete the Business Combination with BPGIC or another business combination within the required time period, Twelve Seas will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem 100% of the outstanding Public Shares, which Redemption will completely extinguish Public Shareholders’ rights as shareholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such Redemption, subject to the approval of its remaining shareholders and its board of directors, dissolve and liquidate, subject (in the case of (ii) and (iii) above) to its obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law. Twelve Seas cannot assure you that it will properly assess all claims that may be potentially brought against Twelve Seas. As such, Twelve Seas’ shareholders could potentially be liable for any claims to the extent of distributions received by them (but no more) and any liability of its shareholders may extend well beyond the third anniversary of the date of distribution. Accordingly, Twelve Seas cannot assure you that third parties will not seek to recover from its shareholders amounts owed to them by Twelve Seas.
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If Twelve Seas is forced to file a bankruptcy case or an involuntary bankruptcy case is filed against it which is not dismissed, any distributions received by shareholders could be viewed under applicable debtor/ creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover all amounts received by Twelve Seas’ shareholders. Furthermore, because Twelve Seas intends to distribute the proceeds held in the Trust Account to its Public Shareholders promptly after the expiration of the time period to complete a business combination, this may be viewed or interpreted as giving preference to its Public Shareholders over any potential creditors with respect to access to or distributions from its assets. Furthermore, Twelve Seas’ board may be viewed as having breached their fiduciary duties to its creditors and/or may have acted in bad faith, and thereby exposing itself and the company to claims of punitive damages, by paying Public Shareholders from the Trust Account prior to addressing the claims of creditors. Twelve Seas cannot assure you that claims will not be brought against it for these reasons.
Activities taken by existing Twelve Seas shareholders to increase the likelihood of approval of the Business Combination Proposal and other proposals could have a depressive effect on the ordinary shares of Twelve Seas.
At any time prior to the Meeting, during a period when they are not then aware of any material nonpublic information regarding Twelve Seas or its securities, Twelve Seas’ Initial Shareholders, officers, directors, BPGIC or BPGIC’s shareholders and/or their respective affiliates may purchase shares from institutional and other investors who vote, or indicate an intention to vote, against the Business Combination Proposal, or execute agreements to purchase such shares from such investors in the future, or they may enter into transactions with such investors and others to provide them with incentives to acquire ordinary shares of Twelve Seas or vote their shares in favor of the Business Combination Proposal. The purpose of such share purchases and other transactions would be to increase the likelihood of satisfaction of the requirements to consummate the Business Combination where it appears that such requirements would otherwise not be met. Entering into any such arrangements may have a depressive effect on the ordinary shares of Twelve Seas. For example, as a result of these arrangements, an investor or holder may have the ability to effectively purchase shares at a price lower than market and may therefore be more likely to sell the shares he owns, either prior to or immediately after the Meeting.
Risks Related to Pubco’s Business and Operations Following the Business Combination with BPGIC
The value of your investment in Pubco following consummation of the Business Combination will be subject to the significant risks affecting Pubco and BPGIC and inherent in the industry in which BPGIC operates. You should carefully consider the risks and uncertainties described below and other information included in this proxy statement/prospectus. If any of the events described below occur, the post-acquisition business and financial results could be adversely affected in a material way. This could cause the trading price of Pubco’s Ordinary Shares to decline, perhaps significantly, and you therefore may lose all or part of your investment. As used in the risks described in this subsection, references to “we,” “us” and “our” are intended to refer to BPGIC unless the context clearly indicates otherwise.
Following the consummation of the Business Combination, Pubco’s only significant asset will be its ownership of BPGIC and affiliates and such ownership may not be sufficient to pay dividends or make distributions or obtain loans to enable Pubco to pay any dividends on its Ordinary Shares or satisfy other financial obligations.
Following the consummation of the Business Combination, Pubco will be a holding company and will not directly own any operating assets other than its ownership of interests in BPGIC. Pubco will depend on BPGIC for distributions, loans and other payments to generate the funds necessary to meet its financial obligations, including its expenses as a publicly traded company and to pay any dividends. The earnings from, or other available assets of, BPGIC may not be sufficient to make distributions or pay dividends, pay expenses or satisfy Pubco’s other financial obligations.
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Fluctuations in operating results, quarter to quarter earnings and other factors, including incidents involving BPGIC’s customers and negative media coverage, may result in significant decreases in the price of Pubco securities post-Business Combination.
The stock markets experience volatility that is often unrelated to operating performance. These broad market fluctuations may adversely affect the trading price of Pubco securities post-Business Combination and, as a result, there may be significant volatility in the market price of Pubco securities post-Business Combination. If BPGIC is unable to operate profitably as investors expect, the market price of Pubco securities post-Business Combination will likely decline when it becomes apparent that the market expectations may not be realized. In addition to operating results, many economic and seasonal factors outside of Pubco’s or BPGIC’s control could have an adverse effect on the price of Pubco securities post-Business Combination and increase fluctuations in its quarterly earnings. These factors include certain of the risks discussed herein, operating results of other companies in the same industry, changes in financial estimates or recommendations of securities analysts post-Business Combination, speculation in the press or investment community, negative media coverage or risk of proceedings or government investigation, the possible effects of war, terrorist and other hostilities, adverse weather conditions, changes in general conditions in the economy or the financial markets or other developments affecting the oil and gas storage industry.
Pubco will incur higher costs post-Business Combination as a result of being a public company.
Pubco will incur significant additional legal, accounting, insurance and other expenses, including costs associated with public company reporting requirements following completion of the Business Combination. Pubco will incur higher costs associated with complying with the requirements of the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, and related rules implemented by the SEC and NASDAQ. The expenses incurred by public companies generally for reporting and corporate governance purposes have been increasing. Pubco expects these laws and regulations to increase its legal and financial compliance costs after the Business Combination and to render some activities more time-consuming and costly, although Pubco is currently unable to estimate these costs with any degree of certainty. Pubco may need to hire more employees post-Business Combination or engage outside consultants to comply with these requirements, which will increase its post-Business Combination costs and expenses. These laws and regulations could make it more difficult or costly for Pubco to obtain certain types of insurance, including director and officer liability insurance, and Pubco may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. These laws and regulations could also make it more difficult for us to attract and retain qualified persons to serve on Pubco’s board of directors, board committees or as executive officers. Furthermore, if Pubco is unable to satisfy its obligations as a public company, it could be subject to delisting of its Ordinary Shares and/or warrants, fines, sanctions and other regulatory action and potentially civil litigation.
The escrow provisions of the Business Combination Agreement and the Escrow Agreement may affect management decisions and incentives.
Under the Business Combination Agreement and the Escrow Agreement, up to 20 million additional Ordinary Shares that will be placed in escrow at Closing will be released to the Seller in the event that Pubco meets certain Annualized EBITDA (as defined in the Escrow Agreement) or share price targets during the period commencing from the Closing until the end of the twentieth (20th) fiscal quarter after the commencement date of the first full fiscal quarter beginning after the Closing (the “Escrow Period”). As a result, Pubco management may focus on increasing the Annualized EBITDA of Pubco and its subsidiaries, including BPGIC, for quarters within the Escrow Period rather than on increasing net income during such quarters. Additionally, the share price target can be achieved at any time during the Escrow Period, and the share price targets could be achieved early in the Escrow Period which would trigger release of the escrow shares even if the share price fell later in the Escrow Period. See “The Business Combination Proposal — The Business Combination Agreement and Related Agreements”.
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Pubco does not anticipate paying any cash dividends in the foreseeable future.
Following the Business Combination, Pubco intends to retain future earnings, if any, for use in the business or for other corporate purposes and does not anticipate that cash dividends with respect to its Ordinary Shares will be paid in the foreseeable future. Any decision as to the future payment of dividends will depend on its results of operations, financial position and such other factors as its board of directors, in its discretion, deems relevant. As a result, capital appreciation, if any, of Pubco’s Ordinary Shares will be a shareholder’s sole source of gain for the foreseeable future.
A market for Pubco’s securities may not develop, which would adversely affect the liquidity and price of Pubco’s securities.
The price of Pubco’s securities may vary significantly due to general market or economic conditions. Furthermore, an active trading market for the post-Business Combination Pubco securities may never develop or, if developed, it may not be sustained. You may be unable to sell your securities unless a market can be established and sustained.
The price of Pubco Ordinary Shares may be volatile.
The price of Pubco Ordinary Shares may fluctuate due to a variety of factors, including but not limited to:
• actual or anticipated fluctuations in our quarterly and annual results and those of other public companies in the industry;
• mergers and strategic alliances in the oil and gas industries;
• market prices and conditions in the oil and gas markets;
• changes in government regulation;
• potential or actual military conflicts or acts of terrorism;
• the failure of securities analysts to publish research about us, or shortfalls in our operating results compared to levels forecast by securities analysts;
• announcements concerning us or our competitors; and
• the general state of the securities markets.
These market and industry factors may materially reduce the market price of our Ordinary Shares, regardless of our operating performance. Volatility in the price of our Ordinary Shares may increase volatility in the price of our warrants.
Reports published by analysts, including projections in those reports that differ from our actual results, could adversely affect the price and trading volume of our Ordinary Shares.
We currently expect that securities research analysts will establish and publish their own periodic projections for our business. These projections may vary widely and may not accurately predict the results we actually achieve. Our share price may decline if our actual results do not match the projections of these securities research analysts. Similarly, if one or more of the analysts who write reports on us downgrades our stock or publishes inaccurate or unfavorable research about our business, our share price could decline. If one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, our share price or trading volume could decline. While we expect research analyst coverage, if no analysts commence coverage of us, the trading price and volume for our Ordinary Shares could be adversely affected.
Pubco may issue additional Ordinary Shares or other equity securities without your approval, which would dilute your ownership interests and may depress the market price of Pubco’s Ordinary Shares.
Pubco may issue additional Ordinary Shares or other equity securities of equal or senior rank in the future in connection with, among other things, future acquisitions, repayment of outstanding indebtedness or our equity incentive plan, without shareholder approval, in a number of circumstances.
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Pubco’s issuance of additional Ordinary Shares or other equity securities of equal or senior rank would have the following effects:
• Pubco’s existing shareholders’ proportionate ownership interest in Pubco will decrease;
• the amount of cash available per share, including for payment of dividends in the future, may decrease;
• the relative voting strength of each previously outstanding Ordinary share may be diminished; and
• the market price of Pubco’s Ordinary Shares may decline.
Pubco is a Cayman Islands exempted company and, because judicial precedent regarding the rights of shareholders is different under Cayman Islands law than under U.S. law, you could have less protection of your shareholder rights than you would under U.S. law.
Pubco’s corporate affairs will be governed by its Amended and Restated Memorandum and Articles of Association, the Cayman Islands Companies Law, and the common law of the Cayman Islands. The rights of shareholders to take action against the directors, actions by non-controlling shareholders and the fiduciary responsibilities of Pubco’s directors to Pubco under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from English common law, which has persuasive, but not binding, authority on a court in the Cayman Islands. Your rights as a shareholders and the fiduciary responsibilities of Pubco’s directors under Cayman Islands law are different from under statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands has a different body of securities laws from the United States and may provide significantly less protection to investors. In addition, some U.S. states, such as Delaware, have different bodies of corporate law than the Cayman Islands.
Pubco has been advised by its Cayman Islands legal counsel, Maples and Calder, that the courts of the Cayman Islands are unlikely (i) to recognize or enforce against Pubco judgments of courts of the United States predicated upon the civil liability provisions of the securities laws of the United States or any State and (ii) in original actions brought in the Cayman Islands, to impose liabilities against Pubco predicated upon the civil liability provisions of the securities laws of the United States or any State, so far as the liabilities imposed by those provisions are penal in nature. In those circumstances, although there is no statutory enforcement in the Cayman Islands of judgments obtained in the United States, the courts of the Cayman Islands will recognize and enforce a foreign money judgment of a foreign court of competent jurisdiction without retrial on the merits based on the principle that a judgment of a competent foreign court imposes upon the judgment debtor an obligation to pay the sum for which judgment has been given provided certain conditions are met. For a foreign judgment to be enforced in the Cayman Islands, such judgment must be final and conclusive and for a liquidated sum, and must not be in respect of taxes or a fine or penalty, inconsistent with a Cayman Islands judgment in respect of the same matter, impeachable on the grounds of fraud or obtained in a manner, and/or be of a kind the enforcement of which is, contrary to natural justice or the public policy of the Cayman Islands (awards of punitive or multiple damages may well be held to be contrary to public policy). A Cayman Islands Court may stay enforcement proceedings if concurrent proceedings are being brought elsewhere. There is recent Privy Council authority (which is binding on the Cayman Islands Court) in the context of a reorganization plan approved by the New York Bankruptcy Court which suggests that due to the universal nature of bankruptcy/insolvency proceedings, foreign money judgments obtained in foreign bankruptcy/insolvency proceedings may be enforced without applying the principles outlined above. However, a more recent English Supreme Court authority (which is highly persuasive but not binding on the Cayman Islands Court), has expressly rejected that approach in the context of a default judgment obtained in an adversary proceeding brought in the New York Bankruptcy Court by the receivers of the bankruptcy debtor against a third party, and which would not have been enforceable upon the application of the traditional common law principles summarized above and held that foreign money judgments obtained in bankruptcy/insolvency proceedings should be enforced by applying the principles set out above, and not by the simple exercise of the Courts’ discretion. Those cases have now been considered by the Cayman Islands Court. The Cayman Islands Court was not asked to consider the specific question of whether a judgment of a bankruptcy court in an adversary proceeding would be enforceable in the Cayman Islands, but it did endorse the need for active assistance of overseas bankruptcy proceedings. Pubco understands that the Cayman Islands Court’s decision in that case has been appealed and it remains the case that the law regarding the enforcement of bankruptcy/insolvency related judgments is still in a state of uncertainty.
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You will have limited ability to bring an action against Pubco or against its directors and officers, or to enforce a judgment against Pubco or them, because Pubco is incorporated in the Cayman Islands, because Pubco conducts all of its operations in the United Arab Emirates and because a majority of Pubco’s directors and officers will reside outside the United States.
Pubco is incorporated in the Cayman Islands and following the Business Combination, would initially conduct all of its operations through its subsidiary, BPGIC, in the United Arab Emirates. All of Pubco’s assets are located outside the United States. Pubco’s officers and directors are expected to reside outside the United States and a substantial portion of the assets of those persons are located outside of the United States. As a result, it could be difficult or impossible for you to bring an action against Pubco or against these individuals in the United States in the event that you believe that your rights have been infringed under the applicable securities laws or otherwise. Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands and of the United Arab Emirates could render you unable to enforce a judgment against Pubco’s assets or the assets of Pubco’s directors and officers.
Shareholders of Cayman Islands exempted companies such as Pubco have no general rights under Cayman Islands law to inspect corporate records and accounts or to obtain copies of lists of shareholders of these companies. Pubco’s directors have discretion under Cayman Islands law to determine whether or not, and under what conditions, Pubco’s corporate records could be inspected by Pubco’s shareholders, but are not obliged to make them available to Pubco’s shareholders. This could make it more difficult for you to obtain the information needed to establish any facts necessary for a shareholder motion or to solicit proxies from other shareholders in connection with a proxy contest.
As a result of all of the above, Pubco shareholders might have more difficulty in protecting their interests in the face of actions taken by management, members of the board of directors or controlling shareholders than they would as public shareholders of a U.S. company.
Provisions in Pubco’s Amended and Restated Memorandum and Articles of Association may inhibit a takeover of us, which could limit the price investors might be willing to pay in the future for Pubco’s securities and could entrench management.
Pubco’s amended and restated memorandum and articles of association will contain provisions that may discourage unsolicited takeover proposals that shareholders of Pubco may consider to be in their best interests. Among other provisions, the ability of Pubco’s board of directors to issue preferred shares with preferences and voting rights determined by the board without shareholder approval may make it more difficult for Pubco’s shareholders to remove incumbent management and accordingly discourage transactions that otherwise could involve payment of a premium over prevailing market prices for Pubco’s securities. Other anti-takeover provisions in Pubco’s Amended and Restated Memorandum and Articles of Association include the indemnification of Pubco’s officers and directors, the requirement that directors may only be removed from Pubco’s board of directors for cause and the requirement for a Special Resolution to amend provisions therein that affect shareholder rights. These provisions could also make it difficult for Pubco shareholders to take certain actions and limit the price investors might be willing to pay for Pubco’s securities.
As a “foreign private issuer” under the rules and regulations of the SEC, Pubco is permitted to, and will, file less or different information with the SEC than a company incorporated in the United States or otherwise subject to these rules, and will follow certain home-country corporate governance practices in lieu of certain NASDAQ requirements applicable to U.S. issuers.
Pubco is, and will be after the consummation of the Transactions, considered a “foreign private issuer” under the Exchange Act and is therefore exempt from certain rules under the Exchange Act, including the proxy rules, which impose certain disclosure and procedural requirements for proxy solicitations for U.S. and other issuers. Moreover, Pubco is not required to file periodic reports and financial statements with the SEC as frequently or within the same time frames as U.S. companies with securities registered under the Exchange Act. Pubco currently prepares its financial statements in accordance with IFRS. Pubco will not be required to file financial statements prepared in accordance with or reconciled to U.S. GAAP so long as its financial statements are prepared in accordance with IFRS as issued by the International Accounting Standards Board. Pubco is not required to comply with Regulation FD, which imposes restrictions on the selective disclosure of material information to shareholders. In addition, Pubco’s officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions
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of Section 16 of the Exchange Act and the rules under the Exchange Act with respect to their purchases and sales of Pubco’s securities. Accordingly, after the Business Combination, if you continue to hold Pubco’s securities, you may receive less or different information about Pubco than you currently receive about Twelve Seas and BPGIC.
In addition, as a “foreign private issuer” whose Ordinary Shares will be listed on the NASDAQ, Pubco is permitted to follow certain home-country corporate governance practices in lieu of certain NASDAQ requirements. A foreign private issuer must disclose in its Annual Reports filed with the SEC each NASDAQ requirement with which it does not comply followed by a description of its applicable home country practice. Pubco currently intends to follow some, but not all of the corporate governance requirements of NASDAQ. With respect to the corporate governance requirements of Pubco that it does follow, Pubco cannot make any assurances that it will continue to follow such corporate governance requirements in the future, and may therefore in the future, rely on available NASDAQ exemptions that would allow Pubco to follow its home country practice. Unlike the requirements of the NASDAQ, the corporate governance practice and requirements in the Cayman Islands do not require Pubco, and Pubco currently does not intend, to establish a nominations committee; and do not require Pubco, and Pubco currently does not intend, to seek shareholder approval for certain security issuances specified in NASDAQ Rule 5635. Such Cayman Islands home country practices may afford less protection to holders of Pubco’s Ordinary Shares. For additional information regarding the home country practices Pubco intends to follow in lieu of NASDAQ requirements, see “Management of Pubco Following the Business Combination — Corporate Governance Practices”.
Pubco would lose its status as a “foreign private issuer” under current SEC rules and regulations if more than 50% of Pubco’s outstanding voting securities become directly or indirectly held of record by U.S. holders and one of the following is true: (i) the majority of Pubco’s directors or executive officers are U.S. citizens or residents; (ii) more than 50% of Pubco’s assets are located in the United States; or (iii) Pubco’s business is administered principally in the United States. If Pubco loses its status as a foreign private issuer in the future, it will no longer be exempt from the rules described above and, among other things, will be required to file periodic reports and annual and quarterly financial statements as if it were a company incorporated in the United States. If this were to happen, Pubco would likely incur substantial costs in fulfilling these additional regulatory requirements and members of Pubco’s management would likely have to divert time and resources from other responsibilities to ensuring these additional regulatory requirements are fulfilled.
Pubco is an “emerging growth company,” and any decision on Pubco’s part to comply with certain reduced disclosure requirements applicable to emerging growth companies could make its Ordinary Shares less attractive to investors.
Pubco is an “emerging growth company,” as defined in the JOBS Act and, for as long as it continues to be an emerging growth company, it may choose to take advantage of certain exemptions from various reporting requirements applicable to other public companies including, but not limited to: not being required to have its internal control over financial reporting audited by our independent registered public accounting firm pursuant to Section 404 of the Sarbanes-Oxley Act for a specified time period; reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements; and exemptions from the requirements to hold a nonbinding advisory vote on executive compensation and to obtain stockholder approval of any golden parachute payments not previously approved. It may take advantage of these provisions for up to five years or such earlier time that we are no longer an “emerging growth company.” Pubco will remain an “emerging growth company” for up to five years, although, it would cease to be an “emerging growth company” upon the earliest of: the first fiscal year following the fifth anniversary of the consummation of this offering; the first fiscal year after our annual gross revenue is $1.07 billion or more; the date on which it has, during the previous three-year period, issued more than $1 billion in non-convertible debt securities; or the date on which it is deemed to be a “large accelerated filer” as defined in the Exchange Act. To the extent Pubco takes advantage of any of these reduced reporting burdens in this proxy statement/prospectus or in future filings, the information that it provides to its security holders may be different than you might get from other public companies in which you hold equity interests. Pubco cannot predict if investors will find its Ordinary Shares less attractive because it may rely on these exemptions. If some investors find Pubco’s Ordinary Shares less attractive as a result, there may be a less active trading market for its Ordinary Shares and its stock price may be more volatile.
Under Section 107(b) of the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards until such time as those standards apply to private companies. Pubco is choosing to delay adoption of new or revised accounting standards accordingly.
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Pubco’s controlling shareholder will have substantial influence over Pubco and its interests may not be aligned with the interests of Pubco’s other shareholders.
Upon closing, BPGIC Holdings Limited will hold a significant percentage of our voting equity. BPGIC Holdings Limited will own more than 70% of our outstanding Ordinary Shares. BPGIC Holdings Limited and Nico Paardenkooper as the Chief Executive Officer of BPGIC Holdings Limited, as well as the majority shareholder of BPGIC Holdings Limited will have substantial influence over our business, including decisions regarding mergers, consolidations, the sale of all or substantially all of our assets, election of directors, declaration of dividends and other significant corporate actions. As the controlling shareholder, BPGIC Holdings Limited may take actions that are not in the best interests of Pubco’s other shareholders. These actions may be taken in many cases even if they are opposed by Pubco’s other shareholders. In addition, this concentration of ownership may discourage, delay or prevent a change in control which could deprive you of an opportunity to receive a premium for your Ordinary Shares as part of a sale of Pubco.
Risks Related to BPGIC
BPGIC is currently reliant on the Phase I & II Customer for all of its revenues and any material non-payment or non-performance by the Phase I & II Customer would have a material adverse effect on BPGIC’s business, financial condition and results of operations.
BPGIC entered into the Phase I End User Agreement, a five-year lease and service agreement with the Phase I End User, an international energy trading company. BPGIC’s revenues historically depended solely on the fees it received pursuant to the Phase I End User Agreement which were comprised of (i) a monthly fixed fee to lease BPGIC’s Phase I storage capacity (regardless of whether the Phase I End User used any storage capacity) and (ii) monthly variable fees based on the Phase I End User’s usage of the following ancillary services: throughput, blending, heating and inter-tank transfers.
In August 2019, with the approval of the Phase I End User, BPGIC restructured its relationship with the Phase I End User by entering into the Phase I Customer Agreement, a four-year lease and offtake agreement with the Phase I & II Customer, Al Brooge International Advisory LLC, for the Phase I facility. After entering the Phase I Customer Agreement, the Phase I & II Customer assumed BPGIC’s rights and obligations under the Phase I End User Agreement. BPGIC’s revenues for the immediate future are expected to depend solely on the fees it receives pursuant to the Phase I Customer Agreement which are comprised of (i) a monthly fixed fee to lease BPGIC’s Phase I storage capacity (regardless of whether the Phase I & II Customer uses any storage capacity) and (ii) monthly variable fees based on the Phase I & II Customer’s, or its sublessee’s, usage of the following ancillary services: throughput, blending, heating and inter-tank transfers.
The terms of the Phase I Customer Agreement allow the Phase I & II Customer to sublease, subject to BPGIC’s prior approval, the use of Phase I’s facilities, and by assuming the Phase I End User Agreement, the Phase I & II Customer subleased the use of the Phase I facility to the Phase I End User. Under the Phase I Customer Agreement, the Phase I & II Customer still retains the obligation to pay any outstanding amounts due, including if a sublessee were to fail to make any payments owed to the Phase I & II Customer. There can be no assurance that in the event of a non-payment by the Phase I End User, or another sublesseee, of amounts owed to the Phase I & II Customer, that the Phase I & II Customer would honor its obligation to pay any outstanding amounts due to BPGIC.
There can be no assurance that BPGIC’s plans of diversifying its end-user relationships through the opening of the Sahara Refinery will be achieved.
BPGIC expects to remain reliant on the Phase I & II Customer for all of its revenues until the First Quarter of 2020, which is when BPGIC expects the Sahara Refinery to become operational.
In March 2019, BPGIC entered into the Refinery and Services Agreement, a five-year refinery and services agreement with Sahara relating to the development and subsequent operation of the Sahara Refinery, a modular refinery owned by Sahara, or a wholly-owned subsidiary of Sahara, at the BPGIC Terminal. Pursuant to the terms of the Refinery and Services Agreement, Sahara’s payment obligations thereunder will commence on the first date of operation of the Sahara Refinery. BPGIC expects to provide to Sahara refinery operation services, usage of five Phase I storage tanks, and ancillary services. Fees under the Refinery and Services Agreement are equal to the greater of (i) a fixed fee per barrel per day, and (ii) a minimum fee. In addition, BPGIC will charge Sahara monthly
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variable fees based on Sahara’s usage of the ancillary services. To the extent BPGIC receives fees from Sahara, it would reduce BPGIC’s dependence on the Phase I & II Customer for revenues. However there can be no assurance that the Sahara Refinery will be operational during the First Quarter of 2020. While BPGIC and Sahara expect that Sahara will use the ancillary services to the same extent as the Phase I End User has in the past, there can be no assurance that Sahara will, in fact, do so.
The Phase I End User’s usage of BPGIC’s ancillary services has an impact on BPGIC’s profitability. The demand for such ancillary services can be influenced by a number of factors including current or expected prices and market demand for refined petroleum products, each of which can be volatile.
With respect to the Phase I Customer Agreement, the total monthly storage fees are fixed and the total monthly fees for BPGIC’s ancillary services are subject to variation based on the Phase I & II Customer’s, or its sublessee’s, usage of BPGIC’s ancillary services. BPGIC expects its revenue from the ancillary services offered in Phase I to vary based on the orders the Phase I & II Customer receives from the Phase I End User, which in turn, vary based on the orders the Phase I End User receives from its customers. The needs of the Phase I End User’s customers, and consequently, the Phase I & II Customer’s usage of BPGIC’s ancillary services, tend to vary based on a number of factors including current or expected refined petroleum product prices and trading activity. Factors that could lead to a decrease in the demand for BPGIC’s ancillary services include:
• changes in expectations for future prices of refined petroleum products;
• the level of worldwide oil and gas production and any disruption of those supplies;
• a decline in global trade volumes, economic growth, or access to markets;
• higher fuel taxes or other governmental or regulatory actions that increase, directly or indirectly, the cost of gasoline and diesel; and
• changes to applicable regulations or new regulations affecting the refined petroleum products serviced by BPGIC.
Any of the factors referred to above, either alone or in combination, may result in the Phase I End User’s reduced usage of BPGIC’s ancillary services, which would ultimately have a material adverse effect on BPGIC’s business, financial condition and results of operations.
In the event that the Phase I Customer Agreement expires or otherwise terminates, BPGIC may have difficulty locating a replacement for the Phase I & II Customer due to competition with other oil storage companies in the Port of Fujairah and at other ports.
BPGIC may have to compete with other oil storage companies in the Port of Fujairah to secure a third party to contract for BPGIC’s services in the event that the Phase I Customer Agreement expires or otherwise terminates. Such third parties may not only consider competitors in the Port of Fujairah but may also consider companies located at other ports. Although BPGIC believes that it has a best-in-class technically designed terminal in Fujairah and there is a scarcity of land in Fujairah available for expansion by competitors, BPGIC’s ability to compete could be harmed by factors it cannot control, including:
• BPGIC’s competitors’ construction of new assets or conversion of existing terminals in a manner that would result in more intense competition in the Port of Fujairah;
• BPGIC’s competitors, which currently provide services to their own businesses, seeking to provide their services to third parties, including third-party oil companies and oil traders;
• BPGIC’s competitors making significant investments to upgrade or convert their facilities in a manner that, while limiting their capacity in the short term, would eventually enable them to meet or exceed BPGIC’s capabilities;
• the perception that another company or port may provide better service; and
• the availability of alternative heating and blending facilities located closer to users’ operations.
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Any combination of these factors could result in third parties entering into long-term contracts to utilize the services of BPGIC’s competitors instead of BPGIC’s services, or BPGIC being required to lower its prices or increase its costs to attract such parties, either of which could adversely affect BPGIC’s business, financial condition and results of operations.
In addition, in the event that the Phase I End User Agreement expires or otherwise terminates, the Phase I & II Customer would have similar risks and may face similar difficulties locating a replacement for the Phase I End User due to competition with other oil storage companies in the Port of Fujairah and at other ports. If the Phase I & II Customer is unable to contract with a new end-user, or the new end-user does not use ancillary services to the same extent as the Phase I End User, the ancillary services used by the Phase I & II Customer would be reduced and the Phase I & II Customer’s ability to satisfy its payment obligations to BPGIC under the Phase I Customer Agreement would be impaired, each of which could adversely affect BPGIC’s business, financial condition and results of operations.
BPGIC may be subject to significant risks and expenses when constructing Phase II, which could adversely affect BPGIC’s business, financial condition and results of operations.
The construction of Phase II will be subject to a number of risks, including:
• delays by the Phase II Contractor, Audex, in constructing Phase II;
• a shortage of building materials, equipment or labor;
• poor performance in project execution on the part of Audex;
• default by or financial difficulties faced by Audex or other third-party service and goods providers or failure by Audex or other providers to meet their contractual obligations;
• BPGIC’s inability to find a suitable replacement contractor in the event of a default by Audex; and
• although BPGIC’s budgeted costs for the construction of Phase II will have been fully funded following the completion of the Business Combination, if there are any cost overruns that require BPGIC to obtain additional financing, there can be no assurance such additional financing would be available at all or upon acceptable terms by BPGIC.
Any of the factors referred to above, either alone or in combination, could materially delay the completion of Phase II or materially increase the costs associated with the construction of Phase II, and therefore materially adversely affect BPGIC’s future financial condition. Any failure to complete construction according to specifications may also result in liabilities, reduced efficiency and lower financial returns than anticipated which may result in BPGIC having to enter into restructuring negotiations with its creditors. Delays in one part of Phase II may cause delays to other parts and to the overall Phase II completion timetable. While the construction of Phase II is not expected to have any material impact on the ongoing operations of Phase I or the development and installation of the Sahara Refinery, there can be no assurance, given the proximity and ultimate connectivity of Phase I, Phase II, and the Sahara Refinery that disruptions to Phase I’s operations and/or the development and installation of the Sahara Refinery will not occur.
BPGIC will become reliant on Sahara for all of its Sahara Refinery revenues, and the termination of the Refinery and Services Agreement and related agreements would have a material adverse effect on BPGIC’s business, financial condition and results of operations.
BPGIC entered into the five-year Refinery and Services Agreement with Sahara which, at the parties option, may be extended for additional five-year terms, to develop and operate the Sahara Refinery at the BPGIC Terminal. Once the Sahara Refinery becomes operational, which is expected to occur during the First Quarter of 2020, it will be owned by Sahara, or a wholly-owned subsidiary of Sahara, and operated by BPGIC for Sahara’s exclusive use. When the Sahara Refinery is operational, BPGIC will become reliant on Sahara for a significant portion of its revenues. Upon termination of the Refinery and Services Agreement, Sahara is entitled to dismantle and remove the Sahara Refinery from the BPGIC Terminal. In that event, there can be no assurance that BPGIC would be able to buy back the Sahara Refinery, find a new partner to install a modular refinery at the BPGIC Terminal, or enter into a comparable agreement to provide refinery, storage and ancillary services at comparable or more favorable pricing and/or terms. Additionally,
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BPGIC may incur substantial cost if it suffers delays in locating a third party or if modifications or installation of a new refinery are required by a new agreement. The occurrence of any one or more of these events could have a material adverse effect on BPGIC’s business, financial condition and results of operations.
BPGIC will become reliant on the Phase I & II Customer for all of its Phase II revenues, and the termination of the Phase II Customer Agreement and the failure to find a replacement for the Phase I & II Customer would have a material adverse effect on BPGIC’s business, financial condition and results of operations.
In connection with Phase II, BPGIC entered into the Phase II End User Agreement, a five-year lease and service agreement with the Phase II End User, an international commodities trading company, which extends automatically for an additional five years. Pursuant to the Phase II End User Agreement, the Phase II End User has agreed to lease all eight oil storage tanks in Phase II once Phase II becomes operational, which is expected to occur during 2020.
In September 2019, with the approval of the Phase II End User, BPGIC restructured its relationship with the Phase II End User by entering into the Phase II Customer Agreement, a five-year lease and offtake agreement for the Phase II facility with the Phase I & II Customer. In connection with the Phase II Customer Agreement, the Phase I & II Customer assumed BPGIC’s rights and obligations under the Phase II End User Agreement.
When Phase II becomes operational, BPGIC will become reliant on the Phase I & II Customer for another significant portion of its revenues. In the event that insolvency proceedings are commenced against the Phase I & II Customer, BPGIC would have the option to terminate the Phase II Customer Agreement. Upon the termination of the Phase II Customer Agreement, BPGIC would be able to enter into lease and service agreements with one or more third parties. However, in that event, there can be no assurance that BPGIC would be able to locate one or more third parties to enter into lease and service agreements with BPGIC and/or that BPGIC would be able to obtain agreements for a comparable amount of utilization of Phase II’s oil storage and ancillary services at comparable or more favorable pricing and/or terms. Additionally, BPGIC may incur substantial costs if it suffers delays in locating a third party or if modifications to Phase II are required by a new agreement. The occurrence of any one or more of these events would have a material adverse effect on BPGIC’s business, financial condition and results of operations.
The terms of the Phase II Customer Agreement allow the Phase I & II Customer to sublease, subject to BPGIC’s prior approval, the use of Phase II’s facilities, and by assuming the Phase II End User Agreement, the Phase I & II Customer subleased the use of the Phase II facility to the Phase II End User. Under the Phase II Customer Agreement, the Phase I & II Customer still retains the obligation to pay any outstanding amounts due, including if a sublessee were to fail to make any payments owed to the Phase I & II Customer. There can be no assurance that in the event of a non-payment by the Phase II End User, or another sublesseee, of amounts owed to the Phase I & II Customer, that the Phase I & II Customer would honor its obligation to pay any outstanding amounts due to BPGIC in the event of a non-payment by a sublessee.
BPGIC will become further reliant on the Phase I & II Customer for a substantial majority of its revenues, and any material non-payment or non-performance by the Phase I & II Customer would have a material adverse effect on BPGIC’s business, financial condition and results of operations.
Upon completion of Phase II, the Phase I & II Customer will be BPGIC’s sole customer with respect to both the Phase I and Phase II facilities. The terms of both the Phase I Customer Agreement and the Phase II Customer Agreement allow the Phase I & II Customer to sublease the corresponding facilities, subject to BPGIC’s prior approval. By assuming the Phase I End User Agreement and the Phase II End User Agreement, the Phase I & II Customer has subleased the Phase I facility to the Phase I End User and the Phase II facility to the Phase II End User. Under both the Phase I Customer Agreement, and the Phase II Customer Agreement, the Phase I & II Customer remains obligated to pay any outstanding amounts due to BPGIC, even if a sublessee fails to make any payment owed to it as sublessor. There can be no assurance that the Phase I & II Customer would honor its obligation to pay any outstanding amounts due to BPGIC.
The Phase I & II Customer’s inability or failure to meet its obligations under the Phase I Customer Agreement, the Phase II Customer Agreement, or both, would have a material adverse effect on BPGIC’s business, financial condition and results of operations. If the Phase I & II Customer fails to honor its obligations under either agreement, BPGIC is entitled to terminate such agreement and the Phase I & II Customer remains liable to pay certain termination fees. However, in that event, there can be no assurance that BPGIC would be able to locate one or more third parties to enter
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into lease and service agreements with BPGIC and/or that BPGIC would be able to obtain agreements for a comparable amount of utilization of such facility and ancillary services at comparable or more favourable pricing and/or terms. Additionally, BPGIC may incur substantial costs if it suffers delays in locating a third party or if modifications to such facility are required by a new agreement. The occurrence of any one or more of these events would have a material adverse effect on BPGIC’s business, financial condition and results of operations.
The scarcity of available land in the Fujairah oil zone region could subject BPGIC to competition for additional land, unfavorable lease terms for that land and limit BPGIC’s ability to expand its facilities in Fujairah beyond Phase II.
As discussed further in “Business of BPGIC — Strategy”, BPGIC has entered into a land lease initial agreement to lease an additional plot of land that has a total area of approximately 450,000 m2. BPGIC intends to use the relevant land to expand its crude oil storage and service capacity (“Phase III”). BPGIC’s entry into any final lease agreement in respect of this Phase III land would be conditional upon the results of a site inspection, technical design and project feasibility study BPGIC. BPGIC has also entered into a memorandum of understanding with a leading European oil major, which would potentially cover a portion of the yet to be determined capacity of Phase III. However, there are no binding commitments currently in place and, as a result, BPGIC’s ability to achieve its yet to be determined desired level of utilization for the Phase III services is subject to the future terms of any agreement with its future customer and prevailing market conditions.
In addition, all land in the Fujairah oil zone region is owned and controlled by FOIZ, the Fujairah Oil Industry Zone. The Fujairah oil zone region currently has limited available land to lease. As a result, BPGIC’s ability to further expand its facilities if it is unable to secure a final lease for the Phase III land or wishes to expand in Fujairah beyond Phase III is limited. This could subject BPGIC to enhanced competition both in terms of price and lease terms for any land that becomes available to lease.
If BPGIC is able to lease additional land, there can be no assurance that it would be able to do so on terms that are as favorable or more favorable than the terms of the BPGIC Terminal Land Lease, the land lease that BPGIC entered into in connection with Phases I and II or that would allow BPGIC to use the land as intended. BPGIC’s inability to secure new land from FOIZ in the Fujairah oil zone region could substantially impair BPGIC’s regional growth prospects in Fujairah beyond Phase II, leading to fewer remaining options for its expansion in Fujairah, other than the acquisition of an existing third-party owned oil storage terminal in Fujairah.
Accidents involving the handling of oil products at the BPGIC Terminal could disrupt BPGIC’s business operations and/or subject it to environmental and other liabilities.
Accidents in the handling of oil products (hazardous or otherwise) at the BPGIC Terminal could disrupt BPGIC’s business operations during any repair or clean-up period, which could negatively affect its business operations. The BPGIC Terminal, which has received two international awards since it began operations, was designed to minimize the risk of oil leakage and has state-of-the-art control facilities. In addition, pursuant to the Fujairah Municipality environmental regulations, BPGIC installed impermeable lining over the ground soil throughout its tank farm area and any other area where oil leakage could occur and potentially reach the ground soil. Nevertheless, there is a risk that oil leakages or fires could occur at the terminal and, in the event of an oil leakage, there can be no assurance that the installed lining will prevent any oil products from reaching the ground soil. Although BPGIC believes that it has adequate insurance in place to insure against the occurrence of any of the foregoing events, any such leakages or fires could disrupt terminal operations and result in material remediation costs. Any such damage or contamination could reduce gross throughput and/or subject BPGIC to liability in connection with environmental damage, any or all of which could have a material adverse effect on its business, financial condition and results of operations.
The Sahara Refinery, once completed, will face operating hazards, and the potential limits on insurance coverage could expose us to potentially significant liability costs.
Once completed, the Sahara Refinery will be subject to certain operating hazards, and our cash flow from its operations could decline if it experiences a major accident, pipeline rupture or spill, explosion or fire, is damaged by severe weather or other natural disaster, or otherwise is forced to curtail its operations or shut down. These operating hazards
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could result in substantial losses due to personal injury and/or loss of life, severe damage to and destruction of property and equipment and pollution or other environmental damage and may result in significant curtailment or suspension of our related operations.
Although we intend to maintain insurance policies, including personal and property damage and business interruption insurance for each of our facilities, we cannot ensure that this insurance will be adequate to protect us from all material expenses related to potential future claims for personal and property damage or significant interruption of operations. Furthermore, we may be unable to maintain or obtain insurance of the type and amount we desire at reasonable rates. If we were to incur a significant liability for which we were not fully insured, it could affect our financial condition and diminish our ability to make distributions to our shareholders.
When the Sahara Refinery is completed, our financial results will be affected by volatile refining margins, which are dependent upon factors beyond our control, including the price of crude oil, to the extent such volatility reduces customer demand of ancillary services.
When the Sahara Refinery is operational, our financial results will be affected by the relationship, or margin, between refined petroleum product prices and the prices for crude oil and other feedstocks to the extent decreases in refining margins reduce Sahara’s use of the Sahara Refinery and our ancillary services. Historically, refining margins have been volatile, and we believe they will continue to be volatile in the future. Sahara’s costs to acquire feedstocks and the price at which it can ultimately sell refined petroleum products depend upon several factors beyond its, and our, control, including regional and global supply of and demand for crude oil, gasoline, diesel, and other feedstocks and refined petroleum products. These in turn depend on, among other things, the availability and quantity of imports, production levels, levels of refined petroleum product inventories, productivity and growth (or the lack thereof) of global economies, international relations, political affairs, and the extent of governmental regulation. Some of these factors can vary by region and may change quickly, adding to market volatility, while others may have longer-term effects. The longer-term effects of these and other factors on refining and marketing margins are uncertain. Decreased refining margins could have a significant effect on the extent to which Sahara uses the Sahara Refinery and our ancillary services which, in turn, could have a significant effect on our financial results.
Economic turmoil and political unrest or hostilities, including the threat of future terrorist attacks, could affect the economies of the UAE and other countries. Lower levels of economic activity could result in declines in energy consumption, including declines in the demand for and consumption of refined petroleum products, such as those we will produce for Sahara, which could cause our revenues and margins to decline and limit our future growth prospects.
BPGIC’s competitive position and prospects depend on the expertise and experience of Senior Management and BPGIC’s ability to continue to attract, retain and motivate qualified personnel.
BPGIC’s business is dependent on retaining the services of, or in due course promptly obtaining equally qualified replacements for Senior Management, those persons named as senior managers in “Management of Pubco Following the Business Combination”. Competition in the UAE for personnel with relevant expertise is intense and it could lead to challenges in locating qualified individuals with suitable practical experience in the oil storage industry. Although BPGIC has, or will have, employment agreements with all of the members of Senior Management, the retention of their services cannot be guaranteed. Should they decide to leave BPGIC, it may be difficult to replace them promptly with other managers of sufficient expertise and experience or at all. To mitigate this risk, BPGIC intends to enter into long term incentive plans with members of Senior Management in due course. BPGIC does not have key-man insurance in place for any of the members of Senior Management. In the event of any increase in the levels of competition in the oil storage industry or general price levels in the Fujairah region, BPGIC may experience challenges in retaining members of the Senior Management team or recruiting replacements with the appropriate skills. Should BPGIC lose any of the members of Senior Management without prompt and equivalent replacement or if BPGIC is otherwise unable to attract or retain such qualified personnel for BPGIC’s requirements, this could have a material adverse effect on its business, financial condition and results of operations. For more information regarding Senior Management, see “Management of Pubco Following The Business Combination”.
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In connection with the preparation of BPGIC’s financial statements as of and for the years ended December 31, 2017 and 2018, BPGIC and its independent registered public accounting firm identified two material weaknesses in BPGIC’s internal control over financial reporting, one related to lack of sufficient skilled personnel and one related to lack of sufficient entity level and financial reporting policies and procedures. If Pubco and BPGIC are not able to remediate the material weaknesses in BPGIC’s financial reporting and otherwise to maintain an effective system of internal control over financial reporting in the future, investors may lose confidence in the accuracy and completeness of Pubco’s and BPGIC’s financial reports, and the market price of Pubco securities could be materially and adversely affected.
Prior to the consummation of the Business Combination, BPGIC is neither a publicly listed company, nor an affiliate or a consolidated subsidiary of, a publicly listed company, and it has had limited accounting personnel and other resources with which to address its internal controls and procedures. Effective internal control over financial reporting is necessary for it to provide reliable financial reports and, together with adequate disclosure controls and procedures, are designed to prevent fraud. If in subsequent years Pubco and/or BPGIC are unable to assert that their internal control over financial reporting is effective, they could lose investor confidence in the accuracy and completeness of their financial reports, which could have a material adverse effect on the price of Pubco’s securities.
In connection with the preparation and external audit of BPGIC’s financial statements as of and for the years ended December 31, 2017 and December 31, 2018, BPGIC and our auditors, noted material weaknesses in BPGIC’s internal control over financial reporting. The Public Company Accounting Oversight Board has defined a material weakness as a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of BPGIC’s financial statements will not be prevented or detected on a timely basis.
The material weaknesses identified were (1) a lack of sufficient skilled personnel with requisite IFRS and SEC reporting knowledge and experience and (2) a lack of sufficient financial reporting policies and procedures that are commensurate with IFRS and SEC reporting requirements.
BPGIC was not required to perform an evaluation of internal control over financial reporting as of December 31, 2018 or December 31, 2017 in accordance with the provisions of the Sarbanes-Oxley Act because it was a private company during those periods. Had such an evaluation been performed, additional control deficiencies may have been identified by BPGIC’s management, and those control deficiencies could have also represented one or more material weaknesses.
BPGIC’s auditors did not undertake an audit of the effectiveness of its internal controls over financial reporting. Neither Pubco’s nor BPGIC’s independent registered public accounting firm will be required to report on the effectiveness of their respective internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002 until Pubco’s first annual report on Form 20-F following the date on which it ceases to qualify as an “emerging growth company,” which may be up to five full fiscal years following the date of the Closing. The process of assessing the effectiveness of Pubco’s and BPGIC’s internal control over financial reporting may require the investment of substantial time and resources, including by members of Pubco’s and BPGIC’s senior management. As a result, this process may divert internal resources and take a significant amount of time and effort to complete. In addition, Pubco and BPGIC cannot predict the outcome of this determination and whether Pubco and/or BPGIC will need to implement remedial actions in order to implement effective control over financial reporting. If in subsequent years Pubco and/or BPGIC is unable to assert that Pubco’s and/or BPGIC’s internal control over financial reporting is effective, or if Pubco’s and/or BPGIC’s auditors express an opinion that Pubco’s and/or BPGIC’s internal control over financial reporting is ineffective, BPGIC and Pubco could lose investor confidence in the accuracy and completeness of their financial reports, which could have a material adverse effect on the price of Pubco’s securities.
Pubco and BPGIC will be implementing a number of measures to address the material weaknesses including (i) hiring personnel with relevant public reporting experience, (ii) conducting training for Pubco and BPGIC personnel with respect to IFRS and SEC financial reporting requirements and (iii) documenting and evaluating the controls over financial reporting. Pubco and BPGIC plan to have remediated these material weaknesses by December 31, 2020. In this regard, Pubco and BPGIC will need to dedicate internal resources, recruit personnel with public reporting experience, potentially engage outside consultants and adopt a detailed work plan to assess and document the adequacy of their internal control over financial reporting. This may include taking steps to improve control processes as appropriate, validating that controls are functioning as documented and implementing a continuous reporting and improvement process for internal control over financial reporting.
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Our auditor’s report includes a going concern paragraph.
Our auditor’s report on our financial statements for the year ended December 31, 2018 includes a going concern paragraph. As of June 30, 2019 and December 31, 2018, the Company had not paid $6,277,709 and $3,747,537 respectively of principal and accrued interest that was due under the Company’s Phase I Financing Facilities. Also, as of June 30, 2019 and December 31, 2018, the Company was not in compliance with its debt covenants, including the debt service coverage ratio contained in the Company’s Phase I Financing Facilities. Even though the lender did not declare an event of default under the loan agreements, these breaches constituted events of default and could have resulted in the lender requiring immediate repayment of the loans. Accordingly, as of June 30, 2019 and December 31, 2018, the Company has classified its debt balance of $92,559,028 and $94,792,088 as a current liability. As of June 30, 2019 and December 31, 2018, the Company’s current liabilities exceeded its current assets by $101,547,022 and $108,536,113, respectively. All of the above represents a material uncertainty that casts significant doubt upon the Company’s ability to continue as a going concern.
On September 10, 2019, the Company entered into an agreement with its lender to amend the Phase I Construction Facility. The principal and accrued interest of $5,494,063 outstanding under this facility as of July 31, 2019 as per the original repayment schedule will now be due on November 30, 2019. The Phase I Construction Facility is now payable in 45 instalments starting October 31, 2019 with final maturity on July 30, 2030. The Phase I Admin Building Financing Facility was not amended as part of the September 10, 2019 agreement to amend the Phase I Construction Facility. Subsequent to the period end, the Company had repaid $5,646,206 due under the Phase I Admin Building Facility and the Phase I Short Term Financing Facility. As such, all instalments related to Phase I Admin Building Facility and the Phase I Short Term Financing Facility due under the original repayment schedules up to September 10, 2019 were repaid. In addition, the Company agreed to assign to the lender all proceeds from the operation of the tanks and to pre-settle by December 31, 2019 AED 100,000,000 (($27,225,701) translated using the exchange rate as of June 30, 2019) of principal under the Phase I Construction Facilities from the proceeds received from the Business Combination.
During 2018, the Company signed the Phase II End User Agreement to provide storage and ancillary services to the Phase II End User, an international commodity trading company. Phase II operations are scheduled to start in the Second Quarter of 2020 and management expects this will generate significant operating cash flows. Further, in 2019, the Company entered into the Refinery and Services Agreement with Sahara to develop and operate the Sahara Refinery at the BPGIC Terminal. The Company expects to provide operation, storage and ancillary services to Sahara. Refinery operations are scheduled to start in the First Quarter of 2020. Based on the above, management expects the Company will generate sufficient cash flows from its operations to meet its liabilities as and when the loan instalments fall due. Further, the owners intend to provide further financial support to enable the Company to meet its financial obligations as and when required.
The annual and interim condensed financial statements have been prepared assuming that the Company will continue as a going concern. Accordingly, the annual and interim condensed financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, the amounts and classification of liabilities, or any other adjustments that might result in the event the Company is unable to continue as a going concern.
BPGIC has a limited operating history and this proxy statement/prospectus contains limited financial information, which makes it particularly difficult for a potential investor to evaluate BPGIC’s financial performance and predict its future prospects.
BPGIC commenced operations of Phase I in late Fourth Quarter 2017 and began operating it at full capacity on April 1, 2018. As a result, although BPGIC’s Senior Management and site teams have up to thirty years of relevant international and industry experience, BPGIC has only limited operating results to demonstrate its ability to operate its business on which a potential investor may rely to evaluate BPGIC’s business and prospects. Accordingly, the financial information included in this proxy statement/prospectus may be of limited use in assessing the business. In addition, this proxy statement/prospectus does not contain a comparison of BPGIC’s results of operations across full fiscal year periods, as BPGIC did not commence full-capacity operations of Phase I until April 1, 2018. BPGIC is also subject to the business risks and uncertainties associated with any new business, including the risk that it will not achieve its operating objectives and business strategy. BPGIC’s limited operating history increases the risks and uncertainties that potential investors face in making an investment in the Ordinary Shares and warrants and the lack of historic information may make it particularly difficult for a potential investor to evaluate BPGIC’s financial performance and forecast reliable long-term trends.
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If BPGIC is unable to make acquisitions on economically acceptable terms, its future growth would be limited, and any acquisitions it makes could adversely affect its business, financial condition and results of operations.
As discussed further in “Business of BPGIC — Strategy”, one of BPGIC’s medium to long term strategies is to potentially grow its business through the acquisition and development of oil storage terminals globally. BPGIC’s strategy to grow its business is dependent on its ability to make acquisitions that improve its financial condition. If BPGIC is unable to make acquisitions from third parties because it is unable to identify attractive acquisition candidates or negotiate acceptable purchase contracts, it is unable to obtain financing for these acquisitions on economically acceptable terms or it is outbid by competitors, its future growth will be limited. Furthermore, even if BPGIC does consummate acquisitions that it believes will be accretive, they may in fact harm its business, financial condition and results of operations. Any acquisition involves potential risks, some of which are beyond BPGIC’s control, including, among other things:
• inaccurate assumptions about revenues and costs, including synergies;
• an inability to successfully integrate the various business functions of the businesses BPGIC acquires;
• an inability to hire, train or retain qualified personnel to manage and operate BPGIC’s business and newly acquired assets;
• an inability to comply with current or future applicable regulatory requirements;
• the assumption of unknown liabilities;
• limitations on rights to indemnity from the seller;
• inaccurate assumptions about the overall costs of equity or debt;
• the diversion of management’s attention from other business concerns;
• unforeseen difficulties operating in new product areas or new geographic areas; and
• customer or key employee losses at the acquired businesses.
If BPGIC consummates any future acquisitions, its business, financial condition and results of operations may change significantly, and holders of Ordinary Shares will not have the opportunity to evaluate the economic, financial and other relevant information that BPGIC will consider in determining the application of these funds and other resources.
BPGIC is subject to a wide variety of regulations and may face substantial liability if it fails to comply with existing or future regulations applicable to its businesses or obtain necessary permits and licenses pursuant to such regulations.
BPGIC’s operations are subject to extensive international, national and local laws and regulations governing, amongst other things, the loading, unloading and storage of hazardous materials, environmental protection and health and safety. BPGIC’s ability to operate its business is contingent on its ability to comply with these laws and regulations and to obtain, maintain and renew as necessary related approvals, permits and licences from governmental agencies and authorities in Fujairah and the UAE. Because of the complexities involved in ensuring compliance with different and sometimes inconsistent national and international regulatory regimes, BPGIC cannot assure investors that it will remain in compliance with all the regulatory and licensing requirements imposed on it by each relevant jurisdiction. BPGIC’s failure to comply with all applicable regulations and obtain and maintain requisite certifications, approvals, permits and licences, whether intentional or unintentional, could lead to substantial penalties, including criminal or administrative penalties or other punitive measures, result in revocation of its licences and/or increased regulatory scrutiny, impair its reputation, subject it to liability for damages, or invalidate or increase the cost of the insurance that it maintains for its business. Additionally, BPGIC’s failure to comply with regulations that affect its staff, such as health and safety regulations, could affect its ability to attract and retain staff. BPGIC could also incur civil liabilities such as abatement and compensation for loss in amounts in excess of, or that are not covered by, its insurance. For the most serious violations, BPGIC could also be forced to suspend operations until it obtains such approvals, certifications, permits or licences or otherwise brings its operations into compliance.
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In addition, changes to existing regulations or tariffs or the introduction of new regulations or licensing requirements are beyond BPGIC’s control and may be influenced by political or commercial considerations not aligned with its interests. Any such changes to regulations, tariffs or licensing requirements could adversely affect BPGIC’s business by reducing its revenue, increasing its operating costs or both and BPGIC may be unable to mitigate the impact of such changes.
Finally, any expansion of the scope of the regulations governing BPGIC’s environmental obligations, in particular, would likely involve substantial additional costs, including costs relating to maintenance and inspection, development and implementation of emergency procedures and insurance coverage or other financial assurance of BPGIC’s ability to address environmental incidents or external threats. If BPGIC is unable to control the costs involved in complying with these and other laws and regulations, or pass the impact of these costs on to users through pricing, BPGIC’s business, financial condition and results of operations could be adversely affected.
Any material reduction in the quality or availability of the Port of Fujairah’s facilities could have a material adverse effect on BPGIC’s business, financial condition and results of operations.
BPGIC is dependent on the Port of Fujairah to operate and maintain the Port’s facilities at an appropriate standard and BPGIC is dependent on such facilities, including the berths, the VLCC jetty and the associated pipelines, to operate its business. Any interruptions or reduction in the capabilities or availability of these facilities would result in reduced volumes being transported through the BPGIC Terminal. Reductions of this nature are beyond BPGIC’s control. If the utilization or the costs to BPGIC or users to deliver oil products through these facilities were to significantly increase, BPGIC’s profitability could be reduced. The Port of Fujairah’s facilities are subject to deterioration or damage, due to potential declines in the physical condition of its facilities and ship collisions, among other things. Any failure of the Port of Fujairah to carry out necessary repairs, maintenance and expansions of its facilities and any resulting interruptions for access to its facilities could adversely affect BPGIC’s business volumes, cause delays in the arrival and departure of oil tankers or disruptions to BPGIC’s operations, in part or in whole, may subject BPGIC to liability or impact its brand and reputation and may otherwise hinder the normal operation of the BPGIC Terminal, which could have a material adverse effect on its business, financial condition and results of operations.
BPGIC is subject to restrictive covenants in its Financing Facilities that may limit its operating flexibility and, if it defaults under its covenants, it may not be able to meet its payment obligations.
BPGIC entered into the Financing Facilities, secured Shari’a compliant Istisna’ and Murabaha financing arrangements of USD 84.6 million (the Phase I Construction Facility) and of USD 11.1 million (the Phase I Admin Building Facility) to fund a portion of the construction costs of Phase I, of USD 3.5 million (the Phase I Short Term Financing Facility) to settle certain amounts due under the Phase I Construction Facilities and of USD 95.3 million (the Phase II Financing Facility) to fund a portion of the capital expenditure in respect of Phase II. The Financing Facilities contain covenants limiting BPGIC’s ability to incur indebtedness, grant liens, engage in transactions with affiliates and make distributions on or redeem or repurchase ordinary shares. The facilities also contain covenants requiring BPGIC to maintain certain financial ratios, including a facility service coverage ratio of greater than 1.50:1. BPGIC’s ability to comply with these restrictions and covenants may be affected by events beyond its control, including prevailing economic, financial and industry conditions. If BPGIC is unable to comply with these restrictions and covenants, a significant portion of the indebtedness under the Financing Facilities may become immediately due and payable. BPGIC might not have, or be able to obtain, sufficient funds to make these accelerated payments. In addition, BPGIC’s obligations under the Financing Facilities are secured by substantially all of BPGIC’s assets, and if BPGIC is unable to repay the indebtedness under the Financing Facilities, the lenders could seek to foreclose on such assets, which would adversely affect BPGIC’s business, financial condition and results of operations. The Financing Facilities also have cross default provisions that apply to any other material indebtedness that BPGIC may have. For more information regarding the Financing Facilities, see “BPGIC’s Management’s Discussion and Analysis of Financial Condition and Results of Operation — Liquidity and Capital Resources — Indebtedness”.
In preparation for the Business Combination, BPGIC has hired, and Pubco will hire, new management personnel and implemented a number of corporate governance and financial reporting procedures and other policies, processes, systems and controls which have a limited operating history.
In preparation for the Business Combination, BPGIC has hired new management personnel, including a new chief financial officer, and implemented a number of corporate governance and financial reporting procedures and other policies, processes, systems and controls to comply with the requirements for a foreign private issuer on NASDAQ.
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While Pubco believes it will be in full compliance with these requirements, it does not have a long track record on which it can assess the performance and effectiveness of these policies, processes, systems and controls or the analysis of their outputs. Any material inadequacies, weaknesses or failures in BPGIC’s policies, processes, systems and controls could have a material adverse effect on BPGIC’s business, financial condition and results of operations.
The fixed cost nature of BPGIC’s operations could result in lower profit margins if certain costs were to increase and BPGIC were not able to offset such costs with sufficient increases in its storage or ancillary service fees or the Principal Customers’ utilization of BPGIC’s ancillary services.
BPGIC’s fixed costs are paid for with the fixed storage fees it receives or will receive, as the case may be, from the Principal Customers. BPGIC expects that a large portion of its future expenses related to the operation of the BPGIC Terminal will be relatively fixed because the costs for full-time employees, rent in connection with the BPGIC Terminal Land Lease, maintenance, depreciation, utilities and insurance generally do not vary significantly with changes in users’ needs. However, BPGIC expects that its profit margins could change if its costs change.
In particular, if wages in the region’s oil storage industry were to increase, BPGIC may need to increase the levels of its employee compensation more rapidly than in the past to remain competitive or keep up with increases in general price levels or inflation in the UAE and in Fujairah. If wage costs were to increase at a greater rate than the Principal Customers’ utilization of BPGIC’s ancillary services, then such increased wage costs may reduce BPGIC’s profit margins.
The Phase I Customer Agreement provides that every two years, BPGIC may elect to review and seek to amend its storage and ancillary services fees with the Phase I & II Customer. The Phase I Customer Agreement provides that the outcome of this review can result only in either an increase in rates or no change. As such, if wages were to increase, BPGIC may yield lower margins for a period of time before it is able to review and amend its storage and ancillary service fees. Furthermore, if the Phase I & II Customer does not agree to increase the storage and ancillary service fees, or if the increase is insufficient, then BPGIC may not be able to maintain its profit margins.
The Refinery and Services Agreement provides that every two years, BPGIC may elect to seek to amend its fee thereunder. The Refinery and Service Agreement provides that the outcome of this amendment can result only in either an increase in rate or no change from the contracted price. As such, if wages were to increase, BPGIC may yield lower margins for a period of time before it is able to amend its storage fees. Furthermore, if the increase is insufficient, or if Sahara does not agree to increase the fees, then BPGIC may not be able to maintain its profit margins.
The Phase II Customer Agreement provides that every two years, BPGIC may elect to seek to amend its storage fee to the applicable market price. The Phase II Customer Agreement provides that the outcome of this amendment can result only in either an increase in rate or no change from the contracted floor price. As such, if wages were to increase, BPGIC may yield lower margins for a period of time before it is able to amend its storage fees. Furthermore, if the increase is insufficient, or the Phase I & II Customer does not agree to increase the fees, then BPGIC may not be able to maintain its profit margins.
If BPGIC is unable to maintain its margins, it could have a material adverse effect on its business, financial condition and results of operations.
BPGIC is currently reliant on the Phase I Customer Agreement for all of its revenues, and the expiration or termination of the Phase I Customer Agreement and the failure to find a replacement for the Phase I & II Customer would have a material adverse effect on BPGIC’s business, financial condition and results of operations.
BPGIC entered into a four-year lease and service agreement with the Phase I & II Customer, which extends automatically for an additional five years unless terminated by either party prior to the scheduled expiration date. Pursuant to the Phase I Customer Agreement, the Phase I & II Customer has leased all 14 oil storage tanks in Phase I and BPGIC is currently reliant on it for all its revenues. BPGIC will remain reliant on the Phase I & II Customer for a substantial portion of its revenue notwithstanding Sahara’s anticipated lease of 5 of the 14 oil storage tanks in Phase I and related use of ancillary services.
Even when the Sahara Refinery and Phase II become operational, a significant part of BPGIC’s revenue will come from the fees it receives under the Phase I Customer Agreement. Upon the expiration or termination of the Phase I Customer Agreement, BPGIC would be able to enter into lease and service agreements with one or more third parties. Due to Phase I’s strong performance track record to date, and BPGIC’s reputation and business development
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efforts, including through inspections from potential users, BPGIC believes that it has developed strong relationships with several oil traders that could potentially utilize the services of Phase I. While BPGIC believes there would be sufficient demand for the oil storage and ancillary services at Phase I based on current industry dynamics and BPGIC’s continuing efforts to build relationships with potential users, there can be no assurance that BPGIC would be able to locate one or more third parties to enter into lease and service agreements with BPGIC and/or that BPGIC would be able to obtain agreements for a comparable amount of utilization of Phase I’s oil storage and ancillary services at comparable or more favorable pricing and/or terms. Additionally, BPGIC may incur substantial costs if it suffers delays in locating a third party or if modifications to Phase I are required by a new agreement. The occurrence of any one or more of these events would have a material adverse effect on BPGIC’s business, financial condition and results of operations.
BPGIC is dependent on its IT and operational systems, which may fail or be subject to disruption.
BPGIC relies on the proper functioning of its information technology, including the information technology systems in BPGIC’s operation control room, databases, computer systems, telecommunication networks and other infrastructure in its day-to-day operations. BPGIC’s business continuity procedures and measures may not anticipate, prevent or mitigate a network failure or disruption and may not protect against an incident in the limited event that there is no alternative system or backed-up data in place. The nature of BPGIC’s operations and the variety of systems in place to support its business can also present challenges to the efficiency of its information technology networks. BPGIC’s systems are vulnerable to interruptions or damage from a number of factors, including power loss, network and telecommunications failures, data corruption, computer viruses, security breaches, natural disasters, theft, vandalism or other acts, although the BPGIC Terminal’s operational system has limited vulnerability to computer viruses or security breaches because the systems are fully isolated. BPGIC is reliant on third party vendors to supply and maintain much of its information technology. In particular, as is the case for many of BPGIC’s competitors, a significant percentage of its core operations currently use information and technology systems provided by ABB Group and Intelex Technologies, Inc., which BPGIC relies on for related support and upgrades. BPGIC may experience delay or failure in finding a suitable replacement in the event that one or more of the third-party vendors ceases operations or becomes otherwise unable or unwilling to meet BPGIC’s needs.
Although the BPGIC Terminal, based on the nature of BPGIC’s business, is configured to keep its systems operational under abnormal conditions, including with respect to business processes and procedures, any failure or breakdown in these systems could interrupt BPGIC’s normal business operations and result in a significant slowdown in operational and management efficiency for the duration of such failure or breakdown. Any prolonged failure or breakdown could dramatically affect BPGIC’s ability to offer services to users, which could have a material adverse effect on BPGIC’s business, financial condition and results of operations.
Beyond Phase II, expansion of BPGIC’s business may require substantial capital investment, and BPGIC may not have sufficient capital to make future capital expenditures and other investments as it deems necessary or desirable.
BPGIC operates in a capital-intensive industry that requires a substantial amount of capital and other long-term expenditures, including those relating to the expansion of existing terminal facilities and the development and acquisition of new terminal facilities. BPGIC has several plans for expansion beyond Phase II that may require significant capital investment. For example, BPGIC plans to establish an external connection to the local power grid in due course, which would provide the BPGIC Terminal with an additional source of power if necessary.
In addition, as discussed further in “Business of BPGIC — Strategy”, in July 2019, BPGIC entered into a Land Lease Initial Agreement with FOIZ to lease a plot of land that has a total area of approximately 450,000 m2 on which it would build a new oil storage facility. If the parties proceed to enter a final land lease, BPGIC plans to engage MUC, the same advisor that designed the facilities for the Port of Fujairah and the BPGIC Terminal, to create several proposals for the design of Phase III. If BPGIC decides to construct a new facility, it would require substantial capital investment, and BPGIC may not have sufficient capital to make the capital expenditures and other investments as it deems necessary or desirable.
To meet the financing requirements for such capital investments, BPGIC may have to utilize a combination of internally generated cash and external borrowings, including banking and capital markets transactions. BPGIC may also seek, in the event that further material expansion opportunities arise in the future, to obtain additional funding from the capital markets to further enhance its funding position. BPGIC’s ability to arrange external financing and the
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cost of such financing is dependent on numerous factors, including its future financial condition, general economic and capital market conditions, interest rates, credit availability from banks or other lenders, investor confidence in BPGIC, applicable provisions of tax and securities laws and political and economic conditions in any relevant jurisdiction. Moreover, the decline in global credit markets and reduced liquidity may affect BPGIC’s ability to secure financing on commercially reasonable terms, if at all. BPGIC cannot provide any assurance that it will be able to arrange any such external financing on commercially reasonable terms, if at all, and it may be required to secure any such financing with a lien over its assets or agree to contractual limitations on its business. If BPGIC is unable to generate or obtain funds sufficient to make necessary or desirable capital expenditure and other investments, it may be unable to grow its business, which may have a material adverse effect on its business, financial condition and results of operations.
Beyond Phase II, the aforementioned projects and the projects described in “Business of BPGIC — Strategy”, BPGIC may consider additional projects in the future, which would be subject to the same risks mentioned above.
Increases in interest rates, to the extent BPGIC has not hedged its interest rate exposure, could adversely affect BPGIC’s business, financial condition and results of operations and its ability to issue equity or incur debt for acquisitions or other purposes.
Interest rates may increase in the future. As a result, BPGIC’s floating interest rates on its Financing Facilities or future credit facilities and debt offerings could be higher than current levels, causing BPGIC’s financing costs to generally increase to the extent BPGIC has not fully hedged its interest rate risk exposure. Although BPGIC has entered into a contractual arrangement with FAB to hedge the interest rates for BPGIC’s interest payments coming due from June 28, 2019 to June 30, 2023 under the Phase I Financing Facilities, to the extent BPGIC does not hedge its interest rate exposure resulting from other borrowings, including the Phase II Financing Facility, or such hedging arrangements prove ineffective, a rising interest rate environment could have an adverse effect on BPGIC’s business, financial condition and results of operations and its ability to issue equity or incur debt for acquisitions or other purposes.
Risks Related to Doing Business in Countries in Which BPGIC Operates
BPGIC is subject to political and economic conditions in Fujairah and the UAE.
All of BPGIC’s operations are located in the UAE. BPGIC’s operations in Fujairah are located near an area of strategic economic and military importance for the entire region. As such, BPGIC’s future business may be affected by the financial, political and general economic conditions prevailing from time to time in the region and the UAE.
Although economic growth rates in the UAE remain above those of many more developed, as well as regional, markets, the UAE has experienced slower economic growth in recent years, following the downturn experienced as a result of the global financial crisis in 2008 and the sharp decline in oil prices in recent years, which remain volatile and below historic highs. There can be no assurance that economic growth or performance in Fujairah or the UAE, in general, will be sustained. The UAE’s wealth remains largely based on oil and gas. Despite the UAE being viewed as being less vulnerable than some of its Gulf Cooperation Council (“GCC”) neighbors, due to the growth in the non-oil sector and the sizeable wealth of the government of Abu Dhabi, fluctuations in energy prices have an important bearing on economic growth. To the extent that economic growth or performance in the UAE subsequently declines, BPGIC’s business, financial condition and results of operations may be adversely affected. In addition, the implementation by the governments of the UAE of restrictive fiscal or monetary policies or regulations, including in respect of interest rates, or new legal interpretations of existing regulations and the introduction of taxation or exchange controls could have a material adverse effect on BPGIC’s business, financial condition, results of operations and prospects.
While the UAE enjoys domestic political stability and generally healthy international relations, since early 2011 there has been political unrest in a range of countries in the MENA region, including Algeria, Bahrain, Egypt, Iraq, Libya, Morocco, Oman, Saudi Arabia, Syria, Tunisia and Yemen. This unrest has ranged from public demonstrations to, in extreme cases, armed conflict and civil war and has given rise to a number of regime changes and increased political uncertainty across the region. The MENA region is currently subject to a number of armed conflicts including those in Yemen (in which the UAE armed forces, along with a number of other Arab states, are involved), Syria and Iraq as well as the multinational conflict with Islamic State.
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It is not possible to predict the occurrence of events or circumstances such as terrorism, war or hostilities, or more generally the financial, political and economic conditions prevailing from time to time, or the impact of such occurrences or conditions, and no assurance can be given that BPGIC would be able to sustain its current profit levels if adverse financial, political or economic events or circumstances were to occur. A general downturn or instability in certain sectors of the UAE or the regional economy, or political upheaval therein, could have an adverse effect on BPGIC’s business, results of operations and financial condition. Investors should also note that BPGIC’s business and financial performance could be adversely affected by political, economic or related developments both within and outside the MENA region because of interrelationships within the global financial markets.
On June 5, 2017, three GCC countries, Saudi Arabia, the UAE and Bahrain, as well as Egypt and Yemen, severed diplomatic ties with Qatar, cut trade and transport links and imposed sanctions on Qatar. The stated rationale for such actions was Qatar’s support of terrorist and extremist organisations and Qatar’s interference in the internal affairs of other countries. There can be no assurance as to when diplomatic relations will be restored or air, land and sea connections reopened with Qatar. It is also not currently possible to predict the outcome of this dispute, and any significant escalation or continuation of the current situation for an extended period could negatively affect Fujairah and the UAE.
In the past, political conflicts have results in attacks on vessels, mining of waterways and other efforts to disrupt shipping. Continuing conflicts, instability and other recent developments in the Middle East and elsewhere, including recent attacks involving vessels and vessel seizures in the Strait of Hormuz and off the coast of Gibraltar, and the presence of U.S. or other armed forces in Afghanistan and Syria, may lead to additional acts of terrorism or armed conflict around the world, and our customer’s vessels may face higher risks of being attacked or detained. BPGIC’s business and financial performance would be adversely affected by any reduction in use of the Port of Fujairah as a result of such tensions or conflict.
Prospective investors should also be aware that investments in emerging markets, such as the UAE, are subject to greater risks than those in more developed markets. The economy of the UAE, like those of many emerging markets, has been characterised by significant government involvement through direct ownership of enterprises and extensive regulation of market conditions, including foreign investment, foreign trade and financial services. While the policies of the local and central governments of the UAE generally resulted in improved economic performance in previous years, there can be no assurance that these levels of performance can be sustained.
Recent geopolitical developments have increased the risk that the region in which BPGIC operates could be involved in an escalating conflict that could have a material adverse effect on our business, financial condition and results of operations.
On September 14, 2019, certain attacks on an oil processing plant and an oil field in Saudi Arabia took place, which, according to preliminary reports, significantly disrupted the oil production capacity of Saudi Arabia, and could cause short and/or long term geopolitical strife. The government of Saudi Arabia and the United States have reported their belief that the attacks were conducted by Iran or its proxy (possibly Yemen). Whether or not these reports are accurate, rising tensions in the region could significantly place the extraction, production and delivery of oil produced in the region at risk. Further, because the UAE is also involved in the conflict in Yemen, it is possible that the perpetrators of the attacks may seek to launch a similar attack against the UAE. Should such an attack occur, or should rising tension in the region cause a conflict, the ports, pipelines and terminal facilities of the UAE could be put at risk and BPGIC’s operations could be materially and adversely affected.
BPGIC’s business operations could be adversely affected by terrorist attacks, natural disasters or other catastrophic events beyond its control.
BPGIC’s business operations could be adversely affected or disrupted by terrorist attacks, natural disasters (such as floods, fires or significant storms) or other catastrophic or otherwise disruptive events, including changes to predominant natural weather, sea and climatic patterns, piracy, sabotage, insurrection, military conflict or war, riots or civil disturbance, radioactive or other material environmental contamination, an outbreak of a contagious disease, or changes to sea levels, which may adversely affect global or regional trade volumes or user demand for oil products transported to or from affected areas, and denial of the use of any railway, port, airport, shipping service or other means
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of transport and disrupt users’ logistics chains. In addition, BPGIC may be exposed to extreme weather conditions such as severe heat, flooding, rain or wind conditions, which could disrupt activities at the BPGIC Terminal and the Port of Fujairah. Several of BPGIC’s competitors in the Fujairah oil zone region have experienced issues with flooding in the past due to the region’s close proximity to the Al Hajar mountainous region, where floods sometimes occur when a significant amount of rain mixes with the dirt from the mountains and subsequently clogs the region’s drainage system. Although the BPGIC Terminal has been designed with sufficient drainage capabilities to handle certain flooding scenarios and the Phase I oil storage tanks have been constructed to withstand high levels of radiation and fire in accordance with NFPA standards, if the flooding, radiation or fire is significantly severe, there can be no assurance BPGIC’s business operations would be unaffected by it.
The occurrence of any of these events at the BPGIC Terminal or in Fujairah may reduce BPGIC’s business volumes, cause delays in the arrival and departure of oil tankers or disruptions to its operations, in part or in whole, may increase the costs associated with storage, heating or blending activities, may subject BPGIC to liability or impact its brand and reputation and may otherwise hinder the normal operation of the BPGIC Terminal, which could substantially impair BPGIC’s growth prospects and could have a material adverse effect on its business, financial condition and results of operations. Although BPGIC has insurance in place to cover certain of these events if they occur at the BPGIC Terminal, including sabotage and terrorism insurance, there can be no assurance that such insurance will be sufficient to cover all costs and lost business volumes associated with such events.
Climate change legislation or regulations restricting emissions of greenhouse gases could result in increased operating and capital costs and reduced demand for BPGIC’s storage services.
There is a growing belief that emissions of greenhouse gases, or GHGs, such as carbon dioxide and methane, may be linked to climate change. Climate change and the costs that may be associated with its impacts and the regulation of GHGs have the potential to affect BPGIC’s business and the businesses of users in many ways, including negatively impacting the costs BPGIC incurs in providing its services and the demand for its services (due to change in both costs and weather patterns).
In February 2005, the Kyoto Protocol to the United Nations Framework Convention on Climate Change, or the Kyoto Protocol, entered into force. The UAE ratified the Kyoto Protocol in 2005. The first commitment period of the Kyoto Protocol ended in 2012, but it was nominally extended past its expiration date with a requirement for a new legal construct to be put into place by 2015. To that end, in December 2015, over 190 countries, including the UAE, reached an agreement to reduce global greenhouse gas emissions. From the time BPGIC completed construction of Phase I on November 19, 2017, its facilities have been in full compliance with the latest requirements. The Paris Agreement, which will enter into force in 2020, will require governments to take legislative and regulatory measures to reduce emissions that are thought to be contributing to climate change. While BPGIC has already taken certain measures to reduce emissions of volatile organic compounds, additional measures might become necessary, which could increase operating costs. Moreover, BPGIC’s business might be impacted by changes in demand of the oil products that it stores to the extent users are impacted by such regulations.
Although it is not possible at this time to accurately estimate how potential future laws or regulations addressing GHG emissions would impact BPGIC’s business, any future local, national, international or federal laws or implementing regulations that may be adopted to address GHG emissions could possibly require BPGIC to incur increased operating costs and could adversely affect demand for the oil or oil products it stores. The potential increase in the costs of BPGIC’s operations resulting from any legislation or regulation to restrict emissions of GHGs could include new or increased costs to operate and maintain its facilities, install new emission controls on its facilities, acquire allowances to authorize its greenhouse gas emissions, pay any taxes related to its GHG emissions and administer and manage a GHG emissions program. Moreover, incentives to conserve energy or use alternative energy sources could reduce demand for BPGIC’s services. BPGIC cannot predict with any certainty at this time how these possibilities may affect its operations. Many scientists have concluded that increasing concentrations of GHGs in the Earth’s atmosphere may produce climate change that could have significant physical effects, such as increased frequency and severity of storms, droughts, and floods and other climatic events; if such effects were to occur, they could have an adverse effect on BPGIC’s business, financial condition and results of operations.
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BPGIC may incur significant costs to maintain compliance with, or address liabilities under, environmental, health and safety regulation applicable to its business.
BPGIC’s business operations are subject to UAE, national, state and local environmental laws and regulations concerning, among other things, the management of hazardous substances, the storage and handling of hazardous waste, the control of the emission of vapor into the air and water discharges, the remediation of contaminated sites and employee health and safety. These laws and regulations are complex and subject to change. BPGIC could incur unexpected costs, penalties and other civil and criminal liability if it fails to comply with applicable environmental or health and safety laws. Although BPGIC has installed impermeable lining over the ground soil throughout the terminal’s tank farm area and any other area where oil leakage could occur and potentially reach the ground soil, there can be no assurance in the unlikely event of an accidental leak, release or spill of oil products or other products at the BPGIC Terminal site, that BPGIC will not experience operational disruptions or incur costs related to cleaning and disposing waste and oil products, remediating ground soil or groundwater contamination, paying for government penalties, addressing natural resource damage, compensating for human exposure or property damage, or a combination of these measures. Although BPGIC believes it has adequate insurance in place to insure against the occurrence of any of the foregoing events, there can be no assurance BPGIC’s insurance would be sufficient to cover all potential costs. Therefore, the occurrence of any of the foregoing events could have a material adverse effect on BPGIC’s business, financial condition and results of operations.
Furthermore, although BPGIC monitors the exposure of its employees, neighbors and others to risks connected with its operations, future health claims of its employees or other such persons, caused by past, present or future exposure cannot be excluded. BPGIC could be subject to claims by government authorities, individuals and other third parties seeking damages for alleged personal injury or property damage resulting from hazardous substance contamination or exposure caused by its operations, facilities or products, and BPGIC’s insurance may not be sufficient to cover these claims.
In addition, compliance with future environmental or health and safety laws and regulations may require significant capital or operational expenditures or changes to BPGIC’s operations.
BPGIC could be adversely affected by violations of anti-corruption laws or economic sanctions programs.
Currently, all of BPGIC’s operations are conducted in the UAE. BPGIC is committed to doing business in accordance with all applicable laws and its own code of ethics. BPGIC is subject, however, to the risk that users, BPGIC or their respective officers, directors, employees and agents may take actions determined to be in violation of anti-corruption laws. In addition, as a result of the Business Combination, BPGIC will be subject for the first time to the U.S. Foreign Corrupt Practices Act. Any violations of applicable anti-corruption laws could result in substantial civil and criminal penalties, and could have a damaging effect on BPGIC’s reputation and business relationships. Furthermore, BPGIC is subject to economic sanctions programs, including those administered by the United Nations Security Council, the United Arab Emirates and the United States. Although BPGIC has policies and procedures designed to ensure compliance with applicable sanctions programs, there can be no assurance that such policies and procedures will be sufficient or that users, BPGIC, Pubco or their respective officers, directors, employees and agents will not take actions in violation of BPGIC’s policies and procedures (or otherwise in violation of the relevant sanctions regulations) for which they, Pubco or BPGIC may ultimately be held responsible.
Tax liabilities associated with indirect taxes on the oil products BPGIC services could result in losses to it.
In Fujairah, the oil products that BPGIC stores and blends for the Phase I & II Customer in the Phase I facility are subject to numerous duties or taxes that are not based on income, sometimes referred to as “indirect taxes”, including import duties, excise duties, environmental levies and value-added taxes. Once Phase II becomes operational, the oil products that BPGIC stores and blends for the Phase I & II Customer in the Phase II facility will likely be subject to similar “indirect taxes”. Under the terms and conditions of the respective Principal Customer Agreements, BPGIC is entitled to pass on such indirect taxes to the Phase I & II Customer.
However, changes to existing regulations for indirect taxes or the introduction of new regulations are beyond BPGIC’s control and may be influenced by political or commercial considerations not aligned with its interests. Any such regulations could adversely affect BPGIC’s business by increasing its costs to the extent it is unable to pass on such indirect taxes to the Phase I & II Customer, and as a result, adversely affect its business, financial condition and results of operations.
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Changes to VAT law in the UAE may have an adverse effect on BPGIC’s business, financial condition and results of operations.
On August 23, 2017, the government of the UAE published Federal Decree-Law No. 8 of 2017 (the “VAT Law”) on value added tax (“VAT”) which came into effect on January 1, 2018. Cabinet Decision No. 52 of 2017 on the executive regulations of the VAT Law, issued on November 26, 2017, and Cabinet Decision No. 59 of 2017 on designated zones for the purposes of the VAT Law, issued on December 28, 2017, provide that certain designated zones in the UAE are subject to special VAT treatment. Subject to it continuing to meet the conditions set out in the executive regulations to the VAT Law, the area in which BPGIC operates is a designated zone for the purposes of the VAT Law and therefore BPGIC benefits from certain exemptions under the VAT Law. There is no guarantee that the free zone in which BPGIC operates will remain a designated zone in the future. If the area in which BPGIC operates loses its designation as a designated zone or any change is made to the applicable rate on the supply of services for the area in which BPGIC operates, BPGIC’s business, financial condition and results of operations may be adversely affected.
BPGIC’s business may be materially adversely affected if the US dollar/UAE dirham-tied exchange rate were to be removed or adjusted.
All of BPGIC’s current revenues are received in US dollars and all of its operating costs are incurred in UAE dirhams. All of BPGIC’s current revenues and operating costs derive from its operations in the UAE. Although the US dollar/UAE dirham exchange rate is currently fixed, there can be no assurance that the government of the UAE will not de-peg the UAE dirham from the US dollar in the future. Alternatively, the existing fixed rate may be adjusted in a manner that increases the costs of certain equipment used in BPGIC’s business or decreases BPGIC’s receipt of payments from users. Any adjustment of the fixed rate or de-pegging of the UAE dirham from the US dollar in the future could cause BPGIC’s operations and reported results of operations and financial condition to fluctuate due to currency translation effects, which could have a material adverse effect on its business, financial condition and results of operations.
BPGIC’s business may be materially adversely affected by unlawful or arbitrary governmental action.
Governmental authorities in the UAE have a high degree of discretion and, at times, act selectively or arbitrarily, without hearing or prior notice, and sometimes in a manner that is contrary to law or influenced by political or commercial considerations. Such governmental action could include, among other things, the expropriation of property without adequate compensation or the forcing of business acquisitions, combinations or sales. Any such action taken may have a material adverse effect on BPGIC’s business, financial condition and results of operations.
Legal and regulatory systems may create an uncertain environment for investment and business activities.
The UAE’s institutions and legal and regulatory systems are not yet as fully matured and as established as those of Western Europe and the United States. Existing laws and regulations may be applied inconsistently with anomalies in their interpretation or implementation. Such anomalies could affect BPGIC’s ability to enforce its rights under its contracts or to defend its business against claims by others. Changes in the UAE legal and regulatory environment, including in relation to foreign ownership restrictions, labor, welfare or benefit policies or in tax regulations could have a material impact on BPGIC’s business, financial condition and results of operations.
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Twelve Seas believes that some of the information in this proxy statement/prospectus constitutes forward-looking statements. You can identify these statements by forward-looking words such as “may,” “expect,” “anticipate,” “contemplate,” “believe,” “estimate,” “intends,” and “continue” or similar words. You should read statements that contain these words carefully because they:
• discuss future expectations;
• contain projections of future results of operations or financial condition; or
• state other “forward-looking” information.
Twelve Seas believes it is important to communicate its expectations to its security holders. However, there may be events in the future that Twelve Seas is not able to predict accurately or over which it has no control. The risk factors and cautionary language discussed in this proxy statement/prospectus provide examples of risks, uncertainties and events that may cause actual results to differ materially from the expectations described by Twelve Seas or BPGIC in such forward-looking statements, including among other things:
• the number and percentage of its Public Shareholders voting against the Business Combination Proposal and/or seeking Redemption;
• the occurrence of any event, change or other circumstances that could give rise to the termination of the Business Combination Agreement;
• Pubco’s ability to maintain the listing of its securities on NASDAQ following the Business Combination;
• changes adversely affecting the business in which BPGIC is engaged;
• management of growth;
• general economic conditions;
• BPGIC’s business strategy and plans; and
• the result of future financing efforts.
Pubco and BPGIC believe that some of the information in this proxy statement/prospectus contains “forward-looking statements”. Forward-looking statements can be identified by words such as: “forecast,” “anticipate,” “intend,” “plan,” “target,” “seek,” “believe,” “project,” “estimate,” “expect,” “future,” “likely,” “outlook,” “will” and other similar expressions that predict or indicate future events or trends or that are not statements of historical matters. Such forward looking statements include projected financial information. Examples of forward-looking statements include, among others, statements we make regarding:
• projected completion, start of operations, operating capacity and capabilities, and operating results, such as revenue growth, earnings, and EBITDA, at facilities that are not yet constructed;
• our future market position and growth prospects;
• expected conditions in the local, regional and global oil markets;
• expected operating results, such as revenue growth, earnings, and EBITDA;
• anticipated levels of capital expenditures and uses of capital for fiscal years 2019 and 2020;
• expected future supply and demand of oil; and
• strategies for customer retention, growth, product development, market position, financial results, reserves and risk management.
Such forward-looking statements with respect to revenues, earnings, performance, strategies, prospects and other aspects of the businesses of BPGIC and Pubco after completion of the proposed business combination are neither historical facts nor assurances of future performance. Instead, they are based only on BPGIC’s and/or Pubco’s current
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beliefs, expectations and assumptions regarding the future of the business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions that are subject to risks and uncertainties. The risk factors and cautionary language discussed in this proxy statement/prospectus provide examples of risks, uncertainties and events that may cause actual results to differ materially from the expectations described by Twelve Seas, BPGIC, or Pubco in such forward-looking statements, including among other things:
• non-payment or non-performance by BPGIC’s Principal Customers or end-users;
• changes in customer demand with respect to ancillary services provided by BPGIC including throughput, blending, heating, and intertank transfers;
• a decline or disruption of supply or demand of oil and gas;
• higher fuel taxes or other governmental or regulatory actions that increase the price of gasoline or diesel;
• changes to applicable regulations or new regulations, including those affecting the refined petroleum products serviced by BPGIC such as climate change legislation and regulations restricting the emission of greenhouse gases;
• the extent to which BPGIC is successful in developing new long-term relationships with customers or retaining existing ones in the competitive oil storage market in the Port of Fujairah and other ports;
• BPGIC’s ability to effectively manage the risks and expenses associated with the construction of Phase II and other growth and expansion projects;
• the results of future financing efforts;
• changes in expectations of future prices for refined petroleum products;
• accidents involving the handling of oil products at the BPGIC Terminal;
• disruptions to BPGIC’s technology network including computer systems and software;
• natural events such as severe weather, fires, floods and earthquakes or man-made or other disruptions of BPGIC’s operating systems, structures, or equipment or of the Port of Fujairah’s facilities;
• political and economic conditions in Fujairah and the United Arab Emirates, as well as the occurrence of hostilities, political instability or catastrophic events in Fujairah, the United Arab Emirates and the MENA region;
• changes in labor costs;
• unlawful or arbitrary governmental action;
• the failure of the parties to consummate the Transactions, including as a result of the occurrence of any event, change or other circumstances that could give rise to the termination of the Business Combination Agreement;
• the outcome of any legal proceedings that may be instituted against BPGIC, Pubco or Twelve Seas arising from the announcement of the Business Combination and the Transactions contemplated thereby;
• the inability to complete the transactions contemplated by the Business Combination due to the failure to obtain approval of the stockholders of Twelve Seas, or the failure to satisfy other conditions to closing in the Business Combination Agreement;
• the ability of the combined company to meet the NASDAQ’s listing standards, including having the requisite number of stockholders;
• the risk that the Business Combination disrupts current plans and operations as a result of the announcement and consummation of the transactions described herein;
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• the inability to recognize the anticipated benefits of the Business Combination, which may be affected by, among other things, competition, inability of BPGIC to meet anticipated construction timelines and the ability of the combined business to grow and manage growth profitably;
• costs related to the Business Combination; and
• the possibility that BPGIC or Twelve Seas may be adversely affected by other economic, business, and/or competitive factors.
Before a shareholder grants its proxy or instructs how its vote should be cast on the Business Combination Proposal, the Merger Proposal, the Share Issuance Proposal or the Adjournment Proposal, it should be aware that the occurrence of the events described in the “Risk Factors” section and elsewhere in this proxy statement/prospectus may adversely affect Twelve Seas, Pubco and/or BPGIC.
You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this proxy statement/prospectus.
All forward-looking statements included herein attributable to any of Twelve Seas, BPGIC, Pubco or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Except to the extent required by applicable laws and regulations, Twelve Seas, BPGIC, and Pubco undertake no obligations to update these forward-looking statements to reflect events or circumstances after the date of this proxy statement/prospectus or to reflect the occurrence of unanticipated events.
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EXTRAORDINARY GENERAL MEETING OF TWELVE SEAS
General
Twelve Seas is furnishing this proxy statement/prospectus to Twelve Seas’ shareholders as part of the solicitation of proxies by Twelve Seas’ board of directors for use at the Meeting to be held on [ ], 2019, and at any adjournment thereof. This proxy statement/prospectus provides Twelve Seas’ shareholders with information they need to know to be able to vote or instruct their vote to be cast at the Meeting.
Date, Time and Place
The Meeting will be held on [ ], 2019 at 10:00 a.m., eastern time, at the offices of Ellenoff Grossman & Schole LLP, Twelve Seas’ counsel, at 1345 Avenue of the Americas, 11th Floor, New York, New York 10105.
Purpose of the Twelve Seas Extraordinary General Meeting
At the Meeting, Twelve Seas is asking holders of ordinary shares of Twelve Seas to:
• consider and vote upon a proposal to adopt the Business Combination Agreement and approve the Business Combination contemplated by the Business Combination Agreement (The Business Combination Proposal);
• consider and vote upon a proposal to approve the Merger of Twelve Seas with Merger Sub as contemplated by the Business Combination Agreement (The Merger Proposal);
• consider and vote upon a proposal to approve issuances of 20% or more of Twelve Seas’ ordinary shares in connection with financing related to the proposed Business Combination (The Share Issuance Proposal); and
• consider and vote upon a proposal to adjourn the Meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that, based upon the tabulated votes at the time of the Meeting, Twelve Seas would not have been authorized to consummate the Business Combination (The Adjournment Proposal).
Recommendation of Twelve Seas Board of Directors
Twelve Seas’ board of directors has unanimously determined that the Business Combination Proposal is fair to and in the best interests of Twelve Seas and its shareholders; has unanimously approved the Business Combination Proposal; and unanimously recommends that shareholders vote “FOR” the Business Combination Proposal, “FOR” the Merger Proposal, “FOR” the Share Issuance Proposal and “FOR” an Adjournment Proposal if one is presented to the Meeting.
Record Date; Outstanding Shares; Shareholders Entitled to Vote
Twelve Seas has fixed the close of business on [ ], 2019, as the “Record Date” for determining Twelve Seas shareholders entitled to notice of and to attend and vote at the Meeting. As of the close of business on [ ], 2019, the Record Date, there were 26,779,000 ordinary shares of Twelve Seas outstanding and entitled to vote. Each ordinary share of Twelve Seas is entitled to one vote per share at the Meeting.
Pursuant to agreements with Twelve Seas, the 5,175,000 Founder Shares held by the Initial Shareholders, the shares included in the 529,000 Private Placement Units held by the Initial Shareholders and any ordinary shares of Twelve Seas acquired in the aftermarket by such shareholders, will be voted in favor of the Business Combination Proposal. Such holders have indicated they intend to vote their shares in favor of the other proposals presented at the Meeting.
Quorum
The presence, in person or by proxy, of the holders of a majority of all the outstanding ordinary shares of Twelve Seas entitled to vote constitutes a quorum at the Meeting.
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Abstentions and Broker Non-Votes
Proxies that are marked “abstain” and proxies relating to “street name” shares that are returned to Twelve Seas but marked by brokers as “not voted” will be treated as shares present for purposes of determining the presence of a quorum on all matters. The latter will not be treated as shares entitled to vote on the matter as to which authority to vote is withheld from the broker. If a shareholder does not give the broker voting instructions, under applicable self-regulatory organization rules, its broker may not vote its shares on “non-routine” proposals, such as the Business Combination Proposal and the Merger Proposal. However, a broker may vote its shares on “routine” proposals such as the Share Issuance Proposal.
Abstentions and broker non-votes, while considered present for the purposes of establishing a quorum, are not treated as votes cast and will have no effect on any of the proposals.
Vote Required
The approval of the Business Combination Proposal, the Share Issuance Proposal and the Adjournment Proposal (if presented) will require an “Ordinary Resolution” as a matter of Cayman Islands law.
The approval of the Merger Proposal will require a “Special Resolution” as a matter of Cayman Islands law.
Voting Your Shares
Each ordinary share of Twelve Seas that you own in your name entitles you to one vote. Your proxy card shows the number of ordinary shares of Twelve Seas that you own. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted.
There are two ways to vote your ordinary shares of Twelve Seas at the Meeting:
You Can Vote By Signing and Returning the Enclosed Proxy Card. If you vote by proxy card, your “proxy,” whose name is listed on the proxy card, will vote your shares as you instruct on the proxy card. If you sign and return the proxy card but do not give instructions on how to vote your shares, your shares will be voted as recommended by Twelve Seas’ board “FOR” the Business Combination Proposal, the Merger Proposal, the Share Issuance Proposal and the Adjournment Proposal, if presented. Votes received after a matter has been voted upon at the Meeting will not be counted.
You Can Attend the Meeting and Vote in Person. You will receive a ballot when you arrive. However, if your shares are held in the name of your broker, bank or another nominee, you must get a proxy from the broker, bank or other nominee. That is the only way Twelve Seas can be sure that the broker, bank or nominee has not already voted your shares.
If your shares are held in “street name” or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted. If you wish to attend the Meeting and vote in person and your shares are held in “street name,” you must obtain a legal proxy from your broker, bank or nominee. That is the only way Twelve Seas can be sure that the broker, bank or nominee has not already voted your shares.
Stock Ownership of and Voting by Twelve Seas Directors and Officers
Current directors and officers of Twelve Seas beneficially own an aggregate of 5,704,000 ordinary shares of Twelve Seas. Each current director and officer has agreed to vote their ordinary shares of Twelve Seas in favor of the Business Combination Proposal and the Merger Proposal.
Revoking Your Proxy
If you are a shareholder and you give a proxy, you may revoke it at any time before it is exercised by doing any one of the following:
• you may send another proxy card with a later date;
• you may notify Twelve Seas’ secretary, in writing before the Meeting that you have revoked your proxy; or
• you may attend the Meeting, revoke your proxy, and vote in person, as indicated above.
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Who Can Answer Your Questions About Voting Your Shares
If you are a shareholder and have any questions about how to vote or direct a vote in respect of your ordinary shares of Twelve Seas, you may call Stephen Cannon of Twelve Seas at +1 650 560 4753 or [ ], Twelve Seas’ proxy solicitor, at [ ].
Redemption rights
Holders of Public Shares may seek to convert their shares, regardless of whether or not they are holders on the Record Date or whether or how they vote at the Meeting, but no later than 5:00 p.m. Eastern Time on [ ], 2019 (two (2) business days prior to the Meeting). Any shareholder holding Public Shares may demand that Twelve Seas convert such shares into a full pro rata portion of the Trust Account (which was $[ ] per share as of [ ], 2019, the Record Date), calculated as of two business days prior to the anticipated consummation of the Business Combination. If a holder properly seeks Redemption as described in this section and the Business Combination is consummated, Twelve Seas will convert these shares into a pro rata portion of funds deposited in the Trust Account and the holder will no longer own these shares following the Business Combination.
Twelve Seas’ Sponsor, officers and directors will not have Redemption rights with respect to any ordinary shares of Twelve Seas owned by them, directly or indirectly.
Twelve Seas shareholders who seek to convert their Public Shares are required to (A) either (i) check the box on their proxy card, or (ii) submit their request in writing to Continental Stock Transfer & Trust Company, Twelve Seas’ transfer agent and (B) deliver their stock, either physically or electronically using The Depository Trust Company’s DWAC System, to Twelve Seas’ transfer agent no later than 5:00 p.m. Eastern Time on [ ], 2019 (two (2) business days prior to the Meeting). If you hold the shares in “street name”, you will have to coordinate with your broker to have your shares certificated or delivered electronically. Certificates that have not been tendered (either physically or electronically) in accordance with these procedures will not be converted into cash. There is a nominal cost associated with this tendering process and the act of certificating the shares or delivering them through the DWAC system. The transfer agent will typically charge the tendering broker $45 and it would be up to the broker whether or not to pass this cost on to the converting shareholder. In the event the proposed Business Combination is not consummated this may result in an additional cost to shareholders for the return of their shares.
Any request to convert such shares, once made, may be withdrawn at any time up to the vote on the Business Combination Proposal. Furthermore, if a holder of a Public Share delivered its certificate in connection with an election of its Redemption and subsequently decides prior to the applicable date not to elect to exercise such rights, it may simply request that the transfer agent return the certificate (physically or electronically).
If the Business Combination is not approved or completed for any reason, then Twelve Seas’ Public Shareholders who elected to exercise their Redemption rights will not be entitled to convert their shares into a pro rata portion of the cash in the Trust Account, as applicable. Twelve Seas will thereafter promptly return any shares delivered by Public Shareholders. In such case, holders may only share in the assets of the Trust Account upon the liquidation of Twelve Seas. This may result in holders receiving less than they would have received if the Business Combination was completed and they had exercised Redemption rights in connection therewith due to potential claims of creditors. If Twelve Seas would be left with less than $5,000,001 of net tangible assets as a result of the holders of Public Shares properly demanding Redemption of their shares, Twelve Seas will not be able to consummate the Business Combination. Further, BPGIC, Pubco, Merger Sub and the Seller are not obligated to consummate the transaction if Pubco and Twelve Seas will have Closing Net Cash of less than $125,000,000 as of the Closing after giving effect to the Redemptions of Public Shares and the proceeds of any private placement.
The closing price of the ordinary shares of Twelve Seas on the Record Date was $[ ]. The cash held in the Trust Account on such date was approximately $[ ] million (approximately $[ ] per Public Share). Prior to exercising Redemption rights, shareholders should verify the market price of the ordinary shares of Twelve Seas as they may receive higher proceeds from the sale of their ordinary shares in the public market than from exercising their Redemption rights if the market price per share is higher than the Redemption price. Twelve Seas cannot assure its shareholders that they will be able to sell their ordinary shares of Twelve Seas in the open market, even if the market price per share is higher than the Redemption price stated above, as there may not be sufficient liquidity in its securities when its shareholders wish to sell their shares.
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If a holder of Public Shares exercises its Redemption rights, then it will be exchanging its ordinary shares of Twelve Seas for cash and will no longer own those shares. You will be entitled to receive cash for these shares only if you properly demand Redemption and deliver your stock certificate (either physically or electronically) to Twelve Seas’ transfer agent prior to the vote at the Meeting, and the Business Combination is consummated.
If a holder of Public Shares exercises its Redemption rights, it will not result in the loss of any Twelve Seas Warrants and Rights that it may hold and, upon consummation of the Business Combination, each Warrant will become exercisable to purchase one Ordinary Share of Pubco in lieu of one ordinary share of Twelve Seas for a purchase price of $11.50 and each Right will automatically be converted into one-tenth of an Ordinary Share of Pubco.
Appraisal Rights
None of the Unit holders, Warrant holders or Rights holders of Twelve Seas have appraisal rights in connection the Business Combination under the Companies Law. Twelve Seas shareholders are entitled to give notice to Twelve Seas prior to the Meeting that they wish to dissent to the Business Combination, the effect of which would be that such dissenting shareholders would be entitled to the payment of fair market value of his or her shares of Twelve Seas if they follow the procedures set out in the Companies Law. It is Twelve Seas’ view that such fair market value would equal the amount which Twelve Seas shareholders would obtain if they exercise their Redemption rights as described herein.
Proxy Solicitation Costs
Twelve Seas is soliciting proxies on behalf of its board of directors. This solicitation is being made by mail but also may be made by telephone or in person. Twelve Seas and its directors, officers and employees may also solicit proxies in person, by telephone or by other electronic means. Twelve Seas will bear the cost of the solicitation.
Twelve Seas has hired [ ] to assist in the proxy solicitation process.
Twelve Seas will ask banks, brokers and other institutions, nominees and fiduciaries to forward the proxy materials to their principals and to obtain their authority to execute proxies and voting instructions. Twelve Seas will reimburse them for their reasonable expenses.
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THE BUSINESS COMBINATION PROPOSAL
General
Holders of ordinary shares of Twelve Seas are being asked to approve and adopt the Business Combination Agreement and the transactions contemplated thereby, including the Business Combination. Twelve Seas shareholders should read carefully this proxy statement/prospectus in its entirety for more detailed information concerning the Business Combination Agreement, which is attached as Annex A to this proxy statement/prospectus. Please see the section entitled “— The Business Combination Agreement and Related Agreements” below, for additional information and a summary of certain terms of the Business Combination Agreement. You are urged to read carefully the Business Combination Agreement in its entirety before voting on this proposal.
Because Twelve Seas is holding a shareholder vote on the Business Combination, Twelve Seas may consummate the Business Combination only if it is approved by an Ordinary Resolution.
The Business Combination Agreement and Related Agreements
The subsections that follow this subsection describe the material provisions of the Business Combination Agreement, but do not purport to describe all of the terms of the Business Combination Agreement. The following summary is qualified in its entirety by reference to the complete text of the Business Combination Agreement, a copy of which is attached as Annex A hereto. Shareholders and other interested parties are urged to read the Business Combination Agreement carefully and in its entirety (and, if appropriate, with the advice of financial and legal counsel) because it is the primary legal document that governs the Business Combination.
The Business Combination Agreement contains representations, warranties and covenants that the respective parties made to each other as of the date of the Business Combination Agreement or other specific dates, which may be updated prior to the Closing of the Business Combination. The assertions embodied in those representations, warranties and covenants were made for purposes of the contract among the respective parties and are subject to important qualifications and limitations agreed to by the parties in connection with negotiating the Business Combination Agreement. The representations, warranties and covenants in the Business Combination Agreement are also modified in important part by the disclosure schedules attached thereto which are not filed publicly and which are subject to a contractual standard of materiality different from that generally applicable to shareholders. The disclosure schedules were used for the purpose of allocating risk among the parties rather than establishing matters as facts. We do not believe that the disclosure schedules contain information that is material to an investment decision.
General Description of the Business Combination Agreement
On April 15, 2019, Twelve Seas entered into the Business Combination Agreement with Pubco, Merger Sub, BPGIC, and the shareholders of BPGIC who would become parties thereto.
As required by the Business Combination Agreement, on May 10, 2019, BPGIC’s sole shareholder Brooge Petroleum and Gas Investment Company (BPGIC) PLC, a company incorporated under the laws of England and Wales (the “Seller”), executed and delivered to Twelve Seas, BPGIC and Pubco a joinder agreement to become party to the Business Combination Agreement as a “Seller” party thereunder (the “Joinder”).
Pursuant to the Business Combination Agreement, subject to the terms and conditions set forth therein, at the closing of the transactions contemplated by the Business Combination Agreement (the “Closing”), (a) Twelve Seas will merge with Merger Sub, with Twelve Seas continuing as the surviving entity (the “Merger”), and with all holders of Twelve Seas securities receiving substantially identical securities of Pubco, and (b) Pubco will acquire all of the issued and outstanding ordinary shares of BPGIC (the “Purchased Shares”) from the Seller in exchange for Ordinary Shares of Pubco, with BPGIC becoming a wholly-owned subsidiary of Pubco, (the “Share Exchange,” and together with the Merger and the other transactions contemplated by the Business Combination Agreement, the “ Transactions”).
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The total consideration to be paid by Pubco to the Sellers for the Purchased Shares will be 100,000,000 Pubco Ordinary Shares, subject to reduction to the extent that the Cash Election (as defined below) is made by BPGIC for the Seller to have the option to receive a portion of the consideration in cash, and the Seller elects to do so (as so reduced, the “Exchange Shares”); provided that 20,000,000 of the Exchange Shares otherwise issuable to the Seller at the Closing (the “Escrow Shares”) will be set aside in escrow and delivered to Continental Stock Transfer & Trust Company as escrow agent (the “Escrow Agent”), at the Closing, with such Escrow Shares subject to vesting and potential forfeiture as described below.
The Seller has the right, at the sole election of BPGIC (the “Cash Election”), to elect to receive a portion of the consideration for the Purchased Shares at the Closing as cash in lieu of receiving Pubco Ordinary Shares in an amount (such amount as elected by BPGIC, the “Cash Election Amount”) not to exceed 40% of the Closing Net Cash. Once BPGIC makes the Cash Election, the Seller must notify BPGIC and Twelve Seas of the Cash Election Amount that the Seller desires to receive as cash consideration in lieu of Exchange Shares (the “Cash Consideration”). If the Cash Election is made, the number of Exchange Shares issued at the Closing will be reduced by a number of Pubco Ordinary Shares equal to the Cash Consideration divided by a price per share equal to the price per share at which each Twelve Seas ordinary share is redeemed or converted pursuant to the redemption by Twelve Seas of its Public Shareholders in connection with Twelve Seas’ initial business combination, as required by its amended and restated memorandum and articles of association (the “Redemption”). As described below, it is a condition to BPGIC’s and the Sellers’ obligations to consummate the Closing that the Closing Net Cash (prior to giving effect to any Cash Election) must be at least $125 million.
A calculation detailing the consideration as of the anticipated closing date to be received by holders of BPGIC securities in such a scenario assuming Closing Net Cash of $125 million, pursuant to the Business Combination Agreement is provided in the table below:
(in millions) |
Shares |
$ |
||
Net Closing Cash from SPAC |
125.0 |
|||
Cash Consideration Received by BPGIC Shareholders at Closing(1) |
50.0 |
|||
Pubco Ordinary Shares to be Issued to BPGIC at Closing |
80.0 |
|||
(-) Reduction to Pubco Ordinary Shares(2) |
4.9 |
|||
Pubco Ordinary Shares Received by BPGIC Shareholders at Closing(2) |
75.1 |
|||
Pubco Escrow Shares to be Issued to BPGIC at Closing |
20.0 |
|||
Pubco Escrow Shares Received by BPGIC Shareholders at Closing |
20.0 |
____________
(1) Assuming BPGIC elects to receive the maximum 40% of the Closing Net Cash in lieu of Pubco Ordinary Shares
(2) Assuming redemption price per share of $10.27 per Twelve Seas ordinary share based on the 20.7 million of outstanding Twelve Seas ordinary shares and Trust Account balance of approximately $[212.5] million as of August 31, 2019. Accordingly, the numbers in the table may change if the redemption price at Closing is different from the redemption price used in the analysis.
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The table below illustrates the number of Pubco shares to be issued to the shareholder of BPGIC and Twelve Seas security holders and their respective ownership percentages subsequent to the Business Combination assuming no Cash Election and no Redemption, no Cash Election and maximum Redemption that leaves Twelve Seas with at least $5,000,001 of net tangible assets, and no Cash Election and maximum Redemption that leaves Twelve Seas with at least $125 million of Net Closing Cash. The number of shares and ownership percentages listed below are based on the Trust account balance of $212.5 million and redemption price of $10.27 as of August 31, 2019 and indebtedness of Twelve Seas of $0.5 million as of June 30, 2019. Accordingly, the numbers in the table may change if the redemption price or indebtedness of Twelve Seas at Closing is different from the redemption price and indebtedness of Twelve Seas used in the analysis.
(in millions) |
Shares |
%(5) |
|||
Scenario A: No Cash Election, No Redemption |
|
||||
BPGIC Shareholder(1) |
100.0 |
78.2 |
% |
||
Twelve Seas Public Shareholders(2) |
22.8 |
17.8 |
% |
||
Twelve Seas Sponsor, Underwriter, and Independent Directors(1) |
5.1 |
4.0 |
% |
||
Total |
127.9 |
100.0 |
% |
||
|
|||||
Scenario B: No Cash Election, Max Redemption, Twelve Seas with at Least $5,000,001 of net tangible assets |
|
||||
BPGIC Shareholder(1) |
100.0 |
92.9 |
% |
||
Twelve Seas Public Shareholders(2)(3) |
2.6 |
2.4 |
% |
||
Twelve Seas Sponsor, Underwriter, and Independent Directors(1) |
5.1 |
4.7 |
% |
||
Total |
107.7 |
100.0 |
% |
||
|
|||||
Scenario C: No Cash Election, Max Redemption, at least $125 million of net Cash Remaining at Business Combination |
|
||||
BPGIC Shareholder(1) |
100.0 |
83.1 |
% |
||
Twelve Seas Public Shareholders(2)(4) |
15.2 |
12.6 |
% |
||
Twelve Seas Sponsor, Underwriter, and Independent Directors(1) |
5.1 |
4.2 |
% |
||
Total |
120.3 |
100.0 |
% |
____________
(1) Includes Pubco Escrow Shares
(2) Includes outstanding Rights that convert into 1/10 of a Pubco Ordinary Share at Closing and forfeiture of approximately 1 million Founder Shares at Closing
(3) With Trust account balance of approximately $212.5 million as of August 30, 2019 and indebtedness of Twelve Seas of approximately $0.5 million as of June 30, 2019, the maximum cash redemption possible that would still allow Twelve Seas to meet the requirement of having at least $5,000,001 of net tangible assets at Closing is approximately $207 million which, at $10.27 redemption price per share, is equivalent to approximately 20.2 million Pubco Ordinary Shares.
(4) With Trust Account balance of approximately $212.5 million as of August 30, 2019, indebtedness of Twelve Seas of approximately $0.5 million as of June 30, 2019 and expected Business Combination transaction cost of approximately $9.2 million, the maximum cash redemption possible that would still allow Twelve Seas to meet the requirement of $125 million Closing Net Cash is approximately $77.8 million which, at $10.27 redemption price per share, is equivalent to approximately 7.6 million Pubco Ordinary Shares.
(5) Individual share % in scenarios may not total to 100% due to rounding
As contemplated by the Business Combination Agreement, at the Closing, twenty million (20,000,000) of the Pubco Ordinary Shares otherwise issuable to Seller at the Closing (together with any equity securities paid as dividends or distributions with respect to such shares or into which such shares are exchanged or converted, the “Escrow Shares”) will instead be issued in the name of Continental Stock Transfer and Trust Company, as escrow agent for the benefit of Seller to be held and controlled, along with any other Escrow Property (as defined in the Escrow Agreement) by the Escrow Agent in a separate segregated escrow account (the “Escrow Account”), and released in accordance with the Escrow Agreement.
While the Escrow Property is held in the Escrow Account, Seller shall have all voting, consent and other rights (other than the rights to dividends, distributions or other income paid or accruing to the Escrow Property). The Escrow Agreement provides, however, that after the Closing, Seller shall be permitted to (i) pledge or otherwise encumber the Escrow Property as collateral security for documented loans entered into by Seller, Pubco or its subsidiaries, including BPGIC, after the Closing or (ii) transfer its rights to the Escrow Property to a third party, provided, that (a) in each case of clauses (i) and (ii), that the lender’s or transferee’s rights to any such pledged or transferred Escrow Property
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shall be subject to the provisions of the Escrow Agreement and the sections of the Business Combination Agreement pertaining to the escrow, including the forfeiture provisions contained therein, and (b) in the event of a pledge or encumbrance of the Escrow Property under clause (i) above, Seller may transfer the Escrow Property to another escrow agent selected by Seller and reasonably acceptable to Pubco.
The Escrow Property will only become vested and not subject to forfeiture, and released to Seller, in the event that Pubco meets the following performance or milestone requirements during the period commencing from the Closing until the end of the twentieth (20th) fiscal quarter after the commencement date of the first full fiscal quarter beginning after the Closing (such period, the “Escrow Period”):
(i) One-half (½) of the Escrow Property shall become vested and no longer subject to forfeiture, and be released to Seller, in the event that either: (a) the Annualized EBITDA (as defined in the Escrow Agreement) for any full fiscal quarter during the Escrow Period (beginning with the first full fiscal quarter beginning after the Closing) (an “Escrow Quarter”) equals or exceeds $175,000,000 or (b) at any time during the Escrow Period, the closing price of the Pubco ordinary shares equals or exceeds $12.50 per share (subject to equitable adjustment) for any ten (10) Trading Days (as defined in the Escrow Agreement) within any twenty (20) Trading Day period during the Escrow Period.
(ii) All Escrow Property remaining in the Escrow Account shall become vested and no longer subject to forfeiture, and be released to Seller, in the event that either: (a) the Annualized EBITDA for any Escrow Quarter equals or exceeds $250,000,000 or (b) at any time during the Escrow Period, the closing price of the Pubco ordinary shares equals or exceeds $14.00 per share (subject to equitable adjustment) for any ten (10) Trading Days within any twenty (20) Trading Day period during the Escrow Period.
The Annualized EBITDA for each fiscal quarter is equal to four times the earnings before interest, income taxes, depreciation and amortization of Pubco and its subsidiaries, on a consolidated basis, for such fiscal quarter, as determined in accordance with IFRS, consistently applied, but subject to certain adjustments set forth on Exhibit A to the Escrow Agreement.
At the end of the Escrow Period, if there is any Escrow Property which has not vested and that Seller is not entitled to receive in accordance with the Escrow Agreement and the Business Combination Agreement, such Escrow Property will be forfeited and automatically surrendered by Seller and distributed to Pubco from the Escrow Account, for cancellation by Pubco. All actions or determinations on behalf of Pubco under the Escrow Agreement after the Closing (other than certain reports to be delivered by Pubco’s chief financial officer) will be exclusively made and determined by a majority of the independent directors then serving on Pubco’s board of directors that are disinterested in the Escrow Property.
The issuances of Pubco securities in connection with the Share Exchange will be exempted from registration under the Securities Act in reliance upon Section 4(a)(2) thereof because securities of Pubco will issued to a single holder of BPGIC securities without involving a public offering. Such issuances will also be exempted from registration in reliance upon Regulation S of the Securities Act with regard to certain holders of BPGIC securities receiving Pubco securities who are qualified as non-U.S. persons thereunder.
Representations and Warranties
The Business Combination Agreement contains a number of representations and warranties made by Twelve Seas, BPGIC and Pubco as of the date of such agreement or other specific dates solely for the benefit of certain of the parties to the Business Combination Agreement, which in certain cases are subject to specified exceptions and materiality, Material Adverse Effect, knowledge and other qualifications contained in the Business Combination Agreement or in information provided pursuant to certain disclosure schedules to the Business Combination Agreement. “Material Adverse Effect” as used in the Business Combination Agreement means with respect to any specified person or entity, any fact, event, occurrence, change or effect that has had or would reasonably be expected to have a material adverse effect on the business, assets, liabilities, results of operations, prospects or condition (financial or otherwise) of such person or entity and its subsidiaries, taken as a whole, or the ability of such person or entity or any of its subsidiaries on a timely basis to consummate the transactions contemplated by the Business Combination Agreement or the ancillary documents to which it is a party or bound or to perform its obligations thereunder, in each case subject to certain customary exceptions. The representations and warranties made by Twelve Seas, BPGIC and Pubco are customary for transactions similar to the Transactions.
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In the Business Combination Agreement, BPGIC made certain customary representations and warranties to Twelve Seas, including among others, related to the following: (1) corporate matters, including due organization, existence and good standing; (2) authority and binding effect relative to execution and delivery of the Business Combination Agreement and other ancillary documents; (3) capitalization; (4) subsidiaries; (5) governmental approvals; (6) non-contravention; (7) financial statements; (8) absence of certain changes; (9) compliance with laws; (10) permits; (11) litigation; (12) material contracts; (13) intellectual property; (14) taxes and returns; (15) real property; (16) personal property; (17) title to and sufficiency of assets; (18) employee matters; (19) benefit plans; (20) environmental matters; (21) oil and gas matters; (22) transactions with related parties; (23) insurance; (24) customers and suppliers; (25) business practices; (26) Investment Company Act of 1940; (27) finders and brokers; (28) information supplied; (29) disclosure and (30) independent investigation. Additionally, Pubco made certain customary representations and warranties to Twelve Seas with respect to Pubco and Merger Sub, including representations and warranties related to the following: (1) corporate matters, including due organization, existence and good standing; (2) authority and binding effect relative to execution and delivery of the Business Combination Agreement and other ancillary documents; (3) governmental approvals; (4) non-contravention; (5) capitalization; (6) title and ownership of the Pubco shares to be issued to the Seller; (7) Pubco and Merger Sub activities; (8) finders and brokers; (9) information supplied; and (10) independent investigation.
In the Business Combination Agreement, Twelve Seas made certain customary representations and warranties to BPGIC and the Seller, including among others, related to the following: (1) corporate matters, including due organization, existence and good standing; (2) authority and binding effect relative to execution and delivery of the Business Combination Agreement and other ancillary documents; (3) governmental approvals; (4) non-contravention; (5) capitalization; (6) SEC filings and financial statements; (7) absence of certain changes; (8) compliance with laws; (9) litigation, orders and permits; (10) taxes and returns; (11) employees and employee benefit plans; (12) properties; (13) material contracts; (14) transactions with affiliates; (15) Investment Company Act of 1940; (16) finders and brokers; (17) business practices; (18) insurance; (19) trust account; and (20) independent investigation.
Pursuant to the Joinder, the Seller made customary representations and warranties to Twelve Seas, including related to the following: (1) organization and standing; (2) authority and binding agreement; (3) ownership; (4) government approvals; (5) non-contravention; (6) litigation; (7) investment representations; (8) finders and brokers; (9) information supplied; and (10) independent investigation, which are incorporated into and a part of the Business Combination Agreement.
Covenants of the Parties
Each party agreed in the Business Combination Agreement to use its commercially reasonable efforts to effect the Closing. The Business Combination Agreement also contains certain customary covenants by each of the parties during the period between the signing of the Business Combination Agreement and the earlier of the Closing or the termination of the Business Combination Agreement in accordance with its terms (the “Interim Period”), including covenants regarding: (1) the provision of access to their properties, books and personnel; (2) the operation of their respective businesses in the ordinary course of business; (3) Twelve Seas’ public filings and BPGIC’s interim financial statements; (4) no solicitation of, or entering into, any alternative competing transactions; (5) no insider trading; (6) notifications of certain breaches, consent requirements or other matters; (7) efforts to consummate the Closing and obtain third party and regulatory approvals; (8) further assurances; (9) public announcements; (10) confidentiality; (11) indemnification of directors and officers; (12) use of trust proceeds after the Closing; and (13) efforts to retain trust funds and support a private placement or backstop arrangements, if sought.
Twelve Seas agreed that during the Interim Period, BPGIC has the right to have up to two individuals selected by BPGIC present at each meeting of the Twelve Seas’ board of directors, as non-voting board observers, subject to customary confidentiality obligations and exclusion for matters that could adversely affect the attorney-client privilege between Twelve Seas and its counsel or result in disclosure of a material trade secret or a conflict of interest.
The parties also agreed to take all necessary actions to cause Pubco’s board of directors immediately after the Closing to include such number of directors as reasonably determined by BPGIC prior to filing the Registration Statement, and consisting of such qualified persons that are designated by BPGIC prior to the Closing, a majority of which, to the extent required by NASDAQ rules, will be independent under NASDAQ requirements. As a foreign private issuer, Pubco will not be required to, and will not, have a majority of independent directors. The parties also agreed that, unless otherwise determined by BPGIC, the individuals serving as the chief executive officer and chief financial officer of BPGIC will serve as the chief executive officer and chief financial officer of Pubco immediately after the Closing.
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Twelve Seas and Pubco also agreed to prepare, with the assistance of BPGIC, and use their commercially reasonable efforts to file a Registration Statement on Form F-4 with the SEC in connection with the registration under the Securities Act of the issuance of securities of Pubco to the holders of the Twelve Seas securities and containing a proxy statement/prospectus for the purpose of soliciting proxies from the shareholders of Twelve Seas for the matters relating to the Transactions to be acted on at the Meeting and providing such holders an opportunity to participate in the Redemption.
Twelve Seas agreed to use its reasonable efforts to promptly after the execution of the Business Combination Agreement change its NASDAQ ticker symbol from “TWLV” to “BROG,” which covenant Twelve Seas already satisfied on Friday, April 12, 2019. Twelve Seas also agreed to use its commercially reasonable efforts to cause EarlyBirdCapital, Inc. (“EBC”) to amend the Business Combination Marketing Agreement that Twelve Seas entered into with EBC in connection with Twelve Seas’ Initial Public Offering to reduce the fee payable to EBC thereunder by an amount as mutually determined by Twelve Seas and BPGIC (the “Business Combination Marketing Agreement Fee Amendment”).
The parties agreed that BPGIC’s disclosure schedules to the Business Combination Agreement (the “BPGIC Disclosure Schedules”), which were not delivered at the signing of the Business Combination Agreement, were to be delivered on or prior to May 10, 2019 (or such later date as mutually agreed by Twelve Seas and BPGIC), and Twelve Seas would have 10 business days to review the BPGIC Disclosure Schedules. In addition, BPGIC also agreed to deliver an executed Joinder for each BPGIC shareholder on or prior to May 10, 2019 (or such later date as mutually agreed by Twelve Seas and BPGIC).
As required by the Business Combination Agreement, on May 10, 2019, BPGIC’s sole shareholder, Brooge Petroleum and Gas Investment Company (BPGIC) PLC executed and delivered to Twelve Seas, BPGIC and Pubco the executed Joinder to become party to the Business Combination Agreement as a “Seller” party thereunder, and BPGIC delivered the BPGIC Disclosure Schedules to Twelve Seas. Twelve Seas’ 10 business day period to review the BPGIC Disclosure Schedules ended on May 24, 2019.
Survival
The representations and warranties of the parties terminate as of and do not survive the Closing. The covenants and agreements of the parties shall not survive the Closing, except those covenants and agreements to be performed after the Closing which covenants and agreement shall survive until fully performed.
Conditions to Closing
The obligations of the parties to consummate the Transactions are subject to various conditions, including the following mutual conditions of the parties unless waived: (i) the approval of the Business Combination Agreement and the transactions contemplated thereby and related matters by the requisite vote of Twelve Seas’ shareholders; (ii) receipt by BPGIC and its shareholders of all requisite material consents to consummate the Transactions, including consents and approval of shareholders, any governmental authorities and third parties, including ASMA Capital; (iii) receipt with respect to Twelve Seas, Pubco and Merger Sub of requisite consents from governmental authorities to consummate the Transactions; (iv) expiration of any waiting period under applicable antitrust laws; (v) no law or order preventing or prohibiting the Transactions; (vi) no pending litigation to enjoin or restrict the consummation of the Closing; (vii) Twelve Seas having at least $5,000,001 in net tangible assets as of the Closing, after giving effect to the completion of the Redemption and any private placement financing; (viii) the election or appointment of members to Pubco’s board of directors as described above; (ix) the effectiveness of the Registration Statement; (x) amendment by the shareholders of Pubco of Pubco’s amended and restated memorandum and articles of association in form and substance reasonably acceptable to Pubco, BPGIC and Twelve Seas; and (xi) receipt by BPGIC and Twelve Seas of evidence reasonably satisfactory to each such party that Pubco qualifies as a foreign private issuer.
In addition, unless waived by BPGIC, the obligations of BPGIC, Pubco, Merger Sub and the Seller to consummate the Transactions are subject to the satisfaction of the following closing conditions, in addition to customary certificates and other closing deliveries: (i) the representations and warranties of Twelve Seas being true and correct as of the date of the Business Combination Agreement and as of the Closing (subject to Material Adverse Effect); (ii) Twelve Seas having performed in all material respects its obligations and complied in all material respects with its covenants and agreements under the Business Combination Agreement required to be performed or complied with by it on or prior to the date of the Closing; (iii) absence of any Material Adverse Effect with respect to Twelve Seas since the date of the Business Combination Agreement which is continuing and uncured; (iv) receipt by BPGIC and Pubco of the Escrow Agreement, duly executed by the Escrow Agent; (v) receipt by BPGIC and Pubco of a Registration Rights Agreement,
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in form and substance reasonably acceptable to BPGIC and Twelve Seas, providing customary registration rights to the Seller with respect to the portion of the Exchange Shares delivered to the Seller at the Closing and any Escrow Shares that are released from escrow to the Seller (the “Registration Rights Agreement”); (vi) Twelve Seas, Pubco and the other parties thereto will have amended Twelve Seas’ Registration Rights Agreement (such amendment, the “Founder Registration Rights Agreement Amendment”) and Share Escrow Agreement (such amendment, the “Founder Share Escrow Agreement Amendment”) that were entered into by Twelve Seas at the time of its Initial Public Offering, each in form and substance reasonably acceptable to Twelve Seas and BPGIC, to among other matters, have such agreements apply to Pubco and the Pubco securities to be received in connection with the Merger by Twelve Seas’ shareholders that are parties to such agreements and with respect to the amendment of the Share Escrow Agreement revise it to accommodate the provisions of the Founder Share Letter (described below); (vii) receipt by BPGIC and Pubco of the Business Combination Marketing Agreement Fee Amendment; (viii) receipt by BPGIC of written resignations from the directors and officers of Twelve Seas; and (ix) receipt by BPGIC and Pubco of a voting agreement in favor of Pubco by Twelve Seas’ sponsor, Twelve Seas Sponsors I LLC, a Delaware limited liability company (the “Sponsor”), and the other Initial Shareholders (defined below) with respect to Pubco Ordinary Shares issuable upon conversion or exchange of (A) their Founder Shares, (B) securities underlying their Private Placement Units, or (C) securities of Twelve Seas or Pubco that they acquire or agree to acquire up to the Closing. Additionally, unless waived by BPGIC, the Closing Net Cash must be at least $125 million.
Unless waived by Twelve Seas, the obligations of Twelve Seas, to consummate the Transactions are subject to the satisfaction of the following closing conditions, in addition to customary certificates and other closing deliveries: (i) the representations and warranties of BPGIC, Merger Sub, Pubco and the Seller being true and correct as of the date of the Business Combination Agreement (or with respect to the Seller, the date of its Joinder) and as of the Closing (subject to Material Adverse Effect); (ii) BPGIC, Pubco, Merger Sub and the Seller having performed in all material respects the respective obligations and complied in all material respects with their respective covenants and agreements under the Business Combination Agreement required to be performed or complied with on or prior to the date of the Closing; (iii) absence of any Material Adverse Effect with respect to BPGIC or Pubco since the date of the Business Combination Agreement which is continuing and uncured; (iv) receipt by Twelve Seas of employment agreements, effective as of the Closing, in form and substance reasonably acceptable to Twelve Seas and BPGIC between such individuals as they mutually agree acting reasonably and either Pubco or BPGIC, as they mutually agree acting reasonably, duly executed by the parties thereto; (v) receipt by Twelve Seas of the Escrow Agreement, Registration Rights Agreement, Founders Registration Rights Agreement Amendment, the Founders Share Escrow Agreement Amendment and the Voting Agreement, each executed by each of the other parties thereto; (vi) receipt by Twelve Seas of share certificates and other documents evidencing the transfer of the Purchased Shares to Pubco; (vii) receipt by Twelve Seas of the evidence of the termination of any outstanding options, warrants or other convertible securities of BPGIC, without any consideration or liability therefor; (viii) receipt by Twelve Seas that certain contracts to be mutually agreed between Twelve Seas and BPGIC acting reasonably involving BPGIC and/or the Seller or other related parties have been terminated with no further liability of BPGIC thereunder; (ix) receipt by Twelve Seas of executed Joinders and related documents from the BPGIC shareholder; and (x) receipt by Twelve Seas of the BPGIC Disclosure Schedules and the expiration of the related 10 business day review period.
Termination
The Business Combination Agreement may be terminated under certain customary and limited circumstances at any time prior the Closing, including, among other reasons: (i) by mutual written consent of Twelve Seas and BPGIC; (ii) by either Twelve Seas or BPGIC if the Closing has not occurred on or prior to December 22, 2019 (the “Outside Date”) and the failure of the Closing to occur by such date was not caused by or the result of a breach of the Business Combination Agreement by such termination party (or with respect to BPGIC, the Sellers, Pubco or Merger Sub), (iii) by either Twelve Seas or BPGIC if a governmental authority of competent jurisdiction shall have issued an order or taken any other action permanently restraining, enjoining or otherwise prohibiting the Transactions, and such order or other action has become final and non-appealable; (iv) by BPGIC for Twelve Seas’ uncured breach of the Business Combination Agreement, such that the related closing condition would not be met; (v) by Twelve Seas for the uncured breach of the Business Combination Agreement by BPGIC, Pubco, Merger Sub or the Seller, such that the related closing condition would not be met; (vi) by Twelve Seas if there has been a Material Adverse Effect with respect to BPGIC since the date of the Business Combination Agreement which is uncured and continuing; (vii) by BPGIC if there has been a Material Adverse Effect with respect to Twelve Seas since the date of the Business Combination Agreement which is uncured and continuing; (viii) by either Twelve Seas or BPGIC if Twelve Seas holds its shareholder meeting to approve the Business Combination Agreement and the Transactions
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and such approval is not obtained; (ix) by Twelve Seas if BPGIC fails to deliver executed Joinders from all BPGIC shareholders and related documents by May 10, 2019 (or such later date as mutually agreed by BPGIC and Twelve Seas) (such Joinders were timely delivered to Twelve Seas); (x) by Twelve Seas (A) if BPGIC fails to deliver the BPGIC Disclosure Schedules by May 10, 2019 (or such later date as mutually agreed by BPGIC and Twelve Seas) (such BPGIC Disclosure Schedules were timely delivered) or (B) within 10 business days after the end of the 10-business day BPGIC Disclosure Schedule review period, if the BPGIC Disclosure Schedules delivered are not reasonably acceptable to Twelve Seas (such review period expired on May 24, 2019); or (xi) by Twelve Seas if BPGIC fails to deliver to Twelve Seas by May 10, 2019 (or such later date as mutually agreed by BPGIC and Twelve Seas) the Escrow Agreement in form and substance reasonably acceptable to Twelve Seas, executed by BPGIC, Pubco and each Seller (such executed Escrow Agreement was timely delivered).
If the Business Combination Agreement is terminated, all further obligations of the parties under the Business Combination Agreement (except for certain obligations related to publicity, confidentiality, fees and expenses, trust fund waiver, termination and general provisions) will terminate, and no party to the Business Combination Agreement will have any further liability to any other party thereto except for liability for fraud or for willful breach of the Business Combination Agreement prior to termination.
In the event the Business Combination Agreement is terminated (i) by Twelve Seas or BPGIC as a result of the Closing not occurring by the Outside Date and the failure of the Closing to occur was not caused by or the result of a breach of the Business Combination Agreement by BPGIC, the Seller, Pubco or Merger Sub or (ii) by BPGIC as a result of an uncured breach by Twelve Seas, Twelve Seas shall pay BPGIC a cash termination fee equal to the aggregate amount of the legal and advisory fee expenses incurred by BPGIC prior to such termination, up to a maximum of $250,000, within 20 business days after such termination (or if later, within 3 business days of receipt of the amount of such expenses and reasonable related documentation).
Trust Account Waiver and Seller Release
BPGIC, Pubco, Merger Sub and the Seller have agreed that they and their affiliates will not have any right, title, interest or claim of any kind in or to any monies in Twelve Seas’ Trust Account held for its Public Shareholders, and have agreed not to, and have waived any right to, make any claim against the Trust Account (including any distributions therefrom).
The parties agreed that all claims or actions that may be based upon, arise out of or relate to the Business Combination Agreement or any of the ancillary documents may only be made against the parties to the Business Combination Agreement and not against any of their past, present or future directors, officers, employees, members, managers, partners, affiliates, agents, attorneys or representatives.
The Seller, on behalf of itself and its affiliates that own shares of such Seller, has agreed to provide a release of BPGIC, effective as of the Closing, for any rights that it may have in its capacity as a shareholder of BPGIC, other than its rights under the Business Combination Agreement and ancillary documents.
Governing Law and Arbitration
The Business Combination Agreement is governed by New York law. Any disputes under the Business Combination Agreement, other than claims for injunctive or equitable relief, will be subject to arbitration by the International Chamber of Commerce. Any such arbitration is to be held in London, United Kingdom.
Related Agreements
This section describes the material provisions of certain additional agreements entered into or to be entered into pursuant to the Business Agreement (the “Related Agreements”) but does not purport to describe all of the terms thereof. The following summary is qualified in its entirety by reference to the complete text of each of the Related Agreements, copies of each of which are attached hereto as part of Annex A. Shareholders and other interested parties are urged to read such Related Agreements in their entirety.
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Founder Share Letter
Simultaneously with the execution of the Business Combination Agreement, the Initial Shareholders entered into a letter agreement with Twelve Seas, Pubco and BPGIC (the “Founder Share Letter”), pursuant to which the Initial Shareholders have agreed, effective upon the Closing, on a pro rata basis amongst the Initial Shareholders based on the number of Founder Shares owned by each of them, to (i) forfeit 20% of the Founder Shares owned by the Initial Shareholders at the Closing and (ii) subject 30% of the Founder Shares owned by the Initial Shareholders at the Closing (including any Pubco Ordinary Shares issued in exchange therefor in the Merger) to escrow and vesting and potential forfeiture obligations that are substantially identical to those that apply to the Escrow Property as described above.
Registration Rights Agreement
Pursuant to the Business Combination Agreement, the parties have agreed to negotiate mutually agreeable terms for a Registration Rights Agreement by and between Pubco and Seller (the “Registration Rights Agreement”), to be entered at or prior to the Closing and which shall become effective upon the Closing, with respect to the Exchange Shares to be received by the Seller at the Closing. Under the proposed Registration Rights Agreement, the Seller shall have registration rights that will obligate Pubco to register for resale under the Securities Act all or any portion of the Exchange Shares (together with any securities issued as a dividend or distribution with respect thereto or in exchange therefor, the “Registrable Securities”), except that the Escrow Shares may not be requested to be registered or registered until they are released from the Escrow Account. The holders of a majority-in-interest of the Registrable Securities will be entitled under the proposed Registration Rights Agreement to make a written demand for registration under the Securities Act of all or part of their Registrable Securities, and the other holders of Registrable Securities will be entitled to join in such demand registration. Subject to certain exceptions, if any time after the Closing, Pubco proposes to file a registration statement under the Securities Act with respect to its securities, under the proposed Registration Rights Agreement, Pubco shall give notice to the Seller and all other holders of Registrable Securities as to the proposed filing and offer them an opportunity to register the sale of such number of Registrable Securities as requested by the holders in writing, subject to customary cut-backs. In addition, the proposed Registration Rights Agreement shall provide that subject to certain exceptions, the holders of Registrable Securities shall be entitled under the Registration Rights Agreement to request in writing that Pubco register the resale of any or all of such Registrable Securities on Form F-3 or S-3 and any similar short-form registration that may be available at such time. Under the proposed Registration Rights Agreement, Pubco will agree to indemnify the holders of Registrable Securities and certain persons or entities related to them, such as their officers, directors, employees, agents and representatives, against any losses or damages resulting from any untrue statement or omission of a material fact in any registration statement or prospectus pursuant to which they sell Registrable Securities, unless such liability arose from their misstatement or omission, and the holders of Registrable Securities, will agree to indemnify Pubco and certain persons or entities related to Pubco, such as its officers and directors and underwriters, against all losses caused by their misstatements or omissions in those documents.
Voting Agreement
Pursuant to the Business Combination Agreement, the parties have agreed to negotiate mutually agreeable terms for a post-Closing Voting Agreement in favor of the Seller (the “Voting Agreement”) to be entered at or prior to the Closing by the Initial Shareholders and the Seller. The proposed Voting Agreement will apply to the Ordinary Shares and other voting securities of Pubco issuable to the Initial Shareholders upon the conversion, exercise, exchange (or are otherwise granted in Pubco) of their (x) Founder Shares, (y) Private Placement Units and (z) the securities of Twelve Seas and Pubco that the Initial Shareholders (or their affiliates) acquire or agree to acquire prior to the Closing (collectively, the “Subject Shares”). The proposed Voting Agreement shall provide that from and after the Closing until the Voting Agreement terminates with respect to each Initial Shareholder, at each meeting of the shareholders of Pubco and in each written consent or resolutions of the Pubco shareholders in which an Initial Shareholder is entitled to vote, consent or approve, such Initial Shareholder unconditionally and irrevocably agrees to be present for such meeting and vote its Subject Shares (in person or by proxy), as directed by Seller, or consent to any action by written consent or resolution with respect to all such matters, as directed by the Seller. The proposed Voting Agreement will terminate upon the earlier to occur of (i) the mutual written consent of the Seller and the Initial Shareholders and (ii) with respect to any Initial Shareholder, automatically on the date such Initial Shareholder no longer holds any Subject Shares.
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Transaction and Organizational Structures Prior to and Following Consummation of the Business Combination
The following diagram illustrates the transaction structure of the Business Combination and organizational structures of the parties thereto.
The following diagram illustrates Pubco’s organizational structure following the consummation of the Business Combination.
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Charter Documents of Pubco Following the Business Combination
Pursuant to the Business Combination Agreement, upon the Closing of the Business Combination, Pubco’s memorandum and articles of association will be amended and restated promptly to:
• reflect necessary changes and to be consistent with the proposed amended charter (for a full description of the proposed amendments to the charter see “The Business Combination Proposal — Pubco’s Amended and Restated Memorandum and Articles of Association”); and
• make certain other changes that Pubco’s board of directors deems appropriate for a public company.
Headquarters; Stock Symbols
After completion of the transactions contemplated by the Business Combination Agreement:
• the corporate headquarters and principal executive offices of Pubco will be located at P.O. Box 50170, Fujairah, UAE, which are BPGIC’s current corporate headquarters; and
• If Pubco’s applications for listing are approved, Pubco’s Ordinary Shares and warrants will be traded on NASDAQ under the symbols BROG and BROGW, respectively.
Background of the Business Combination
The following is a discussion of Twelve Seas’ formation, the background of Twelve Seas’ previous attempts at a business combination, its negotiations with and evaluation of BPGIC, the Business Combination Agreement and related matters.
On June 22, 2018, Twelve Seas closed its Initial Public Offering of 18,000,000 Units, with each Unit consisting of one ordinary share, one Warrant to acquire one ordinary share at a price of $11.50 and one Right entitling the holder thereof to received one-tenth (1/10) of one ordinary share. On June 28, 2018, Twelve Seas consummated the sale of an additional 2,700,000 Units which were subject to an over-allotment option granted to the underwriters of its Initial Public Offering. The Units from the Initial Public Offering (including the over-allotment option) were sold at an offering price of $10.00 per Unit, generating total gross proceeds of $207,000,000. Simultaneously with the consummation of the Initial Public Offering and the exercise of the underwriters’ over-allotment option, Twelve Seas consummated the private sale of an aggregate of 529,000 Units to its Initial Shareholders, in each case at $10.00 per Unit for an aggregate purchase price of $5,290,000.
Promptly following its Initial Public Offering, Twelve Seas commenced consideration of potential target businesses with the objective of consummating a business combination. Twelve Seas sought out potential target businesses based on internal research and through the networks of relationships of Twelve Seas’ management, board of directors and with professional service providers (lawyers, accountants, consultants, finders and investment bankers). Twelve Seas educated these parties on its structure as a special purpose acquisition company and its criteria for an acquisition. Twelve Seas also responded to inquiries from investment bankers or other similar professionals who represented companies engaged in a sale or financing process. On a regular basis, Twelve Seas’ directors were updated with respect to the status of the Business Combination search. Input received from Twelve Seas’ directors was material to its management’s evaluation of a potential business combination.
From the closing of Twelve Seas’ initial public offering through the signing of the Business Combination Agreement with BPGIC in April 2019, representatives of Twelve Seas contacted and were contacted by a number of individuals and entities with respect to business combination opportunities and engaged with several possible target businesses in discussions with respect to potential transactions. In all, representatives of Twelve Seas have evaluated over 100 potential transactions from a wide range of industry segments including, but not limited to, oil and gas equipment and services, telecommunications, manufacturing, education, software, financial, retail, consumer products and technology.
The following is not intended to be a complete list of all opportunities initially evaluated or explored or discussions held by Twelve Seas but sets forth the significant discussions and steps that Twelve Seas took to reaching a Business Combination Agreement with BPGIC.
On September 11, 2018, Gregory Stoupnitzky, Independent Director of Twelve Seas, met with a representative of RBC Capital Markets, LLC (“RBC”) to commence initial discussions on potential targets, at which time they agreed to have a follow-up meeting in October.
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On October 15, 2018, Bryant Edwards, COO of Twelve Seas, met with a representative of RBC’s London offices to discuss potential targets. BPGIC was identified as a possible target as it satisfied Twelve Seas’ desired company profile for a target. Mr. Edwards expressed an interest in BPGIC, and RBC agreed to provide additional information.
On November 6, 2018, Messrs. Stoupnitzky and Edwards attended a dinner sponsored by RBC, where members of senior management of BPGIC, were presenting. The parties met and Twelve Seas was invited to visit BPGIC at its offices in Dubai later in November.
On November 13, 2018, representatives of RBC hosted a call with Messrs. Stoupnitzky, Edwards and Steve Cannon, CFO of Twelve Seas, to discuss SPAC merger structures generally.
On November 26, 2018, Messrs. Edwards and Cannon met with members of senior management of BPGIC in Dubai, at which meeting they gave a presentation on Twelve Seas, including an illustration of a potential merger transaction and statistics about the relative size of public company listings in the U.S. versus London markets for the oil and gas storage sector. Mr. Cannon also provided a copy of the presentation to RBC.
On November 28, 2018, Mr. Cannon met with members of senior management of BPGIC, and gave a presentation on Twelve Seas. On the same day, Mr. Cannon had a call with representatives of RBC to discuss the meeting with BPGIC.
On November 29, 2018, Messrs. Edwards and Cannon met with members of senior management of BPGIC at BPGIC’s Dubai offices to review the presentation on Twelve Seas and answer related questions.
On December 4, 2018, Messrs. Stoupnitzky, Edwards and Cannon had a call with representatives of RBC regarding the merger model. On the same day, Mr. Cannon had a call with a representative of EarlyBirdCapital, Inc. (“EBC”) to review the Twelve Seas presentation and certain comparable companies. In addition, Mr. Cannon emailed senior management of BPGIC a detailed transaction timeline as well as a responsibilities checklist.
On December 5, 2018, Mr. Cannon emailed senior management of BPGIC an analysis comparing “traditional initial public offerings” versus mergers with SPACs.
On December 8, 2018, RBC sent a preliminary valuation analysis of BPGIC to Twelve Seas.
On December 9, 2018, Twelve Seas and BPGIC entered into a non-disclosure agreement.
On December 11, 2018, Messrs. Edwards and Cannon met with members of senior management of BPGIC in Abu Dhabi, at which meeting they gave a presentation and received initial due diligence materials from BPGIC, including financial statements, as well as the prospectus and investor presentation from BPGIC’s attempted London Stock Exchange initial public offering. On the same day, Messrs. Stoupnitzky, Edwards and Cannon had a call with representatives of RBC to discuss the meeting with BPGIC in Abu Dhabi and certain financial information prepared by RBC with respect to BPGIC.
On December 12, 2018, Mr. Cannon emailed senior management of BPGIC a detailed timeline and responsibilities proposal with alternatives and options. On the same day, Mr. Cannon met with senior management of BPGIC and the BPGIC finance team to review a draft letter of intent and commence due diligence.
On December 13, 2018, Mr. Stoupnitzky met with a representative of EBC in its New York offices to discuss the transaction.
On December 16, 2018, Twelve Seas and BPGIC executed a non-binding letter of intent.
On December 18, 2018, EBC hosted a meeting in its New York offices with representatives from Twelve Seas, EBC and RBC to discuss the status of the transaction with BPGIC, including the valuation and investor interest. On the same day, Mr. Cannon met with senior management of BPGIC at the Fujairah facility for a due diligence site visit and facilities tour.
On December 19, 2018, Mr. Cannon met with senior management of BPGIC at BPGIC’s Dubai office to review and discuss valuation materials comparing an LSE initial public offering and a merger with a SPAC and next steps in the process.
On December 19-20, 2018, Mr. Cannon also conducted due diligence in the Dubai office.
On January 8, 2019, Mr. Cannon and senior management of BPGIC exchanged emails discussing valuation of BPGIC and ways to move forward.
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On January 9, 2019, Mr. Cannon had a call with representatives of RBC to discuss the BPGIC business model in the context of the oil and gas storage industry sector, as well as U.S. investor interest in BPGIC.
On January 29, 2019, senior management of BPGIC emailed Mr. Cannon regarding the valuation.
On February 28, 2019, Mr. Cannon had a call with representatives of EBC to discuss the implications of investments by KKR and Blackrock in the Abu Dhabi National Oil Company (“ADNOC”) as it relates to U.S. investor interest in the region and companies such as BPGIC.
On March 6, 2019, Mr. Cannon had a call with representatives of RBC to discuss the KKR and Blackrock investment in ADNOC as it relates to U.S. investor interest in the region and companies such as BPGIC.
March 7, 2019, Mr. Cannon emailed senior management of BPGIC to inform him that Twelve Seas was prepared to present a revised offer to BPGIC with an increased valuation. On the same date, Mr. Stoupnitzky had calls with a representative of RBC to discuss moving the deal forward.
On March 11, 2019, Messrs. Edwards and Cannon met with various team members from BPGIC to present a revised transaction proposal, an analysis of a potential capital raise in connection with the closing of the merger and a revised timeline and responsibilities checklist.
On March 12, 2019, senior management of BPGIC called Mr. Cannon to inform him that BPGIC wanted to move forward with the transaction.
On March 13, 2019, Messrs. Edwards and Cannon met with senior management of BPGIC at BPGIC’s Abu Dhabi office to review and discuss the transaction terms, after which Twelve Seas presented a revised letter of intent based on negotiations held during such meeting.
On March 14, 2019, Mr. Cannon emailed the BPGIC team information about listing on NASDAQ.
On March 19, 2019, Mr. Cannon met with the BPGIC team at BPGIC’s Abu Dhabi office to further negotiate transaction terms.
On March 21, 2019, Twelve Seas provided senior management of BPGIC additional materials in response to questions that arose during the March 19, 2019 meeting in Abu Dhabi.
On March 25, 2019, Mr. Cannon met with senior management of BPGIC at BPGIC’s Abu Dhabi office to further negotiate transaction terms. On the same day, Mr. Cannon sent BPGIC an executed revised letter of intent.
On March 27, 2019, Mr. Cannon emailed senior management of BPGIC to address certain terms that were discussed at the March 25, 2019 meeting.
On March 28, 2019, Messrs. Stoupnitzky and Cannon had a call with representatives of RBC. On the same day, a senior manager of BPGIC contacted Mr. Edwards to confirm receipt of the executed letter of intent. A senior manager of BPGIC indicated that BPGIC was not yet prepared to sign the letter of intent but agreed upon certain non-circumvention provisions therein.
On March 31, 2019 and April 1, 2019, Messrs. Edwards and Cannon met with the BPGIC team as well as K&L Gates LLP, counsel to BPGIC, in BPGIC’s Abu Dhabi office to further discuss transaction terms.
On April 1, 2019, Mr. Cannon spoke with a representative of EBC regarding EBC working with RBC regarding investor outreach.
On April 2, 2019, Messrs. Edwards and Cannon met with the BPGIC team as well as K&L Gates LLP in BPGIC’s Abu Dhabi office to further negotiate transaction terms.
On April 3, 2019, Mr. Cannon met with senior management of BPGIC in BPGIC’s Abu Dhabi office to further negotiate transaction terms, after which the parties agreed upon terms.
On April 4, 2019, Mr. Cannon met with senior management of BPGIC as well as K&L Gates at BPGIC’s Abu Dhabi office to discuss the schedule for completion of the definitive Business Combination Agreement and BPGIC’s financial statements, review of a management presentation and to conduct a site visit for Messrs. Edwards and Stoupnitzky. On the same day, Messrs. Edwards and Cannon spoke with EBC regarding investor outreach. On the same day, Mr. Cannon
82
contacted Albeck Financial Services, Inc. (“Albeck”), Twelve Seas’ independent registered public accounting firm to begin preparing audited financial statements and unaudited pro-forma financial statements to be used in the Business Combination’s proxy statement/prospectus. In addition, Mr. Cannon contacted UHY Ltd. (“UHY”), Twelve Seas’ independent auditors, to begin preparing to audit the financial statements.
On April 6, 2019, Twelve Seas had calls with Ellenoff Grossman & Schole LLP (“EGS”), counsel for Twelve Seas, as well as Al Tamimi, UAE counsel for Twelve Seas, regarding due diligence to be conducted by local counsel in UAE for BPGIC.
On April 7, 2019, Twelve Seas, Al Tamimi, Robin Mills from Qamar Energy, representatives from RBC, BPGIC and K&L Gates met to discuss the progress of the Business Combination Agreement, and the investor presentation. On the same day, a senior manager of BPGIC sent Mr. Cannon a five-year financial forecast for BPGIC.
On April 8, 2019, Messrs. Edwards and Stoupnitzky and Ms. Mills met with senior management of BPGIC to take a facilities tour of BPGIC. On the same day, Twelve Seas had calls with the EBC team to discuss BPGIC and the investor presentation. On the same day, Twelve Seas had discussions with UHY, Albeck and EGS to discuss details relating to execution of the Business Combination Agreement.
On April 9-10, 2019, Mr. Cannon met with the BPGIC team to continue discussions related to terms of the Business Combination Agreement.
On April 10, 2019, Twelve Seas held a meeting of its board of directors where the board unanimously approved the transaction presented by Mr. Cannon and authorized Twelve Seas to finalize and execute the Business Combination Agreement with BPGIC. In addition, the board of Twelve Seas approved the change of Twelve Seas’ ticker symbols from “TWLV,” “TWLVR,” “TWLVR” and “TWLVU” to “BROG,” “BROGR,” “BROGW” and “BROGU,” respectively.
On April 11, 2019, Mr. Cannon met and had calls with the BPGIC, K&L Gates and EGS teams to continue working on the terms of the Business Combination Agreement as well as the investor presentation.
On April 12, 2019, Twelve Seas held a meeting of its board of directors where Mr. Cannon updated the board on changes in the proposed transaction and other key developments with BPGIC since the last meeting of the board held on April 10, 2019. The board of directors approved an updated version of the Business Combination Agreement, which included the revised deal terms.
On April 15, 2019, the parties executed the Business Combination Agreement and various team members from Twelve Seas, BPGIC, EBC, EGS, UHY, and K&L Gates attended a ceremony at NASDAQ.
The parties have continued and expect to continue regular discussions regarding the execution and timing of the Business Combination.
Twelve Seas’ Board of Directors’ Reasons for Approval of the Business Combination
Twelve Seas’ Board of Directors listened to and reviewed a presentation provided by the Twelve Seas management team and certain Board members visited BPGIC’s storage facilities in order to determine that the consideration to be paid to BPGIC was reasonable and that the Business Combination was in the best interests of Twelve Seas’ shareholders.
The presentation provided to the Board was derived from due diligence that the Twelve Seas’ management team conducted of BPGIC that included:
• Review of BPGIC’s historical financials and projected financials
• BPGIC’s customer contracts
• BPGIC’s financing agreements
• Market research commissioned by BPGIC
• Site visit of BPGIC’s storage facilities
• Discussions with BPGIC management and investors
• Discussions with investment professionals in the oil and gas industry
• Presentation materials from BPGIC’s London IPO efforts
• Financial data of public companies that are comparable to BPGIC
83
The presentation to the Twelve Seas Board included the following qualitative and quantitative evaluations made by the Twelve Seas management team regarding BPGIC in order to enable its board of directors to ascertain the reasonableness of the consideration being paid:
Evaluation Criteria |
Evaluation of BPGIC by Twelve Seas Management |
|
A high-quality senior management team |
BPGIC’s management team has extensive industry experience, solid understanding of business operations, and in-depth knowledge of industry trends and customer needs. |
|
Operating stability with significant growth potential |
BPGIC’s has been profitable since 2018 with stable monthly revenue, consistently high profit margins, zero safety incidents, and expansion plans underway that will significantly increase revenue and profit. |
|
Demonstration of industry leadership |
BPGIC has received the “Excellence in Terminal Optimisation Award” at the 2019 Global Tank Storage Awards in Rotterdam in recognition of the industry-leading technology and design incorporated into its facilities. Additionally, BPGIC has consistently generated profit margins significantly above that of comparable public market companies. |
|
Competitive advantages |
BPGIC’s facilities are located on a prime location within Fujairah, the second largest bunker hub in the world. BPGIC’s facilities are closer to the jetties than almost any other of its competitors in Fujairah, allowing for quick vessel turnaround time at lower cost to its customers. |
|
BPGIC’s facilities are designed to deliver superior ancillary services (blending, heating, transfer) to clients, reduce operational cost to BPGIC, and increase safety. The focus on superior ancillary services attracts clients with higher ancillary service utilization requirements and results in higher revenue and profits beyond the base storage fees. The built-in automation features of BPGIC’s facilities reduces headcount requirements and improves safety. Additionally, BPGIC’s facilities are IMO 2020 compliant. |
||
An attractive valuation |
BPGIC’s valuation expectations are at an attractive discount to comparable public market companies. |
|
Alignment with public investors |
BPGIC’s investors have expressed that they are not planning to sell significant portions of their shares at the time of the Business Combination and have expressed commitment to remain as majority owners. Additionally, BPGIC investors have agreed to have a significant portion of the consideration paid to them be held in escrow until certain financial or share price growth milestones have been met. |
|
Use of proceeds |
BPGIC has reasonable expectations relating to the use of the funds it will receive in the Business Combination, with a significant portion of the funds earmarked for its ongoing expansion plans. |
84
The tables below summarize the key financial data and quantitative analysis Twelve Seas management presented to the Board in support of its evaluation that BPGIC’s valuation expectations are at an attractive discount to comparable public market companies.
BPGIC Historical Financials & Projections
In connection with Twelve Seas’ review of the Business Combination, BPGIC provided Twelve Seas management with historical financials and certain projections regarding future financial performance. Such information is provided below. The projections were based on internal BPGIC estimates, which have not been examined by BPGIC’s auditors, and may not be consistent with actual performance. No assurance can be given that any of the projections set forth below will prove to be accurate, or that the growth described, or any growth, will be able to be achieved. The following information is provided solely for the convenience of the reader.
Actuals |
Projections |
||||||||||
2018(1) |
2019E |
2020E(2) |
|||||||||
(capacity in m3) |
|
|
|
|
|
||||||
Storage Capacity |
|
400,000 |
|
|
400,000 |
|
1,000,000 |
|
|||
(dollars in millions) |
|
|
|
|
|
||||||
Total EBITDA |
$ |
28 |
|
$ |
36 |
$ |
128 |
|
|||
Storage (Take-or-pay) EBITDA(3) |
|
14 |
|
|
17 |
|
50 |
|
|||
Ancillary Services EBITDA |
|
14 |
|
|
19 |
|
58 |
|
|||
Refinery EBITDA |
|
— |
|
|
— |
|
20 |
|
|||
EBITDA Margin |
|
84 |
% |
|
|
89 |
% |
____________
(1) BPGIC’s facilities did not become fully operational until the Second Quarter of 2018
(2) Annualized EBITDA upon all 1,000,000 m3 becoming fully operational for storage and ancillary services (projected to occur starting the Third Quarter of 2020)
(3) All actual and projected costs and expenses allocated to “Storage” EBITDA
Financials of Public Companies Comparable to BPGIC
In order to assess the attractiveness of BPGIC’s valuation versus comparable public companies in the oil and gas storage industry, Twelve Seas management reviewed and compared certain financial information (including revenue, enterprise value, EBITDA, EBITDA margins and Enterprise Value to EBITDA multiple) of five selected public companies operating in the Americas, EMEA, and Asia. In the exercise of its professional judgment, based on its knowledge of the relevant industries, and based on its consultation with investment banking professionals within the industry, Twelve Seas management deemed these selected public companies similar to BPGIC. The financial data was sourced from Capital IQ as of March 26, 2019.
Vopak |
Buckeye |
Nustar Energy |
SemGroup Corp |
Global Partners |
Mean |
Median |
|||||||||||||||
Ticker |
|
ENXTAM: VPK |
|
NYSE: BPL |
|
|
NYSE:
|
|
NYSE: SEMG |
|
|
NYSE: GLP |
|||||||||
Market Cap |
$ |
5,971 |
$ |
5,494 |
|
$ |
2,868 |
$ |
1,158 |
|
$ |
664 |
|||||||||
Enterprise Value (EV) |
$ |
8,218 |
$ |
10,218 |
|
$ |
7,305 |
$ |
4,065 |
|
$ |
2,010 |
|||||||||
Last Twelve Months |
|
|
|
|
|
|
|
||||||||||||||
– Revenue |
$ |
1,447 |
$ |
4,108 |
|
$ |
1,962 |
$ |
2,503 |
|
$ |
12,673 |
|||||||||
– EBITDA |
$ |
693 |
$ |
879 |
|
$ |
655 |
$ |
304 |
|
$ |
258 |
|||||||||
– Net Income |
$ |
333 |
|
($52 |
) |
$ |
206 |
|
($24 |
) |
$ |
102 |
|||||||||
– EV / Revenue |
|
5.7x |
|
2.5x |
|
|
3.7x |
|
1.6x |
|
|
0.2x |
2.7x |
2.5x |
|||||||
– EV / EBITDA |
|
11.9x |
|
11.6x |
|
|
11.2x |
|
13.4x |
|
|
7.8x |
11.2x |
11.6x |
|||||||
– Price / Earnings |
|
17.9x |
|
NM |
|
|
13.9x |
|
NM |
|
|
6.5x |
12.8x |
13.9x |
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Vopak |
Buckeye |
Nustar Energy |
SemGroup Corp |
Global Partners |
Mean |
Median |
||||||||||||||||
Ticker |
ENXTAM: VPK |
|
NYSE: BPL |
|
NYSE:
|
|
NYSE: SEMG |
|
|
NYSE: GLP |
|
|
|
|||||||||
2019E |
|
|
|
|
|
|
|
|
||||||||||||||
– EV / Revenue |
5.4x |
|
2.6x |
|
3.5x |
|
1.7x |
|
$ |
258 |
|
2.7x |
|
2.6x |
|
|||||||
– EV / EBITDA |
10.1x |
|
11.5x |
|
10.7x |
|
9.3x |
|
|
9.3x |
|
10.2x |
|
10.1x |
|
|||||||
– EBITDA Margin |
53.8 |
% |
22.4 |
% |
33.1 |
% |
17.9 |
% |
|
1.8 |
% |
25.8 |
% |
22.4 |
% |
|||||||
– Price / Earnings |
16.5x |
|
14.7x |
|
15.0x |
|
NM |
|
|
62.5x |
|
27.2x |
|
15.8x |
|
|||||||
2020E |
|
|
|
|
|
|
|
|
||||||||||||||
– EV / Revenue |
5.2x |
|
2.7x |
|
3.4x |
|
1.6x |
|
|
0.2x |
|
2.6x |
|
2.7x |
|
|||||||
– EV / EBITDA |
9.5x |
|
10.6x |
|
9.9x |
|
8.3x |
|
|
9.0x |
|
9.5x |
|
9.5x |
|
|||||||
– EBITDA Margin |
55.2 |
% |
24.9 |
% |
34.8 |
% |
19.2 |
% |
|
1.8 |
% |
27.2 |
% |
24.9 |
% |
|||||||
– Price / Earnings |
15.7x |
|
12.9x |
|
14.2x |
|
110.1x |
|
|
35.0x |
|
37.6x |
|
15.7x |
|
The companies had market cap, enterprise value, revenue, EBITDA, net income, EV / Revenue multiple, EV / EBITDA multiples, EBITDA margin and price / earnings multiples as listed in the table above. Based on a review of the different types of multiples in the table above and the nature of BPGIC’s business, Twelve Seas management team judged that enterprise value / EBITDA multiple is the most appropriate way to value and compare BPGIC’s value to its public peers.
Of the selected public companies, Twelve Seas management identified Vopak as the competitor with the most similar business model as BPGIC and, accordingly, placed more weight on its financials and multiples. Additionally, because Twelve Seas management is valuing BPGIC based on BPGIC’s projected 2020 financials, Twelve Seas management focused on the 2020E financials in the table above when comparing BPGIC’s value to its public peers. With the mean and median of the five selected public companies and Vopak’s 2020E EV / EBITDA multiples all converging to 9.5:1, Twelve Seas management assessed that 9.5:1 is an appropriate EV / EBITDA multiple comparison point to use in order to assess the attractiveness of BPGIC’s valuation.
BPGIC’s EV / EBITDA Multiple Analysis
(in millions) |
Shares |
$ |
|||
Net Cash from SPAC(1) |
203 |
|
|||
Projected BPGIC Cash at Merger Closing |
0 |
|
|||
Projected BPGIC Debt at Merger Closing |
185 |
|
|||
BPGIC Net Debt at Merger Closing |
(18 |
) |
|||
Equity of Existing BPGIC Shareholders(2) |
80 |
800 |
|
||
SPAC Shareholders(2) |
22.8 |
228 |
|
||
Sponsor & Underwriter Shareholders(2) |
3.5 |
35 |
|
||
Total Outstanding Equity of Combined Company(2) |
106.3 |
1,063 |
|
||
Enterprise Value of Combined Company |
1,045 |
|
|||
BPGIC 2020E EBITDA(3) |
128 |
|
|||
2020E EV / EBITDA Multiple |
8.2x |
|
____________
(1) Assumes no investors in Twelve Seas redeem shares in connection with the Business Combination; includes estimated interest earned in Trust by time of merger of $4.8 million; assumes $9.2 million of transaction fees and expenses for the merger
(2) Excluding all Escrow Shares; including Rights Shares issued at Business Combination; assumes an illustrative value per share of $10
Based on the foregoing analysis, Twelve Seas’ management determined that the $800 million preliminary estimate of fair market value of BPGIC based on BPGIC’s projected annualized EBITDA starting in the Third Quarter of 2020 is equivalent to a 8.2:1 EV / EBITDA multiple and represents an attractive discount to the 2020E EV / EBITDA multiple of 9.5:1 estimated for BPGIC’s comparable public peers.
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In addition to the above valuation analysis, Twelve Seas’ management, certain board members and advisors conducted on-site diligence of BPGIC during which they reviewed key aspects of BPGIC’s business operations such as technology and infrastructure and conducted interviews of BPGIC’s management members and investors. Twelve Seas and its legal advisor also reviewed legal, accounting and other materials in the data room set up for the transaction and analyzed issues and risks discovered in this process.
Twelve Seas’ management and the members of its board of directors have long and diverse experience in both operational management and investment and financial management and analysis and, in its opinion, was suitably qualified to conduct the due diligence and other investigations and analyses required in connection with Twelve Seas’ search for a merger partner. A detailed description of the experience of Twelve Seas’ board of directors is included in the section of this proxy statement/prospectus entitled “Other Information Related to Twelve Seas — Directors and Executive Officers.”
The Twelve Seas board of directors determined that the consideration being paid in the Business Combination, the amount of which was negotiated at arms-length, was fair to and in the best interests of Twelve Seas and its shareholders and appropriately reflected BPGIC’s value. The board based this conclusion on (i) a comparison of (a) the agreed $1.05 billion enterprise value of BPGIC, which excludes value of shares held in escrow, as a multiple of the estimated annualized EBTIDA as of the Third Quarter of 2020 (a 8.2:1 multiple), to (b) the mean enterprise values as a multiple of the estimated 2020 EBITDA of a set of comparable companies (a 9.5:1 multiple); (ii) a review of revenue projections provided by BPGIC by reviewing key customer contract terms, key assumptions supporting the projection, and historical financial performance; and (iii) a range of qualitative and quantitative factors such as BPGIC’s market position, management experience, geographic foothold, and future growth opportunities. In particular, the enterprise value/EBITDA multiple analysis indicated that Twelve Seas’ valuation of BPGIC was at a lower multiple of its EBITDA compared to that of the selected comparable public companies in the same industry. Such comparison supported the fairness of Twelve Seas’ valuation of BPGIC.
Based on information provided by Twelve Seas’ management and financial advisors as well as information collected in its own diligence of BPGIC, the Twelve Seas board of directors concluded that the Business Combination Agreement with BPGIC was in the best interests of Twelve Seas’ shareholders. The Twelve Seas board of directors considered a wide variety of factors in connection with its evaluation of the Business Combination. In light of the complexity of those factors, the Twelve Seas board of directors did not consider it practicable to, nor did it attempt to, quantify or otherwise assign relative weights to the specific factors it considered in reaching its decision. In addition, individual members of the Twelve Seas board may have given different weight to different factors.
The Twelve Seas board also considered a variety of uncertainties and risks and other potentially negative factors concerning the Business Combination, including, but not limited to, the following:
• Macroeconomic Risks. Macroeconomic uncertainty and the effects it could have on the combined company’s revenues;
• Foreign Holding Company Structure. The added risks that would be present in the proposed post-Business Combination structure, such as the risk of being able to enforce future judgments against a foreign company, that would not have been present if the combined company was a U.S. domiciled entity;
• Ability to Assess BPGIC’s Business and Management. Twelve Seas’ ability to assess BPGIC’s business’ management may be limited due to a lack of time, resources or information. Twelve Seas’ assessment of the capabilities of BPGIC’s management may accordingly prove to be incorrect and BPGIC management may lack the skills, qualifications or abilities that Twelve Seas believed BPGIC management had; and
• Other Risks. Various other risks associated with the business of BPGIC, as described in the section entitled “Risk Factors” appearing elsewhere in this proxy statement/prospectus.
The Twelve Seas board concluded that the potential benefits that it and its shareholders expected to achieve as a result of the Transactions outweighed the potentially negative factors associated with the Transactions. The board also noted that the Twelve Seas shareholders would have a substantial economic interest in the combined company (depending on the level of Redemption). Accordingly, the board unanimously determined that the Business Combination Agreement and the Transactions contemplated therein, were advisable, fair to, and in the best interests of Twelve Seas and its shareholders.
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Satisfaction of 80% Test
It is a requirement under Twelve Seas’ amended and restated memorandum and articles of association that any business acquired by Twelve Seas have a fair market value equal to at least 80% of the balance of the funds in the Trust Account at the time of the execution of a definitive agreement for an initial Business Combination.
As of April 15, 2019, the date of the execution of the Business Combination Agreement, the balance of the funds in the Trust Account was approximately $211 million and 80% thereof represents approximately $169 million. In reaching its conclusion on the 80% asset test, Twelve Seas’ board of directors used as a fair market value for BPGIC of $1.0 billion enterprise value, which is before given any affect for the Merger and was implied based on the terms of the Business Combination agreed to by parties in negotiating the Business Combination Agreement. This fair market value was implied based on adding (i) the $800 million common equity value consideration to the current BPGIC owners that is not held in escrow and (ii) the $185 million of estimated net debt of BPGIC to be rolled over at Closing, but excluding the effects of the Merger. The parties to the Business Combination Agreement considered factors such as BPGIC’s historical financial results, the future growth outlook and financial plan, as well as valuations and trading of publicly traded companies in similar and adjacent sectors.
The Twelve Seas board of directors believes that because of the financial skills and background of its directors, it was qualified to conclude that the acquisition of BPGIC met the 80% requirement. Based on the fact that the $1.0 billion fair market value of BPGIC as described above, is in excess of the threshold of approximately $169 million, representing 80% of the balance of the funds in the Trust Account, the Twelve Seas board determined that the fair market value of BPGIC was substantially in excess of 80% of the funds in the Trust Account and that the 80% test was met.
Interests of Twelve Seas’ Directors and Officers in the Business Combination
In considering the recommendation of the board of directors of Twelve Seas to vote in favor of approval of the Business Combination Proposal, the Merger Proposal, the Share Issuance Proposal and the Adjournment Proposal, shareholders should keep in mind that Twelve Seas’ Initial Shareholders, including its directors and executive officers, have interests in such proposals that are different from, or in addition to, those of Twelve Seas shareholders generally. In particular:
• If the Business Combination with BPGIC or another business combination is not consummated by December 22, 2019, Twelve Seas will cease all operations except for the purpose of winding up, redeeming 100% of the outstanding Public Shares for cash and, subject to the approval of its remaining shareholders and its board of directors, dissolving and liquidating. In such event, the 5,175,000 Founder Shares held by Twelve Seas’ Initial Shareholders, including its directors and officers, which were acquired for an aggregate purchase price of $25,000 prior to Twelve Seas’ Initial Public Offering, would be worthless because Twelve Seas’ Initial Shareholders are not entitled to participate in any Redemption or distribution with respect to such shares. As part of the Business Combination, Twelve Seas’ Initial Shareholders agreed to forfeit 1,035,000 Founder Shares, which would be cancelled. As a result, Twelve Seas’ Initial Shareholders would retain 4,140,000 Founder Shares. Such shares had an aggregate market value of $41.6 million based upon the closing price of $10.06 per share on NASDAQ on April 12, 2019.
• Twelve Seas’ Sponsor purchased an aggregate of 529,000 Private Placement Units from Twelve Seas for an aggregate purchase price of $5,290,000 (or $10.00 per Unit). This purchase took place on a private placement basis simultaneously with the consummation of the Initial Public Offering. All of the proceeds Twelve Seas received from these purchases were placed in the Trust Account. Such Units had an aggregate market value of $5.6 million based upon the closing price of $10.50 per Unit on NASDAQ on April 12, 2019, the day before the Business Combination was announced. The purchasers of the Private Placement Units waived the right to participate in any Redemption or liquidation distribution with respect to such Private Placement Units. Accordingly, the Twelve Seas shares, Warrants and Rights underlying the Private Placement Units will become worthless if Twelve Seas does not consummate a business combination by December 22, 2019 (as will the Twelve Seas Warrants and Rights held by Public Shareholders).
• The total market value of the Twelve Seas directors’ current equity ownership in Twelve Seas ordinary shares and Units, based on the closing price of $10.06 per ordinary share of Twelve Seas and $10.50 per Unit on the NASDAQ as of April 12, 2019, is approximately $1.0 million.
• If Twelve Seas is unable to complete a business combination within the required time period, the Initial Shareholders will be liable to ensure that the proceeds in the Trust Account are not reduced by the claims
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of target businesses or claims of vendors or other entities that are owed money by Twelve Seas for services rendered or contracted for or products sold to Twelve Seas, but only if such a vendor or target business has not executed such a waiver.
• Twelve Seas’ Initial Shareholders, including its officers and directors, and their affiliates are entitled to reimbursement of out-of-pocket expenses incurred by them in connection with certain activities on Twelve Seas’ behalf, such as identifying and investigating possible business targets and business combinations. However, if Twelve Seas fails to consummate a business combination within the required period, they will not have any claim against the Trust Account for reimbursement. Accordingly, Twelve Seas may not be able to reimburse these expenses if the Business Combination with BPGIC or another business combination, is not completed by December 22, 2019. As of the date of this proxy statement/prospectus, there are no unpaid reimbursable expenses.
• Since its inception, the Sponsor has made loans from time to time to Twelve Seas to fund certain capital requirements. As of the date of this proxy statement/prospectus, an aggregate of $500,000 principal amount of these loans is outstanding. These loans are evidenced by non-interest-bearing notes that are convertible at the Sponsor’s election upon the consummation of an initial business combination into Units of Twelve Seas, at a price of $10.00 per Unit.
Recommendation of Twelve Seas’ Board of Directors
After careful consideration of the matters described above, particularly BPGIC’s high historical profit margins versus competitors, potential for growth, the experience of BPGIC’s management, BPGIC’s competitive positioning, its customer relationships, and technical skills, Twelve Seas’ board determined unanimously that each of the Business Combination Proposal, the Merger Proposal, the Share Issuance Proposal and the Adjournment Proposal, if presented, Twelve Seas’ board of directors has approved and declared advisable and unanimously recommend that you vote or give instructions to vote “FOR” each of these proposals.
The foregoing discussion of the information and factors considered by the Twelve Seas board of directors is not meant to be exhaustive but includes the material information and factors considered by the Twelve Seas board of directors.
Pubco’s Amended and Restated Memorandum and Articles of Association
Pursuant to the Business Combination Agreement, prior to the consummation of the Business Combination, the board of directors and shareholders of Pubco will amend and restate Pubco’s memorandum and articles of association. Pubco’s Amended and Restated Memorandum and Articles of Association will reflect the following material differences from Twelve Seas’ current amended and restated memorandum and articles of association:
• the name of the new public entity will be “Brooge Holdings Limited” as opposed to “Twelve Seas Investment Company”;
• Pubco will have 450,000,000 authorized Ordinary Shares and 50,000,000 authorized preferred shares, as opposed to Twelve Seas having 200,000,000 authorized ordinary shares and 2,000,000 authorized preferred shares;
• Pubco’s corporate existence will be perpetual as opposed to Twelve Seas’ corporate existence which terminates if Twelve Seas is unable to consummate a business combination; and
• Pubco’s amended and restated memorandum and articles of association will not include the various provisions applicable only to special purpose acquisition companies that Twelve Seas’ amended and restated memorandum and articles of association contains (Article Sixth).
As noted above, the provisions of Article Sixth of Twelve Seas’ amended and restated memorandum and articles of association will not be included in Pubco’s Amended and Restated Memorandum and Articles of Association. The provisions of Article Sixth that are proposed to be deleted, by the terms of the preamble (which will also be deleted), apply only during the period that will terminate upon the consummation of the Business Combination:
• Section A requires that Twelve Seas submit such business combination to its shareholders for approval pursuant to the proxy rules promulgated under the Exchange Act.
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• Section B provides that Twelve Seas may consummate a business combination that is submitted to its shareholders for approval only if a majority of the then issued and outstanding ordinary shares present and entitled to vote at the Meeting to approve such business combination are voted for the approval of such business combination.
• Section C specifies the procedures for exercising Redemption rights with respect to Public Shares.
• Section D relates to certain tender offer procedures in connection with a business combination.
• Section E prohibits Twelve Seas from consummating a business combination unless Twelve Seas has net tangible assets of at least $5,000,001 upon consummation of such business combination.
• Section F provides that, if a business combination is not consummated by December 22, 2019, Twelve Seas will cease all operations except for the purposes of winding up, redeeming 100% of the Public Shares for cash and, subject to approval of Twelve Seas’ then shareholders and Twelve Seas’ board of directors, dissolving and liquidating.
• Section G provides when holders of Public Shares are entitled to receive distributions from the Trust Account.
• Section H prohibits a business combination prior to the initial business combination.
• Section I prohibits Twelve Seas from issuing any ordinary shares, any securities convertible into ordinary shares, or any securities which participate in or are otherwise entitled in any manner to any of the proceeds in the Trust Account or which vote as a class with the ordinary shares on a business combination, prior to the consummation of a business combination.
• Section J relates to the classification of directors.
The preamble and Article Sixth (other than Section J providing for a classified board) relate to the operation of Twelve Seas as a blank check company prior to the consummation of its initial business combination and would not be applicable to Pubco after consummation of the Merger. Accordingly, they would serve no further purpose.
Certain provisions in the Amended and Restated Memorandum and Articles of Association of Pubco, such as the super majority voting requirements for amendments thereto described above, may discourage unsolicited takeover proposals that Pubco’s shareholders may consider to be in their best interest and may make the removal of Pubco’s incumbent management more difficult.
Other anti-takeover provisions under the Amended and Restated Memorandum and Articles of Association of Pubco include:
• Undesignated Preferred Shares. Pubco’s board of directors will have the ability to designate and issue preferred shares with voting or other rights or preferences that could deter hostile takeovers or delay changes in its control or management.
• Directors Removed Only for Cause. Pubco’s Amended and Restated Memorandum and Articles of Association will provide that shareholders may remove directors only for cause.
For discussions on risks associated with the above anti-takeover provisions, please see “Risk Factors — Provisions in Pubco’s amended and restated memorandum and articles of association may inhibit a takeover of us, which could limit the price investors might be willing to pay in the future for Pubco’s securities and could entrench management.”
Certain U.S. Federal Income Tax Considerations
The following discussion sets forth the material U.S. federal income tax consequences to the U.S. Holders (as defined below) of Twelve Seas ordinary shares, Warrants or Rights of (i) the Business Combination, (ii) the ownership of Pubco Ordinary Shares following the Business Combination and (iii) the election to have Twelve Seas ordinary shares redeemed for cash. The information set forth in this section is based on the Code, its legislative history, final, temporary and proposed treasury regulations promulgated thereunder (“Treasury Regulations”), published rulings and court decisions, all as currently in effect. These authorities are subject to change or differing interpretations, possibly on a retroactive basis.
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For purposes of this summary, a “U.S. Holder” means a beneficial owner of Twelve Seas ordinary shares, Warrants or Rights that is for U.S. federal income tax purposes:
• an individual citizen or resident of the United States;
• a corporation (or other entity treated as a corporation) that is created or organized (or treated as created or organized) in or under the laws of the United States, any state thereof or the District of Columbia;
• an estate whose income is includible in gross income for U.S. federal income tax purposes regardless of its source; or
• a trust if (i) a U.S. court can exercise primary supervision over the trust’s administration and one or more U.S. persons are authorized to control all substantial decisions of the trust, or (ii) it has a valid election in effect under applicable U.S. Treasury Regulations to be treated as a U.S. person.
This discussion does not address all aspects of U.S. federal income taxation that may be relevant to any particular holder based on such holder’s individual circumstances. In particular, this discussion considers only holders that hold Twelve Seas ordinary shares, Warrants or Rights as capital assets within the meaning of Section 1221 of the Code. This discussion does not address the alternative minimum tax, the Medicare tax on net investment income, or the U.S. federal income tax consequences to holders that are subject to special rules, including:
• financial institutions or financial services entities;
• broker-dealers;
• persons that are subject to the mark-to-market accounting rules under Section 475 of the Code;
• tax-exempt entities;
• governments or agencies or instrumentalities thereof;
• insurance companies;
• regulated investment companies;
• real estate investment trusts;
• certain expatriates or former long-term residents of the United States;
• persons that acquired Twelve Seas ordinary shares, Warrants or Rights pursuant to an exercise of employee options, in connection with employee incentive plans or otherwise as compensation;
• persons that hold Twelve Seas ordinary shares as part of a straddle, constructive sale, hedging, redemption or other integrated transaction;
• persons whose functional currency is not the U.S. dollar;
• controlled foreign corporations;
• passive foreign investment companies;
• persons required to accelerate the recognition of any item of gross income with respect to Twelve Seas ordinary shares as a result of such income being recognized on an applicable financial statement; and
• persons who actually or constructively own 5 percent or more of Twelve Seas ordinary shares (except as specifically provided below); or the Sponsor or its affiliates.
This discussion does not address any tax laws other than the U.S. federal income tax law, such as gift or estate tax laws, state, local or non-U.S. tax laws or, except as discussed herein, any tax reporting obligations of a holder of Twelve Seas ordinary shares, Warrants or Rights. Additionally, this discussion does not address the tax treatment of partnerships or other pass-through entities or persons who hold Twelve Seas ordinary shares, Warrants or Rights through such entities. If a partnership (or other entity classified as a partnership for U.S. federal income tax purposes) is the beneficial owner of Twelve Seas ordinary shares, Warrants or Rights, the U.S. federal income tax treatment of a partner in
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the partnership will generally depend on the status of the partner and the activities of the partnership. Additionally, this discussion does not address the conversion of Warrants (including the Private Placement Warrants) into Twelve Seas ordinary shares. Holders of Warrants should consult with their own tax advisors regarding the particular tax consequences to them of holding, exercising or disposing of the Warrants.
THE U.S. FEDERAL INCOME TAX TREATMENT OF THE BENEFICIAL OWNERS OF TWELVE SEAS ORDINARY SHARES, WARRANTS OR RIGHTS MAY BE AFFECTED BY MATTERS NOT DISCUSSED HEREIN AND DEPENDS IN SOME INSTANCES ON DETERMINATIONS OF FACT AND INTERPRETATIONS OF COMPLEX PROVISIONS OF U.S. FEDERAL INCOME TAX LAW FOR WHICH NO CLEAR PRECEDENT OR AUTHORITY MAY BE AVAILABLE. WE URGE BENEFICIAL OWNERS OF TWELVE SEAS ORDINARY SHARES WHO CHOOSE TO HAVE THEIR ORDINARY SHARES REDEEMED FOR CASH OR WHO CHOOSE TO PARTICIPATE IN THE BUSINESS COMBINATION TO CONSULT THEIR TAX ADVISOR REGARDING THE SPECIFIC TAX CONSEQUENCES TO SUCH HOLDER OF THE BUSINESS COMBINATION AND OWNING AND DISPOSING OF PUBCO’S ORDINARY SHARES AS A RESULT OF ITS PARTICULAR CIRCUMSTANCES, INCLUDING THE U.S. FEDERAL, STATE, LOCAL AND FOREIGN INCOME AND OTHER TAX CONSEQUENCES THEREOF.
Certain U.S. Federal Income Tax Considerations of Participating in the Business Combination
In General
This section is subject in its entirety to the discussion in the section below entitled “— Passive Foreign Investment Company”. This section is addressed to U.S. Holders of ordinary shares of Twelve Seas that elect to participate in the Business Combination. It is intended that the Merger of Twelve Seas and Merger Sub together with the Share Exchange by BPGIC qualify as an exchange described in Section 351 of the Code. However, there can be no assurance that the IRS will not successfully challenge this position, and if so then the exchange of ordinary shares of Twelve Seas for Pubco Ordinary Shares will be a taxable exchange, and the tax consequences described herein will be materially different from those described below. The remainder of this discussion assumes that the transactions described above qualify as an exchange described in Section 351 of the Code.
A U.S. Holder who owns ordinary shares of Twelve Seas and who exchanges such ordinary shares for Pubco’s Ordinary Shares will generally not recognize gain or loss. The aggregate tax basis for U.S. federal income tax purposes of the shares of Pubco received by such a U.S. Holder in the Merger will be the same as the aggregate adjusted tax basis of the Twelve Seas shares surrendered in exchange therefor. The holding period of the shares of Pubco received in the Merger by such U.S. Holder will include the period during which the Twelve Seas shares exchanged therefor were held by such U.S. Holder.
A U.S. Holder whose Twelve Seas Warrant automatically converts into a warrant to purchase Pubco’s Ordinary Shares will recognize gain or loss upon such exchange equal to the difference between the fair market value of the Pubco warrant received and such U.S. Holder’s adjusted basis in its Twelve Seas Warrant. A U.S. Holder’s basis in its Pubco warrant deemed received in the Merger will equal the fair market value of such Warrant. A U.S. Holder’s holding period in its Pubco warrant will begin on the day after the Merger.
A U.S. Holder who receives Pubco Ordinary Shares in exchange for such U.S. Holder’s ordinary shares of Twelve Seas and whose Twelve Seas Warrants automatically convert into warrants to purchase Pubco’s Ordinary Shares will recognize gain (if any) with respect to each ordinary share of Twelve Seas and Warrant held immediately prior to the Merger in an amount equal to the lesser of (i) the excess (if any) of the fair market value of the Pubco Ordinary Shares and warrants to acquire Pubco Ordinary Shares deemed received in exchange for such share or Warrant, as described below, over such U.S. Holder’s tax basis in the Twelve Seas share or Warrant exchanged therefor or (ii) the fair market value of the warrants to acquire Pubco Ordinary Shares deemed received in exchange for such Twelve Seas share or Warrant. To determine the amount of gain, if any, that such U.S. Holder must recognize, the holder must compute the amount of gain or loss realized as a result of the Merger on a share-by-share and warrant-by-warrant basis by allocating the aggregate fair market value of (i) the Pubco Ordinary Shares received by such U.S. Holder and (ii) the warrants to purchase Pubco Ordinary Shares owned by such U.S. Holder as a result of the Merger among the ordinary shares and Warrants of Twelve Seas owned by such U.S. Holder immediately prior to the Merger in proportion to their fair market values. Any loss recognized by a U.S. Holder is disallowed.
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A U.S. Holder of Rights generally should not recognize gain or loss upon the acquisition of Twelve Seas ordinary shares on the conversion of the Rights, such ordinary shares should have a tax basis equal to such holder’s tax basis in the Rights, and the holding period of such shares should begin on the day after such conversion. Thereafter, the redemption or exchange of Twelve Seas ordinary shares received upon the acquisition of such shares on the conversion of the Rights should have the tax consequences described in this discussion, depending on whether the holder of such ordinary shares elects to have such shares redeemed for cash or whether such holder participates in the Business Combination (in which case the Twelve Seas ordinary shares are exchanged for Pubco Ordinary Shares), as applicable.
Passive Foreign Investment Company
A foreign (i.e., non-U.S.) corporation will be a “passive foreign investment company” (a “PFIC”) for U.S. tax purposes if at least 75% of its gross income in a taxable year of such foreign corporation, including its pro rata share of the gross income of any corporation in which it is considered to own at least 25% of the shares by value, is passive income. Alternatively, a foreign corporation will be a PFIC if at least 50% of its assets in a taxable year, ordinarily determined based on fair market value and averaged quarterly over the year, including its pro rata share of the assets of any corporation in which it is considered to own at least 25% of the shares by value, are held for the production of, or produce, passive income. Passive income generally includes dividends, interest, rents and royalties (other than certain rents or royalties derived from the active conduct of a trade or business) and gains from the disposition of passive assets.
Because Twelve Seas is a blank check company, with no current active business, we believe that it is likely that Twelve Seas will meet the PFIC asset or income test for its current taxable year. However, pursuant to a start-up exception, a corporation will not be a PFIC for the first taxable year the corporation has gross income, if (1) no predecessor of the corporation was a PFIC; (2) the corporation satisfies the IRS that it will not be a PFIC for either of the first two taxable years following the start-up year; and (3) the corporation is not in fact a PFIC for either of those years. The applicability of the start-up exception to Twelve Seas is uncertain. After the acquisition of a company or assets in a business combination, Twelve Seas may still meet one of the PFIC tests depending on the timing of the acquisition and the amount of its passive income and assets as well as the passive income and assets of the acquired business. If the company that Twelve Seas acquires in a business combination is a PFIC, then we will likely not qualify for the start-up exception and will be a PFIC for our current taxable year. The actual PFIC status of Twelve Seas for its current taxable year or any subsequent taxable year, however, will not be determinable until after the end of such taxable year. Accordingly, there can be no assurance with respect to the status of Twelve Seas as a PFIC for its current taxable year or any future taxable year.
If Twelve Seas is determined to be a PFIC for any taxable year (or portion thereof) that is included in the holding period of a U.S. Holder of our securities and, in the case of our ordinary shares, the U.S. Holder did not make a timely QEF election for our first taxable year as a PFIC in which the U.S. Holder held (or was deemed to hold) such ordinary shares, a QEF election along with a deemed sale (or purging) election, or a “mark-to-market” election, each as described below, such holder generally will be subject to special rules for regular U.S. federal income tax purposes with respect to:
• any gain recognized by the U.S. Holder on the sale or other disposition of our securities; and
• any “excess distribution” made to the U.S. Holder (generally, any distributions to such U.S. Holder during a taxable year of the U.S. Holder that are greater than 125% of the average annual distributions received by such U.S. Holder in respect of our securities during the three preceding taxable years of such U.S. Holder or, if shorter, such U.S. Holder’s holding period for our securities).
Under these rules,
• the U.S. Holder’s gain or excess distribution will be allocated ratably over the U.S. Holder’s holding period for our securities;
• the amount allocated to the U.S. Holder’s taxable year in which the U.S. Holder recognized the gain or received the excess distribution, or to the period in the U.S. Holder’s holding period before the first day of our first taxable year in which we are a PFIC, will be taxed as ordinary income;
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• the amount allocated to other taxable years (or portions thereof) of the U.S. Holder and included in its holding period will be taxed at the highest tax rate in effect for that year and applicable to the U.S. Holder; and
• the interest charge generally applicable to underpayments of tax will be imposed in respect of the tax attributable to each such other taxable year(s) of the U.S. Holder.
In general, if Twelve Seas is determined to be a PFIC, a U.S. Holder may avoid the PFIC tax consequences described above in respect to our ordinary shares by making a timely QEF election (or a QEF election along with a purging election). Pursuant to the QEF election, a U.S. Holder generally will be required to include in income its pro rata share of the net capital gains of Twelve Seas (as long-term capital gain) and our other earnings and profits (as ordinary income), on a current basis, in each case whether or not distributed, in the taxable year of the U.S. Holder in which or with which our taxable year ends if we are treated as a PFIC for that taxable year. A U.S. Holder may make a separate election to defer the payment of taxes on undistributed income inclusions under the QEF rules, but if deferred, any such taxes will be subject to an interest charge.
A U.S. Holder may not make a QEF election with respect to its Warrants or Rights to acquire Twelve Seas ordinary shares. As a result, if a U.S. Holder sells or otherwise disposes of such Warrants or Rights (other than upon exchange of Warrants or conversion of such Rights), any gain recognized generally will be subject to the special tax and interest charge rules treating the gain as an excess distribution, as described above, if Twelve Seas were a PFIC at any time during the period the U.S. Holder held the Warrants or Rights. If a U.S. Holder that exercises such Warrants or Rights properly makes a QEF election with respect to the newly acquired Twelve Seas ordinary shares (or has previously made a QEF election will continue to apply with respect to our ordinary shares), the QEF election will apply to the newly acquired ordinary shares, but the adverse tax consequences relating to PFIC shares, adjusted to take into account the current income inclusions resulting from the QEF election, will continue to apply with respect to such newly acquired ordinary shares (which generally will be deemed to have a holding period for purposes of the PFIC rules that includes the period the U.S. Holder held the Warrants or Rights), unless the U.S. Holder makes a purging election under the PFIC rules. The purging election creates a deemed sale of such shares at their fair market value. The gain recognized by the purging election will be subject to the special tax and interest charge rules treating the gain as an excess distribution, as described above. As a result of the purging election, the U.S. Holder will have a new basis and holding period in the ordinary shares acquired upon the exercise of the Warrants or the conversion of the Rights by the gain recognized and will also have a new holding period in such ordinary shares for purposes of the PFIC rules.
The QEF election is made on a shareholder-by-shareholder basis and, once made, can be revoked only with the consent of the IRS. A U.S. Holder generally makes a QEF election by attaching a completed IRS Form 8621 (Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund), including the information provided in a PFIC annual information statement, to a timely filed U.S. federal income tax return for the tax year to which the election relates. Retroactive QEF elections generally may be made only by filing a protective statement with such return and if certain other conditions are met or with the consent of the IRS. U.S. Holders should consult their own tax advisors regarding the availability and tax consequences of a retroactive QEF election under their particular circumstances.
In order to comply with the requirements of a QEF election, a U.S. Holder must receive a PFIC annual information statement from Twelve Seas. If Twelve Seas determines it is a PFIC for any taxable year, we will endeavor to provide to a U.S. Holder upon request such information as the IRS may require, including a PFIC annual information statement, in order to enable the U.S. Holder to make and maintain a QEF election. However, there is no assurance that Twelve Seas will have timely knowledge of its status as a PFIC or of the required information to be provided.
If a U.S. Holder has made a QEF election with respect to Twelve Seas ordinary shares, and the special tax and interest charge rules do not apply to such shares (because of a timely QEF election for our first taxable year as a PFIC in which the U.S. Holder holds (or is deemed to hold) such shares or a purge of the PFIC taint pursuant to a purging election, as described above), any gain recognized on the sale of our ordinary shares generally will be taxable as capital gain and no interest charge will be imposed. As discussed above, for regular U.S. federal income tax purposes, U.S. Holders of a QEF generally are currently taxed on their pro rata shares of its earnings and profits, whether or not distributed. In such case, a subsequent distribution of such earnings and profits that were previously included in income generally should not be taxable as a dividend to such U.S. Holders. The adjusted tax basis of a U.S. Holder’s shares in a QEF will
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be increased by amounts that are included in income, and decreased by amounts distributed but not taxed as dividends, under the above rules. Similar basis adjustments apply to property if by reason of holding such property the U.S. Holder is treated under the applicable attribution rules as owning shares in a QEF.
Although a determination as to the PFIC status of Twelve Seas will be made annually, an initial determination we are a PFIC will generally apply for subsequent years to a U.S. Holder who held our securities while we were a PFIC, whether or not we meet the test for PFIC status in those subsequent years. A U.S. Holder who makes the QEF election discussed above for the first taxable year Twelve Seas is a PFIC in which the U.S. Holder holds (or is deemed to hold) our ordinary shares, however, will not be subject to the PFIC tax and interest charge rules discussed above in respect to such shares. In addition, such U.S. Holder will not be subject to the QEF inclusion regime with respect to such shares for any taxable year of Twelve Seas that ends within or with a taxable year of the U.S. Holder and in which we are not a PFIC. On the other hand, if the QEF election is not effective for each of the taxable years in which Twelve Seas is a PFIC and the U.S. Holder holds (or is deemed to hold) our ordinary shares, the PFIC rules discussed above will continue to apply to such shares unless the holder files on a timely filed U.S. federal income tax return (including extensions) a QEF election and a purging election to recognize under the rules of Section 1291 of the Code any gain that the U.S. Holder would otherwise recognize if the U.S. Holder had sold our shares for their fair market value on the “qualification date.” The qualification date is the first day of the tax year in which Twelve Seas qualifies as a QEF with respect to such U.S. Holder. The purging election can only be made if such U.S. Holder held Twelve Seas ordinary shares on the qualification date. The gain recognized by the purging election will be subject to the special tax and interest charge rules treating the gain as an excess distribution, as described above. As a result of the purging election, the U.S. Holder will increase the adjusted tax basis in the Twelve Seas ordinary shares by the amount of the gain recognized and will also have a new holding period in the shares for purposes of the PFIC rules.
Alternatively, if a U.S. Holder, at the close of its taxable year, owns (or is deemed to own) shares in a PFIC that are treated as marketable shares, the U.S. Holder may make a mark-to-market election with respect to such shares for such taxable year. If the U.S. Holder makes a valid mark-to-market election for the first taxable year of the U.S. Holder in which the U.S. Holder holds (or is deemed to hold) Twelve Seas ordinary shares and for which we are determined to be a PFIC, such holder generally will not be subject to the PFIC rules described above in respect to its ordinary shares as long as such shares continue to be treated as marketable shares. Instead, in general, the U.S. Holder will include as ordinary income each year that Twelve Seas is treated as a PFIC the excess, if any, of the fair market value of such U.S. Holder’s ordinary shares at the end of its taxable year over the adjusted basis in its ordinary shares. The U.S. Holder also will be allowed to take an ordinary loss in respect of the excess, if any, of the adjusted basis of its Twelve Seas ordinary shares over the fair market value of such ordinary shares at the end of the U.S. Holder’s taxable year (but only to the extent of the net amount of previously included income as a result of the mark-to-market election). The U.S. Holder’s adjusted tax basis in its Twelve Seas ordinary shares will be adjusted to reflect any such income or loss amounts, and any further gain recognized on a sale or other taxable disposition of the ordinary shares in a taxable year in which we are treated as a PFIC will be treated as ordinary income. Special tax rules may also apply if a U.S. Holder makes a mark-to-market election for a taxable year after the first taxable year in which the U.S. Holder holds (or is deemed to hold) Twelve Seas ordinary shares and for which we are treated as a PFIC. Currently, a mark-to-market election may not be made with respect to the Warrants or Rights.
The mark-to-market election is available only for stock that is regularly traded on a national securities exchange that is registered with the Securities and Exchange Commission, including NASDAQ Capital Market, or on a foreign exchange or market that the IRS determines has rules sufficient to ensure that the market price represents a legitimate and sound fair market value. U.S. Holders should consult their own tax advisors regarding the availability and tax consequences of a mark-to-market election in respect to the Twelve Seas ordinary shares under their particular circumstances.
A U.S. Holder that owns (or is deemed to own) shares in a PFIC during any taxable year of the U.S. Holder, may have to file an IRS Form 8621 (whether or not a QEF or market-to-market election is or has been made) with such U.S. Holder’s U.S. federal income tax return and provide such other information as may be required by the U.S. Treasury Department.
The rules dealing with PFICs and with the QEF and mark-to-market elections are very complex and are affected by various factors in addition to those described above. Accordingly, U.S. Holders of Twelve Seas securities should consult their own tax advisors concerning the application of the PFIC rules to our securities under their particular circumstances.
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Certain U.S. Federal Income Tax Considerations of Owning Pubco Ordinary Shares
This section is addressed to U.S. Holders of ordinary shares of Twelve Seas that receive Pubco Ordinary Shares in the Merger.
Taxation of Dividends and Other Distributions on Pubco Ordinary Shares
Subject to the passive foreign investment company rules discussed below, the gross amount of distributions made by Pubco to you with respect to the Ordinary Shares (including the amount of any taxes withheld therefrom) will generally be includable in your gross income as dividend income on the date of receipt by you, but only to the extent that the distribution is paid out of Pubco’s current or accumulated earnings and profits (as determined under U.S. federal income tax principles). With respect to corporate U.S. Holders, the dividends will generally not be eligible for the dividends-received deduction allowed to corporations in respect of dividends received from other U.S. corporations.
With respect to non-corporate U.S. Holders, including individual U.S. Holders, dividends will be taxed at the lower capital gains rate applicable to qualified dividend income, provided that (1) the Ordinary Shares are readily tradable on an established securities market in the United States, or Pubco is eligible for the benefits of an approved qualifying income tax treaty with the United States that includes an exchange of information program, (2) Pubco is not a passive foreign investment company (as discussed below) for either the taxable year in which the dividend is paid or the preceding taxable year, and (3) certain holding period requirements are met. You are urged to consult your tax advisors regarding the availability of the lower rate for dividends paid with respect to Pubco’s Ordinary Shares.
To the extent that the amount of the distribution exceeds Pubco’s current and accumulated earnings and profits (as determined under U.S. federal income tax principles), it will be treated first as a tax-free return of your tax basis in your Ordinary Shares, and to the extent the amount of the distribution exceeds your tax basis, the excess will be taxed as capital gain. We do not intend to calculate Pubco’s earnings and profits under U.S. federal income tax principles. Therefore, a U.S. Holder should expect that a distribution will be treated as a dividend even if that distribution would otherwise be treated as a non-taxable return of capital or as capital gain under the rules described above.
Taxation of Dispositions of Pubco Ordinary Shares
Subject to the passive foreign investment company rules discussed below, you will recognize taxable gain or loss on any sale, exchange or other taxable disposition of a Pubco Ordinary Share equal to the difference between the amount realized (in U.S. dollars) for the Ordinary Share and your tax basis (in U.S. dollars) in the Ordinary Share. The gain or loss will be capital gain or loss. If you are a non-corporate U.S. Holder, including an individual U.S. Holder, who has held the Ordinary Shares for more than one year, you may be eligible for reduced tax rates on any such capital gains. The deductibility of capital losses is subject to limitations.
Passive Foreign Investment Company
A foreign (i.e., non-U.S.) corporation will be a PFIC for U.S. tax purposes if at least 75% of its gross income in a taxable year of such foreign corporation, including its pro rata share of the gross income of any corporation in which it is considered to own at least 25% of the shares by value, is passive income. Alternatively, a foreign corporation will be a PFIC if at least 50% of its assets in a taxable year, ordinarily determined based on fair market value and averaged quarterly over the year, including its pro rata share of the assets of any corporation in which it is considered to own at least 25% of the shares by value, are held for the production of, or produce, passive income. Passive income generally includes dividends, interest, rents and royalties (other than certain rents or royalties derived from the active conduct of a trade or business) and gains from the disposition of passive assets. In determining the value and composition of its assets for purposes of the PFIC asset test, (1) the cash Pubco owns at any time will generally be considered to be held for the production of passive income and (2) the value of Pubco’s assets must be determined based on the market value of its Ordinary Shares from time to time, which could cause the value of its non-passive assets to be less than 50% of the value of all of its assets (including cash) on any particular quarterly testing date for purposes of the asset test.
A determination as to whether Pubco is a PFIC with respect to any particular tax year will be made following the end of such tax year. If Pubco is a PFIC for any year during which you hold Pubco Ordinary Shares, it will continue to be treated as a PFIC for all succeeding years during which you hold Ordinary Shares. However, if Pubco ceases to be a PFIC and you did not previously make a timely “mark-to-market” election as described below, you may avoid some of the adverse effects of the PFIC regime by making a “purging election” (as described below) with respect to the Ordinary Shares.
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If Pubco is determined to be a PFIC for any taxable year (or portion thereof) that is included in the holding period of a U.S. Holder of Pubco securities and, in the case of the Ordinary Shares, the U.S. Holder did not make a timely “mark-to-market” election, as described below, such holder generally will be subject to special rules for regular U.S. federal income tax purposes with respect to:
• any gain recognized by the U.S. Holder on the sale or other disposition of Pubco securities; and
• any “excess distribution” made to the U.S. Holder (generally, any distributions to such U.S. Holder during a taxable year of the U.S. Holder that are greater than 125% of the average annual distributions received by such U.S. Holder in respect of Pubco securities during the three preceding taxable years of such U.S. Holder or, if shorter, such U.S. Holder’s holding period for such securities).
Under these rules,
• the U.S. Holder’s gain or excess distribution will be allocated ratably over the U.S. Holder’s holding period for such securities;
• the amount allocated to the U.S. Holder’s taxable year in which the U.S. Holder recognized the gain or received the excess distribution, or to the period in the U.S. Holder’s holding period before the first day of Pubco’s first taxable year in which it is a PFIC, will be taxed as ordinary income;
• the amount allocated to other taxable years (or portions thereof) of the U.S. Holder and included in its holding period will be taxed at the highest tax rate in effect for that year and applicable to the U.S. Holder; and
• the interest charge generally applicable to underpayments of tax will be imposed in respect of the tax attributable to each such other taxable year(s) of the U.S. Holder.
If a U.S. Holder, at the close of its taxable year, owns (or is deemed to own) shares in a PFIC that are treated as marketable shares, the U.S. Holder may make a “mark-to-market” election with respect to such shares for such taxable year. If the U.S. Holder makes a valid mark-to-market election for the first taxable year of the U.S. Holder in which the U.S. Holder holds (or is deemed to hold) Pubco Ordinary Shares and for which Pubco is determined to be a PFIC, such holder generally will not be subject to the PFIC rules described above in respect to its Ordinary Shares as long as such shares continue to be treated as marketable shares. Instead, in general, the U.S. Holder will include as ordinary income each year that Pubco is treated as a PFIC the excess, if any, of the fair market value of such U.S. Holder’s Ordinary Shares at the end of its taxable year over the adjusted basis in its Ordinary Shares. The U.S. Holder also will be allowed to take an ordinary loss in respect of the excess, if any, of the adjusted basis of its Ordinary Shares over the fair market value of such shares at the end of the U.S. Holder’s taxable year (but only to the extent of the net amount of previously included income as a result of the mark-to-market election). The U.S. Holder’s adjusted tax basis in its Ordinary Shares will be adjusted to reflect any such income or loss amounts, and any further gain recognized on a sale or other taxable disposition of the shares in a taxable year in which Pubco is treated as a PFIC will be treated as ordinary income. Special tax rules may also apply if a U.S. Holder makes a mark-to-market election for a taxable year after the first taxable year in which the U.S. Holder holds (or is deemed to hold) Ordinary Shares and for which Pubco is treated as a PFIC.
The mark-to-market election is available only for stock that is regularly traded on a national securities exchange that is registered with the Securities and Exchange Commission, including NASDAQ Capital Market, or on a foreign exchange or market that the IRS determines has rules sufficient to ensure that the market price represents a legitimate and sound fair market value. U.S. Holders should consult their own tax advisors regarding the availability and tax consequences of a mark-to-market election in respect to the Pubco Ordinary Shares under their particular circumstances.
Alternatively, a U.S. Holder of stock in a PFIC may make a “qualified electing fund” election with respect to such PFIC to elect out of the tax treatment discussed above. A U.S. Holder who makes a valid qualified electing fund election with respect to a PFIC will generally include in gross income for a taxable year such holder’s pro rata share of the corporation’s earnings and profits for the taxable year. However, the qualified electing fund election is available only if such PFIC provides such U.S. Holder with certain information regarding its earnings and profits as required under applicable U.S. Treasury regulations. Pubco does not currently intend to prepare or provide the information that would enable you to make a qualified electing fund election. If you hold Ordinary Shares in any taxable year in which
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Pubco is a PFIC, you will be required to file U.S. Internal Revenue Service Form 8621 in each such year and provide certain annual information regarding such Ordinary Shares, including regarding distributions received on the Ordinary Shares and any gain realized on the disposition of the Ordinary Shares.
If you do not make a timely “mark-to-market” election (as described above), and if Pubco were a PFIC at any time during the period you hold its Ordinary Shares, then such Ordinary Shares will continue to be treated as stock of a PFIC with respect to you even if Pubco ceases to be a PFIC in a future year, unless you make a “purging election” for the year we cease to be a PFIC. A “purging election” creates a deemed sale of such Ordinary Shares at their fair market value on the last day of the last year in which Pubco is treated as a PFIC. The gain recognized by the purging election will be subject to the special tax and interest charge rules treating the gain as an excess distribution, as described above. As a result of the purging election, you will have a new basis (equal to the fair market value of the Ordinary Shares on the last day of the last year in which Pubco is treated as a PFIC) and holding period (which new holding period will begin the day after such last day) in your Ordinary Shares for tax purposes.
You are urged to consult your tax advisors regarding the application of the PFIC rules to your investment in Pubco’s Ordinary Shares and the elections discussed above.
Information Reporting and Backup Withholding
Certain U.S. Holders are required to report information to the IRS relating to an interest in “specified foreign financial assets,” including shares issued by a non-U.S. corporation, for any year in which the aggregate value of all specified foreign financial assets exceeds US$50,000 (or a higher dollar amount prescribed by the IRS), subject to certain exceptions (including an exception for shares held in custodial accounts maintained with a United States financial institution). These rules also impose penalties if a U.S. Holder is required to submit such information to the IRS and fails to do so.
Dividend payments with respect to Pubco Ordinary Shares and proceeds from the sale, exchange or redemption of Pubco Ordinary Shares may be subject to information reporting to the IRS and possible U.S. backup withholding at a current rate of 24%. Backup withholding will not apply, however, to a U.S. Holder who furnishes a correct taxpayer identification number and makes any other required certification on IRS Form W-9 or who is otherwise exempt from backup withholding. U.S. Holders who are required to establish their exempt status generally must provide such certification on IRS Form W-9. U.S. Holders are urged to consult their tax advisors regarding the application of the U.S. information reporting and backup withholding rules.
Backup withholding is not an additional tax. Amounts withheld as backup withholding may be credited against your U.S. federal income tax liability, and you may obtain a refund of any excess amounts withheld under the backup withholding rules by timely filing the appropriate claim for refund with the IRS and timely furnishing any required information. Transactions effected through certain brokers or other intermediaries may be subject to withholding taxes (including backup withholding), and such brokers or intermediaries may be required by law to withhold such taxes.
Certain U.S. Federal Income Tax Considerations of Exercising Redemption Rights
This section is addressed to U.S. Holders of ordinary shares of Twelve Seas that elect to have their ordinary shares of Twelve Seas redeemed for cash (we refer to these U.S. Holders as “Redeeming U.S. Holders”). A Redeeming U.S. Holder will generally recognize capital gain or loss equal to the difference between the amount realized on the Redemption and such shareholder’s adjusted basis in the ordinary shares of Twelve Seas exchanged therefor if the Redeeming U.S. Holder’s ownership of shares in Twelve Seas is completely terminated or if the Redemption meets certain other tests described below. Special constructive ownership rules apply in determining whether a Redeeming U.S. Holder’s ownership of stock in Twelve Seas is treated as completely terminated. If gain or loss treatment applies, such gain or loss will be long-term capital gain or loss if the holding period of such stock is more than one year at the time of the exchange. Shareholders who hold different blocks of ordinary shares of Twelve Seas (generally, ordinary shares of Twelve Seas purchased or acquired on different dates or at different prices) should consult their tax advisors to determine how the above rules apply to them.
Cash received upon Redemption that does not completely terminate the Redeeming U.S. Holder’s interest will still give rise to capital gain or loss, if the Redemption is either (i) “substantially disproportionate” or (ii) “not essentially equivalent to a dividend.” In determining whether the Redemption is substantially disproportionate or not essentially equivalent to a dividend with respect to a Redeeming U.S. Holder, that Redeeming U.S. Holder is deemed to own not
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just stock actually owned but also any stock underlying a right to acquire stock, such as the Twelve Seas Warrants, and also, in some cases, stock owned by certain family members, certain estates and trusts of which the Redeeming U.S. Holder is a beneficiary, and certain affiliated entities.
Generally, the Redemption will be “substantially disproportionate” with respect to the Redeeming U.S. Holder if (i) the Redeeming U.S. Holder’s percentage ownership of the outstanding voting stock (including all classes which carry voting rights) of Twelve Seas is reduced immediately after the Redemption to less than 80% of the Redeeming U.S. Holder’s percentage interest in such stock immediately before the Redemption; (ii) the Redeeming U.S. Holder’s percentage ownership of the outstanding ordinary shares (both voting and nonvoting) immediately after the Redemption is reduced to less than 80% of such percentage ownership immediately before the Redemption; and (iii) the Redeeming U.S. Holder owns, immediately after the Redemption, less than 50% of the total combined voting power of all classes of shares of Twelve Seas entitled to vote. Whether the Redemption will be considered “not essentially equivalent to a dividend” with respect to a Redeeming U.S. Holder will depend upon the particular circumstances of that U.S. Holder. At a minimum, however, the Redemption must result in a meaningful reduction in the Redeeming U.S. Holder’s actual or constructive percentage ownership of Twelve Seas. The IRS has ruled that any reduction in a shareholder’s proportionate interest is a “meaningful reduction” if the shareholder’s relative interest in the corporation is minimal and the shareholder does not have meaningful control over the corporation.
If none of the Redemption tests described above give rise to capital gain or loss, the consideration paid to the Redeeming U.S. Holder will be treated as dividend income for U.S. federal income tax purposes to the extent of our current or accumulated earnings and profits. However, for the purposes of the dividends-received deduction and of “qualified dividend” treatment, due to the Redemption right, a Redeeming U.S. Holder may be unable to include the time period prior to the Redemption in the shareholder’s “holding period.” Any distribution in excess of our earnings and profits will reduce the Redeeming U.S. Holder’s basis in the ordinary shares of Twelve Seas (but not below zero), and any remaining excess will be treated as gain realized on the sale or other disposition of the ordinary shares of Twelve Seas.
As these rules are complex, U.S. Holders of ordinary shares of Twelve Seas considering exercising their Redemption rights should consult their own tax advisors as to whether the Redemption will be treated as a sale or as a distribution under the Code.
This discussion is intended to provide only a summary of the material United States federal income tax consequences of the Merger to holders of Twelve Seas securities. The disclosure in this section, in so far as it relates to matters of U.S. federal income tax law, constitutes the opinion of Ellenoff Grossman & Schole LLP, a copy of which is filed as Exhibit 8.1 to this proxy statement/prospectus. It does not address tax consequences that may vary with, or are contingent on, your individual circumstances. In addition, the discussion does not address any non-income tax or any non-U.S., state or local tax consequences of the Business Combination. Accordingly, you are strongly urged to consult with your tax advisor to determine the particular United States federal, state, local or non-U.S. income or other tax consequences to you of the Business Combination.
Anticipated Accounting Treatment
The Business Combination will be accounted for as a reverse merger in accordance with International Financial Reporting Standards (“IFRS”). Under this method of accounting, Twelve Seas will be treated as the “acquired” company for financial reporting purposes. This determination was primarily based on BPGIC comprising the ongoing operations of the combined company, BPGIC senior management comprising the senior management of the combined company, and the former owners and management of BPGIC having control of the board of directors after the Merger by virtue of being able to appoint at least a majority of the directors of the combined company. In accordance with guidance applicable to these circumstances, the Merger will be treated as the equivalent of BPGIC issuing shares for the net assets of Twelve Seas, accompanied by a recapitalization. The net assets of Twelve Seas will be stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Merger will be those of BPGIC.
Regulatory Matters
The Business Combination and the transactions contemplated by the Business Combination Agreement are not subject to any additional federal or state regulatory requirement or approval, except for filings with Registrar of Companies of the Cayman Islands necessary to effectuate the Merger.
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Resolution to be Voted Upon
The full text of the resolution to be passed is as follows:
“RESOLVED, as an ordinary resolution, that the entry into the Business Combination Agreement, dated as of April 15, 2019, attached to the accompanying proxy statement/prospectus as Annex A (the “Business Combination Agreement”), by and among Twelve Seas Investment Company, Brooge Holdings Limited, Brooge Merger Sub Limited, Brooge Petroleum And Gas Investment Company FZE (“BPGIC”) and the shareholders of BPGIC who are parties thereto and the transactions contemplated thereby including, among other things, (a) the merger of Twelve Seas Investment Company with Brooge Merger Sub Limited, with Twelve Seas Investment Company surviving the merger and the security holders of Twelve Seas Investment Company becoming security holders of Brooge Holdings Limited, which will become a new public company, and (b) upon the effectiveness of such merger, the exchange of 100% of the outstanding ordinary shares of BPGIC by the shareholder of BPGIC for ordinary shares of Brooge Holdings Limited and (c) adoption of the amended and restated memorandum and articles of association of Brooge Holdings Limited be confirmed, ratified and approved in all respects.”
Required Vote and Recommendation of the Board
The approval of the Business Combination Proposal will require an “Ordinary Resolution” as a matter of Cayman Islands law. Abstentions and broker non-votes will not have an effect on the Business Combination Proposal.
Additionally, the Business Combination will not be consummated if, upon consummation of the Business Combination, Twelve Seas has less than $5,000,001 of net tangible assets after taking into account the holders of Public Shares that properly demanded that Twelve Seas convert their Public Shares into their pro rata share of the Trust Account.
The approval of the Business Combination Proposal is a condition to the consummation of the Business Combination. If the Business Combination Proposal is not approved, the other proposals (except an adjournment proposal, as described below) will not be presented to the shareholders for a vote.
THE TWELVE SEAS BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE TWELVE SEAS SHAREHOLDERS VOTE “FOR” THE APPROVAL OF THE BUSINESS COMBINATION PROPOSAL.
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UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
Introduction
On April 15, 2019, Twelve Seas Investment Company (“Twelve Seas”), entered into a Business Combination Agreement with Brooge Merger Sub Limited (“Merger Sub”), Brooge Holdings Limited (“Pubco”), Brooge Petroleum And Gas Investment Company FZE (“BPGIC”), and the shareholders of BPGIC named as Seller therein (the “Seller”), pursuant to which at the Closing (a) Merger Sub will merge with Twelve Seas, with Twelve Seas continuing as the surviving entity, and with holders of Twelve Seas securities receiving securities of Pubco, which will become a new public company, and (b) Pubco will acquire all of the issued and outstanding capital shares of BPGIC from the Sellers in exchange for Ordinary Shares of Pubco, with BPGIC becoming a wholly-owned subsidiary of Pubco (Collectively, the “Transactions”).
The total consideration to be paid by Pubco to the Seller for the purchased shares will be 100,000,000 Pubco Ordinary Shares, subject to reduction to the extent that an election is made by BPGIC for the Seller to receive a portion of the consideration in cash (as so reduced, the “Exchange Shares”); provided that 20,000,000 of the Exchange Shares otherwise issuable to the Seller at the Closing will be set aside in escrow until released upon the satisfaction of certain financial milestones and share price targets.
The Seller has the right, at the sole election of BPGIC (the “Cash Election”), to receive a portion of the consideration for the Purchased Shares at the Closing as cash in lieu of receiving Pubco Ordinary Shares in an amount (such amount as elected by BPGIC, the “Cash Election Amount”) not to exceed 40% of the Closing Net Cash (with the “Closing Net Cash” being the aggregate cash and cash equivalents of Twelve Seas and Pubco as of the Closing, including remaining funds in the Trust Account after giving effect to the Redemption and the proceeds of any potential private placement financing, less unpaid expenses and liabilities of Twelve Seas and Pubco as of the Closing, prior to giving effect to any Cash Election). It is a condition to BPGIC’s and the Sellers’ obligations to consummate the Closing that the Closing Net Cash (prior to giving effect to any Cash Election) must be at least $125 million.
Twelve Seas is providing the following unaudited pro forma combined financial information to aid you in your analysis of the financial aspects of the Transactions.
The following unaudited pro forma combined statement of financial position as of June 30, 2019 combines the unaudited statement of financial position of BPGIC as of June 30, 2019, the audited consolidated statement of financial position of Pubco as of June 30, 2019, and the unaudited balance sheet of Twelve Seas as of June 30, 2019 giving effect to the Transactions as if they had been consummated as of that date.
The following unaudited pro forma combined statement of profit or loss for the six months ended June 30, 2019 combines the unaudited statement of comprehensive income of BPGIC for the six months ended June 30, 2019, the audited consolidated statement of comprehensive income of Pubco for the period from inception to June 30, 2019, and the unaudited statement of operations of Twelve Seas for the six months ended June 30, 2019, giving effect to the Transactions as if they had occurred as of the beginning of the earliest period presented.
The following unaudited pro forma combined statement of profit or loss for the year ended December 31, 2018 combines the audited statement of comprehensive income of BPGIC for the year ended December 31, 2018 with the audited statement of operations of Twelve Seas for the year ended December 31, 2018, giving effect to the Transactions as if they had occurred as of the beginning of the earliest period presented.
The unaudited combined pro forma financial information should be read in conjunction with the accompanying notes. In addition, the unaudited combined pro forma financial information was based on and should be read in conjunction with the following historical financial statements and the accompanying notes, which are included in this proxy statement/prospectus:
• historical audited financial statements of BPGIC for the year ended December 31, 2018
• historical audited financial statements of Twelve Seas for the year ended December 31, 2018
• historical unaudited interim condensed financial statements of BPGIC for the six months ended June 30, 2019
101
• historical audited consolidated financial statements of Pubco for the period from inception date of April 12, 2019 to June 30, 2019
• historical unaudited financial statements of Twelve Seas for the six months ended June 30, 2019
The historical financial statements of BPGIC and Pubco have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and in its functional and presentation currency of the United States dollar. The historical financial statements of Twelve Seas have been prepared in accordance with generally accepted accounting principles in the United States (“US GAAP”) in its functional and presentation currency of United States dollars.
Accounting for the Transactions
The Transactions will be accounted for as a reverse merger in accordance with IFRS. Under this method of accounting, Twelve Seas will be treated as the “acquired” company for financial reporting purposes. This determination was primarily based on the expectation that the former shareholders of BPGIC will have a majority of the voting power of the combined company, that the business of BPGIC will comprise the ongoing operations of the combined entity, that persons designated by BPGIC will comprise a majority of the governing body of the combined company, and that BPGIC’s senior management will comprise the senior management of the combined company. Accordingly, for accounting purposes, the Transactions will be treated as the equivalent of BPGIC issuing shares for the net assets of Twelve Seas, accompanied by a recapitalization. The net assets of Twelve Seas will be stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Transactions will be deemed to be those of BPGIC. Pubco was incorporated on April 12, 2019 solely for the Transactions. Upon completion of the Transactions, Pubco will become the parent of Twelve Seas and Brooge. Consequently, Pubco’s historical financial statements were combined within the unaudited pro forma combined financial statements.
Basis of Pro Forma Presentation
The historical financial information has been adjusted to give pro forma effect to events that are related and/or directly attributable to the Transactions, are factually supportable and are expected to have a continuing impact on the results of the combined company. The adjustments presented on the unaudited pro forma combined financial statements have been identified and presented to provide relevant information necessary for an understanding of the combined company upon consummation of the Transactions.
The unaudited pro forma combined financial information is presented for illustrative purposes only. The financial results may have been different had the companies been combined for the referenced periods. You should not rely on the unaudited pro forma combined financial information as being indicative of the historical results that would have been achieved had the companies been combined for the referenced periods or the future results that the combined company will experience. BPGIC, Pubco, and Twelve Seas have not had any historical relationship prior to the Transactions. Accordingly, no pro forma adjustments were required to eliminate activities between the companies.
The historical financial information of Twelve Seas has been adjusted to give effect to the differences between US GAAP and IFRS as issued by the IASB for the purposes of the combined unaudited pro forma financial information. No adjustments were required to convert Twelve Seas’ financial statements from US GAAP to IFRS for purposes of the combined unaudited pro forma financial information, except to classify Twelve Seas’ common stock subject to redemption as non-current liabilities under IFRS. The adjustments presented in the unaudited pro forma combined financial information have been identified and presented to provide relevant information necessary for an understanding of the combined company after giving effect to the Transactions.
The unaudited pro forma combined financial information has been prepared based upon the following four scenarios (all scenarios below assumes the 40% cash option is not elected and a minimum of $125 million cash is maintained at closing):
• Scenario 1 - Assuming $150 million private investment and no redemption of shares: This presentation assumes that no Twelve Seas’ stockholders exercise redemption rights with respect to their common stock upon consummation of the Transactions and $150 million cash is raised through private investment;
102
• Scenario 2 - Assuming no private investment and no redemption of shares: This presentation assumes that no Twelve Seas’ stockholders exercise redemption rights with respect to their common stock upon consummation of the Transactions and no private investment;
• Scenario 3 - Assuming no private investment but partial redemption of shares: This presentation assumes that Twelve Seas’ stockholders exercise their redemption rights with respect to 7,536,835 shares of common stock upon consummation of the Transactions at a redemption price of $10.23 per share. The maximum redemption amount is derived on the basis that the combined entity will be required to have net cash of $125 million following the Transactions, after giving effect to payments to redeeming stockholders, and
• Scenario 4 - Assuming $150 million private investment, and maximum redemption of shares: This presentation assumes that all of the Twelve Seas’ stockholders exercise redemption rights with respect to their common stock upon consummation of the Transactions at a redemption price of $10.23 per share and $150 million cash are raised through private investment. The maximum redemption amount is derived on the basis that the combined entity will be required to have $5,000,001 minimum net tangible assets following the Transactions, after giving effect to payments to redeeming stockholders.
Included in the shares outstanding and weighted average shares outstanding as presented in the pro forma combined financial statements are an assumed 80,000,000 ordinary shares (net of 20,000,000 ordinary shares put aside in an escrow) of Twelve Seas to be issued to the Sellers (subject to BPGIC’s election for the Seller to have the option to receive a portion of the consideration as cash, not to exceed 40% of the Closing Net Cash, in lieu of receiving Pubco Ordinary Shares).
As a result of the Transactions, assuming no Twelve Seas stockholders elect to redeem their shares for cash and providing for a minimum of $125 million net cash; under Scenario 1 with a $150 million gross proceeds from a private placement, former shareholders of BPGIC would own approximately 65.94% of Twelve Seas’ ordinary shares to be outstanding immediately after the Transactions and former Twelve Seas’ stockholder would own approximately 21.69% and private placement holders would own approximately 12.37% of Twelve Seas’ ordinary shares, and under Scenario 2 without a private placement, former shareholders of BPGIC would own approximately 75.24% of Twelve Seas’ ordinary shares to be outstanding immediately after the Transactions and former Twelve Seas’ stockholders would own approximately 24.76% of Twelve Seas’ ordinary shares, based on the unaudited consolidated indebtedness and cash and cash equivalent of BPGIC and its subsidiaries and the redemption price for public stockholders using the balance of the trust account as of June 30, 2019 and the number of Twelve Seas’ shares outstanding as of June 30, 2019.
In Scenario 3, which assumes no private placement, if 7,536,835 shares were redeemed for cash and providing for a minimum of $125 million net cash after giving effect to payments to redeeming stockholders, former shareholders of BPGIC would own approximately 81.13% of Twelve Seas and former stockholders of Twelve Seas would own approximately 18.87% of Twelve Seas’ ordinary shares immediately after the Transactions.
In Scenario 4, which assumes the maximum redemption of Twelve Seas’ shares and gross proceeds for $150 million from a private placement, and providing for a minimum of $125 million net cash after giving effect to payments to redeeming stockholders, former shareholders of BPGIC would own approximately 79.42% of Twelve Seas and former stockholders of Twelve Seas would own approximately 5.68% and private placement holders would own approximately 14.90% of Twelve Seas’ ordinary shares immediately after the Transactions.
(In all cases above, not giving effect to any shares issuable upon the exercise of warrants)
103
PRO FORMA COMBINED STATEMENT OF FINANCIAL POSITION AS OF JUNE 30, 2019
(UNAUDITED)
(A) |
(B) |
(C) |
Scenario 1 Assuming $125 million
|
Scenario 2 Assuming no private
|
Scenario 3 Assuming $125 million
|
Scenario 4 Assuming $125 million
|
|||||||||||||||||||||||||||||||
BPGIC |
Twelve Seas |
Pubco |
Pro Forma
|
Pro Forma
|
Pro Forma
|
Pro Forma
|
Pro Forma
|
Pro Forma
|
Pro Forma
|
Pro Forma
|
|||||||||||||||||||||||||||
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Non-current assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Property, plant and equipment |
$ |
205,919,914 |
$ |
— |
$ |
— |
$ |
— |
|
$ |
205,919,914 |
$ |
— |
|
$ |
205,919,914 |
$ |
— |
|
$ |
205,919,914 |
$ |
— |
|
$ |
205,919,914 |
|||||||||||
Advance to contractors |
|
29,377,827 |
|
— |
|
— |
|
— |
|
|
29,377,827 |
|
— |
|
|
29,377,827 |
|
— |
|
|
29,377,827 |
|
— |
|
|
29,377,827 |
|||||||||||
Cash and securities held in Trust Account |
|
— |
|
211,727,689 |
|
— |
|
(211,727,689 |
)(1) |
|
— |
|
(211,727,689 |
)(1) |
|
— |
|
(211,727,689 |
)(1) |
|
— |
|
(211,727,689 |
)(1) |
|
— |
|||||||||||
Total non-current assets |
|
235,297,741 |
|
211,727,689 |
|
— |
|
(211,727,689 |
) |
|
235,297,741 |
|
(211,727,689 |
) |
|
235,297,741 |
|
(211,727,689 |
) |
|
235,297,741 |
|
(211,727,689 |
) |
|
235,297,741 |
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Inventories |
|
175,030 |
|
— |
|
— |
|
— |
|
|
175,030 |
|
— |
|
|
175,030 |
|
— |
|
|
175,030 |
|
— |
|
|
175,030 |
|||||||||||
Trade receivables, prepayments and other receivables |
|
4,613,412 |
|
35,694 |
|
— |
|
— |
|
|
4,649,106 |
|
— |
|
|
4,649,106 |
|
— |
|
|
4,649,106 |
|
— |
|
|
4,649,106 |
|||||||||||
Bank balances and cash |
|
6,731,829 |
|
66,596 |
|
— |
|
211,727,689 |
(1) |
|
353,638,123 |
|
211,727,689 |
(1) |
|
208,888,123 |
|
211,727,689 |
(1) |
|
131,798,425 |
|
211,727,689 |
(1) |
|
147,701,143 |
|||||||||||
|
|
|
|
(2,000,000 |
)(2) |
|
|
(2,000,000 |
)(2) |
|
|
(2,000,000 |
)(2) |
|
|
(2,000,000 |
)(2) |
|
|||||||||||||||||||
|
|
|
|
(492,991 |
)(3) |
|
|
(492,991 |
)(3) |
|
|
(492,991 |
)(3) |
|
|
(492,991 |
)(3) |
|
|||||||||||||||||||
|
|
|
|
— |
(4) |
|
|
— |
(4) |
|
|
(77,089,698 |
)(4) |
|
|
(205,936,980 |
)(4) |
|
|||||||||||||||||||
|
|
|
|
(7,245,000 |
)(9) |
|
|
(7,245,000 |
)(9) |
|
|
(7,245,000 |
)(9) |
|
|
(7,245,000 |
)(9) |
|
|||||||||||||||||||
|
|
|
|
100,000 |
(10) |
|
|
100,000 |
(10) |
|
|
100,000 |
(10) |
|
|
100,000 |
(10) |
|
|||||||||||||||||||
|
|
|
|
150,000,000 |
(11) |
|
|
|
|
|
|
|
|
150,000,000 |
(11) |
|
|||||||||||||||||||||
|
|
|
|
(5,250,000 |
)(12) |
|
|
|
|
|
|
|
|
(5,250,000 |
)(12) |
|
|||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total Current Assets |
|
11,520,271 |
|
102,290 |
|
— |
|
346,839,698 |
|
|
358,462,259 |
|
202,089,698 |
|
|
213,712,259 |
|
125,000,000 |
|
|
136,622,561 |
|
140,902,718 |
|
|
152,525,279 |
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
TOTAL ASSETS |
$ |
246,818,012 |
$ |
211,829,979 |
$ |
— |
$ |
135,112,009 |
|
$ |
593,760,000 |
$ |
(9,637,991 |
) |
$ |
449,010,000 |
$ |
(86,727,689 |
) |
$ |
371,920,302 |
$ |
(70,824,971 |
) |
$ |
387,823,020 |
104
PRO FORMA COMBINED STATEMENT OF FINANCIAL POSITION AS OF JUNE 30, 2019
(UNAUDITED)
(A) |
(B) |
(C) |
Scenario 1 Assuming $125 million
|
Scenario 2 Assuming no private
|
Scenario 3 Assuming $125 million
|
Scenario 4 Assuming $125 million
|
||||||||||||||||||||||||||||||||
BPGIC |
Twelve Seas |
Pubco |
Pro Forma
|
Pro Forma
|
Pro Forma
|
Pro Forma
|
Pro Forma
|
Pro Forma
|
Pro Forma
|
Pro Forma
|
||||||||||||||||||||||||||||
EQUITY AND LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Preferred shares, $0.0001 par value; 2,000,000 shares authorized; no shares issued and outstanding |
$ |
— |
$ |
— |
$ |
— |
|
$ |
— |
|
$ |
— |
$ |
— |
|
$ |
— |
$ |
— |
|
$ |
— |
$ |
— |
|
$ |
— |
|||||||||||
Ordinary shares, $0.0001 par value; 200,000,000 shares authorized; 6,351,330 shares (excluding 20,427,670 shares subject to possible redemption) and 4,312,500 shares issued and outstanding at December 31, 2018 and 2017, respectively |
|
— |
|
618 |
|
— |
|
|
2,059 |
(5) |
|
14,292 |
|
2,059 |
(5) |
|
12,792 |
|
1,288 |
(5) |
|
12,021 |
|
(104 |
)(6) |
|
12,233 |
|||||||||||
|
|
|
|
|
(104 |
)(6) |
|
|
(104 |
)(6) |
|
|
(104 |
)(6) |
|
|
212 |
(7) |
|
|||||||||||||||||||
|
|
|
|
|
212 |
(7) |
|
|
212 |
(7) |
|
|
212 |
(7) |
|
|
10,000 |
(8) |
|
|||||||||||||||||||
|
|
|
|
|
10,000 |
(8) |
|
|
10,000 |
(8) |
|
|
10,000 |
(8) |
|
|
1,500 |
(11) |
|
|||||||||||||||||||
|
|
|
|
|
1,500 |
(11) |
|
|
6 |
(13) |
|
|
6 |
(13) |
|
|
6 |
(13) |
|
|||||||||||||||||||
|
|
|
|
|
6 |
(13) |
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Share capital |
|
1,361,285 |
|
— |
|
1 |
|
|
(1,361,286 |
)(8) |
|
— |
|
(1,361,286 |
)(8) |
|
— |
|
(1,361,286 |
)(8) |
|
— |
|
(1,361,286 |
)(8) |
|
— |
|||||||||||
Owners’ accounts |
|
80,363,942 |
|
— |
|
— |
|
|
— |
|
|
80,363,942 |
|
— |
|
|
80,363,942 |
|
— |
|
|
80,363,942 |
|
— |
|
|
80,363,942 |
|||||||||||
Share subscription receivable |
|
— |
|
— |
|
(1 |
) |
|
1 |
(8) |
|
— |
|
1 |
(8) |
|
— |
|
1 |
(8) |
|
— |
|
1 |
(8) |
|
— |
|||||||||||
Additional paid-in capital |
|
— |
|
1,534,278 |
|
— |
|
|
205,934,921 |
(5) |
|
362,783,981 |
|
205,934,921 |
(5) |
|
212,785,481 |
|
128,845,994 |
(5) |
|
135,696,554 |
|
104 |
(6) |
|
156,849,060 |
|||||||||||
|
|
|
|
|
104 |
(6) |
|
|
104 |
(6) |
|
|
104 |
(6) |
|
|
(212 |
)(7) |
|
|||||||||||||||||||
|
|
|
|
|
(212 |
)(7) |
|
|
(212 |
)(7) |
|
|
(212 |
)(7) |
|
|
4,816,397 |
(8) |
|
|||||||||||||||||||
|
|
|
|
|
4,816,397 |
(8) |
|
|
4,816,397 |
(8) |
|
|
4,816,397 |
(8) |
|
|
149,998,500 |
(11) |
|
|||||||||||||||||||
|
|
|
|
|
149,998,500 |
(11) |
|
|
499,994 |
(13) |
|
|
499,994 |
(13) |
|
|
499,994 |
(13) |
|
|||||||||||||||||||
|
|
|
|
|
499,994 |
(13) |
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Statutory reserve |
|
680,643 |
|
— |
|
— |
|
|
— |
|
|
680,643 |
|
— |
|
|
680,643 |
|
— |
|
|
680,643 |
|
— |
|
|
680,643 |
|||||||||||
Retained earnings (accumulated losses) |
|
23,171,540 |
|
3,465,112 |
|
(128,098 |
) |
|
(2,000,000 |
)(2) |
|
8,548,442 |
|
(2,000,000 |
)(2) |
|
13,798,442 |
|
(2,000,000 |
)(2) |
|
13,798,442 |
|
(2,000,000 |
)(2) |
|
8,548,442 |
|||||||||||
|
|
|
|
|
(3,465,112 |
)(8) |
|
|
(3,465,112 |
)(8) |
|
|
(3,465,112 |
)(8) |
|
|
(3,465,112 |
)(8) |
|
|||||||||||||||||||
|
|
|
|
|
(7,245,000 |
)(9) |
|
|
(7,245,000 |
)(9) |
|
|
(7,245,000 |
)(9) |
|
|
(7,245,000 |
)(9) |
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
(5,250,000 |
)(12) |
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,250,000 |
)(12) |
|
|
||||||||||||
Total equity |
|
105,577,410 |
|
5,000,008 |
|
(128,098 |
) |
|
341,941,980 |
|
|
452,391,300 |
|
197,191,980 |
|
|
307,641,300 |
|
120,102,282 |
|
|
230,551,602 |
|
136,005,000 |
|
|
246,454,320 |
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
105
PRO FORMA COMBINED STATEMENT OF FINANCIAL POSITION AS OF JUNE 30, 2019
(UNAUDITED) (Continued)
(A) |
(B) |
(C) |
Scenario 1 Assuming $125 million
|
Scenario 2 Assuming no private
|
Scenario 3 Assuming $125 million
|
Scenario 4 Assuming $125 million
|
|||||||||||||||||||||||||||||
BPGIC |
Twelve Seas |
Pubco |
Pro Forma
|
Pro Forma
|
Pro Forma
|
Pro Forma
|
Pro Forma
|
Pro Forma
|
Pro Forma
|
Pro Forma
|
|||||||||||||||||||||||||
Noncurrent liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Provision for employees’ end of service
|
|
9,485 |
|
— |
|
— |
|
— |
|
|
9,485 |
|
— |
|
|
9,485 |
|
— |
|
|
9,485 |
— |
|
9485 |
|||||||||||
Lease liability |
|
28,163,824 |
|
— |
|
— |
|
— |
|
|
28,163,824 |
|
— |
|
|
28,163,824 |
|
— |
|
|
28,163,824 |
— |
|
28,163,824 |
|||||||||||
Ordinary shares subject to possible redemption |
|
— |
|
205,936,980* |
|
— |
|
— |
(4) |
|
— |
|
— |
(4) |
|
— |
|
(77,089,698 |
)(4) |
|
— |
(205,936,980 |
)(4) |
— |
|||||||||||
|
|
|
|
|
|
|
(205,936,980 |
)(5) |
|
|
|
(205,936,980 |
)(5) |
|
|
|
(128,847,282 |
)(5) |
|
|
|
|
|
||||||||||||
Total non-current liabilities |
|
28,173,309 |
|
205,936,980 |
|
— |
|
(205,936,980 |
) |
|
28,173,309 |
|
(205,936,980 |
) |
|
28,173,309 |
|
(205,936,980 |
) |
|
28,173,309 |
(205,936,980 |
) |
28,173,309 |
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Current liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Accounts payable, accruals and other payables |
|
16,497,132 |
|
75,347 |
|
128,098 |
|
(75,347 |
)(3) |
|
16,625,230 |
|
(75,347 |
)(3) |
|
16,625,230 |
|
(75,347 |
)(3) |
|
16,625,230 |
(75,347 |
)(3) |
16,625,230 |
|||||||||||
Deferred legal fees |
|
— |
|
359,952 |
|
— |
|
(359,952 |
)(3) |
|
— |
|
(359,952 |
)(3) |
|
— |
|
(359,952 |
)(3) |
|
— |
(359,952 |
)(3) |
— |
|||||||||||
Due to related parties |
|
— |
|
57,692 |
|
— |
|
(57,692 |
)(3) |
|
— |
|
(57,692 |
)(3) |
|
— |
|
(57,692 |
)(3) |
|
— |
(57,692 |
)(3) |
— |
|||||||||||
Sponsor loans |
|
— |
|
400,000 |
|
— |
|
100,000 |
(10) |
|
— |
|
100,000 |
(10) |
|
— |
|
100,000 |
(10) |
|
— |
100,000 |
(10) |
— |
|||||||||||
|
|
|
|
(500,000 |
)(13) |
|
|
(500,000 |
)(13) |
|
|
(500,000 |
)(13) |
|
(500,000 |
)(13) |
|||||||||||||||||||
Term loans |
|
92,559,028 |
|
— |
|
— |
|
— |
|
|
92,559,028 |
|
— |
|
|
92,559,028 |
|
— |
|
|
92,559,028 |
— |
|
92,559,028 |
|||||||||||
Derivative financial instruments |
|
1,674,676 |
|
— |
|
— |
|
— |
|
|
1,674,676 |
|
— |
|
|
1,674,676 |
|
— |
|
|
1,674,676 |
— |
|
1,674,676 |
|||||||||||
Lease liability |
|
2,336,457 |
|
— |
|
— |
|
— |
|
|
2,336,457 |
|
— |
|
|
2,336,457 |
|
— |
|
|
2,336,457 |
— |
|
2,336,457 |
|||||||||||
Total current liabilities |
|
113,067,293 |
|
892,991 |
|
128,098 |
|
(892,991 |
) |
|
113,195,391 |
|
(892,991 |
) |
|
113,195,391 |
|
(892,991 |
) |
|
113,195,391 |
(892,991 |
) |
113,195,391 |
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Commitments and Contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
TOTAL LIABILITIES |
|
141,240,602 |
|
206,829,971 |
|
128,098 |
|
(206,829,971 |
) |
|
141,368,700 |
|
(206,829,971 |
) |
|
141,368,700 |
|
(206,829,971 |
) |
|
141,368,700 |
(206,829,971 |
) |
141,368,700 |
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
TOTAL EQUITY AND LIABILITIES |
$ |
246,818,012 |
$ |
211,829,979 |
$ |
— |
$ |
135,112,009 |
|
$ |
593,760,000 |
$ |
(9,637,991 |
) |
$ |
449,010,000 |
$ |
(86,727,689 |
) |
$ |
371,920,302 |
(70,824,971 |
) |
387,823,020 |
106
Pro Forma Adjustments to the Unaudited Combined Statement of Financial Position
(A) Derived from the unaudited statement of financial position of BPGIC as of June 30, 2019.
(B) Derived from the unaudited balance sheet of Twelve Seas as of June 30, 2019, as adjusted for the reclassification of Twelve Seas’ common stock subject to redemption as non-current liabilities under IFRS due to the nature of the common stock subject to redemption.
(C) Derived from the audited consolidated statement of financial position of Pubco as of June 30, 2019.
(1) To reflect the release of cash from investments held in the Trust Account.
(2) To reflect payment of estimated other professional fees related to the Transactions.
(3) To record payment of accounts payable, advances from related parties and Sponsor. Pursuant to the terms of the agreement, the Sponsor loan will be repaid promptly after the date on which the Company consummates a Business Combination.
(4) To reflect the redemption of shares into cash by Twelve Seas’ stockholders on a consummation of the Merger. In Scenario 1, it reflects no shares are redeemed into cash assuming $150 million private investment. In Scenario 2, it reflects no shares are redeemed into cash and no private investment. In Scenario 3, it reflects 7,536,835 shares are redeemed into cash assuming $125 million gross cash left in trust and no private investment. In Scenario 4, it reflects all shares are redeemed into cash assuming $125 million gross cash left in trust and $150 million private investment.
(5) To reclass the ordinary shares subject to possible redemptions.
(6) To reflect the forfeitures of 1,035,000 Founder Shares. The forfeiture shares are to be cancelled.
(7) To reflect Rights automatically converted into Ordinary Shares at Closing.
(8) To reflect recapitalization of Brooge through the contribution of the share capital in Brooge to Twelve Seas, and the issuance of 100,000,000 Pubco Ordinary Shares and the elimination of the historical accumulated deficit of Twelve Seas, the accounting acquirer.
(9) To reflect the financial advisory fee paid to the Initial Public Offering underwriters.
(10) To reflect the issuance of the unsecured promissory note to Sponsor.
(11) To reflect the $150 million private investment.
(12) To reflect the 3.5% fee payable to RBC for the gross proceeds of the $150 million private investment.
(13) To reflect the repayment of the unsecured promissory note to Sponsor by issuing stock and Rights that will automatically be converted into Ordinary Shares at Closing.
107
PRO FORMA COMBINED STATEMENT OF PROFIT OR LOSS
SIX MONTHS ENDED JUNE 30, 2019
(UNAUDITED)
(A) |
(B) |
(C) |
Scenario 1 Assuming
|
Scenario 2 Assuming no private
|
Scenario 3 Assuming
|
Scenario 4 Assuming $125 million
|
||||||||||||||||||||||||||||||||
BPGIC |
Twelve Seas |
Pubco |
Pro Forma
|
Pro Forma
|
Pro Forma
|
Pro Forma
|
Pro Forma
|
Pro Forma
|
Pro Forma
|
Pro Forma
|
||||||||||||||||||||||||||||
Revenue |
$ |
22,042,687 |
$ |
— |
$ |
— |
|
$ |
— |
|
$ |
22,042,687 |
$ |
— |
|
$ |
22,042,687 |
$ |
— |
|
$ |
22,042,687 |
$ |
— |
|
$ |
22,042,687 |
|||||||||||
Direct costs |
|
4,955,436 |
|
— |
|
— |
|
|
— |
|
|
4,955,436 |
|
— |
|
|
4,955,436 |
|
— |
|
|
4,955,436 |
|
— |
|
|
4,955,436 |
|||||||||||
Gross profit (loss) |
|
17,087,251 |
|
— |
|
— |
|
|
— |
|
|
17,087,251 |
|
— |
|
|
17,087,251 |
|
— |
|
|
17,087,251 |
|
— |
|
|
17,087,251 |
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
General and administrative expenses |
|
1,236,507 |
|
839,119 |
|
128,098 |
|
|
(712,245 |
)(2) |
|
1,491,479 |
|
(712,245 |
)(2) |
|
1,491,479 |
|
(712,245 |
)(2) |
|
1,491,479 |
|
(712,245 |
)(2) |
|
1,491,479 |
|||||||||||
Changes in fair value of derivative financial instruments |
|
484,603 |
|
— |
|
— |
|
|
— |
|
|
484,603 |
|
— |
|
|
484,603 |
|
— |
|
|
484,603 |
|
— |
|
|
484,603 |
|||||||||||
Finance costs |
|
3,412,843 |
|
— |
|
— |
|
|
— |
|
|
3,412,843 |
|
— |
|
|
3,412,843 |
|
— |
|
|
3,412,843 |
|
— |
|
|
3,412,843 |
|||||||||||
Dividend Income |
|
— |
|
882,925 |
|
— |
|
|
— |
|
|
882,925 |
|
— |
|
|
882,925 |
|
— |
|
|
882,925 |
|
— |
|
|
882,925 |
|||||||||||
Interest income |
|
— |
|
1,616,472 |
|
— |
|
|
(1,616,472 |
)(1) |
|
— |
|
(1,616,472 |
)(1) |
|
— |
|
(1,616,472 |
)(1) |
|
— |
|
(1,616,472 |
)(1) |
|
— |
|||||||||||
Net income (loss) |
$ |
11,953,298 |
$ |
1,660,278 |
$ |
(128,098 |
) |
$ |
(904,227 |
) |
$ |
12,581,251 |
$ |
(904,227 |
) |
$ |
12,581,251 |
$ |
(904,227 |
) |
$ |
12,581,251 |
$ |
(904,227 |
) |
$ |
12,581,251 |
|||||||||||
Weighted average shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
basic and diluted |
|
|
26,729,000 |
|
1 |
|
|
|
|
121,319,400 |
|
|
|
106,319,400 |
|
|
|
98,610,430 |
|
|
|
100,725,702 |
||||||||||||||||
Net income (loss) per share
|
$ |
$ |
0.06 |
$ |
(128,09800 |
) |
|
|
$ |
0.10 |
|
|
$ |
0.12 |
|
|
$ |
0.13 |
|
|
$ |
0.12 |
Forma Adjustments to the Unaudited Combined Statement of Profit or Loss
(In USD thousands, except share and per share amounts)
(A) Derived from the unaudited statement of profit or loss of BPGIC for the six months ended June 30, 2019.
(B) Derived from the unaudited statement of operations of Twelve Seas for the period from January 1, 2019 through June 30, 2019.
(C) Derived from the audited consolidated statement of comprehensive income of Pubco for the period from Pubco’s inception on April 12, 2019 to June 30, 2019.
(1) Represents an adjustment to eliminate interest income held in the trust account as of the beginning of the period.
(2) Represents an adjustment to eliminate direct costs related to the Merger.
108
PRO FORMA COMBINED STATEMENT OF PROFIT OR LOSS
YEAR ENDED DECEMBER 31, 2018
(UNAUDITED)
(A) |
(B) |
Scenario 1 Assuming $150
|
Scenario 2 Assuming no
|
Scenario 3 Assuming $125
|
Scenario 4 Assuming $125
|
|||||||||||||||||||||||||||||
BPGIC |
Twelve Seas |
Pro Forma
|
Pro Forma
|
Pro Forma
|
Pro Forma
|
Pro Forma
|
Pro Forma
|
Pro Forma
|
Pro Forma
|
|||||||||||||||||||||||||
Revenue |
$ |
35,839,268 |
$ |
— |
$ |
— |
|
$ |
35,839,268 |
$ |
— |
|
$ |
35,839,268 |
$ |
— |
|
$ |
35,839,268 |
$ |
— |
|
$ |
35,839,268 |
||||||||||
Direct costs |
|
9,607,360 |
|
— |
|
— |
|
|
9,607,360 |
|
— |
|
|
9,607,360 |
|
— |
|
|
9,607,360 |
|
— |
|
|
9,607,360 |
||||||||||
Gross profit (loss) |
|
26,231,908 |
|
— |
|
— |
|
|
26,231,908 |
|
— |
|
|
26,231,908 |
|
— |
|
|
26,231,908 |
|
— |
|
|
26,231,908 |
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
General and administrative expenses |
|
2,029,260 |
|
394,961 |
|
(54,322 |
)(2) |
|
2,369,899 |
|
(54,322 |
)(2) |
|
2,369,899 |
|
(54,322 |
)(2) |
|
2,369,899 |
|
(54,322 |
)(2) |
|
2,369,899 |
||||||||||
Changes in fair value of derivative financial instruments |
|
1,190,073 |
|
— |
|
— |
|
|
1,190,073 |
|
— |
|
|
1,190,073 |
|
— |
|
|
1,190,073 |
|
— |
|
|
1,190,073 |
||||||||||
Finance costs |
|
6,951,923 |
|
— |
|
— |
|
|
6,951,923 |
|
— |
|
|
6,951,923 |
|
— |
|
|
6,951923 |
|
— |
|
|
6,951,923 |
||||||||||
Interest income |
|
— |
|
2,228,308 |
|
(2,228,308 |
)(1) |
|
— |
|
(2,228,308 |
)(1) |
|
— |
|
(2,228,308 |
)(1) |
|
— |
|
(2,228,308 |
)(1) |
|
— |
||||||||||
Net income (loss) |
$ |
16,060,652 |
$ |
1,833,347 |
$ |
(2,173,986 |
) |
$ |
15,720,013 |
$ |
(2,173,986 |
) |
$ |
15,720,013 |
$ |
(2,173,986 |
) |
$ |
15,720,013 |
$ |
(2,173,986 |
) |
$ |
15,720,013 |
||||||||||
Weighted average shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
basic and diluted |
|
|
16,197,597 |
|
|
|
110,947,586 |
|
|
|
95,947,586 |
|
|
|
91,871,337 |
|
|
|
100,058,316 |
|||||||||||||||
Net income (loss) per share basic and diluted |
$ |
$ |
0.11 |
|
|
$ |
0.14 |
|
|
$ |
0.16 |
|
|
$ |
0.17 |
|
|
$ |
0.16 |
Pro Forma Adjustments to the Unaudited Combined Statement of Profit or Loss
(In USD thousands, except share and per share amounts)
(A) Derived from the audited statement of comprehensive income of BPGIC for the year ended December 31, 2018.
(B) Derived from the audited statement of operations of Twelve Seas for the year ended December 31, 2018.
(1) Represents an adjustment to eliminate interest income held in the trust account as of the beginning of the period.
(2) Represents an adjustment to eliminate direct costs related to the Merger.
109
Weighted average shares outstanding-basic and diluted are calculated as follows:
For the six months ended June 30, 2019
Scenario 1
|
Scenario 2
|
Scenario 3
|
Scenario 4
|
|||||||||
Unaudited |
Unaudited |
Unaudited |
Unaudited |
|||||||||
Weighted average shares calculation, basic and diluted |
|
|
|
|
||||||||
Twelve Seas weighted average shares outstanding |
26,729,000 |
|
26,729,000 |
|
26,729,000 |
|
26,729,000 |
|
||||
Twelve Seas forfeited Sponsor shares |
(1,035,000 |
) |
(1,035,000 |
) |
(1,035,000 |
) |
(1,035,000 |
) |
||||
Twelve Seas Sponsor shares put in escrow |
(1,552,500 |
) |
(1,552,500 |
) |
(1,552,500 |
) |
(1,552,500 |
) |
||||
Twelve Seas rights converted to shares |
2,122,900 |
|
2,122,900 |
|
2,122,900 |
|
2,122,900 |
|
||||
Twelve Seas shares redeemed by cash |
— |
|
— |
|
(7,708,970 |
) |
(20,593,698 |
) |
||||
Twelve Seas shares and rights issued to repay the convertible note to Sponsor |
55,000 |
|
55,000 |
|
55,000 |
|
55,000 |
|
||||
Twelve Seas shares issued arising from private placement |
15,000,000 |
|
— |
|
— |
|
15,000,000 |
|
||||
Twelve Seas shares issued in the Merger |
80,000,000 |
|
80,000,000 |
|
80,000,000 |
|
80,000,000 |
|
||||
Weighted average shares outstanding |
121,319,400 |
|
106,319,400 |
|
98,610,430 |
|
100,725,702 |
|
||||
|
|
|
|
|||||||||
Percent of shares owned by BPGIC’s holders |
65.94 |
% |
75.24 |
% |
81.13 |
% |
79.42 |
% |
||||
Percent of shares owned by Twelve Seas stockholders |
21.69 |
% |
24.76 |
% |
18.87 |
% |
5.68 |
% |
||||
Percent of shares owned by PIPE holders |
12.37 |
% |
0.00 |
% |
0.00 |
% |
14.90 |
% |
Scenario 1
|
Scenario 2
|
Scenario 3
|
Scenario 4
|
|||||
Unaudited |
Unaudited |
Unaudited |
Unaudited |
|||||
Weighted average shares calculation, basic and diluted |
||||||||
Existing BPGIC holders |
80,000,000 |
80,000,000 |
80,000,000 |
80,000,000 |
||||
Twelve Seas holders |
26,319,400 |
26,319,400 |
18,610,430 |
5,725,702 |
||||
PIPE holders |
15,000,000 |
|
|
15,000,000 |
||||
Weighted average shares outstanding |
121,319,400 |
106,319,400 |
98,610,430 |
100,725,702 |
110
Weighted average shares outstanding-basic and diluted are calculated as follows:
For the year ended December 31, 2018
Scenario 1
|
Scenario 2
|
Scenario 3
|
Scenario 4
|
|||||||||
Unaudited |
Unaudited |
Unaudited |
Unaudited |
|||||||||
Weighted average shares calculation, basic and diluted |
|
|
|
|
||||||||
Twelve Seas weighted average shares outstanding |
16,197,597 |
|
16,197,597 |
|
16,197,597 |
|
16,197,597 |
|
||||
Twelve Seas forfeited Sponsor shares |
(969,164 |
) |
(969,164 |
) |
(969,164 |
) |
(969,164 |
) |
||||
Twelve Seas Sponsor shares put in escrow |
(1,453,747 |
) |
(1,453,747 |
) |
(1,453,747 |
) |
(1,453,747 |
) |
||||
Twelve Seas rights converted to shares |
2,122,900 |
|
2,122,900 |
|
2,122,900 |
|
2,122,900 |
|
||||
Twelve Seas shares redeemed by cash |
— |
|
— |
|
(4,076,250 |
) |
(10,889,270 |
) |
||||
Twelve Seas shares and rights issued to repay the convertible note to Sponsor |
55,000 |
|
55,000 |
|
55,000 |
|
55,000 |
|
||||
Twelve Seas shares issued arising from private placement |
15,000,000 |
|
— |
|
— |
|
15,000,000 |
|
||||
Twelve Seas shares issued in the Merger |
80,000,000 |
|
80,000,000 |
|
80,000,000 |
|
80,000,000 |
|
||||
Weighted average shares outstanding |
110,952,586 |
|
95,952,586 |
|
91,876,337 |
|
100,063,316 |
|
||||
|
|
|
|
|||||||||
Percent of shares owned by
|
72.10 |
% |
83.37 |
% |
87.07 |
% |
79.95 |
% |
||||
Percent of shares owned by Twelve Seas stockholders |
14.38 |
% |
16.63 |
% |
12.93 |
% |
5.06 |
% |
||||
Percent of shares owned by PIPE holders |
13.52 |
% |
0.00 |
% |
0.00 |
% |
14.99 |
% |
Scenario 1
|
Scenario 2
|
Scenario 3
|
Scenario 4
|
|||||
Unaudited |
Unaudited |
Unaudited |
Unaudited |
|||||
Weighted average shares calculation, basic and diluted |
||||||||
Existing BPGIC holders |
80,000,000 |
80,000,000 |
80,000,000 |
80,000,000 |
||||
Twelve Seas holders |
15,952,586 |
15,952,586 |
11,876,337 |
5,063,316 |
||||
PIPE holders |
15,000,000 |
|
|
15,000,000 |
||||
Weighted average shares outstanding |
110,952,586 |
95,952,586 |
91,876,337 |
100,063,316 |
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Pursuant to the Business Combination Agreement, subject to the terms and conditions set forth therein, at the Closing Twelve Seas will merge with Merger Sub, with Twelve Seas continuing as the surviving entity. See the section entitled “The Business Combination Proposal” for a description of the Merger and its structure as it relates to the Business Combination.
Resolution to be Voted Upon
The full text of the resolution to be passed is as follows:
“RESOLVED, as a special resolution, that: (a) Twelve Seas Investment Company be authorised to merge with Brooge Merger Sub Limited so that Twelve Seas Investment Company be the surviving company and all the undertaking, property and liabilities of Brooge Merger Sub Limited vest in Twelve Seas Investment Company by virtue of such merger pursuant to the Companies Law (2018 Revision); and (b) the Plan of Merger in the form attached to the accompanying proxy statement/prospectus as Annex A (the “Plan of Merger”) be authorised, approved and confirmed in all respects and the Twelve Seas Investment Company be authorised to enter into the Plan of Merger.”
Required Vote and Recommendation of the Board
The approval of the Merger Proposal will require a “Special Resolution” as a matter of Cayman Islands law. Abstentions and broker non-votes will not have an effect on the Merger Proposal. The Merger Proposal will not be submitted if the Business Combination Proposal is not approved.
THE TWELVE SEAS BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT TWELVE SEAS SHAREHOLDERS VOTE “FOR” THE APPROVAL OF THE MERGER PROPOSAL.
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At the Meeting, Twelve Seas will ask its shareholders to vote upon and approve, for purposes of complying with applicable NASDAQ Stock Market LLC listing rules, the issuance of securities that exceed 20% of the issued and outstanding ordinary shares of Twelve Seas.
NASDAQ Listing Rule 5635(a) requires shareholder approval where, among other things, the issuance of securities in a transaction exceeds 20% of the number of ordinary shares of Twelve Seas or the voting power outstanding before the transaction. Twelve Seas currently has 26,779,000 ordinary shares issued and outstanding.
Since the issuance of securities in potential financing transactions in connection with the Business Combination will exceed 20% of the currently outstanding ordinary shares of Twelve Seas, Twelve Seas is required to obtain approval of its shareholders under NASDAQ Listing Rule 5635(a).
Resolution to be Voted Upon
The full text of the resolution to be passed is as follows:
“RESOLVED, as an ordinary resolution, that, for the purposes of complying with applicable NASDAQ Stock Market LLC listing rules, the issuance of more than 20% of Twelve Seas’ issued and outstanding ordinary shares in financing transactions in connection with the proposed Business Combination be approved in all respects.”
Required Vote and Recommendation of the Board
The approval of the Share Issuance Proposal will require an “Ordinary Resolution” as a matter of Cayman Islands law. Abstentions and broker non-votes will not have an effect on the Share Issuance Proposal. The Share Issuance Proposal will not be submitted if the Business Combination Proposal is not approved.
THE TWELVE SEAS BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT Twelve Seas shareholders VOTE “FOR” THE APPROVAL OF the Share Issuance Proposal.
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The Adjournment Proposal allows Twelve Seas’ board of directors to submit a proposal to adjourn the Meeting to a later date or dates, if necessary, to permit further solicitation of proxies in the event, based on the tabulated votes, there are not sufficient votes at the time of the Meeting to approve the consummation of the Business Combination. In no event will Twelve Seas solicit proxies to adjourn the Meeting or consummate the Business Combination beyond the date by which it may properly do so under its amended and restated memorandum and articles of association and Cayman Islands law. The purpose of the Adjournment Proposal is to provide more time for the Twelve Seas Initial Shareholders, BPGIC and the Seller to make purchases of Public Shares or other arrangements that would increase the likelihood of obtaining a favorable vote on the Business Combination Proposal and to meet the requirements that are necessary to consummate the Business Combination. See the section entitled “The Business Combination Proposal — Interests of Twelve Seas’ Directors and Officers in the Business Combination.”
Consequences if the Adjournment Proposal is Not Approved
If an adjournment proposal is presented to the Meeting and is not approved by the shareholders, Twelve Seas’ board of directors may not be able to adjourn the special meeting to a later date in the event, based on the tabulated votes, there are not sufficient votes at the time of the special meeting to approve the consummation of the Business Combination (because either the Business Combination Proposal is not approved or the conditions to consummating the Business Combination have not been met). In such event, the Business Combination would not be completed.
Resolution to be Voted Upon
The full text of the resolution to be passed is as follows:
“RESOLVED, as an ordinary resolution, the adjournment of the Meeting to a later date or dates to be determined by the chairman of the Meeting, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the Meeting that more time is necessary or appropriate to approve one or more proposals of the Meeting be approved in all respects.”
Required Vote and Recommendation of the Board
The approval of the Adjournment Proposal will require an “Ordinary Resolution” as a matter of Cayman Islands law. Abstentions and broker non-votes will not have an effect on the Adjournment Proposal. Adoption of the Adjournment Proposal is not conditioned upon the adoption of any of the other proposals.
THE TWELVE SEAS BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT TWELVE SEAS SHAREHOLDERS VOTE “FOR” THE APPROVAL OF THE ADJOURNMENT PROPOSAL.
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Pubco was incorporated under the laws of the Cayman Islands as an exempted company on April 12, 2019 solely for the purpose of effectuating the Business Combination. Pubco owns no material assets and does not operate any business.
On April 12, 2019, Pubco issued one (1) Ordinary Share to one shareholder for a total consideration of $0.0001 (or $0.0001 per share). This share represents all Ordinary Shares of Pubco that are currently issued and outstanding. For descriptions of Pubco securities, please see the section titled “Description of Pubco Securities.”
Prior to the consummation of the Business Combination, the sole director and shareholder of Pubco is Meclomen Maramot.
The mailing address of Pubco’s registered office is PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands. After the consummation of the Business Combination, its principal executive office will be that of BPGIC, located at P.O. Box 50170, Fujairah, UAE.
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OTHER INFORMATION RELATED TO TWELVE SEAS
References in this section to “Twelve Seas”, “we”, “our”, “us” or “the Company” refer to Twelve Seas Investment Company, a Cayman Islands exempted company.
Introduction
Twelve Seas was incorporated on November 30, 2017 in order to serve as a vehicle for the acquisition of a target business. Twelve Seas’ efforts to identify a prospective target business were not limited to any particular industry or geographic region. Prior to executing the Business Combination Agreement with BPGIC, Twelve Seas’ efforts were limited to organizational activities, completion of its Initial Public Offering and the evaluation of possible business combinations.
In December 2017, our Initial Shareholders purchased an aggregate of 4,312,500 ordinary shares for an aggregate purchase price of $25,000, or approximately $0.006 per share. In December 2017, our Sponsor transferred 50,000 of such Founder Shares to each of Messrs. Stoupnitzky and Kaji, our independent directors, at cost. On June 1, 2018, our Sponsor returned 1,437,500 ordinary shares to us for cancellation resulting in an aggregate of 2,875,000 Founder Shares being outstanding and held by our Initial Shareholders. On June 8, 2018, we effectuated a 1.5-for-1 dividend of our ordinary shares resulting in an aggregate of 4,312,500 Founder Shares outstanding and held by our Initial Shareholders. On June 19, 2018, we effectuated a 1.2-for-1 dividend of our ordinary shares resulting in an aggregate of 5,175,000 Founder Shares outstanding and held by our Initial Shareholders. As a result of the underwriters’ election to exercise their over-allotment option in full on June 28, 2018, 675,000 Founder Shares were no longer subject to forfeiture and all 5,175,000 shares remained outstanding. The Initial Shareholders have agreed to forfeit 1,035,000 Founder Shares at the Closing.
Initial Public Offering
On June 22, 2018, Twelve Seas consummated its Initial Public Offering of 18,000,000 Units, each Unit consisting of one ordinary share, one Warrant to acquire one ordinary share and one Right entitling the holder thereof to receive one-tenth of one ordinary share upon the consummation of an initial business combination. The Units were sold at an offering price of $10.00 per Unit, generating gross proceeds of $180,000,000. On June 28, 2018, Twelve Seas consummated the sale of an additional 2,700,000 Units that were subject to the underwriters’ over-allotment option, for aggregate additional proceeds of $27,000,000. EBC acted as the representative of the underwriters for the Initial Public Offering. The ordinary shares, Warrants and Rights comprising the Units commenced separate trading on July 13, 2018.
Simultaneously with each of the consummation of the Initial Public Offering and the exercise of the over-allotment option, Twelve Seas consummated a private placement of an aggregate of 529,000 Private Placement Units to its Sponsor, Twelve Seas Sponsors I LLC, an affiliate of Twelve Seas’ directors and officers and their respective designees. The Private Placement Units were sold at an offering price of $10.00 per Unit, generating gross proceeds of $5,290,000. The Private Placement Units are identical to the Units sold in the Initial Public Offering, except that the Warrants included in the Private Placement Units are not redeemable and are exercisable on a cashless basis as long as held by the original purchasers or their permitted transferees. In addition, the holders of the private Unit securities have agreed (A) to vote the underlying shares in favor of any proposed business combination, (B) not to propose, or vote in favor of, an amendment to Twelve Seas’ amended and restated memorandum and articles of association with respect to its pre-business combination activities prior to the consummation of such a business combination, (C) not to convert any underlying shares into the right to receive cash from the Trust Account in connection with a shareholder vote to approve a proposed initial business combination or a vote to amend the provisions of its amended and restated memorandum and articles of association relating to shareholders’ rights or pre-business combination activity and (D) that such underlying shares shall not participate in any liquidating distribution upon winding up if a business combination is not consummated. The purchasers have agreed that these Units will not be sold or transferred by them (except to certain permitted transferees) until after Twelve Seas has completed an initial business combination.
Offering Proceeds Held in Trust
The net proceeds from the Initial Public Offering (including the exercise of the over-allotment option), plus the net proceeds from the private placement of Private Placement Units, or an aggregate of $207,000,000, was placed in a Trust Account at JP Morgan Chase Bank, N.A., with Continental Stock Transfer & Trust Company acting as trustee.
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Except as described in the prospectus for Twelve Seas’ Initial Public Offering and in the section entitled “Other Information Related to Twelve Seas — Twelve Seas’ Management’s Discussion and Analysis of Financial Condition and Results of Operations,” these proceeds will not be released until the earlier of the completion of an initial business combination and Twelve Seas’ Redemption of 100% of the outstanding Public Shares upon its failure to consummate a business combination within the required time period.
Fair Market Value of Target Business
The target business or businesses that Twelve Seas acquires must collectively have a fair market value equal to at least 80% of the balance of the funds in the Trust Account at the time of the execution of a definitive agreement for its initial business combination, although Twelve Seas may acquire a target business whose fair market value significantly exceeds 80% of the Trust Account balance. Twelve Seas’ board of directors determined that this test was met in connection with the proposed Business Combination with BPGIC.
Shareholder Approval of Business Combination
Under Twelve Seas’ amended and restated memorandum and articles of association, in connection with any proposed business combination, Twelve Seas must seek shareholder approval of an initial business combination at a meeting called for such purpose at which Public Shareholders may seek to convert their Public Shares, regardless of whether they vote for or against the proposed business combination, subject to the limitations described in the prospectus for Twelve Seas’ Initial Public Offering. Accordingly, in connection with the Business Combination with BPGIC, the Twelve Seas Public Shareholders may seek to convert their Public Shares in accordance with the procedures set forth in this proxy statement/prospectus.
Voting Restrictions in Connection with the Meeting
In connection with any vote for a proposed business combination, including the vote with respect to the Business Combination Proposal, all of Twelve Seas’ Initial Shareholders, as well as all of its officers and directors, have agreed to vote the Founder Shares, shares included in the Private Placement Units as well as any ordinary shares acquired in the aftermarket in favor of such proposed business combination.
No directors or officers of Twelve Seas have purchased any securities of Twelve Seas in any open market transactions. However, at any time prior to the Meeting, during a period when they are not then aware of any material nonpublic information regarding Twelve Seas or its securities, the Twelve Seas Initial Shareholders, BPGIC or BPGIC’s shareholders and/or their respective affiliates may purchase shares from institutional and other investors who vote, or indicate an intention to vote, against the Business Combination Proposal, or execute agreements to purchase such shares from them in the future, or they may enter into transactions with such persons and others to provide them with incentives to acquire ordinary shares of Twelve Seas or vote their shares in favor of the Business Combination Proposal. The purpose of such share purchases and other transactions would be to increase the likelihood of satisfaction of the requirements that the Business Combination be approved where it appears that such requirements would otherwise not be met. All shares repurchased by Twelve Seas’ affiliates pursuant to such arrangements would be voted in favor of the proposed Business Combination. As of the date of this proxy statement/prospectus, there have been no such discussions and no agreements to such effect have been entered into with any such investor or holder.
Sponsor Loan
On April 4, 2019, Twelve Seas issued an unsecured promissory note in the principal amount of up to $500,000 to the Sponsor. The Note bears no interest and is repayable in full upon consummation of Twelve Seas’ initial Business Combination. The Sponsor has the option to convert any unpaid balance of the Note into units, each unit consisting of one ordinary share of the Company, one warrant exercisable for one ordinary share of the Company and one right to receive one-tenth (1/10) of one ordinary share of the Company upon the consummation of an initial Business Combination, based on a conversion price of $10.00 per unit. The terms of any such units shall be identical to the terms of the units issued pursuant to the private placement that was consummated by Twelve Seas in connection with Twelve Seas’ Initial Public Offering.
As of August 21, 2019, the Sponsor had funded an aggregate amount of $500,000 to the Company pursuant to the Note.
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Liquidation if No Business Combination
Under Twelve Seas’ amended and restated memorandum and articles of association, if Twelve Seas does not complete the Business Combination with BPGIC or another initial business combination by December 22, 2019, Twelve Seas will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem 100% of the outstanding Public Shares for a pro rata portion of the funds held in the Trust Account (currently anticipated to be approximately $[ ] per share) and (iii) as promptly as reasonably possible following such Redemption, subject to the approval of Twelve Seas’ remaining shareholders and its board of directors, dissolve and liquidate, subject (in the case of (ii) and (iii) above) to Twelve Seas’ obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law. At such time, the Rights and Warrants will expire. Holders of Rights and Warrants will receive nothing upon a liquidation with respect to such securities and they will be worthless.
Each of Twelve Seas’ Initial Shareholders has agreed to waive its rights to participate in any distribution from Twelve Seas’ Trust Account or other assets with respect to the Founder Shares and shares underlying the Private Placement Units. There will be no distribution from the Trust Account with respect to Twelve Seas’ Warrants, which will expire worthless if Twelve Seas is liquidated.
The proceeds deposited in the Trust Account could, however, become subject to the claims of Twelve Seas’ creditors which would be prior to the claims of the Twelve Seas Public Shareholders. Although Twelve Seas has obtained waiver agreements from certain vendors and service providers it has engaged and owes money to, and the prospective target businesses Twelve Seas has negotiated with, whereby such parties have waived any right, title, interest or claim of any kind they may have in or to any monies held in the Trust Account, and although Twelve Seas will seek such waivers from vendors it engages in the future, there is no guarantee that they or other vendors who did not execute such waivers will not seek recourse against the Trust Account notwithstanding such agreements. In order to protect the amounts held in the Trust Account, Dimitri Elkin, the Chief Executive Officer of Twelve Seas, has contractually agreed, pursuant to a written agreement to Twelve Seas, that if Twelve Seas liquidates the Trust Account prior to the consummation of a business combination, he will be liable to ensure that the proceeds in the Trust Account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by Twelve Seas for services rendered or contracted for or products sold to Twelve Seas. This liability will not apply with respect to any claims by a third party who executed a waiver of any right, title, interest or claim of any kind in or to any monies held in the Trust Account. Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, then Dimitri Elkin will not be responsible to the extent of any liability for such third party claims. Twelve Seas will seek to reduce the possibility that Dimitri Elkin will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers (other than the independent auditors of Twelve Seas), prospective target businesses or other entities with which Twelve Seas does business, execute agreements with Twelve Seas waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account. Accordingly, the actual per-share Redemption price could be less than $[ ], plus interest, due to claims of creditors. Additionally, if Twelve Seas is forced to file a bankruptcy case or an involuntary bankruptcy case is filed against it which is not dismissed, the proceeds held in the Trust Account could be subject to applicable bankruptcy law, and may be included in Twelve Seas’ bankruptcy estate and subject to the claims of third parties with priority over the claims of Twelve Seas’ shareholders. To the extent any bankruptcy claims deplete the Trust Account, Twelve Seas cannot assure you it will be able to return to the Twelve Seas Public Shareholders at least $[ ] per share. Twelve Seas’ Public Shareholders are entitled to receive funds from the Trust Account only in the event of its failure to complete a business combination within the required time periods or if the shareholders properly seek to have Twelve Seas convert their respective shares for cash upon a business combination which is actually completed by Twelve Seas. In no other circumstances does a shareholder have any right or interest of any kind to or in the Trust Account.
Twelve Seas will pay the costs of any subsequent liquidation from its remaining assets outside of the Trust Account. If such funds are insufficient, Bryant Edwards, the Chief Operating Officer of Twelve Seas, has contractually agreed to advance us the funds necessary to complete such liquidation (currently anticipated to be no more than approximately $20,000) and has contractually agreed not to seek repayment for such expenses.
Facilities
Twelve Seas currently maintains its principal executive offices at 135 East 57th Street, 18th Floor, New York, New York 10022. The cost for this space is included in the $10,000 per-month fee Twelve Seas’ Sponsor, Twelve Seas Sponsors I LLC, charges Twelve Seas for general and administrative services pursuant to a letter agreement between us and
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Twelve Seas Sponsors I LLC. Twelve Seas believes, based on rents and fees for similar services in the New York, NY area, that the fee charged by Twelve Seas Sponsors I LLC is at least as favorable as Twelve Seas could have obtained from an unaffiliated person. Twelve Seas considers its current office space, combined with the other office space otherwise available to its executive officers, adequate for its current operations. Upon consummation of the Business Combination, the principal executive offices of Pubco will be located at P.O. Box 50170, Fujairah, UAE and its telephone number will be +971 2 633 3149, at which time nothing more will be paid to Twelve Seas Sponsors I LLC.
Employees
Twelve Seas has four executive officers. These individuals are not obligated to devote any specific number of hours to Twelve Seas’ matters and intend to devote only as much time as necessary to assist Twelve Seas to identify, negotiate and complete a business combination and perform fiduciary duties to Twelve Seas’ shareholders and other obligations of such officers pursuant to applicable legal requirements and Twelve Seas’ memorandum and articles of association. Twelve Seas does not intend to have any full time employees prior to the consummation of a business combination. Twelve Seas will continue to exist as a wholly owned subsidiary of Pubco for potential business purposes, including, but not limited to, potential expansions of Pubco’s operations into the United States as may be determined by Pubco’s board of directors. Pubco’s board of directors may, however, in its judgment, determine to dissolve Twelve Seas at any time.
Directors and Executive Officers
Twelve Seas’ directors and officers are as follows:
Name |
Age |
Position |
||
Neil Richardson |
62 |
Chairman |
||
Dimitri Elkin |
50 |
Chief Executive Officer |
||
Stephen A. Vogel |
70 |
President and Director |
||
Bryant B. Edwards |
64 |
Chief Operating Officer and Director |
||
Stephen N. Cannon |
51 |
Chief Financial Officer |
||
Gregory A. Stoupnitzky |
62 |
Director |
||
Suneel G. Kaji |
50 |
Director |
Mr. Neil Richardson has been our Chairman since December 2017. Since January 2013, Mr. Richardson has been the Chairman of North Sea Capital, an independent family office involved in private equity and other investments. From 2004 to 2013, Mr. Richardson was a Founding Partner for Lion Capital, a London-based private equity firm specializing in consumer industry investments globally. From 1994 to 2004, Mr. Richardson was with Kohlberg Kravis Roberts & Co, a leading global private equity firm, where he was a General Partner. From 1986 to 1994, Mr. Richardson was a Managing Director with Credit Suisse First Boston, an investment banking firm. From 1980 to 1986, Mr. Richardson was a manager with Bain & Company, a consulting firm. Mr. Richardson previously served as director of multiple corporate entities including Newsquest, Wincor Nixdorf, Tenovis, Russian Alcohol, American Apparel, and Aurum. He is an investor in Twelve Seas Limited, a private equity advisory company, and currently serves as a director of that company. Mr. Richardson graduated from Oxford University.
Mr. Dimitri Elkin has been our Chief Executive Officer since inception and was a director from inception until May 2018. Since April 2013, Mr. Elkin has been a Founding Partner of Twelve Seas Limited. From 2007 to April 2013, Mr. Elkin served as General Partner of UFG Private Equity, a mid-market regional buyout firm based in Moscow. From 2003 to 2006, Mr. Elkin was a Founding Partner at GIC Capital, a U.S. private equity firm. From 1998 to 2003, Mr. Elkin served as an investment executive at Kohlberg Kravis Roberts & Co., heading its activities in the former Soviet Union and Eastern Europe. From 1996 to 1998, Mr. Elkin served as an investment banker at Lehman Brothers Holdings, Inc., an investment banking firm. Mr. Elkin previously served as director of multiple corporate entities, including Kamaz, Imperial Porcelain Company, and Russian Alcohol. Mr. Elkin graduated from Moscow State University and received an MBA from Harvard Business School.
Mr. Stephen A. Vogel has been our President since May 2018 and has served as a director since June 2018. Mr. Vogel has over 40 years of operating and private equity experience. He has served as General Partner of Vogel Partners, LLP, a private investment firm, since 1996. Mr. Vogel serves as the Chief executive Officer of Tuscan Holdings Corp. and Tuscan Holdings II Corp., both blank check companies which went public in March and July 2019, respectively,
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and which are both currently seeking a target business with which to consummate an initial business combination. Mr. Vogel was Executive Chairman of Forum Merger Corp., a blank check company that went public in April 2017 and then merged with ConvergeOne (NASDAQ: CVON) in February 2018. Mr. Vogel began his career in 1971 as President, CEO and Co-Founder of Synergy Gas Corp., a retail propane distribution company. During his 25-year tenure, Mr. Vogel grew Synergy to more than 250,000 customers, 2,700 employees and more than $300 million in annual revenue. Synergy Gas Corp. successfully completed 50 acquisitions during this time and increased its distribution base to 330 retail locations. After selling Synergy Gas Corp. to Northwestern Corp. in 1995, Mr. Vogel co-founded EntreCapital Partners, a private equity firm that focused on companies facing operational or management challenges, and served until 1999. Additionally, he was a venture partner at EnerTech Capital Partners, an energy focused venture capital firm, from 1999 to 2002, and an operating partner at Tri-Artisan Capital Partners, LLC, an investment bank, from 2004 to 2006. Mr. Vogel also served as CEO of Grameen America, a not-for-profit organization that provides microloans to low-income borrowers in the United States, from 2008 to 2013. He was on the board of Netspend (NASDAQ: NTSP), a leader for prepaid stored value platforms, from 2011 to 2013. Mr. Vogel was a member of the Board of Trustees at Montefiore Medical Center and Children’s Hospital for over 20 years and served on the Board of Trustees at Lighthouse International, a non-profit organization. Mr. Vogel is a past Trustee of the Horace Mann School and previously served on the Board of Directors of the National Propane Gas Association. Mr. Vogel received a BS degree from Syracuse University School of Management.
Mr. Bryant B. Edwards has been our Chief Operating Officer and a director since June 2018. Mr. Edwards retired from Latham & Watkins a premier global law firm and the world’s largest law firm by revenue, in 2016, after a 35-year legal career. From 1981 to 2016, Mr. Edwards gained extensive experience throughout the Pan-Eurasian region, as both a practicing corporate and securities attorney, as well as in various management roles building the firm’s practices in Europe (from 2000 to 2008), the Middle East (from 2008 to 2012) and then East Asia (from 2012 to 2016). He served as Chair of the European High Yield Association (EHYA) from 2004 to 2008, and helped establish the Gulf Bond & Sukuk Association (GBSA) and served on its Steering Committee and as Chair of its Regulatory Committee, from 2008 to 2012. Additionally, Mr. Edwards served as Vice-Chair of the Credit Markets Committee of the Asia Securities & Financial Markets Committee (ASIFMA) from 2012 to 2016. Mr. Edwards graduated from Brigham Young University with a BA and received his Juris Doctor from the University of Chicago Law School.
Mr. Stephen N. Cannon has been our Chief Financial Officer since December 2017 and was our President from inception until May 2018. Since October 2014, Mr. Cannon has been President of Everest Partners Limited, a privately-owned investment firm, focused on Asian private investments. Since July 2017, Mr. Cannon has been the President, CFO and a director of CM Seven (NASD: CMSS), a NASDAQ-listed SPAC sponsored by a leading Chinese private investment firm that raised approximately $200 million in an initial public offering in October 2017. From June 2014 until July 2016, Mr. Cannon was CEO and a director of DT Asia Acquisition Corp, a NASDAQ-listed SPAC, which consummated its business combination with China Direct Lending Corp. in July 2016. From 2010 until October 2014, Mr. Cannon was a Partner and Head of China for RedBridge Group Ltd., a boutique merchant banking firm focused on Chinese and Arabian Gulf cross-border investments. From 2009 until October 2014, Mr. Cannon was a senior advisor at Ackrell & Co, a U.S. broker-dealer. From 2007 until 2010, Mr. Cannon served in various capacities with Hambrecht Asia Acquisition Corp., a NASDAQ-listed SPAC, as a co-founder, initial CFO and a director, and then VP of Acquisitions. Hambrecht Asia Acquisition Corp. merged with SGOCO Ltd, a Chinese company, in April 2010. From 2005 until 2008, Mr. Cannon served as a Managing Director of Asian investment banking for WR Hambrecht & Co. Prior to WR Hambrecht & Co, Mr. Cannon worked at the following investment banking firms: Ackrell & Co (2003-2005); ABN-Amro Securities (2000-2002); Donaldson Lufkin & Jenrette (1994-2000); Smith Barney (1993-1994); and Salomon Brothers (1991-1993). Mr. Cannon graduated from the University of Notre Dame with a Bachelor’s degree. Mr. Cannon serves on the board of the Cambodian Hotel Association.
Mr. Gregory A. Stoupnitzky has served as a director since June 2018. As of September 2019, Mr. Stoupnitzky joined as a Director Investment Banking with Early Bird Capital LLC, a financial services firm. He is the Senior Independent Director and a member of the Audit and Nominating Committees for Eland Oil & Gas Plc. (AIM: ELA) which he joined in January 2016. He also serves as an Advisory Director with Innolith AG, a private company developing a new battery technology for utility scale power storage and other applications. From January 2014 to October 2015, Mr. Stoupnitzky served as CEO and Executive Director of Azonto Petroleum Limited (ASX: APY), a gas-to-power developer in West Africa, where he led the company’s transformation efforts. Gregory has over 25 years of investment banking experience in the energy and natural resources sectors. He held senior positions with Morgan Stanley (1998-2008) Bear Stearns (1986-1996) and Renaissance Capital in London, Moscow and New York, where he worked
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with both companies and investor groups operating assets across emerging markets including Latin America, the CIS and Sub-Saharan Africa. Mr. Stoupnitzky has served on the board of the U.S.-Russia Business Council and of several corporate entities including Rialto Energy Limited and Vioco Petroleum. Mr. Stoupnitzky graduated from Columbia University with a BA and an MA as well as a certificate from Moscow State University. He is currently an Advisory Board Member of Columbia University’s School of International and Public Affairs.
Mr. Suneel G. Kaji has served as a director since June 2018. Since May 2019, Mr. Kaji has served as a Managing Director of Everstone Capital, which manages in excess of US$6.5 billion, and its Everstone Capital US and Everstone Capital Asia Pte group of funds, for which he co-leads control equity and special situations investing in consumer and business services cross-border investments between the US and Asia. Previously from October 2016 through the spring of 2019, Mr. Kaji had served as an employee director of the University of Texas and Texas A&M System Management Company (UTIMCO), advising on co- and direct principal investments globally as well as emerging markets’ fund selection. Previously, Mr. Kaji has served as a Managing Director of Accordion Partners LLC, a private equity consultancy with three offices globally. He established and led the firm’s investment affiliate (established in 2014) that co-invests with the firm’s consultancy clientele. From 2008 to June 2014, Mr. Kaji had been a Managing Director and Senior Investment Manager-Private Investments at TRG Management (an affiliate of the Rohatyn Group). He managed non-real estate private investment activity across Asia, including cross-border investments with the US and Australia. He was responsible for origination, evaluation, and structuring of private equity and distressed credits across diverse industries such as natural resource services, chemicals, logistics, and consumer services. Mr. Kaji also sat on the boards of two joint venture real estate and infrastructure funds in Asia. From 2003 to 2008, Mr. Kaji was a Managing Director at the GEM-Kinderhook Funds in New York, focused on mid-cap control investments, structured minority equity and hybrid credit transactions in the US, as well as opportunistic pursuits in China, the Middle East North Africa region, and India. From 1999 to 2003, Mr. Kaji was a Principal at Crown Capital Group, a mid-cap private equity group established by DLJ Merchant Banking, Apollo Management and former employees thereof. Previously he was a Vice President at DLJ Merchant Banking Partners (1996 to 1999), based in New York and Hong Kong. Mr. Kaji started his career in finance with Salomon Brothers (1991 to 1994) and entered the principal investment business at Goldman Sachs (1995). He graduated from the Wharton School of the University of Pennsylvania with a Bachelors of Science in Economics, magna cum laude, and Stanford University with an MBA from the Stanford Graduate School of Business.
Number and Terms of Office of Officers and Directors
Twelve Seas’ board of directors is divided into two classes with only one class of directors being elected in each year and each class (except for those directors appointed prior to our first annual general meeting) serving a two-year term. The term of office of the first class of directors, consisting of Messrs. Stoupnitzky and Kaji, will expire at our first annual general meeting. The term of office of the second class of directors, consisting of Messrs. Vogel, Richardson and Edwards, will expire at the second annual general meeting. We do not currently intend to hold an annual general meeting until after we consummate our initial business combination (unless we do not consummate our initial business combination prior to December 31, 2019, in which case NASDAQ rules require that we hold an annual meeting prior to December 31, 2019).
Our officers are elected by the board of directors and serve at the discretion of the board of directors, rather than for specific terms of office. Our board of directors is authorized to appoint persons to the offices set forth in our memorandum and articles of association as it deems appropriate. Our memorandum and articles of association provide that our officers may consist of a Chief Executive Officer, President, Chief Financial Officer, Vice Presidents, Secretary, Assistant Secretaries, Treasurer and such other offices as may be determined by the board of directors.
Committees of the Board of Directors
Audit Committee
We have established an audit committee of the board of directors, which consists of Messrs. Richardson, Stoupnitzky and Kaji, each of whom is an independent director under NASDAQ’s listing standards. Mr. Kaji is the Chairperson of the audit committee. The audit committee’s duties, which are specified in our Audit Committee Charter, include, but are not limited to:
• reviewing and discussing with management and the independent auditor the annual audited financial statements, and recommending to the board whether the audited financial statements should be included in our Form 10-K;
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• discussing with management and the independent auditor significant financial reporting issues and judgments made in connection with the preparation of our financial statements;
• discussing with management major risk assessment and risk management policies;
• monitoring the independence of the independent auditor;
• verifying the rotation of the lead (or coordinating) audit partner having primary responsibility for the audit and the audit partner responsible for reviewing the audit as required by law;
• reviewing and approving all related-party transactions;
• inquiring and discussing with management our compliance with applicable laws and regulations;
• pre-approving all audit services and permitted non-audit services to be performed by our independent auditor, including the fees and terms of the services to be performed;
• appointing or replacing the independent auditor;
• determining the compensation and oversight of the work of the independent auditor (including resolution of disagreements between management and the independent auditor regarding financial reporting) for the purpose of preparing or issuing an audit report or related work;
• establishing procedures for the receipt, retention and treatment of complaints received by us regarding accounting, internal accounting controls or reports which raise material issues regarding our financial statements or accounting policies; and
• approving reimbursement of expenses incurred by our management team in identifying potential target businesses.
Financial Experts on Audit Committee
The audit committee will at all times be composed exclusively of “independent directors” who are “financially literate” as defined under NASDAQ’s listing standards. NASDAQ’s standards define “financially literate” as being able to read and understand fundamental financial statements, including a company’s balance sheet, income statement and cash flow statement.
In addition, we must certify to NASDAQ that the committee has, and will continue to have, at least one member who has past employment experience in finance or accounting, requisite professional certification in accounting, or other comparable experience or background that results in the individual’s financial sophistication. The board of directors has determined that Messrs. Kaji and Stoupnitzky each qualify as an “audit committee financial expert,” as defined under rules and regulations of the SEC.
Compensation Committee
We have established a compensation committee of the board of directors, which consists of Messrs. Kaji and Stoupnitzky, each of whom is an independent director under NASDAQ’s listing standards. Mr. Kaji is the Chairperson of the compensation committee. The compensation committee’s duties, which are specified in our Compensation Committee Charter, include, but are not limited to:
• reviewing and approving on an annual basis the corporate goals and objectives relevant to our Chief Executive Officer’s compensation, evaluating our Chief Executive Officer’s performance in light of such goals and objectives and determining and approving the remuneration (if any) of our Chief Executive Officer based on such evaluation;
• reviewing and approving the compensation of all of our other executive officers;
• reviewing our executive compensation policies and plans;
• implementing and administering our incentive compensation equity-based remuneration plans;
• assisting management in complying with our proxy statement and annual report disclosure requirements;
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• approving all special perquisites, special cash payments and other special compensation and benefit arrangements for our executive officers and employees;
• if required, producing a report on executive compensation to be included in our annual proxy statement; and
• reviewing, evaluating and recommending changes, if appropriate, to the remuneration for directors.
Notwithstanding the foregoing, as indicated above, no compensation of any kind, including finders, consulting or other similar fees, will be paid to any of our existing shareholders, including our directors, or any of their respective affiliates, prior to, or for any services they render in order to effectuate, the consummation of a business combination. Accordingly, it is likely that prior to the consummation of an initial business combination, the compensation committee will only be responsible for the review and recommendation of any compensation arrangements to be entered into in connection with such initial business combination.
Nominating Committee
We have established a nominating committee of the board of directors, which consists of Messrs. Richardson, Stoupnitzky and Kaji, each of whom is an independent director under NASDAQ’s listing standards. Mr. Kaji is the Chairperson of the nominating committee. The nominating committee is responsible for overseeing the selection of persons to be nominated to serve on our board of directors. The nominating committee considers persons identified by its members, management, shareholders, investment bankers and others.
Guidelines for Selecting Director Nominees
The guidelines for selecting nominees, which are specified in the Nominating Committee Charter, generally provide that persons to be nominated:
• should have demonstrated notable or significant achievements in business, education or public service;
• should possess the requisite intelligence, education and experience to make a significant contribution to the board of directors and bring a range of skills, diverse perspectives and backgrounds to its deliberations; and
• should have the highest ethical standards, a strong sense of professionalism and intense dedication to serving the interests of the shareholders.
The nominating committee will consider a number of qualifications relating to management and leadership experience, background and integrity and professionalism in evaluating a person’s candidacy for membership on the board of directors. The nominating committee may require certain skills or attributes, such as financial or accounting experience, to meet specific board needs that arise from time to time and will also consider the overall experience and makeup of its members to obtain a broad and diverse mix of board members. The nominating committee does not distinguish among nominees recommended by shareholders and other persons.
Compensation Committee Interlocks and Insider Participation
None of our executive officers currently serves, and in the past year has not served, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on our board of directors.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our officers, directors and persons who beneficially own more than ten percent of our ordinary shares to file reports of ownership and changes in ownership with the SEC. These reporting persons are also required to furnish us with copies of all Section 16(a) forms they file. Based solely upon a review of such forms, we believe that during the year ended December 31, 2018 there were no delinquent filers.
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Code of Ethics
We have adopted a code of ethics that applies to our executive officers, directors and employees. We have filed copies of our code of ethics, our audit committee charter, our compensation committee charter and our nominating committee charter as exhibits to our registration statement in connection with our Initial Public Offering. You may review these documents by accessing our public filings at the SEC’s web site at www.sec.gov. In addition, the code of ethics will be provided without charge upon request to us.
Executive Compensation
Compensation Discussion and Analysis
None of our executive officers has been paid cash compensation in connection with services rendered to the Company for the year ended December 31, 2018. Commencing on June 22, 2018 through the earlier of consummation of our initial business combination and our liquidation, we have paid our Sponsor a total of $10,000 per month for office space, utilities and secretarial support. Our Sponsor, executive officers and directors, or any of their respective affiliates, will be reimbursed for any out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable business combinations. Our independent directors will review on a quarterly basis all payments that were made to our Sponsor, officers, directors or our or their affiliates.
After the completion of our initial business combination, directors or members of our management team who remain with us may be paid consulting, management or other fees from the combined company. All of these fees will be fully disclosed to shareholders, to the extent then known, in the tender offer materials or proxy solicitation materials furnished to our shareholders in connection with a proposed business combination. It is unlikely the amount of such compensation will be known at the time, because the directors of the post-combination business will be responsible for determining executive and director compensation. Any compensation to be paid to our officers will be determined by our compensation committee.
We do not intend to take any action to ensure that members of our management team maintain their positions with us after the consummation of the Business Combination, although it is possible that some or all of our executive officers and directors may negotiate employment or consulting arrangements to remain with us after the Business Combination. The existence or terms of any such employment or consulting arrangements to retain their positions with us may influence our management’s motivation in identifying or selecting a target business but we do not believe that the ability of our management to remain with us after the consummation of the Business Combination will be a determining factor in our decision to proceed with the Business Combination. We are not party to any agreements with our executive officers and directors that provide for benefits upon termination of employment.
Legal Proceedings
Twelve Seas or any of its officers or directors is not currently involved in any legal proceedings.
Periodic Reporting and Audited Financial Statements
Twelve Seas has registered its securities under the Exchange Act and has reporting obligations, including the requirement to file annual and quarterly reports with the SEC. In accordance with the requirements of the Exchange Act, Twelve Seas’ annual reports contain financial statements audited and reported on by Twelve Seas’ independent registered public accounting firm. Twelve Seas has filed with the SEC its Annual Report on Form 10-K covering the year ended December 31, 2018 and its Quarterly Reports on Form 10-Q covering the quarters ended March 31, 2019 and June 30, 2019.
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Twelve Seas’ Management’s Discussion and Analysis of Financial Condition and Results of Operations
References in this section to “we,” “us” or the “Company” refer to Twelve Seas Investment Company. References to our “management” or our “management team” refer to Twelve Seas’ officers and directors, and references to the “Sponsor” refer to Twelve Seas Sponsors I LLC. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this section. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Overview
We were formed on November 30, 2017 as a blank check company for the purpose of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination, with one or more target businesses. Our efforts to identify a prospective target business are not limited to any particular industry or geographic location.
We presently have no revenue, have net income in current period and have had no operations other than the active solicitation of a target business with which to complete a business combination. We have relied upon the sale of our securities and loans from the Sponsor, our officers and directors to fund our operations.
On June 22, 2018, we consummated our Initial Public Offering (“IPO”) of 18,000,000 Units. Each Unit consists of one ordinary share of the Company, one redeemable Public Warrant and one Right to receive 1/10 of an Ordinary Share upon the consummation of our initial Business Combination. The Units were sold at an offering price of $10.00 per Unit, generating gross proceeds of $180,000,000. The Company granted the underwriters a 45-day option to purchase up to 2,700,000 additional Units to cover over-allotments, if any. On June 22, 2018, simultaneously with the consummation of the IPO, we consummated a private placement with our Sponsor of 475,000 Private Placement Units at a price of $10.00 per Private Placement Unit, generating total proceeds of $4,750,000 (the “Initial Private Placement”). The underwriters exercised the over-allotment option in full on June 28, 2018 and purchased 2,700,000 over-allotment option Units at an offering price of $10.00 per Unit, generating gross proceeds of $27,000,000. On June 28, 2018, simultaneously with the sale of the over-allotment Units, the Company consummated the private sale of an additional 54,000 Private Placement Units to our Sponsor, generating gross proceeds of $540,000 (together with the Initial Private Placement, the “Private Placements”).
As of June 30, 2019, a total of $211,727,689 was held in a trust account established for the benefit of the Company’s public shareholders, which included $207,000,000 of the net proceeds from the IPO (including the full exercise of the over-allotment option) and the Private Placements, and subsequent interest and dividend income.
Our management has broad discretion with respect to the specific application of the net proceeds of IPO and the Private Placements, although substantially all of the net proceeds are intended to be applied generally towards consummating a Business Combination.
Recent Development
On April 15, 2019, we entered into the Business Combination Agreement to consummate our initial Business Combination. Following the Closing, our business will consist of the current business of BPGIC. The transaction is subject to our shareholders’ approval and customary closing conditions. See our Current Reports on Form 8-K filed with the SEC on April 19, 2019, May 2, 2019, May 13, 2019 and September 20, 2019 for further information.
Results of Operations
Our entire activity from inception up to June 22, 2018 was related to the Company’s formation and IPO. Since the IPO, our activity has been limited to the evaluation of business combination candidates and consummation of the business combination, and we will not be generating any operating revenues until the closing and completion of our initial Business Combination. We expect to continue to generate small amounts of non-operating income in the form of interest income and dividend income on cash and investments. We expect to continue to incur increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses and business combination expenses. We expect our expenses to increase substantially after this period.
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For the three months ended June 30, 2019, we had a net income of $511,744, which was comprised of interest and dividend income of $1,234,322, net of operating costs of $722,588. For the three months ended June 30, 2018, we had a net income of $35,998, which was comprised of interest income of $42,422, net of operating costs of $6,424.
For the six months ended June 30, 2019, we had a net income of $1,660,278, which was comprised of interest and dividend income of $2,499,397, net of operating costs of $839,119. For the six months ended June 30, 2018, we had a net income of $35,224, which was comprised of interest income of $42,422, net of operating costs of $7,198.
For the years ended December 31, 2018 and 2017, we had a net income of $1,833,347 and a net loss of $28,513, respectively. The formation and operating costs (not charged against shareholders’ equity) for the year ended December 31, 2018 was $394,961, an increase of $366,448, from $28,513 for the period from November 30, 2017 to December 31, 2017. The increase was mainly caused by the increase of activities relating to the search and evaluation of business combination candidates and expenses incurred for legal fees, accounting services fees, filing fees and administrative services fees. The interest income from investments in our Trust Account for the year ended December 31, 2018 was $2,228,308, an increase of $2,228,308, from $0 for the period from November 30, 2017 to December 31, 2017 as the trust account was established upon the IPO.
Liquidity and Capital Resources
As of June 30, 2019, we had cash outside our trust account of $66,596, available for working capital needs. All remaining cash was held in the trust account and is generally unavailable for our use, prior to an initial Business Combination.
Our liquidity needs have been satisfied to date through receipt of $25,000 from the sale of the insider shares, advances from the Sponsor in an aggregate amount of $300,000 which were repaid upon the IPO and the remaining net proceeds from the IPO and Private Placement. Additionally, as of the date of this proxy statement/prospectus, our Sponsor had loaned to us an aggregate of $500,000 pursuant to an unsecured, non-interest-bearing promissory note (“Working Capital Loans”), which will be repaid promptly after the date on which we consummate a business combination.
We intend to use substantially all of the net proceeds of the IPO, including the funds held in the Trust Account, and any additional Working Capital Loans, to acquire a target business or businesses and to pay our expenses relating thereto, including a cash fee equal to 3.5% of the gross proceeds of the IPO payable to the representative of the underwriters upon consummation of our initial business combination for assisting us in connection with such business combination. To the extent that our share capital is used in whole or in part as consideration to effect our initial business combination, the remaining proceeds held in the Trust Account as well as any other net proceeds not expended will be used as working capital to finance the operations of the target business. Such working capital funds could be used in a variety of ways, including continuing or expanding the target business’ operations, for strategic acquisitions and for marketing, research and development of existing or new products. Such funds could also be used to repay any operating expenses or finders’ fees which we had incurred prior to the completion of our initial business combination, if the funds available to us outside of the Trust Account were insufficient to cover such expenses.
We anticipate that the approximately $66,596 outside of our Trust Account as of June 30, 2019 (which has decreased to $43,368 as of September 25, 2019 following our borrowing of the final $100,000 of the Working Capital Loans and payment of ongoing expenses) will not be sufficient to allow us to operate before a business combination is consummated or our automatic winding up, dissolution and liquidation. Over this time period, we will be using these funds for identifying and evaluating prospective business combination candidates, performing business due diligence on prospective target businesses, traveling to and from the offices, plants or similar locations of prospective target businesses, reviewing corporate documents and material agreements of prospective target businesses, selecting the target business to consummate our initial business combination with and structuring, negotiating and consummating the business combination.
The Company currently estimates that it has insufficient funds available to both operate its business and consummate its initial business combination. The Company may need to obtain additional financing either to consummate its initial business combination or because it becomes obligated to redeem a significant number of its Public Shares upon consummation of its initial business combination, in which case the Company may issue additional securities or incur debt in connection with such business combination. Subject to compliance with applicable securities laws, we would only consummate such financing simultaneously with the consummation of our initial business combination. Following our initial business combination, if cash on hand is insufficient, we may need to obtain additional financing
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in order to meet our obligations but there is no assurance that new financing will be available to us on commercially acceptable terms. Furthermore, if we are not able to consummate a business combination by December 22, 2019, it will trigger our automatic winding up, liquidation and dissolution. These conditions raise substantial doubt about our ability to continue as a going concern.
Off-Balance Sheet Financing Arrangements
As of June 30, 2019, we did not have any off-balance sheet arrangements. We have no obligations, assets or liabilities which would be considered off-balance sheet arrangements. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or entered into any non-financial assets.
Critical Accounting Policies
Management’s discussion and analysis of our results of operations and liquidity and capital resources are based on our unaudited financial information. We describe our significant accounting policies in Note 2 - Significant Accounting Policies, of the Notes to Financial Statements included in this report. Our unaudited financial statements have been prepared in accordance with U.S. GAAP. Certain of our accounting policies require that management apply significant judgments in defining the appropriate assumptions integral to financial estimates. On an ongoing basis, management reviews the accounting policies, assumptions, estimates and judgments to ensure that our financial statements are presented fairly and in accordance with U.S. GAAP. Judgments are based on historical experience, terms of existing contracts, industry trends and information available from outside sources, as appropriate. However, by their nature, judgments are subject to an inherent degree of uncertainty, and, therefore, actual results could differ from our estimates.
Quantitative and Qualitative Disclosures about Market Risk
All activity through June 30, 2019 relates to our formation, Initial Public Offering, and search for prospective targets to effect a business combination. We did not have any financial instruments that were exposed to market risks at June 30, 2019.
Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our principal executive officer and principal financial and accounting officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on this evaluation, our principal executive officer and principal financial and accounting officer have concluded that during the period covered by this report, our disclosure controls and procedures were effective.
Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting during the quarter ended June 30, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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This section provides an overview of the market in which BPGIC currently operates and Pubco will operate subsequent to the Business Combination. References in this section to “we,” “us” or “BPGIC” refer to Brooge Petroleum And Gas Investment Company FZE prior to the Business Combination and Pubco and its subsidiaries, including BPGIC, subsequent to the Business Combination.
The information in the following section has been provided for background purposes. The information has been extracted from a variety of sources released by public and private organizations. The industry information has been accurately reproduced and, as far as BPGIC is aware and is able to ascertain from information published by such sources, no facts have been omitted which would render the reproduced information inaccurate or misleading. This section contains forward-looking statements. Actual results may differ materially from those currently anticipated because of many factors, including those described under “Risk Factors” and elsewhere in this prospectus. See “Special Note Regarding Forward Looking Statements”.
1. Storage industry overview
Tank storage facilities play a vital role in the business of refined petroleum products, crude oil and liquid chemicals. They serve as a critical logistical midstream link between the upstream (exploration and production) and the downstream (refining) segments of the refined petroleum product and crude oil industry. They are used to store primary, intermediate and end products and facilitate a continuous supply of the required feedstocks to refineries and chemical plants in the processing industry on the one hand and absorb fluctuations in sales volumes on the other.
Each change in the mode of transport, e.g. from a ship to a pipeline network or from a pipeline to a freight train, requires temporary storage capacities and transhipment facilities, i.e. terminals with tank storage facilities. An efficient oil logistics chain would be inconceivable without these infrastructure components.
Source: IHS Markit data as of June 2018 please see “Industry and Market Data” for a full description.
Global oil storage capacity providers can be divided into three operator groups: captive, independent and semi-captive.
BPGIC is an independent storage capacity provider.
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Classification of storage capacity owners by line of business
The liquid storage business has evolved from its beginnings as a component of an integrated production, transportation and logistics process, into a mature, stand-alone operation.
Source: IHS Markit data as of June 2018 please see “Industry and Market Data” for a full description, and company information.
Many major energy companies and traders own and operate terminal storage facilities to help integrate their upstream or downstream energy assets into the larger marketplace. Although such terminals often have the same basic capabilities as terminals owned by independent commercial operators such as BPGIC, they generally do not provide storage to third parties nor do they typically have the flexible infrastructure and business approach required to do so. Moreover, major energy companies are increasing their focus on capital intensive, upstream activities that generate riskier and higher returns on investment at the expense of midstream activities, including tank storage and shipping. To both reduce their capital employed in such midstream activities and also to capitalize on the safe and efficient operations of independent terminal operators, major energy companies increasingly sell terminal assets against future storage contracts.
While some major energy companies still own their own storage facilities, they are also significant customers of independent terminal operators as they continue to require efficient operations and tailor-made services strategically situated at global hubs. Major energy companies, traders and chemical companies also frequently have a need for storage when specialized handling is required, when refineries experience process upsets or maintenance turnarounds, or when independent terminal operators have more cost-effective locations near key transportation links such as deep-water ports.
Independent storage providers have the most flexibility of the oil storage capacity providers to adjust to prevailing market conditions as their storage is made accessible to the open market for third party usage and is widely used. These facilities are used to build and break bulk quantities of oil; to blend oil to desired specification levels; to distribute oil products for transportation via truck, railcar, barge, pipeline, and vessel; to send crude oil to refineries; to integrate with local industry; and for speculative storage usage encouraged by incentives on the derivatives trading market.
Besides leasing independent storage facilities, oil refiners, traders, and oil companies tend to utilize their own storage assets to facilitate their daily operations. Often, oil companies will use each other’s terminals by means of exchange deals and throughput agreements. Moreover, traders and independent storage providers often develop new assets, which are then backed by long-term contracts that often include exclusive usage.
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Overview of market sectors requiring storage
Source: IHS Markit data as of June 2018 please see “Industry and Market Data” for a full description, and company information.
Product-specific tank storage facilities – Crude, Fuel Oil and Clean petroleum products
Various petroleum products have different characteristics, and tank storage facilities are designed to address the requirements of their contents.
For crude oil, it is more efficient to have oil storage tanks with large capacity because crude carriers tend to be capable of carrying larger oil quantities than refined product carriers. For example, VLCCs generally are capable of carrying between 160,000 to 320,000 DWT and product carriers are generally capable of carrying between 10,000 to 160,000 DWT. Crude oil storage tanks also need to have heating capabilities and floating roofs. In light of the size and needs of VLCCs, BPGIC is currently constructing eight large capacity oil storage tanks to provide crude oil storage as part of Phase II.
Fuel oil is a product that is easy for vessels and oil storage facilities to handle. This allows for large quantities of it to be transported and later stored. Fuel oil storage tanks often have heating blending and chemical treatment capabilities. BPGIC is able to provide storage for fuel oil in addition to heating and blending services as part of Phase I.
Clean petroleum product oil storage tanks tend to be in a wide range of storage sizes reflecting the diversity and various individual requirements of clean petroleum products. Specifications for clean petroleum product oil storage tanks depend on the type of product being stored. The average size of clean petroleum product oil storage tanks tends to be smaller than that of fuel oil storage tanks as they include niche products or components that are demanded in smaller quantities.
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Ancillary services offered in a typical storage terminal
Source: IHS Markit data as of June 2018 please see “Industry and Market Data” for a full description, and company information.
Classification of tank storage by functions
In functional terms, tank storage terminals can generally be classified into three types:
Hub terminals: Located near the major oil hubs of the world (Amsterdam-Rotterdam-Antwerp (“ARA”), Singapore, Fujairah and Houston) where high-volume product flows intersect. Handling these product flows necessitates the operation of large-scale tank storage farms along with appropriately sized loading berths. In addition, substantial economies of scale can be achieved with large-scale tank storage facilities. BPGIC is strategically located in the Port of Fujairah, which is classified as the second largest bunking hub in the world according to Bloomberg and other global news sources.
Import/Distribution/Export terminals: Used for storing products that are exported or imported by local companies and distributed on the domestic market. They are also used for distribution by local refineries.
Industrial terminals: Designed as a component of larger production complexes of the chemicals industry. They are fully integrated into the production of associated operating units via pipelines and handle the logistics of products within the entire complex.
2. Drivers of demand of storage industry
Overview
The main demand driver for the tank storage industry is the development of the (seaborne) transport volume of liquid goods. The volume handled is determined by the total consumption and/or the processing volume of liquid goods
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which in particular, is influenced by trade flows. Crude oil and petroleum products are the most important product groups in terms of volume, well ahead of liquid chemicals and vegetable oils.
Source: IHS Markit data as of June 2018 please see “Industry and Market Data” for a full description.
The Middle East’s economic growth is projected to recover to an annual average of 4 percent through 2020 and to remain at a healthy average rate of 3.3 percent over the 2020 – 2040 period, supported by higher government spending as a result of recovering oil prices.
Oil product consumption growth has been very strong in the UAE since 2010, growing at an annual average rate of approximately 6 percent demand for fuel oil, gasoline and gas oil in the transportation sector has grown greatly over the last decade due to the expansion of the country’s vehicle fleet, with gasoline consumption increasing particularly rapidly. Demand for residual fuel oil is also very high (40 percent of total refined petroleum products demand in 2017) due to the UAE’s substantial bunkering sector.
The Middle East exports crude to virtually every region of the world. Its net oil product export capacity is expected to increase from 2.3 million b/d to 3.6 million b/d in 2040 driven by new refining capacity and growing production of natural gas liquids.
Source: IHS Markit data as of June 2018 please see “Industry and Market Data” for a full description.
Storage capacity additions and fees are driven by the market structure
Storage capacity additions are driven by market structure (e.g. contango or backwardation states) and do not exhibit a strong correlation with spot oil prices.
Source: IHS Markit data as of June 2018 please see “Industry and Market Data” for a full description.
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Source: IHS Markit data as of June 2018 please see “Industry and Market Data” for a full description.
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(1) Storage index is a proxy for storage utilization which is expressed as the ratio of total seaport going traffic to independent and partially independent storage capacity of specific group of products.
(2) Storage fees is for dirty products which is taken as a proxy for crude.
In a contango state (future expected rates are higher than current rates), storage rates tend to increase, but the fees from ancillary services (e.g. blending and heating) might fall due to lower utilization of ancillary services. In a backwardation state (future expected rates are lower than current rates), storage rates tend to fall, but are balanced by higher ancillary fees as utilization of ancillary services are expected to rise.
3. Fujairah storage terminal overview
The Port of Fujairah is an emerging oil storage hub in the Middle East. Activity at the Port of Fujairah has increased rapidly in recent years because of the following key reasons:
• Strategic location outside the Strait of Hormuz
• The Port of Fujairah sits in a prime geographical location outside the Strait of Hormuz, with about 8.8 million cm3 of independent storage capacity.
• 35 percent of the world’s seaborne oil passes through the Strait of Hormuz.
• Increasing preference for companies to avoid sending their vessels through the Strait of Hormuz due to geopolitical risk, higher transportation costs due to increased insurance costs as well as congestion and queuing times at ports inside the Arabian Gulf. The Port of Fujairah’s geographic position outside the Strait allows vessels transporting oil and oil products to bypass the Strait and avoid incurring such additional costs and delays.
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• Favorable business environment, situated within one of the UAE’s “free zones”
• In the Fujairah free zone, private ownership is permitted. Governmental control of the downstream industry’s legal environment allows private investment in retail and free zones only.
• Habshan-Fujairah crude oil pipeline
• The Habshan-Fujairah 1.5 million b/d crude oil pipeline was inaugurated in 2012, giving oil companies the ability to send crude oil from Abu Dhabi directly to Fujairah and, then from there, to the Indian Ocean.
• There is increasing focus in the UAE region on using the crude oil pipeline, as the government of Abu Dhabi has publicly stated that it intends to ensure that approximately 75 percent of the crude oil designated for export in Abu Dhabi goes through the pipeline and to Fujairah.
• Major expansion of private storage ownership in the Port of Fujairah.
• The Port of Fujairah is export-oriented and as a result has attracted bunker fuel suppliers and oil trading houses alike.
Fujairah’s suitability as a global oil storage hub
Source: IHS Markit data as of June 2018 please see “Industry and Market Data” for a full description.
Note: Fujairah is the world’s 2nd largest bunker trading hub as of 2016
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Fujairah as compared to other hubs
Source: IHS Markit data as of June 2018 please see “Industry and Market Data” for a full description, Port Statistic Centre, company information and company websites.
Note: Storage capacity for Fujairah also includes the ADNOC terminal while for Amsterdam-Rotterdam-Antwerp (ARA) and Singapore, the storage capacity is for all independent and partially independent storage terminals.
Note: Port traffic is for crude and refined petroleum products.
Note: Independent / partially independent storage capacity for Greater Singapore and for Amsterdam-Rotterdam-Antwerp (ARA) ports as of 2017.
Note: Capacity additions planned/under-construction as of June 2018.
Fujairah has grown significantly in recent years as a global hub primarily due to very high bunkering demand stemming from its strategic location outside the Strait of Hormuz and its presence in the Fujairah free zone. With growing trade and demand in the MENA region, the more export-oriented refineries will send products out to deficit markets in other Middle Eastern countries as well as in East and North Africa and Southeast Asia, which will require more storage infrastructure.
The Singapore and ARA hubs have historically benefited from the use of modern port infrastructure and nearby refining centers. Also, they have the advantage of being price centers for refined petroleum products owing to extensive trading activity in their respective regions. However, in the future, ARA storage terminals may likely face additional competition from refinery-to-terminal conversions because of refinery rationalizations, while Singapore is expected to experience congestion in land availability.
On the other hand, the Port of Fujairah has more opportunities to scale up due to the expected rise of trade flow in the region coupled with upcoming refining projects. Over the period from 2010 to 2017, the Port of Fujairah has experienced:
• 25 percent growth in base capacity – the highest among the other global hubs.
• Growth in port traffic at a compound annual growth rate (“CAGR”) of 15 percent, which is almost six times the CAGR experienced by ARA.
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Growth potential of Fujairah
Port traffic outlook
The Port of Fujairah has witnessed higher growth in port traffic with a CAGR of 15 percent over the last eight years (from 34 million MT in 2010 to 90 million MT in 2017), as compared to Singapore and ARA. BPGIC believes that the port traffic in the Port of Fujairah is poised to grow in the future - driven primarily by bunkering demand in the region.
Source: IHS Markit data as of June 2018 please see “Industry and Market Data” for a full description.
Refining center
The Fujairah refinery, with a capacity of 82,000 b/d, is the only refinery in Fujairah. However, there are four other refineries located in the UAE, which gives the UAE a total refining capacity of 1.1 million b/d.
Further expansions are expected in the downstream sector, including the planned 200,000 b/d Mubadala refinery and the recent announcement of the UAE’s ADNOC five-year downstream expansion plan, which is projected to cost USD 45 billion (AED 165 billion).
Significant oil flow
Crude oil flow is expected to increase as crude oil from the producing regions in the UAE can be exported through Fujairah through the 1.5 million b/d Habshan-Fujairah crude oil pipeline. Inaugurated in 2012, the pipeline gives oil companies the ability to send crude oil from Abu Dhabi directly to Fujairah and, then from there, to the Indian Ocean.
Impact of IMO regulation on the storage industry
In October 2016, the International Maritime Organization (“IMO”) changed the maximum sulphur level to 0.5 percent m/m for use in all vessels, which goes into effect on January 1, 2020, a significant reduction from the current 3.5 percent level used by most of the world’s shipping industry.
This IMO regulation is expected to increase the use of blending facilities and the segregation of hydrocarbon cutter stocks by oil companies seeking to comply with the sulphur limitation standards. The relevant vessels will also require services for the discharge and disposal of the scrubber wastes while the vessel is anchored at the ports. This regulation is also expected to increase the demand for floating storage tanks as there will be a likely shift in bunkering locations based on low-sulphur compliant fuel availability. Tank farms are expected to have good interchangeability and flexibility so that oil storage tanks can be switched to hold cleaner middle distillate products as well as fuel oil depending on market dynamics.
The need to dispose high-sulphur residuals to alternate markets such as the power industry also presents an opportunity for additional storage requirements.
Fujairah is expected to have a higher storage utilization (as measured by the IHS storage index) particularly for dirty products in the period from 2018 to 2025.
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Source: IHS Markit data as of June 2018 please see “Industry and Market Data” for a full description.
Note: Storage index is defined as the ratio of port traffic to storage capacity of independent and partially independent terminals.
Planned infrastructure investments
• Pursuant to a AED 500 million agreement signed between the Port of Fujairah and the Abu Dhabi Ports Company, the Port of Fujairah plans to develop its port infrastructure in the long term through the deepening of its berths to a 16.5m draft level, the establishment of a 1 km quay and a 300,000 m2 storage yard.
• In August 2017, the government of Fujairah signed a partnership agreement with Minpoint Business Investments and Niras International Consultancy to design and build a new business park in Fujairah — a “Smart Logistics City”, which the government of Fujairah hopes will become the prime choice for businesses targeting emerging and local markets. The first phase of the project will be built on a 68,000 m2 land plot and is expected to be completed in three stages over the next five years.
• Under the strategic Fujairah 2040 Plan, the UAE government has laid out projects, at the projected cost of AED 1.5 billion, focusing on the enhancement of housing and transportation infrastructure facilities in Fujairah.
Expansions are expected in the downstream sector, including the upcoming 200,000-b/d-IPIC refinery and ADNOC’s five-year plan to build the world’s largest integrated refining and petrochemicals facility at Ruwais with a projected gross capacity of 1.5 million b/d. ADNOC’s five-year plan is expected to cost USD 45 billion (AED 165 billion).
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In this section, references to “we,” “us,” “BPGIC” and “our” are intended to refer to Brooge Petroleum And Gas Investment Company FZE prior to the consummation of the Business Combination and to Brooge Holdings Limited and its subsidiaries after the consummation of the Business Combination, unless the context clearly indicates otherwise.
This section contains forward-looking statements about the business and operations of BPGIC, and following the Business Combination, Pubco and its subsidiaries. The actual results of BPGIC and Pubco may differ materially from those currently anticipated as a result of many factors, including those described under “Risk Factors” and elsewhere in this prospectus. See “Special Note Regarding Forward Looking Statements”.
Overview
BPGIC is an oil storage and service provider strategically located in the Port of Fujairah in the emirate of Fujairah in the UAE. BPGIC’s vision is to develop an oil storage business that differentiates itself from competitors by providing its customers with fast order processing times, excellent customer service and high accuracy blending services with low oil losses. BPGIC has a 60-year lease of land for its operations located in close proximity to the Port of Fujairah’s berth connection points. BPGIC is initially developing its terminal’s storage capacity in two phases, Phase I, which is already operational, and Phase II, which is under construction, and simultaneously in partnership with Sahara, is developing the Sahara Refinery, a modular refinery. Phase I commenced operations in December 2017, Phase II is under construction, the Sahara Refinery is under development. BPGIC is led by an experienced management team with over 30 years of experience in the oil storage terminal industry.
The Port of Fujairah is the main bunkering location in the MENA region and the second largest bunkering hub in the world. The Port of Fujairah has witnessed increased growth in port traffic in recent years with oil and oil product volumes increasing at a compound annual growth rate of 15 percent over the eight-year period from 2010 (34 million MT) to 2017 (90 million MT). Located just outside the Strait of Hormuz, the Port of Fujairah allows ships transporting oil and oil products to bypass the Strait, one of world’s most vulnerable chokepoints given that 35 percent of the world’s seaborne oil and oil products passes through it each year. There is an increasing preference among companies to avoid sending their vessels through the Strait of Hormuz due to geopolitical risk, higher transportation costs due to increased insurance costs as well as congestion and queuing times at ports inside the Arabian Gulf. The Port of Fujairah’s geographic position outside the Strait allows vessels transporting oil and oil products to bypass the Strait and avoid incurring such additional costs and delays.
Phase I comprises 14 oil storage tanks with an aggregate geometric oil storage capacity of approximately 0.399 million m3 and related infrastructure. The operations of Phase I are focused primarily on the storage, heating and blending of fuel oil and clean petroleum products, including aviation fuel, gas oil, gasoline, marine gas oil and naphtha. BPGIC designed Phase I to focus its operations on servicing such products after assessing the historical and expected demand for such services in the Port of Fujairah region and the evolution and availability of associated infrastructure. As described below, BPGIC designed Phase I with several key features that enable it to provide users with high accuracy blending services with low oil losses. In addition, due to the relatively long term of BPGIC’s Terminal Land Lease, which has a total period of 60 years, when compared to similar land leases for oil storage terminals located in the Port of Fujairah, BPGIC constructed Phase I with materials, including pumps, valves and steel structures, that have longer expected life spans than comparable materials utilized by other oil storage terminals. As a result, BPGIC believes Phase I will benefit from annual maintenance costs over the period of the BPGIC Terminal Land Lease that are lower than the average for comparable oil storage terminals. In addition, all 14 oil storage tanks in Phase I have been designed to permit conversions from storing one clean petroleum product to another at an average speed of 48 hours and from storing fuel oil to gas oil at an average speed of 14 days, which BPGIC believes compares favorably to BPGIC’s competitors in the UAE region, allowing BPGIC to swiftly adjust its services to meet changing market demands. BPGIC can perform up to 11 simultaneous operations in Phase I, including tank-to-tank transfers, recirculations, blending, heating, loading and discharging, permitting BPGIC to service multiple user orders during the same time period. Phase I has a fully segregated internal manifold, high oil transfer flow rates and an indirect connection to all the Port of Fujairah berths, including certain underutilized berths that are in close proximity to the BPGIC Terminal, to allow users to benefit from lower contamination risks and faster vessel turnaround times and permitting greater access to the BPGIC Terminal. As is common in the oil storage industry, BPGIC commenced operations of Phase I on a staggered basis to ensure a safe and efficient start-up of operations. From the time BPGIC began its operations in December 2017 to March 2018 (testing
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period), BPGIC limited the availability of its storage capacity to 40 percent, allowing its management team to test all systems and make any necessary adjustments. BPGIC increased the availability of its storage capacity to approximately 70 percent on March 1, 2018, and to 100 percent on April 1, 2018.
Since it began operations, BPGIC has won two awards and been shortlisted for several others. In 2019, BPGIC was named the winner of the “Outstanding Port/Terminal Design of the Year 2019” award by The Global Ports Forum, and of the “Excellence in Terminal Optimisation Award” by Tank Storage Magazine’s Global Tank Storage Awards. In March 2018, BPGIC was short-listed by Tank Storage magazine, despite its relatively short track record, for the “Most Efficient Storage Terminal” global award for best throughput rates and most effective operations. In March 2019, BPGIC was once again, short-listed by Tank Storage magazine for the “Most Efficient Storage Terminal” global award, as well as the “Safety Excellence in Bulk Liquid Storage” and “Biggest Commitment to Environmental Protection” global awards.
In order to de-risk the start-up of operations of Phase I, on December 12, 2017, BPGIC entered into the Phase I End User Agreement with the Phase I End User. Pursuant to the Phase I End User Agreement, the Phase I End User has leased all 14 oil storage tanks in Phase I for an initial period of five years, which extends automatically for an additional five years unless terminated prior to the scheduled expiration date. In August 2019, with the approval of the Phase I End User, BPGIC entered into the Phase I Customer Agreement with the Phase I & II Customer to restructure its relationship with the Phase I End User. Under the Phase I Customer Agreement, BPGIC leased the Phase I facilities to the Phase I & II Customer, and in connection therewith, the Phase I & II Customer assumed the rights and obligations of BPGIC under the Phase I End User Agreement. For more information regarding the Phase I End User Agreement and Phase I Customer Agreement, see “Business of BPGIC — Phase I End User Agreement and Phase I Customer Agreement”.
On the remaining land available to it under the BPGIC Terminal Land Lease, BPGIC intends to incorporate a modular refinery, and to construct additional storage tanks that are primarily expected to provide storage and blending of crude oil.
In March 2019, BPGIC partnered with Sahara to develop and operate a modular refinery within the BPGIC Terminal with minimal capital expenditure by BPGIC. Under the terms of the Refinery and Services Agreement, Sahara will finance and arrange the development, construction and commissioning of the Sahara Refinery by an Engineering, Procurement and Construction contractor (the “EPC Contractor”) in compliance with all relevant laws, regulations and best industry standards. The Sahara Refinery is currently expected to begin operations in the First Quarter of 2020. Pursuant to the Refinery and Services Agreement, the Sahara Refinery will be owned by Sahara and operated by BPGIC for Sahara’s exclusive use. The Sahara Refinery will be one of the first refineries in the MENA region capable of supplying IMO 2020 compliant 0.5% sulphur content shipping fuel. The facility is expected to have an initial production capacity of 24,000 b/d. In connection with the operation of the Sahara Refinery, Sahara will use five Phase I storage tanks currently leased to the Phase I & II Customer.
Phase II is expected to focus its operations primarily on the storage and blending of crude oil. Phase II will involve the construction of eight additional oil storage tanks with an aggregate geometric oil storage capacity of approximately 0.601 million m3, which will increase BPGIC’s aggregate geometric oil storage capacity to approximately 1 million m3. In February 2017, BPGIC finalized and issued a front end engineering document, which sets out the qualifications, specifications, drawings and designs of Phase II, to Audex. On September 3, 2018, BPGIC signed the EPC agreement with Audex for the development of Phase II, (the “Phase II EPC Agreement”). As part of Phase II, BPGIC intends to follow a similar approach to Phase I by investing in high-grade, long-life materials for the construction and development of its facilities. Audex commenced construction of Phase II in September 2018 and plans to complete construction in 2020. Phase II is being constructed adjacent to Phase I and the site for the Sahara Refinery on the remaining land available under the BPGIC Terminal Land Lease. The expected capital expenditure in respect of Phase II is USD 160.6 million which is comprised of construction costs of USD 150.0 million and capitalised interest and land lease and consultancy charges of USD 10.6 million. The expected capital expenditure of USD 160.6 million in respect of Phase II will be funded by:
• drawings of USD 90.6 million under the Phase II Financing Facility; and
• shareholders contributions (prior to the consummation of the Business Combination), proceeds of the Business Combination (following the consummation of the Business Combination), and internally generated cashflow in the aggregate amount of USD 70.0 million.
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Of the USD 160.6 million expected capital expenditure in respect of Phase II, USD 105.0 million is expected to be paid out prior to the end of fiscal year 2019. USD 55.6 million is expected to be paid out in fiscal year 2020. See Risk Factors — Risks relating to BPGIC — BPGIC may be subject to significant risks and expenses when constructing Phase II, which could adversely affect BPGIC’s business, financial condition and results of operations.
As was the case with Phase I, in order to de-risk the start-up of operations of Phase II, on June 27, 2018, BPGIC entered into the Phase II End User Agreement with the Phase II End User, an international commodities trading company. Pursuant to the Phase II End User Agreement, the Phase II End User has agreed to lease all eight oil storage tanks in Phase II and will become the end-user with respect to Phase II once Phase II becomes operational, which is expected to occur during the Second Quarter of 2020. In September 2019, with the approval of the Phase II End User, BPGIC entered into the Phase II Customer Agreement with the Phase I & II Customer to restructure its relationship with the Phase II End User. Under the Phase II Customer Agreement, BPGIC leased the Phase II facilities to the Phase I & II Customer, and in connection therewith, the Phase I & II Customer assumed the rights and obligations of BPGIC under the Phase II End User Agreement.
For more information regarding the Phase II End User Agreement, see “Business of BPGIC — Phase II End User Agreement”.
For the six months ended June 30, 2019, BPGIC generated revenue from operations of USD 22.0 million, a profit and total comprehensive income of USD 12 million and an Adjusted EBITDA of USD 18.8 million. As at June 30, 2019, BPGIC had total assets of USD 246.8 million. For more information regarding BPGIC’s financial condition and results of operations, see “BPGIC’s Management’s Discussion and Analysis of Financial Condition and Results of Operations”.
History
The following timeline sets forth BPGIC’s major milestones.
BPGIC was incorporated in 2013 in the Fujairah Free Zone, UAE, to provide oil storage, heating and blending services. On February 10, 2013, the Fujairah Free Zone Authority provided BPGIC with a licence to engage in the following activities: (i) trading and storing all varieties of oil products and gas, including crude and fuel oils; (ii) building,
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managing and investing in refineries and all other types of investments; and (iii) exploring and extracting crude oil and gas in both onshore and offshore fields.
On March 10, 2013, BPGIC entered into the 60-year BPGIC Terminal Land Lease with the Fujairah Municipality, a local government organization specializing in municipal urban and rural municipal affairs, for a parcel of land to build and operate the BPGIC Terminal, which is in the Port of Fujairah. On September 1, 2014, the BPGIC Terminal Land Lease was novated from the Fujairah Municipality to FOIZ. For more information regarding the BPGIC Terminal Land Lease see “Business of BPGIC — Land Lease”.
On March 31, 2016, BPGIC entered into a Port Facilities Agreement with the Port of Fujairah. For more information regarding the Port Facilities Agreement, see “Business of BPGIC — Land Lease” and “Port Facilities Agreement”.
After several years of planning and design, BPGIC finalized plans for Phase I during the First Quarter of 2015. BPGIC signed an EPC agreement for Phase I (the “Phase I EPC Agreement”) on April 2, 2015 with Audex and commenced work in accordance with the Phase I EPC Agreement. Audex completed Phase I works on November 19, 2017 and between 2014 and 2017 BPGIC incurred a total cost of USD 170 million in connection with its construction. On December 12, 2017, BPGIC entered into the Phase I End User Agreement with the Phase I End User. BPGIC began testing operations on December 20, 2017 and commenced limited operations on January 18, 2018. From the time BPGIC began its operations on December 20, 2017 to February 28, 2018, BPGIC limited the availability of its storage capacity to 40 percent, allowing its management team to test all systems and make any necessary adjustments. BPGIC increased the availability of its storage capacity to approximately 70 percent on March 1, 2018 and to 100 percent on April 1, 2018.
In August 2019, with the approval of the Phase I End User, BPGIC entered into the Phase I Customer Agreement with the Phase I & II Customer to restructure its relationship with the Phase I End User. Under the Phase I Customer Agreement, BPGIC leased the Phase I facilities to the Phase I & II Customer, and in connection therewith, the Phase I & II Customer assumed the rights and obligations of BPGIC under the Phase I End User Agreement. Following this restructuring, BPGIC leases the Phase I facility to the Phase I & II Customer, and the Phase I & II Customer subleases the facility to the Phase I End User. The Phase I & II Customer’s obligations to pay BPGIC for the storage and ancillary services provided at the Phase I facility are independent of the Phase I End User’s actual payments to the Phase I & II Customer.
As of June 30, 2019, BPGIC had funded the construction of Phase I, Phase II and all of its other cash requirements with funds from the Phase I Financing Facilities, and net equity contributions (other than share capital) since 2014 of USD 80.3 million from shareholders. For additional information regarding the Phase I Financing Facilities, see “BPGIC’s Management’s Discussion and Analysis of Financial Condition and Results of Operation — Liquidity and Capital Resources — Indebtedness”.
As Phase I neared completion, BPGIC finalized plans for Phase II in the Third Quarter of 2017. On June 27, 2018, BPGIC entered into the Phase II End User Agreement with the Phase II End User. On September 3, 2018, BPGIC signed the Phase II EPC Agreement with Audex. Phase II work commenced in September 2018 and according to the schedule in the Phase II EPC Agreement, it is expected to be completed in 2020. The expected capital expenditure in respect of Phase II is USD 160.6 million (comprised of construction costs of USD 150.0 million and capitalised interest and land lease and consultancy charges of USD 10.6 million). On September 3, 2018, BPGIC signed a project management agreement (the “Phase II Project Management Agreement”) with MUC, the same advisor that designed the facilities for the Port of Fujairah and the BPGIC Terminal, so that MUC could manage the construction plan of Phase II.
On October 15, 2018, BPGIC entered into the Phase II Financing Facility, which is a USD 95.3 million secured Shari’a compliant Istisna’ financing arrangement coordinated by FAB, to fund a portion of the capital expenditure in respect of Phase II.
The Company plans to use USD 185 million of the Business Combination proceeds to repay debt, USD 163.5 million to fund general working capital needs, as well as USD 14.5 million to pay the fees and expenses incurred in connection with the Business Combination. These estimated uses assume there is USD 213 million in the Trust Account at the Closing of the Business Combination and assume there will be proceeds from a simultaneous private placement of USD 150 million.
In September 2019, with the approval of the Phase II End User, BPGIC entered into the Phase II Customer Agreement with the Phase I & II Customer to restructure its relationship with the Phase II End User. Under the Phase II Customer Agreement, BPGIC leased the Phase II facilities to the Phase I & II Customer, and in connection therewith, the
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Phase I & II Customer assumed the rights and obligations of BPGIC under the Phase II End User Contract. Following this restructuring, BPGIC leases the Phase II facility to the Phase I & II Customer, and the Phase I & II Customer subleases the facility to the Phase II End User. The Phase I & II Customer’s obligations to pay BPGIC for the storage and ancillary services provided at the Phase II facility are independent of the Phase II End User’s actual payments to the Phase I & II Customer.
For more information regarding Phase II, see “Business of BPGIC — Proposed Phase II” and: “ BPGIC’s Management’s Discussion and Analysis of Financial Condition and Results of Operation — Liquidity and Capital Resources — Indebtedness” and for more information regarding the Business Combination, see “The Business Combination Proposal”.
On March 13, 2019, BPGIC entered into the Refinery and Services Agreement with Sahara. Under the Refinery and Services Agreement, Sahara is obligated to finance and arrange the development, construction and commissioning of the Sahara Refinery by the EPC Contractor. The Sahara Refinery is expected to become operational in the First Quarter of 2020.
Competitive Strengths
Strategic location of the BPGIC Terminal.
The BPGIC Terminal is strategically located in the Port of Fujairah, which is the main bunkering location in the MENA region and the second largest bunkering hub in the world. The Port of Fujairah has witnessed increased growth in port traffic in recent years with oil and oil product volumes increasing at a compound annual growth rate of 15 percent over the eight-year period from 2010 (34 million MT) to 2017 (90 million MT). Located just outside the Port of Fujairah, the Strait of Hormuz is one of world’s most vulnerable chokepoints for the transportation of oil and oil products as approximately 35 percent of the world’s yearly average seaborne oil and oil products passes through it each year. There is an increasing preference among companies to avoid sending their vessels through the Strait of Hormuz due to the continued geopolitical uncertainty from Iran and the higher transportation costs due to increased insurance costs as well as congestion and queuing times at ports inside the Arabian Gulf. The Port of Fujairah’s geographic position outside the Strait allows vessels transporting oil and oil products to bypass the Strait and avoid incurring such additional costs and delays.
In addition, the BPGIC Terminal is strategically positioned in a prime location within the Port of Fujairah. BPGIC benefits from the terminal’s close proximately to berths 8 and 9 due to the shorter travel distances required for oil product transfers, which in effect lowers contamination risks and leads to faster vessel turnaround times.
Best-in-class facility with low costs.
BPGIC operates the BPGIC Terminal under a 60-year lease, which has allowed BPGIC to design and build a terminal for long term use by using materials that have longer expected life spans than comparable materials utilized by other oil storage terminals in the MENA region, which the Company believes enabled it to build a best-in-class facility. As of the date of this proxy statement/prospectus, the BPGIC Terminal has been inspected by five of the top six global oil majors, all of the top five global oil traders, the top three regional oil traders and three of the five local and regional state oil companies. As is common in the oil storage industry, BPGIC did not receive any notifications from such companies as to whether the BPGIC Terminal was approved for use by such companies; however, in each case, BPGIC believes the BPGIC Terminal was approved.
Phase I was constructed by Audex, an EPC contractor that has a strong track record in building terminals and over 20 years of experience in the industry. All 14 oil storage tanks in Phase I have been designed to permit conversions from storing one clean petroleum product to another at an average speed of 48 hours and from storing fuel oil to gas oil at an average speed of 14 days, which BPGIC believes compares favorably to BPGIC’s competitors in the UAE region, allowing BPGIC to adjust its services to meet changing market demands. BPGIC can perform up to 11 simultaneous operations in Phase I, including tank-to-tank transfers, recirculations, blending, heating, loading and discharging, permitting BPGIC to service multiple user orders during the same time period. Phase I has a fully segregated internal manifold, high oil transfer flow rates and an indirect connection to all the Port of Fujairah berths, including certain underutilized berths that are in close proximity to the BPGIC Terminal, to allow users to benefit from lower contamination risks and faster vessel turnaround times while permitting greater access to the terminal. A fine stripping system has been installed, to minimize energy costs, lowering loss ratios and a higher degree of stripping.
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In addition, maintenance costs for the BPGIC Terminal are relatively low. Furthermore, as the BPGIC Terminal is located in a free-zone, BPGIC is currently not required to pay any taxes and both the Phase I Customer Agreement and the Phase II Customer Agreement specify that any port fees charged by the Port of Fujairah in connection with the Phase I & II Customer’s activities, or those of the Phase I & II Customer’s sublessees, are to be paid by the Phase I & II Customer.
As discussed below under “Business of BPGIC — Strategy — Expand the scale of existing operations by completing Phase II and operating the Sahara Refinery”, “Business of BPGIC — The BPGIC Terminal — Proposed Sahara Refinery”, and “Business of BPGIC — The BPGIC Terminal — Proposed Phase II”, BPGIC is currently partnering with Sahara in connection with the development of the modular Sahara Refinery, and undertaking Phase II construction, which will expand the terminal’s oil storage capacity and enable it to provide services for crude oil. As was the case for Phase I, high-grade, long-life materials will be utilized in the construction and development of these facilities. Phase II will also benefit from the fine stripping system utilized in Phase I. Furthermore, the Phase II Customer Agreement specifies that any port fees charged by the Port of Fujairah in connection with the Phase I & II Customer’s activities are to be paid by the Phase I & II Customer.
Stable and predictable revenue stream for storage services.
BPGIC generates stable and predictable cash flows for its storage services by providing fee-based, take-or-pay storage services to the Phase I & II Customer, under a long-term agreement.
BPGIC entered into the Phase I End User Agreement on December 12, 2017, pursuant to which the Phase I End User paid a monthly fixed storage fee to lease all of Phase I’s storage capacity (irrespective of whether the Phase I End User used any storage capacity). The Phase I End User Agreement is for an initial period of five years, with a remaining period of approximately three and a half years, and is renewable for an additional five year period. For the year ended December 31, 2018, BPGIC generated 57.9 percent of its total revenue from monthly fees for storage services. For the six months ended June 30, 2019, BPGIC generated 54.3 percent of its total revenue from monthly fees for storage services.
In August 2019, BPGIC entered into the Phase I Customer Agreement to restructure its relationship with the Phase I End User. Pursuant to the Phase I Customer Agreement, BPGIC leased the Phase I facility to the Phase I & II Customer on identical price terms and otherwise on substantially the same terms as those of the Phase I End User Agreement, and in connection therewith, the Phase I & II Customer assumed BPGIC’s rights and obligations under the Phase I End User Agreement. Like the Phase I End User, the Phase I & II Customer is required to pay a monthly fixed storage fee to lease all of Phase I’s storage capacity. The Phase I & II Customer is required to satisfy any amounts due for the monthly fixed storage fee in advance for each applicable month. Although the Phase I & II Customer subleases the Phase I facility to the Phase I End User pursuant to the novated Phase I End User Agreement, the Phase I & II Customer’s obligation to pay the monthly fixed storage fee to BPGIC is independent of the Phase I End User’s obligation to pay, and actual payment to, the Phase I & II Customer. The Phase I Customer Agreement is for an initial period of four years with a renewal period of five years. The level of the fixed storage fee for Phase I is more than sufficient to cover all of BPGIC’s costs (other than the variable costs associated with ancillary services), including operating costs, wages, depreciation and interest costs. See “Business of BPGIC — Phase I End User Agreement and Phase I Customer Agreement — Storage Fee”.
The Phase I Customer Agreement also provides that every two years, BPGIC may elect to review and seek to amend the storage fee. The Phase I Customer Agreement provides that the outcome of this review can result only in either an increase in rates or no change.
Pursuant to the Refinery and Services Agreement and upon the commencement of the Sahara Refinery’s operations, which is expected to occur during the First Quarter of 2020, Sahara will be required to pay BPGIC a monthly fee equal to the greater of (a) a fixed fee per barrel per day and (b) a minimum fee (irrespective of whether Sahara uses the refinery or storage at all).
BPGIC entered into the Phase II End User Agreement on June 27, 2018, pursuant to which the Phase II End User is required to pay a monthly fixed storage fee to lease all of Phase II’s storage capacity (regardless of whether the Phase II End User uses any storage capacity) once the facility is operational. The Phase II End User Agreement is for an initial period of five years from January 1, 2020 (subject to adjustment if the facility is not operational on that date), and is renewable for an additional five year period.
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In September 2019, BPGIC entered into the Phase II Customer Agreement to restructure its relationship with the Phase II End User. Pursuant to the Phase II Customer Agreement, BPGIC agreed to lease the Phase II facility to the Phase I & II Customer, once operational, on identical price terms and otherwise on substantially the same terms as those of the Phase II End User Agreement, and in connection therewith, the Phase I & II Customer assumed BPGIC’s rights and obligations under the Phase II End User Agreement. Like the Phase II End User, the Phase I & II Customer is required to pay a monthly fixed storage fee to lease all of Phase II’s storage capacity. The Phase I & II Customer is required to satisfy any amounts due for the monthly fixed storage fee in advance for each applicable month. Although the Phase I & II Customer subleases the Phase II facility to the Phase II End User pursuant to the Phase II End User Agreement, the Phase I & II Customer’s obligation to pay the monthly fixed storage fee to BPGIC is independent of the Phase II End User’s obligation to pay, and actual payment to, the Phase I & II Customer. The Phase II Customer Agreement is for an initial period of five years with a renewal period of five years.
Suite of ancillary services, which provide additional revenue streams.
Under the Phase I End User Agreement, BPGIC was able to increase its revenue beyond the monthly fixed storage fee by providing the Phase I End User with ancillary services. These ancillary services included throughput, blending, heating and inter-tank transfers and earned BPGIC additional revenue in accordance with the type and quantity of ancillary services the Phase I End User requested.
The Phase I End User primarily acts as an intermediary in the oil products and services supply chain by obtaining purchase or service orders for certain oil products (including fuel oil and refined petroleum products) from oil companies and then working with service providers such as BPGIC to fulfil such orders. For the year ended December 31, 2018, BPGIC generated 42.1 percent of its total revenue from monthly fees for ancillary services. For the six months ended June 30, 2019, BPGIC generated 45.7 percent of its total revenue from monthly fees for ancillary services. BPGIC expects its revenues from ancillary services to be a significant driver of value for BPGIC going forward. See “Business of BPGIC — Phase I End User Agreement and Phase I Customer Agreement — Ancillary Services”.
Similarly, under the Phase I Customer Agreement BPGIC is able to supplement its revenue by providing the Phase I & II Customer, or its sublessee, the Phase I End User, ancillary services including throughput, blending, heating and inter-tank transfers. To provide these ancillary services, BPGIC charges a fee, that varies by service, equal to a contractual rate per m3 per month. As a result, BPGIC earns additional revenue in accordance with the type and quantity of ancillary services the Phase I & II Customer, or its sublessee, uses. BPGIC’s ability to provide ancillary services is enhanced due to the design of Phase I, which was designed, among other things, to provide high accuracy blending services with low oil losses, high oil transfer flow rates and the ability to perform up to 11 simultaneous operations, which contributes to the terminal’s attractiveness as a one-stop location for extensive product customization. Because all of BPGIC’s costs are covered by the storage fee, revenues from ancillary services (less any associated variable costs) are a significant driver of profitability for BPGIC. BPGIC’s monthly revenue for ancillary services will depend on the extent to which the Phase I End User, as the sublessee of the Phase I & II Customer, utilizes the ancillary services. Although BPGIC’s ancillary services revenue is dependent on the Phase I End User, the Phase I & II Customer’s obligation to pay for the ancillary services used by it or the Phase I End User (or other sublessee) is independent of the Phase I End User’s obligation to pay, and actual payment to, the Phase I & II Customer.
The Phase I Customer Agreement also provides that every two years, BPGIC may elect to review and seek to amend the ancillary services fees. The Phase I Customer Agreement provides that the outcome of this review can result only in either an increase in rates or no change.
Similarly, Sahara will pay ancillary service fees in connection with any ancillary services that it uses. Although such use may be greater or lesser than, and the fees generated by such use may be greater or lesser than, the fees currently received from the Phase I & II Customer based on the usage of the Phase I End User, we believe the Sahara Refinery will provide an operating financial benefit to BPGIC.
The ancillary service terms of the Phase II Customer Agreement are identical with respect to price and otherwise are substantially the same as the ancillary service terms of the Phase I Customer Agreement. Upon the commencement of Phase II’s operations, which is expected to occur during the Second Quarter of 2020, BPGIC expects that the ancillary service operations of Phase II will be substantially similar to the ancillary service operations of Phase I.
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Experienced Senior Management team.
BPGIC is led by the members of Senior Management, who have over 30 years of experience collectively in the oil storage terminal, infrastructure sectors and related markets. As a result, members of Senior Management will be able to leverage their significant experience while implementing and executing BPGIC’s business plan and to achieve certain growth milestones. Members of Senior Management also have experience with overseeing the construction of oil storage terminals as a result of the Phase I construction process, which is expected to facilitate their management and execution of the Phase II construction process and other future projects. See “Management of Pubco Following the Business Combination — Directors, Senior Managers and Corporate Governance — Senior Managers”.
Strategy
BPGIC’s vision is to develop an oil storage business that differentiates itself from competitors by providing its customers with fast order processing times, excellent customer service and high accuracy blending services with low oil losses. In this pursuit, the key components of BPGIC’s business strategy are as follows:
Expand the scale of existing operations by completing Phase II and operating the Sahara Refinery.
BPGIC plans to leverage its experience from building and operating Phase I while building and ramping up operations for Phase II. Phase II involves the construction of eight additional oil storage tanks with an aggregate geometric oil storage capacity of approximately 0.601 million m3, which will increase BPGIC’s aggregate geometric oil storage capacity to approximately 1.0 million m3. This would lead to the BPGIC Terminal becoming one of the largest oil storage terminals by storage capacity in the Port of Fujairah, according to IHS Markit (data as of June 2018 see “Industry and Market Data”). On September 3, 2018, BPGIC signed the Phase II EPC Agreement with Audex. Phase II work commenced in September 2018 and according to the schedule in the Phase II EPC Agreement, it is expected to be 2020. The expected capital expenditure in respect of Phase II is USD 160.6 million (comprised of construction costs of USD 150.0 million and capitalized interest and land lease and consultancy charges of USD 10.6 million). The expected capital expenditure in respect of Phase II will be partially funded by drawings of USD 90.6 million under the Phase II Financing Facility. For details of the remaining expected capital expenditure, see “Business of BPGIC — Overview”.
BPGIC expects Phase II operations to commence during the Second Quarter of 2020. BPGIC plans to focus Phase II’s operations primarily on the storage and blending of crude oil and thereby capitalize on the demand for crude oil storage. On June 27, 2018, BPGIC entered into the Phase II End User Agreement with the Phase II End User, an international commodities trading company. Pursuant to the Phase II End User Agreement, the Phase II End User agreed to lease all eight oil storage tanks in Phase II once Phase II becomes operational. In September 2019, BPGIC entered into the Phase II Customer Agreement to restructure its relationship with the Phase II End User. Pursuant to the Phase II Customer Agreement, BPGIC agreed to lease the Phase II facility, once operational, to the Phase I & II Customer on identical price terms and otherwise substantially similar terms as those of the Phase II End User Agreement, and in connection therewith, the Phase I & II Customer assumed BPGIC’s rights and obligations under the Phase II End User Agreement. BPGIC expects to generate additional revenues and expenses in connection with Phase II’s operations. Similar to the commencement of operations for Phase I, BPGIC may initially commence operations of Phase II in accordance with certain required safety measures and ramp up utilization of its storage capacity and ancillary services over time to mitigate any potential operational risks. This would impact the amount of storage and ancillary service fees BPGIC would earn during the first quarter of operations under the Phase II Customer Agreement. For more information regarding the terms of the Phase II Customer Agreement, see “Business of BPGIC — Phase II End User Agreement and Phase II Customer Agreement”.
BPGIC partnered with Sahara to finance, develop, construct and commission the Sahara Refinery at minimal capital cost to BPGIC, and without interference with the construction of Phase II. The Sahara Refinery will have a production capacity of 24,000 b/d and be capable of producing IMO 2020 compliant 0.5% sulphur content shipping fuel. Upon completion, the Sahara Refinery is expected to be one of first refineries in the MENA region producing IMO 2020 compliant 0.5% sulphur content shipping fuel. Under the Refinery and Services Agreement, Sahara is responsible for arranging and bearing the costs of the development and construction of the Sahara Refinery through an EPC Contractor. BPGIC expects the Sahara Refinery to be developed, constructed and installed by the First Quarter of 2020 and for operations to commence during the First Quarter of 2020. For more information regarding the terms of the Refinery and Services Agreement, see “Business of BPGIC—Services and Refinery Agreement”.
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Growth Through Expansion of BPGIC’s Facilities and Geography
BPGIC intends to leverage Senior Management’s long-standing industry expertise in the oil and gas and storage section, initially within the Gulf region and, ultimately more broadly geographically, to ensure BPGIC continues to enhance its competitiveness, expand its solution offerings to customers and increase shareholder value. As a result, BPGIC is continuously looking at numerous expansion opportunities beyond Phase II. Our ordinary course of business includes discussions with various potential parties, regarding different types of business opportunities, and in a variety of different geographic markets. None of these ongoing various discussions have yet reached the stage of definitive agreements and there can be no assurance that they ever will.
The business opportunities available vary widely from traditional customer contracts with global industry participants to various partnerships, ranging from operating or acquiring existing facilities to building new facilities. Some potential partnership opportunities have included partial or full financing commitments from the prospective partner for the existing or new facilities, while some opportunities are traditional acquisitions by the Company of existing facilities. The Company carefully evaluates all growth opportunities beyond Phase II to ensure its business remains focused on its high-end market positioning and value creation for existing shareholders.
For instance, within the Fujairah market, BPGIC is in the early stages of pursuing a further major expansion near its existing facilities, which it refers to as Phase III. In July 2019, BPGIC executed an initial lease agreement to secure a new plot of land of approximately 450,000 m2, near its existing facilities. BPGIC currently intends to use such land to (i) further increase its capacity for crude oil storage and services by an additional capacity, and (ii) host the remaining 90% of the refinery facilities under the Refinery and Services Agreement and related agreements with Sahara. We expect that Phase III alone could be three (3) times the size of the Company’s projected operations post-Phase II and post-the initial refinery phase. The Company believes it could execute a final lease agreement, which would permit commencing plans and construction, for this land sometime in 2019, but there can be no assurances that this will occur. Concurrently, BPGIC is in discussions with top global oil majors, which have expressed interest in securing portions of the capacity of a Phase III facility. As of the date of this proxy statement/prospectus, BPGIC does not yet have any planned capital expenditures in connection with Phase III.
In addition to this specific land for Phase III, BPGIC will continue to pursue additional projects within the Fujairah market, either through partnerships with parties who have land leases or through efforts to secure additional land itself in Fujairah. BPGIC already has in place contracts with existing customers which have an existing need for more facilities. For instance, our partnership with Sahara with regards to the modular refinery is much larger than the initial phase being developed. The modular refinery projected to commence operations in the First Quarter of 2020 has a maximum daily output of only 24,000 barrels, while our contract for Sahara is actually for output ten (10) times larger than this capacity, but is dependent upon us securing Phase III or other additional land and building additional storage facilities. The parties intend to develop this additional capacity at a later stage.
An example of a potential partnership opportunity which includes financing commitments is another current memorandum of understanding. In that agreement, a global institutional fund has proposed a potential joint venture to finance a crude oil storage facility operated by BPGIC in Fujairah of up to 3.5 million m3, which alone, would be 3.5 times our capacity after Phase II is completed. In connection with this, we are working to renew an expired memorandum of understanding we had with a large regional energy company for a long-term contract for crude oil storage of this magnitude in size.
Preliminary discussions with existing and potential customers regarding geographic expansion opportunities outside of BPGIC’s current market by acquiring certain of their existing facilities as part of long-term service contracts are ongoing. For instance, BPGIC has entered into preliminary agreements with a global commodity trading firm to evaluate acquisitions of that firm’s interests in oil storage terminals in Africa and Europe. We believe both terminals are well located and provide strategic opportunities for our expansion into those markets, including available land to expand with new state-of-the-art facilities such as we have in Fujairah. We are in the preliminary due diligence phase with respect to these opportunities, and there is no assurance we will decide to pursue them.
Another example of geographic expansion is a memorandum of understanding with a global energy company for a joint venture agreement whereby BPGIC would manage, operate and maintain a relatively new existing facility within the Gulf region. We believe that this facility is in a key location on deep water where that country receives imported gasoline. As with all opportunities, the Company intends to ensure such opportunities it ultimately pursues will fit within its strategy of remaining focused on its high-end market positioning and value creation for existing shareholders.
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For related risks, see “Risk Factors — Risks relating to BPGIC — Beyond Phase II, expansion of BPGIC’s business may require substantial capital investment, and it may not have sufficient capital to make future capital expenditures and other investments as it deems necessary or desirable”.
Continue to build relationships with potential customers.
BPGIC is focused on diversifying its potential customer base over the medium to long-term. Due to Phase I’s strong performance track record to date, and BPGIC’s reputation and business development efforts, including through inspections from potential users, BPGIC believes that it has developed strong relationships with several oil traders that could potentially utilize the services of Phase I and II. The familiarity potential users have gained through their inspections and that oil traders have developed through their experience with BPGIC’s facility represent a valuable marketing opportunity for BPGIC: given the nature of the industry, positive word-of-mouth feedback by these groups can help to establish BPGIC’s industry reputation and thereby help drive potential customer business in the future. Moreover, by continuing to build upon BPGIC’s performance track record during Phase II (after it commences operations) and business developments efforts, BPGIC would be able to expand its base of potential customers for future contracts for oil storage or ancillary services. Similarly, the Sahara Refinery, once operational, will expand the scope of services that BPGIC can offer, diversifying the types of industry participants that it can service.
The BPGIC Terminal
BPGIC began development of the BPGIC Terminal after several years of planning and discussions with industry participants. During this time, BPGIC engaged an industry consultant to conduct a market assessment of the oil storage industry in the Port of Fujairah region and to identify and assess business opportunities and strategies. BPGIC also engaged MUC, the same advisor that designed the facilities for the Port of Fujairah, to design the BPGIC Terminal. During the design stage, BPGIC assessed various challenges faced by other oil storage terminals, including preventing oil losses and precisely meeting customer blending requirements, and incorporated solutions to such challenges into the design of the terminal. BPGIC’s aim in developing the BPGIC Terminal was to create a new standard for oil storage tank terminals by designing a terminal that would reduce oil losses and achieve better blending results than existing oil storage tank terminals. As described below, BPGIC designed the BPGIC Terminal with several key features that enable it to provide users with high-accuracy blending services with low oil losses. In addition, due to the relatively long-term period of the BPGIC Terminal Land Lease when compared to similar land leases for oil storage terminals located in the Port of Fujairah, BPGIC constructed Phase I with materials, including pumps, valves and steel structures, that have longer expected life spans than comparable materials utilized by other oil storage terminals. As a result, BPGIC believes Phase I will benefit from annual maintenance costs over the period of the BPGIC Terminal Land Lease that are lower than the average for comparable oil storage terminals. See “Business of BPGIC — Competitive Strengths — Design and Features of the BPGIC Terminal”. As part of Phase II, BPGIC is following a similar approach to Phase I by investing in high-grade, long-life materials for the construction and development of its facilities.
Location
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The BPGIC Terminal is located in the Port of Fujairah in the emirate of Fujairah in the UAE. The Port of Fujairah is a gateway between the Indian Ocean and the Arabian Gulf, and is strategically situated in one of the world’s major oil markets for fuel oil, crude oil and refined oil products. In addition to the Port of Fujairah’s close access to major markets in the Middle East, it also serves as an outlet to East Africa and South Asia and serves as a consolidation point for fuel oil outlets and the regional fuel oil markets, reducing the need for ships to cross through the Strait of Hormuz.
The Strait of Hormuz has been a strategic geographic chokepoint for many years, and as such, it has often been a site of international military conflict and military exercises. Such events have caused safety concerns and travel delays for ships crossing through the Strait. The Strait has also been subject to repeated threats of closure and blockage by Iran. In 2012, Iran threatened to close the Strait due to international pressures to stop its nuclear program and an Iranian oil embargo that was enacted by the European Union in late January 2012. On September 14, 2019, an attack on Saudi Arabia’s oil facilities and fields, largely blamed on Iran or its proxies, significantly increased tensions in the area, and heightened the distinct possibility that similar attacks by Iran on strategic oil facilities and ports in the UAE or a regional conflict may result. Despite these recent and past threats, the Strait of Hormuz has never been closed. See “Risk Factors — Risks relating to BPGIC — Any material reduction in the quality or availability of the Port of Fujairah’s facilities could have a material adverse effect on BPGIC’s business, financial condition and results of operations”. “Risk Factors — Risks Related to Doing Business in Countries in Which BPGIC Operates — Recent geopolitical developments have increased the risk that the region in which BPGIC operates could be involved in an escalating conflict that could have a material adverse effect on our business, financial condition and results of operations.”
The Habshan-Fujairah oil pipeline, which is a crude oil pipeline that runs between the emirate of Abu Dhabi and the Port of Fujairah, enables ships to obtain crude oil produced in Abu Dhabi without having to cross the Strait of Hormuz. The crude oil pipeline currently has the capacity to transport 1.5 million barrels a day, which is approximately half of the daily average amount of crude oil that was produced in the UAE in 2017. There is increasing focus in the UAE region on using the crude oil pipeline, as the government of Abu Dhabi has publicly stated that it intends to ensure that approximately 75 percent of the crude oil designated for export in Abu Dhabi goes through the pipeline and to Fujairah.
The Port of Fujairah is the largest multi-purpose port on the Eastern seaboard of the UAE, approximately 70 nautical miles from the Strait of Hormuz. Initial construction of the Port of Fujairah started in 1978 as part of the economic development of the UAE. Full operations commenced in 1983. Since then, the Port of Fujairah has embarked on a continuing process of enhancement to both its facilities and its comprehensive range of functions.
The Port of Fujairah initially developed oil terminal 1 (“OT1”) comprising three marine loading berths (berths 1, 2 and 3), oil terminal 2 (“OT2”) comprising four marine loading berths (berths 4, 5, 6 and 7), and a matrix manifold connecting OT1 and OT2 to certain existing oil tank terminals (“Matrix Manifold 1”). To cater to the increasing demand arising from the growing storage capacity in Fujairah, the Port of Fujairah began developing the second phase of OT2, adding two new berths (berths 8 and 9) and a second matrix manifold (“Matrix Manifold 2”). The project, completed in 2014, raised the overall throughput capacity of the Port of Fujairah and contributed to the growth of Fujairah as the largest oil hub in the region. Matrix Manifold 2 is connected directly to berths 8 and 9 and, through a connection to Matrix Manifold 1, is connected indirectly to the remaining Port of Fujairah berths. The BPGIC Terminal is connected to Matrix Manifold 2, which gives it direct access to underutilized berths 8 and 9. Berth 1 is currently unavailable for BPGIC’s use as the Port of Fujairah granted exclusive access and use of berth 1 to four other parties, who have since installed pipelines and marine loading arms on the berth.
To further cater to the increasing demand arising from the growing storage capacity in Fujairah, the Port of Fujairah has developed a VLCC jetty in the Indian Ocean, which allows the Port of Fujairah to accommodate vessels with a maximum overall length of 344 meters and a minimum overall length of 240 meters. The Port of Fujairah completed construction of the VLCC jetty in June 2016 and the jetty went into operation on August 24, 2016.
The Port of Fujairah imposes certain requirements on the companies and oil tankers utilising its port, including requirements for flow rate capacity and ground soil lining. The current minimum required flow rates vary based on berth location and vessel size and range between 460 m3/hr and 3,900 m3/hr, and although the Port of Fujairah has already increased the flow rate requirements in the past, it is possible that the Port of Fujairah could increase them again in the future. BPGIC is well positioned to satisfy any future increases for minimum required flow rates as the pumps in Phase I are capable of transporting gas oil/gasoline at a combined flow rate of 5,000 m3/hr and fuel oil at a combined flow rate of 4,500 m3/hr, which is more than the current minimum required flow rate and exceeds the
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combined flow rates of many of the other oil storage terminals that are subject to the Port of Fujairah’s requirements. The Port of Fujairah also requires each oil storage terminal to install impermeable lining throughout its tank farm area and any other area where oil leakage could occur and potentially reach the ground soil. In connection with the construction of Phase I, BPGIC installed the required lining and is one of only a few oil storage terminals that has been able to satisfy this requirement.
The Port of Fujairah requires oil tankers to use the Port’s reservation system to reserve berths and imposes certain charges on such users, including fees, marine and administrative charges. For information regarding BPGIC’s customer ordering process and coordination of reservations, see “Business of BPGIC — Phase I — Customer Ordering Process”.
BPGIC Terminal Land Lease
On March 10, 2013, BPGIC entered into the BPGIC Terminal Land Lease, as amended by the Novation Agreement dated September 1, 2014. The amended agreement binds BPGIC and FOIZ for a total term of 60 years. The leased land has a total area of 153,916.93 m2. BPGIC used this land to build Phase I and is currently using the remaining portion of the site to build Phase II and develop the Sahara Refinery. Upon mutual agreement of the parties, the term of the BPGIC Terminal Land Lease can be renewed or extended for a further period, the term of which is unspecified and therefore subject to agreement between the parties.
BPGIC began paying rent under the BPGIC Terminal Land Lease in 2014. The rent for 2019 is USD 2,313,323 and increases by 2 percent per annum. Payments are required to be made in advance (the time period of which is unspecified) in four equal quarterly instalments. BPGIC is required to pay all taxes imposed by the federal government of the UAE or FOIZ; however, the leased premises are in a free zone and BPGIC is entitled to all benefits applying to free zone entities, including benefits in respect of taxes.
The BPGIC Terminal Land Lease required BPGIC to enter into the Port Facilities Agreement, which grants it certain usage and access rights in connection with the Port’s facilities. The term of the Port Facilities Agreement, which BPGIC entered into on March 31, 2016, is 25 years and it automatically renews for another 25 years at the end of its term. The Port Facilities Agreement requires BPGIC to pay certain fees in connection with the use of the Port of Fujairah’s facilities; however, the customer agreements provide that any fees charged by the Port of Fujairah in respect of services provided to the Phase I & II Customer, including transportation, loading, unloading, use of berths, marine charges, administration charges, penalties and/or use of any of the Port of Fujairah’s facilities, shall be paid by the Phase I & II Customer. Currently, the Phase I End User sends the Phase I & II Customer any such amounts to be paid, the Phase I & II Customer delivers any such amounts to BPGIC, and BPGIC then sends such amounts to the Port. Once the Sahara Refinery and Phase II become operational, BPGIC expects to follow a similar approach with Sahara and the Phase II End User. Pursuant to the Port Facilities Agreement, BPGIC is required to pay such amounts and is responsible for such amounts irrespective of whether the Phase I & II Customer, the Phase I End User, the Phase II End User, or Sahara pay such fees.
BPGIC is required to obtain the FOIZ’s prior permission in order to use the leased premises for any purpose other than in connection with Phase I, Phase II, and recently received permission for the Sahara Refinery. The agreement contains representations and warranties, dispute resolution and indemnification clauses that are customary for the UAE and the oil storage industry. The Fujairah Municipality can cancel the agreement if BPGIC fails to make certain required rental payments or fails to perform or meet in any material respect any material term, condition, covenant, agreement or obligation under the agreement.
As discussed further in “Business of BPGIC — Strategy”, in July 2019, BPGIC entered into an initial land lease agreement to lease a plot of land that has a total area of approximately 450,000 m2. Under UAE practice, the effect of the initial land lease is to reserve the land for BPGIC while BPGIC undertakes a more thorough investigation to ensure it is suitable for BPGIC’s needs. If the parties enter a final lease, BPGIC intends to use the relevant land plot to expand its crude oil storage and service capacity as part of the Phase III plan. BPGIC’s entry into any final lease agreement in respect of this Phase III land would be conditional upon a site inspection, technical design and project feasibility study each with satisfactory results.
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Phase I
Phase I went into operation on January 18, 2018 and between 2014 and 2017, BPGIC incurred a total cost of USD 170 million in connection with its construction. BPGIC began development of the BPGIC Terminal after several years of planning and discussions with industry participants. BPGIC’s aim in developing the BPGIC Terminal was to create a new standard for oil storage tank terminals by designing a terminal that would reduce user oil losses and achieve better blending results than existing oil storage tank terminals. As described below, BPGIC designed Phase I with several key features that enable it to provide users with high-accuracy blending services with low oil losses. In addition, due to the relatively long-term period of the BPGIC Terminal Land Lease, when compared to comparable land leases for oil storage terminals located in the Port of Fujairah, BPGIC constructed Phase I with materials that have longer expected life spans than comparable materials utilized by other oil storage terminals in the area. As a result, BPGIC believes Phase I will benefit from annual maintenance costs over the period of the BPGIC Terminal Land Lease that are lower than average for comparable oil storage terminals.
The key features of Phase I include:
• all 14 oil storage tanks are inter-connected via the Phase I Internal Manifold;
• the pumping and stripping systems of the Phase I Internal Manifold are equipped with a fine stripping system, minimizing energy costs, lowering loss ratios and permitting a high degree of stripping to be achieved;
• the ability to more efficiently perform required maintenance activities and prepare pipelines for oil transfers;
• lower loss ratios and contamination risks;
• recirculation of oil products to assist with the blending process;
• the ability to simultaneously perform several Phase I operations, permitting BPGIC to service multiple user orders during the same time period; and
• all 14 oil storage tanks have been designed to permit conversions from storing one clean petroleum product to another and from storing fuel oil to gas oil at a speed which is favorable compared to that of competitors in the UAE region, allowing BPGIC to adjust its services to meet changing market demands.
Tanks
Phase I has 14 oil storage tanks, which are capable of storing gas oil, marine gas oil, fuel oil, naphtha, aviation fuel, gasoline, pygas, reformate, cutter stock and methyl tert-butyl ether. Each of the oil storage tanks has been designed to allow fast and efficient cleaning, which permits efficient conversions from storing one product to another. The 14 oil storage tanks are also equipped with the following features:
• accurate product level measurements: a real-time electronic measuring system that monitors product levels in each oil storage tank;
• an efficient, high-quality blending system which improves the quality and speed of blends;
• effective drainage systems leading to lower product contamination risks and allowing for a faster product change process;
• automated fire-fighting systems: an automated fire system that activates automatically in the event of a fire;
• a well-designed pipeline connection: a pipeline connection to the Phase I Internal Manifold that allows any oil storage tank to be connected to the stripping systems and to any other oil storage tank or berth in the Port of Fujairah connected to Matrix Manifold 1 or Matrix Manifold 2; and
• heating services: eight of the oil storage tanks have heating coils installed. Currently, only four of the oil storage tanks are connected to the heating system.
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The following table displays the key attributes of the 14 oil storage tanks of Phase I:
Tank No. |
Capable of Servicing(1) |
Diameter (m) x
|
Blending
|
Roof Type(2) |
Tank Heating
|
Geometric
|
Max
|
|||||||
101 |
GO/ FO |
42 x 30 |
Yes |
AGDR |
Yes |
41,563 |
40,207 |
|||||||
102 |
GO/ FO |
42 x 30 |
Yes |
AGDR |
Yes |
41,563 |
40,207 |
|||||||
103 |
GO/ FO |
42 x 30 |
Yes |
AGDR |
Yes |
41,563 |
40,207 |
|||||||
104 |
GO/ FO |
42 x 30 |
Yes |
AGDR |
Yes |
41,563 |
40,207 |
|||||||
105 |
Gasoline/ AF/ GO/ MGO/ Naphtha/ Pygas/ Reformate |
36 × 30 |
Yes |
AGDR with IFR |
Yes, but not currently enabled |
30,536 |
29,031 |
|||||||
106 |
Gasoline/ AF/ GO/ MGO/ Naphtha/ Pygas/ Reformate |
36 × 30 |
Yes |
AGDR with IFR |
Yes, but not currently enabled |
30,536 |
29,031 |
|||||||
107 |
Gasoline/ AF/ GO/ MGO/ Naphtha/ Pygas/ Reformate |
36 × 30 |
Yes |
AGDR with IFR |
Yes, but not currently enabled |
30,536 |
29,031 |
|||||||
108 |
Gasoline/ AF/ GO/ MGO/ Naphtha/ Pygas/ Reformate |
36 × 30 |
Yes |
AGDR with IFR |
Yes, but not currently enabled |
30,536 |
29,031 |
|||||||
109 |
Gasoline/ AF/ GO/ MGO/ Naphtha/ Pygas/ Reformate |
36 × 30 |
Yes |
AGDR with IFR |
No |
30,536 |
29,031 |
|||||||
110 |
Gasoline/ AF/ GO/ MGO/ Naphtha/ Pygas/ Reformate |
36 × 30 |
Yes |
AGDR with IFR |
No |
30,536 |
29,031 |
|||||||
111 |
Gasoline/ AF/ GO/ Naphtha/ Pygas/ Reformate/ CS |
23 x 30 |
Yes |
AGDR |
No |
12,464 |
11,850 |
|||||||
112 |
Gasoline/ AF/ GO/ Naphtha/ Pygas/ Reformate/ CS |
23 x 30 |
Yes |
AGDR |
No |
12,464 |
11,850 |
|||||||
113 |
MTBE/ Gasoline/ AF/ GO/ Naphtha/ Pygas/ Reformate |
23 x 30 |
Yes |
AGDR with IFR |
No |
12,464 |
11,850 |
|||||||
114 |
MTBE / Gasoline/ AF/ GO/ Naphtha/ Pygas/ Reformate |
23 x 30 |
Yes |
AGDR with IFR |
No |
12,464 |
11,850 |
|||||||
Total Storage Capacity (m3) |
399,324 |
382,400 |
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(1) All the oil storage tanks are convertible and can be cleaned and converted to service other oil products; “GO” means Gas Oil; “FO” means Fuel Oil; “AF” means Aviation Fuel; “MGO” means Marine Gas Oil; “CS” means Cutter Stock; “MTBE” means Methyl Tertiary-Butyl Ether.
(2) “AGDR” means Aluminium Geodesic Dome Roof; “AGDR with IFR” means Aluminium Geodesic Dome Roof with Internal Floating Roof.
BPGIC transports oil products from the BPGIC Terminal to the Port of Fujairah’s berths through the use of pumps and four piggable jetty pipelines. The pumps facilitate on-loading operations from the Phase I Internal Manifold by pumping oil products through one or more of the four piggable jetty pipelines to Matrix Manifold 2, and then through the Port of Fujairah’s pipelines, to ships located at berths 8 and 9 or to ships located at berths 2-7 via Matrix Manifold 1. BPGIC has seven pumps that it can use to on-load oil products to Matrix Manifold 2. Four of the pumps are capable of transporting gas oil/gasoline at an individual flow rate of 1,250 m3/hr and at a combined flow rate of 5,000 m3/hr. Three of the pumps are capable of transporting fuel oil at an individual flow rate of 1,500 m3/hr and at a combined flow rate of 4,500 m3/hr. BPGIC also utilizes these pumps to facilitate inter-tank transfers, blending and other transfers throughout the BPGIC Terminal.
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The users utilize their ship pumps to transport oil products from the relevant berths in the Port of Fujairah via Matrix Manifold 2 to the Phase I Internal Manifold, and following the construction and commencement of operations of Phase II, to the proposed Phase II Internal Manifold.
The Phase I Internal Manifold is equipped with a general stripping system that removes any excess oil products left in the pipelines following any oil product transfers and adds it back to appropriate batches, and a fine stripping system that removes any excess oil products left in the general stripping system and adds it back to appropriate batches. The two levels of stripping permit a high degree of stripping to be achieved. All oil products transferred from any oil storage tank to the stripping systems flows downhill, minimizing energy costs. The Phase I Internal Manifold is also equipped with cranes to perform required maintenance activities and prepare pipelines for oil transfers.
As part of Phase II, BPGIC is currently constructing the Phase II Internal Manifold, an additional internal manifold system to service only crude oil. The Phase II Internal Manifold is being constructed adjacent to the Phase I Internal Manifold on the remaining land available under the BPGIC Terminal Land Lease.
Direct Connection to Matrix Manifold 2
The Phase I Internal Manifold is directly connected to the Port of Fujairah’s Matrix Manifold 2, which is approximately 500 meters away. The Matrix Manifold 2 is directly connected to berths 8 and 9, which are in close proximity to the BPGIC Terminal. The terminal benefits from its close proximately to berths 8 and 9 due to the shorter travel distances required for oil product transfers, which in effect lowers contamination risks and leads to faster vessel turnaround times. Berths 8 and 9 can accommodate vessels with a maximum overall length of 330 meters and a minimum overall length of 75 meters. As part of Phase II, BPGIC plans to directly connect the Phase II Internal Manifold to the Port of Fujairah’s Matrix Manifold 2.
The Matrix Manifold 2 is also connected to the Port of Fujairah’s Matrix Manifold 1, which is in turn connected to berths 1-7 of the Port of Fujairah, providing users with broad access to the BPGIC Terminal.
Generators
Four electricity generators were installed as part of the construction of Phase I. The generators, developed by Cummins Generator Technologies, are diesel-powered and can produce up to 6,000 kWh of power, which BPGIC believes will be sufficient to provide for the needs of Phase I, Phase II and the Sahara Refinery. As BPGIC’s diesel fuel needs currently vary each month based on Phase I End User’s activity levels, BPGIC entered into an arrangement with a local diesel fuel provider, pursuant to which it can order diesel fuel on a monthly or as-needed basis. At the beginning of each month, the local diesel fuel provider will send BPGIC a quote for the price of diesel fuel, and subject to any potential price negotiation, BPGIC will place orders based on its projected needs for the applicable month.
Blending
BPGIC believes that Phase I benefits from state-of-the-art blending capabilities, allowing high levels of accuracy in meeting customer blending specifications. BPGIC’s blending services are designed to accommodate a variety of mixing specifications and to prevent any evaporation or leakage. The stripping systems and oil storage tanks are designed to prevent losses, contamination and residue accumulation, enabling BPGIC to produce blends that precisely meet customer specifications and the volume/mass requested.
All oil storage tanks are connected via the Phase I Internal Manifold and have blending capabilities, which permits BPGIC to utilize any available oil storage tank for blending purposes, leads to higher tank availability for processing user orders and allows BPGIC to perform mixtures within short timeframes.
Each of the oil storage tanks is equipped with the latest technology blending equipment and a real-time electronic measuring system that monitors product levels, resulting in faster blending times and more consistent blends. In connection with a standard blending request, BPGIC takes the specified quantity of oil products to be blended and adds them into a single oil storage tank. A part of the mixture is then withdrawn from and added back to the oil storage tank at high velocity. This typically causes the surrounding liquid to create a circulation path within the oil storage tank, which mixes the oil products and continues until the specified blend requirements are achieved. Generally, the purpose of blending fuel oil is to modify its viscosity or thickness to meet customer specifications and the purpose of blending gasoline is to modify its octane number to meet customer specifications.
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Heating
As part of Phase I, BPGIC constructed a heating system, comprised of a boiler and direct pipeline connections to certain oil storage tanks that have heating coils installed. Generally, in connection with a heating request, BPGIC heats special purpose heating oil in the boiler and then circulates the heating oil via a pipeline connection to the heating coils located at the bottom of an applicable oil storage tank. The heating oil is then recirculated between the boiler and through the heating coils of the applicable oil storage tank until the oil product in the oil storage tank reaches the specified temperature.
Currently, eight of the Phase I oil storage tanks have heating coils installed, but due to current business needs, only four are connected to the heating system. As the heating needs of Phase I increases, BPGIC plans to connect additional oil storage tanks to the heating system. Each new connection will require BPGIC to establish a new pipeline connection between the boiler and the applicable oil storage tank. BPGIC also plans to construct four additional oil storage tanks with heating capacity in connection with Phase II. BPGIC believes that the current heating system will be sufficient to meet the heating needs of the eight oil storage tanks in Phase I that have, and the four oil storage tanks in Phase II that will have, heating capacity.
Customer Ordering Process
BPGIC is committed to providing excellent customer service. BPGIC has allocated a customer service officer (a “CSO”) to the Phase I & II Customer with respect to Phase I and plans to install an online ordering system in due course, which would enable the Phase I & II Customer to place storage, heating and blending orders and track order statuses in real-time. The Phase I & II Customer can place service orders by calling its CSO. When placing orders, the Phase I & II Customer must provide the relevant order details, including the requested services, oil product specifications and desired timing. Following the submission of a service order, the CSO responsible for reviewing the service order will correspond with the Phase I & II Customer, provide a cost estimate for the proposed services, coordinate logistics for discharging operations, including berth reservations through the Port of Fujairah’s reservation system and payment of Port fees on the Phase I & II Customer’s behalf, and liaise with operational staff to facilitate and process the service order. Upon the completion of the requested services, the CSO will notify the Phase I & II Customer of the completion status, coordinate with surveyors to provide any required samples, organize logistics for on-loading operations and send an itemized invoice to the Phase I & II Customer for the services provided. In the future, if and when BPGIC engages with any additional users, BPGIC intends to designate a CSO to each additional user but may also expand the scope of the current CSO’s responsibilities to cover any such additional user.
BPGIC Terminal Office Building
In connection with Phase I, BPGIC built a five-story office building with an area of 3,388 m2 (the “BPGIC Terminal Office Building”) adjacent to the 14 oil storage tanks. Audex completed construction for the BPGIC Terminal Office Building in November 2017 and BPGIC incurred a total cost of USD 28.0 million in connection with its construction. BPGIC funded the construction of the BPGIC Terminal Office Building with funds obtained from the Phase I Construction Facilities. BPGIC owns the BPGIC Terminal Office Building. The BPGIC Terminal Office Building accommodates all terminal and office staff and contains the operational control room for the BPGIC Terminal, where BPGIC facilitates the performance of its services. BPGIC believes that the BPGIC Terminal Office Building will have sufficient capacity to cater to the operations of the Sahara Refinery and Phase II. For additional information regarding the Phase I Construction Facilities, see “BPGIC’s Management’s Discussion and Analysis of Financial Condition and Results of Operation — Liquidity and Capital Resources — Indebtedness”.
Sahara Refinery
BPGIC recently partnered with Sahara to develop and operate the Sahara Refinery at the BPGIC Terminal adjacent to Phase I and the Phase II site on the remaining available land under the BPGIC Terminal Land Lease at minimal cost to BPGIC. Under the terms of the partnership, Sahara will finance and arrange the development, construction and commissioning of a modular refinery on a parcel of BPGIC’s remaining unutilized land. Sahara will engage an EPC Contractor to design and procure construction and commission of the Sahara Refinery. BPGIC currently expects that the Sahara Refinery will be completed by the First Quarter of 2020, and will commence operations in the First Quarter of 2020. Upon completion, the Sahara Refinery will be owned by Sahara or a wholly-owned subsidiary of Sahara and
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operated by BPGIC for Sahara’s exclusive use. The Sahara Refinery will be amongst the first refineries in the MENA region capable of supplying IMO 2020 compliant 0.5% sulphur content shipping fuel. The facility is initially expected to have a production capacity of 24,000 b/d. In connection with the Sahara Refinery, BPGIC has agreed to provide storage capacity of approximately 178,716 m3 shell capacity in the Phase I facility to Sahara.
Capital Expenditure
The expected capital expenditure by BPGIC in connection with the Sahara Refinery is minimal. Pursuant to the Refinery and Services Agreement, Sahara is responsible for all major costs associated with the Sahara Refinery including financing, procurement, design, commissioning and testing. To the extent BPGIC bears any fees or expenses in connection with the foregoing costs, Sahara is obligated to pay or reimburse such fees and expenses.
Key Features and Components
The key proposed features of the Sahara Refinery:
• will be capable of producing IMO 2020 compliant 0.5% sulphur shipping fuel;
• modular design will permit future expansion; and
• will be connected to Phase I; and can be connected to Phase II tanks with minor modifications.
Proposed Phase II
Scope
Phase II is currently being constructed adjacent to Phase I on the remaining land available under the BPGIC Terminal Land Lease. BPGIC had a soil investigation report completed for the land, which determined that the land was adequate for the purposes of construction and the operation of the facilities. Phase II involves the construction of (i) four crude oil storage tanks with a projected geometric storage capacity of 0.431 million m3; (ii) four crude/fuel oil storage tanks with a projected geometric storage capacity of 0.171 million m3; (iii) the Phase II Internal Manifold to service only crude oil; and (iv) the associated infrastructure and facilities, including two new crude oil pipelines and four new pumps to carry crude oil between the Phase II Internal Manifold and Matrix Manifold 2. Portions of the infrastructure to support the two new crude oil pipelines and the Phase II Internal Manifold were developed during Phase I. Each of the four crude/fuel oil storage tanks is expected to be capable of storing crude and fuel oils; however, BPGIC, the Phase I & II Customer and the Phase II End User currently intend to use this storage capacity primarily to store and blend crude oil. BPGIC considered Phase II when developing its plan for Phase I, and constructed infrastructure to accommodate the needs of Phase II and will not need to substantially reconfigure its facilities or install additional generators in order to construct and operate the proposed facilities.
Capital Expenditure
The expected capital expenditure in respect of Phase II is USD 160.6 million which is comprised of construction costs of USD 150.0 million and capitalised interest and land lease and consultancy charges of USD 10.6 million. The expected capital expenditure of USD 160.6 million in respect of Phase II will be funded by:
• drawings of USD 90.6 million under the Phase II Financing Facility; and
• shareholders contributions (prior to the consummation of the Business Combination), proceeds of the Business Combination (after the consummation of the Business Combination), and internally generated cashflow in the aggregate amount of USD 70.0 million.
Of the USD 160.6 million expected capital expenditure in respect of Phase II, USD 105.0 million is expected to be paid out prior to the end of fiscal year 2019. USD 55.6 million is expected to be paid out in fiscal year 2020. See Risk Factors — Risks relating to BPGIC — BPGIC may be subject to significant risks and expenses when constructing Phase II, which could adversely affect BPGIC’s business, financial condition and results of operations.
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Key Features and Components
The key proposed features of Phase II include:
• all eight oil storage tanks will be inter-connected via the Phase II Internal Manifold;
• the pumping and stripping systems of the Phase II Internal Manifold will be equipped with fine stripping systems to minimize energy costs, lower loss ratios and remote changes on product contaminations;
• the cranes of the Phase II Internal Manifold will allow BPGIC to more efficiently perform required maintenance activities and prepare pipelines for oil transfers;
• each of the two piggable crude oil jetty pipelines will be directly connected between the Phase II Internal Manifold and Matrix Manifold 2, lowering loss ratios and contamination risks;
• BPGIC will be able to perform up to six simultaneous operations in Phase II, including tank-to-tank transfers, recirculations, blending, heating, loading and discharging, which would permit BPGIC to service multiple user orders during the same time period; and
• four of the oil storage tanks will be constructed to permit conversion between crude oil and fuel oil products, allowing BPGIC to adjust its services to meet changing market demands.
Proposed Tanks
As part of Phase II, BPGIC is currently constructing eight oil storage tanks. The proposed oil storage tanks are expected to be equipped with the following features:
• accurate product level measurements: a real-time electronic measuring system that will monitor product levels in each oil storage tank;
• effective drainage systems leading to lower product contamination risks and higher cleanliness levels;
• automated fire-fighting systems: an automated fire system that will activate automatically in the event of a fire;
• an efficient, high quality blending system for faster crude oil blending times and more consistent blends; and
• a well-designed pipeline connection: a pipeline connection to the Phase II Internal Manifold and a fine stripping systems.
The following table displays the expected key attributes of the proposed eight oil storage tanks of Phase II:
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(1) “EFRT” means External Floating Roof Tank; “AGDR/ With CS IFR” means Aluminium Geodesic Dome Roof with Carbon Steel Internal Floating Roof.
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Proposed Phase II Internal Manifold
As a part of the construction of the Phase II Internal Manifold, BPGIC plans to install two piggable crude oil jetty pipelines and four pumps to transport crude oil from the BPGIC Terminal to the Port of Fujairah’s berths. The infrastructure to support the pipelines was built during Phase I. The four proposed pumps are expected to facilitate on-loading operations from the Phase II Internal Manifold by pumping crude oil through one or more of the two proposed piggable crude oil jetty pipelines to Matrix Manifold 2. Each of the four pumps is expected to be capable of transporting crude oil at a flow rate of 4,000 m3/hr and at a combined flow rate of 16,000 m3/hr. BPGIC plans to also utilize these pumps to facilitate inter-tank transfers, blending and other transfers throughout the terminal.
Similar to the Phase I Internal Manifold, the Phase II Internal Manifold is expected to have general and fine stripping systems.
Proposed Blending of Crude Oil
Phase II is expected to have state-of-the-art blending capabilities, similar to Phase I, which would allow it to achieve high levels of accuracy in meeting customer blending specifications.
BPGIC plans to blend various grades of crude oil to achieve customer specifications, including to attain specified properties for vapor pressure, viscosity, sulfur content and salt content.
Development and Implementation
In an effort to de-risk the construction of Phase II, BPGIC entered the Phase II EPC Agreement with Audex for the construction of Phase II (including all its component parts and associated infrastructure) on a fixed price lumpsum basis. The Phase II EPC Agreement also includes a clause for liquidated damages if the contractor fails to complete the work within the schedule in the Phase II EPC Agreement. Phase II work commenced in September 2018 and according to the schedule in the Phase II EPC Agreement, it is expected to be completed in 2020. The expected capital expenditure in respect of Phase II is USD 160.6 million. The expected capital expenditure in respect of Phase II will be partially funded by drawings of USD 90.6 million under the Phase II Financing Facility. For details of the remaining expected capital expenditure see “Business of BPGIC — Proposed Phase II — Capital Expenditure”. BPGIC also entered into the Phase II Project Management Agreement with MUC, the same advisor that designed the facilities for the Port of Fujairah and the BPGIC Terminal, so that MUC could manage the construction plan of Phase II. For more information regarding the proposed funding of Phase II, see “BPGIC’s Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Indebtedness”.
Off-take and Sales Arrangements
On June 27, 2018, BPGIC entered into the Phase II End User Agreement with the Phase II End User, an international commodities trading company. The Phase II End User agreed to lease all eight oil storage tanks in Phase II once Phase II becomes operational, which is expected to occur in 2020.
In September 2019, with the consent of the Phase II End User, BPGIC entered into the Phase II Customer Agreement to restructure its relationship with the Phase II End User. Pursuant to the Phase II Customer Agreement, BPGIC agreed to lease the Phase II facility, once operational, to the Phase I & II Customer on identical price terms and otherwise substantially similar terms as those of the Phase II End User Agreement, and in connection therewith, the Phase I & II Customer assumed BPGIC’s rights and obligations under the Phase II End User Agreement. Once Phase II becomes operational, the Phase I & II Customer is required to pay (i) a monthly fixed storage fee to lease all of Phase II’s storage capacity and (ii) monthly variable ancillary service fees for the following ancillary services: throughput, blending, heating and inter-tank transfers. The Phase I & II Customer is required to satisfy any amounts due for the monthly fixed storage fee in advance for each applicable month. Because the Phase I & II Customer subleases the facility to the Phase II End User, BPGIC’s monthly revenue for ancillary services will depend on the extent to which the Phase II End User utilizes the ancillary services. Notwithstanding the sublease, the Phase I & II Customer’s obligation to pay both the monthly fixed storage fee and the ancillary services fees to BPGIC is independent of the Phase II End User’s obligation to pay, and actual payment to, the Phase I & II Customer. For more information regarding the Phase II Customer Agreement, see “Business of BPGIC — Phase II End User Agreement and Phase II Customer Agreement”.
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Phase I End User Agreement and Phase I Customer Agreement
In an effort to de-risk the start-up of operations of Phase I, BPGIC entered into the Phase I End User Agreement. The Phase I End User Agreement went into effect on December 12, 2017. Pursuant to the Phase I End User Agreement, the Phase I End User leased all 14 oil storage tanks in Phase I from BPGIC. The Phase I End User Agreement provided that the Phase I End User would pay BPGIC (i) a monthly fixed storage fee to lease all of Phase I’s storage capacity (irrespective of whether the Phase I End User utilized any storage capacity) and (ii) monthly variable ancillary service fees based on the Phase I End User’s usage of the following ancillary services: throughput, blending, heating and inter-tank transfers. The Phase I End User accounted for 100 percent of BPGIC’s revenue for the year ended December 31, 2018.
The Phase I End User is an international energy trading company. Its activities include trading, financing, hedging, sourcing, storing, processing and transporting crude oil, fuel oil and clean petroleum products, including gas oil, gasoline and naphtha. Its goals are to provide quality services to its business partners, to leverage synergies with other companies and to identify and take advantage of new developments in its marketplace. The Phase I End User primarily acts as an intermediary in the oil products and services supply chain by obtaining purchase or service orders for certain oil products (including fuel oil and refined petroleum products) from oil companies and then working with service providers like BPGIC to fulfil such orders.
In August 2019, BPGIC entered into the Phase I Customer Agreement to restructure its relationship with the Phase I End User. Pursuant to the Phase I Customer Agreement, BPGIC leased the Phase I facility to the Phase I & II Customer on identical price terms and otherwise substantially similar terms as those of the Phase I End User Agreement, and in connection therewith, the Phase I & II Customer assumed BPGIC’s rights and obligations under the Phase I End User Agreement. Like the Phase I End User, the Phase I & II Customer is required to pay (i) a monthly fixed storage fee to lease all of Phase I’s storage capacity and (ii) monthly variable ancillary service fees for the following ancillary services: Throughput, blending, heating and inter-tank transfers. The Phase I & II Customer is required to satisfy any amounts due for the monthly fixed storage fee in advance for each applicable month. Because the Phase I & II Customer subleases the facility to the Phase I End User, BPGIC’s monthly revenue for ancillary services depends on the extent to which the Phase I End User utilizes the ancillary services. Notwithstanding the sublease, the Phase I & II Customer’s obligation to pay both the monthly fixed storage fee and the ancillary services fees to BPGIC is independent of the Phase I End User’s obligation to pay, and actual payment to, the Phase I & II Customer.
Storage Fee
For the year ended December 31, 2018, BPGIC generated approximately 54.3 percent of its revenue from monthly fees for storage services, which the Phase I End User paid to reserve all the storage space in the 14 oil storage tanks of Phase I. The Phase I End User was, and the Phase I & II Customer is, required to pay BPGIC the contracted rate per m3 per month. These fees were, and are, owed to BPGIC regardless of the storage capacity actually used. Further, the Phase I & II Customer is obligated to pay the storage fees to BPGIC whether or not the Phase I & II Customer receives payment, in turn, from the Phase I End User. As discussed in “Business of BPGIC — History”, from the time BPGIC began its operations in December 2017 through February 28, 2018, BPGIC limited the availability of its storage capacity to 40 percent BPGIC then increased the availability of its storage capacity to approximately 70 percent on March 1, 2018 and to 100 percent on April 1, 2018. As a result of these limitations on the availability of storage capacity, BPGIC agreed with the Phase I End User to pro-rate the monthly fixed storage fees to correspond with the amount of available storage capacity during each month prior to April 2018.
Ancillary Services
BPGIC charges the Phase I & II Customer variable fees based on usage for the following ancillary services:
• Throughput Fees. Pursuant to the Phase I Customer Agreement, the Phase I & II Customer is required to pay BPGIC a monthly fee based upon the total volume of oil products delivered from the BPGIC Terminal to the Port of Fujairah’s berths or from the berths to the BPGIC Terminal during an applicable month at the contracted rate per m3. Each month the Phase I & II Customer is allocated an initial amount of throughput volume at no charge that corresponds with the monthly storage capacity leased by it. As the Phase I & II Customer leases all the storage capacity of the Phase I, the amount is approximately 399,000 m3 each month. The Phase I & II Customer is required to pay BPGIC throughput fees on throughput volume to the extent the aggregate amount of throughput volume provided by BPGIC exceeds such initial amount. The revenue BPGIC generates from such service fees varies based upon, among other factors, the volume of oil products
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exiting the BPGIC Terminal. As the Phase I & II Customer’s sublessee, the Phase I End User, utilizes the ancillary services, which involves sending and receiving oil products to and from the terminal, it will lead to corresponding increases in the throughput volumes delivered to the extent BPGIC sends oil products to the Port of Fujairah’s berths. Upon mutual agreement, BPGIC could charge the Phase I & II Customer a supplementary fee to the extent the Phase I & II Customer exceeds an agreed amount of throughput volume.
• Blending Fees. Pursuant to the Phase I Customer Agreement, the Phase I & II Customer is required to pay BPGIC a monthly fee based upon the total volume of oil products blended during the blending processes performed during an applicable month at the contracted rate per m3. The Phase I & II Customer is responsible for providing BPGIC with blend specifications, the component oil products and any additives in connection with any blend request. The revenue BPGIC generates from such service fees varies based upon the activity levels of the Phase I & II Customer’s sublessee, the Phase I End User.
• Heating Fees. Pursuant to the Phase I Customer Agreement, the Phase I & II Customer is required to pay BPGIC a monthly fee based upon the total volume of oil products heated during an applicable month at the contracted rate per m3. The revenue BPGIC generates from such service fees varies based upon the activity levels of the Phase I & II Customer’s sublessee, the Phase I End User.
• Inter-Tank Transfer Fees. Pursuant to the Phase I Customer Agreement, the Phase I & II Customer is required to pay BPGIC a monthly fee based upon the total volume of oil products transferred between oil storage tanks during an applicable month at the contracted rate per m3. The revenue BPGIC generates from such service fees varies based upon the activity levels of the Phase I & II Customer’s sublessee, the Phase I End User.
Every two years, BPGIC may elect to review and seek to amend the above fees to the fair market rate of the relevant services at such time. As a result of such review, the rates shall equal either (i) the then-current rates or (ii) the market rates agreed between the parties, but only if such rates are higher than the then current rates.
The Phase I End User Agreement is for an initial period of five years, with a remaining period of approximately three years, and is renewable for an additional five year period. The term of the Phase I Customer Agreement is four years and renews automatically for another five years, unless either party delivers to the other party a written termination notice not less than six months prior to the expiration date of the agreement. Pursuant to the Phase I Customer Agreement, following the Phase I & II Customer’s failure to cure a default for non-payment or the commencement of insolvency proceedings against it, BPGIC could terminate the agreement, and exercise any other remedies available at law or equity. Following a termination for default, the Phase I & II Customer would be required to pay BPGIC the one-year equivalent of total service fees that would have been charged to the Phase I & II Customer had the agreement not been terminated.
The Phase I Customer Agreement provides that any fees charged by the Port of Fujairah in respect of the Phase I & II Customer (or its sublessee), including transportation, loading, unloading, use of berths, marine charges, administration charges, penalties and/or use of any of the Port of Fujairah’s facilities, shall be paid by the Phase I & II Customer.
Sublessees
The Phase I Customer Agreement contemplates that the Phase I & II Customer, subject to BPGIC’s prior approval, may enter into sublease agreements from time to time to assign its rights under the Phase I Customer Agreement to sublessees. By assuming BPGIC’s rights and obligations under the Phase I End User Agreement, the Phase I & II Customer subleased the Phase I facility to the Phase I End User. Notwithstanding the sublease to the Phase I End User, the Phase I & II Customer is responsible for both the storage fee and the ancillary service fee without regard to whether the Phase I & II Customer receives payment from the Phase I End User.
The fees under any such sublease agreements are generally expected to mirror the fees of the Phase I Customer Agreement. Sublessees may engage directly with BPGIC such that BPGIC delivers services to them and they pay applicable fees to BPGIC for such services. Sublessees may also interface directly with BPGIC to file complaints and to arrange any surveyor inspections.
Prior to doing any business with BPGIC, BPGIC expects that each potential sublessee will perform an intensive inspection of the BPGIC Terminal. The inspections generally entail an examination of various components of the terminal, including the oil storage tanks, jetty pipelines, internal manifold and operational control room, and various aspects of the operations, including flow rates, contamination rates, oil losses and process documentation.
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BPGIC plans to perform a background check on all potential sublessees prior to accepting them as sublessees. BPGIC also plans to coordinate with a third party to perform such background checks and, among other things, confirm that any potential sublessee is not a sanctioned entity.
Pursuant to the Phase I Customer Agreement, the product specifications of the sublessees’ oil products must be approved by BPGIC before any sublessees can deliver any oil products to the BPGIC Terminal. Such oil products must also be in compliance with the Port of Fujairah’s environmental standards, the relevant tank specifications, and must not be considered “hazardous”. BPGIC also retains the right pursuant to the Phase I Customer Agreement to refuse any oil products that are proven to be sanctioned, poor quality or hazardous.
Refinery and Services Agreement
BPGIC recently partnered with Sahara to develop and operate the Sahara Refinery at the BPGIC Terminal adjacent to Phase I and the Phase II site on the remaining available land under the BPGIC Terminal Land Lease at minimal cost to BPGIC. Under the terms of the partnership, Sahara will finance and arrange the development, construction and commissioning of a modular refinery on a parcel of BPGIC’s remaining unutilized land. Sahara will engage an EPC Contractor to design and procure construction and commission of the Sahara Refinery. BPGIC currently expects that the Sahara Refinery will be completed by the First Quarter of 2020, and will commence operations in the First Quarter of 2020. Upon completion, the Sahara Refinery will be owned by a subsidiary of Sahara and operated by BPGIC for Sahara’s exclusive use. The Sahara Refinery will be amongst the first refineries in the MENA region capable of supplying IMO 2020 compliant 0.5% sulphur content shipping fuel. The facility is initially expected to have an initial production capacity of 24,000 b/d. In connection with the Sahara Refinery, BPGIC has agreed to provide storage capacity of approximately 178,716 m3 shell capacity to Sahara in approximately five storage tanks in Phase I.
Land Utilization, Storage Services, and Refinery Operations Fee
Under the terms of the Refinery and Services Agreement, Sahara will pay to BPGIC a monthly fee equal to the greater of a specified price per barrel per day and a minimum fee for the utilization of the plot of land on which the Sahara Refinery is located, the storage capacity, and the refinery services that BPGIC will provide to Sahara. A monthly payment, in an amount no less than the minimum fee, will be owed to BPGIC regardless of whether Sahara uses the storage capacity or the Sahara Refinery.
Ancillary Services Fee
In connection with Sahara’s use of part of the Phase I storage capacity and pursuant to a contemplated Oil Storage Contract with Sahara (the “Sahara Oil Storage Contract”) BPGIC will charge Sahara variable fees based on usage for the following ancillary services:
• Throughput Fees. Pursuant to the Sahara Oil Storage Contract, Sahara will required to pay BPGIC a monthly fee based upon the total volume of oil products delivered from the BPGIC Terminal to the Port of Fujairah’s berths and from the Port of Fujairah’s berths to the BPGIC Terminal during an applicable month at the contracted rate per m3. Each month, Sahara will be allocated an initial amount of throughput volume at no charge that corresponds with the monthly storage capacity leased by it, and Sahara will lease five Phase I storage tanks with an aggregate storage capacity of approximately 178,716 m3 each month. Sahara will be required to pay BPGIC throughput fees on throughput volume to the extent the aggregate amount of throughput volume provided by BPGIC exceeds such initial amount. The revenue BPGIC generates from such service fees varies based upon, among other factors, the volume of oil products exiting the BPGIC Terminal. As Sahara utilizes the ancillary services, which involves sending and receiving oil products to and from the terminal, it will lead to corresponding increases in the throughput volumes delivered.
• Blending and Circulation Fees. Pursuant to the Sahara Oil Storage Contract, Sahara will be required to pay BPGIC a monthly fee based upon the total time that oil products were circulated during an applicable month at the contracted rate per hour. The revenue BPGIC generates from such service fees will vary based upon the activity levels of Sahara.
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• Heating Fees. Pursuant to the Sahara Oil Storage Contract, Sahara will be required to pay BPGIC a monthly fee based upon the total time that oil products were heated up to a specified temperature during an applicable month at the contracted rate per hour. The revenue BPGIC generates from such service fees will vary based upon the activity levels of Sahara.
• Inter-Tank Transfer Fees. Pursuant to the Sahara Oil Storage Contract, Sahara will be required to pay BPGIC a monthly fee based upon the total volume of oil products transferred between oil storage tanks during an applicable month at the contracted rate per m3. The revenue BPGIC generates from such service fees will vary based upon the activity levels of Sahara.
Profit Sharing
Pursuant to the Refinery and Services Agreement, Sahara and BPGIC have agreed to share all profits which Sahara earns from any and all business introduced to Sahara by BPGIC that is associated with the Sahara Refinery. The terms of this profit sharing arrangement will be negotiated when the situation arises.
BPGIC Sahara Energy Alliance FZE
The Sahara Refinery is expected to be owned by a wholly-owned subsidiary of Sahara, BPGIC Sahara Energy Alliance FZE, an entity to be licensed by the Fujairah Free Zone Authority. BPGIC granted Sahara a royalty free, non-exclusive license to include the tradename “BPGIC” in the name of the subsidiary and will allow the subsidiary to use the same solely in connection with the Sahara Refinery. In the event of the termination of any of the parties agreements, Sahara is required to remove the tradename “BPGIC” from the subsidiary’s registered name within a reasonable period of time.
Expansion
While the Sahara Refinery will initially have a maximum capacity of 24,000 bpd, the Refinery and Services Agreement contemplates refinery facilities of up to 250,000 bpd subject to BPGIC securing additional land to locate the expanded facilities and building additional storage facilities. BPGIC intends to use the Phase III land, if secured through a final land lease, for this expansion.
Phase II End User Agreement and Phase II Customer Agreement
As was the case with Phase I, in order to de-risk the start-up of operations of Phase II, on June 27, 2018, BPGIC entered into the Phase II End User Agreement with the Phase II End User, an international commodities trading company. The Phase II End User agreed to lease all eight oil storage tanks in Phase II. The Phase II End User Agreement provides that the Phase II End User will pay (i) a monthly fixed storage fee to lease all of Phase II’s storage capacity (irrespective of whether the Phase II End User uses any storage capacity) and (ii) monthly variable ancillary service fees based on the Phase II End User’s usage of the following ancillary services: throughput, blending, heating and inter-tank transfers.
The Phase II End User is an international commodities trading company. Its activities include sourcing, marketing, trading and distributing crude oil and oil products. Its goals are to continue to maintain its long-term business relationships, apply innovative trading solutions and help smooth worldwide energy markets. The Phase II End User primarily acts as an intermediary in the oil products and services supply chain by obtaining purchase or service orders for certain oil products (including crude oil) from oil companies and then working with service providers like BPGIC to fulfil such orders. BPGIC expects the Phase II End User to utilize BPGIC’s storage and ancillary services to fulfil the needs of its customers. BPGIC expects its revenue for its ancillary services to vary based on the orders the Phase II End User receives from its customers.
In September 2019, with the consent of the Phase II End User, BPGIC entered into the Phase II Customer Agreement to restructure its relationship with the Phase II End User. Pursuant to the Phase II Customer Agreement, BPGIC has agreed to lease the Phase II facility, once operational, to the Phase I & II Customer on identical price terms and otherwise substantially similar terms as those of the Phase II End User Agreement, and in connection therewith, the Phase I & II Customer assumed BPGIC’s rights and obligations under the Phase II End User Agreement. The Phase I & II Customer will become BPGIC’s customer with respect to Phase II once it becomes operational, which is expected to occur during the Second Quarter of 2020. Like the Phase II End User, the Phase I & II Customer will be required to pay (i) a monthly fixed storage fee to lease all of Phase II’s storage capacity and (ii) monthly variable ancillary service fees for the following ancillary services: throughput, blending, heating and inter-tank transfers. The
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Phase I & II Customer is required to satisfy any amounts due for the monthly fixed storage fee in advance for each applicable month. Because the Phase I & II Customer agreed to sublease the facility to the Phase II End User, BPGIC’s monthly revenue for ancillary services depends on the extent to which the Phase II End User utilizes the ancillary services. Notwithstanding the sublease, the Phase I & II Customer’s obligation to pay both the monthly fixed storage fee and the ancillary services fees to BPGIC is independent of the Phase II End User’s obligation to pay, and actual payment to, the Phase I & II Customer. Similar to the commencement of operations for Phase I, BPGIC may initially commence operations of Phase II in accordance with certain required safety measures and ramp up utilization of its storage capacity and ancillary services over time to mitigate any potential operational risks. This would impact the amount of storage and ancillary service fees BPGIC would earn during the first quarter of operations under the Phase II Customer Agreement.
Storage Fee
Upon the commencement of the Phase II Customer Agreement, the Phase I & II Customer will be required to pay the contracted rate per m3 per month. Every two years, BPGIC will have the option to seek to adjust the storage fee to the applicable market price, as determined by mutual agreement. In connection with such determinations, BPGIC plans to consider various factors, including the availability of storage capacity in the Fujairah region and the storage rate charged by other crude oil storage companies in the region. BPGIC also plans to act reasonably and to provide the Phase I & II Customer with supporting documentation to justify any proposed rate changes. Following an adjustment to the storage fee, the Phase I & II Customer will then be required to pay the higher of: (i) the contracted floor price per m3 and (ii) the agreed market price for storage. These fees will be owed to BPGIC regardless of the storage capacity actually used by the Phase I & II Customer.
Ancillary Services
Upon the commencement of the Phase II Customer Agreement, BPGIC will charge the Phase I & II Customer variable fees based on usage for the following ancillary services:
Throughput Fees. Pursuant to the Phase II Customer Agreement, the Phase I & II Customer will be required to pay BPGIC a monthly fee based upon the total volume of oil products delivered from the BPGIC Terminal to the Port of Fujairah’s berths and the VLCC jetty, or from the berths and the VLCC jetty to the BPGIC Terminal, as applicable, during an applicable month at the contracted rate per m3. Each month the Phase I & II Customer will be allocated an initial amount of throughput volume at no charge that corresponds with the monthly storage capacity leased by it. As the Phase I & II Customer will lease all the storage capacity of Phase II, the amount is approximately 601,261 m3 each month. The Phase I & II Customer will be required to pay BPGIC throughput fees on throughput volume to the extent the aggregate amount of throughput volume provided by BPGIC exceeds such initial amount. The revenue BPGIC generates from such service fees will vary based upon, among other factors, the volume of oil products exiting the BPGIC Terminal. As the Phase I & II Customer’s sublessee, the Phase II End User, utilizes the ancillary services, which involves sending and receiving oil products to and from the terminal, it will lead to corresponding increases in the throughput volumes delivered to the extent BPGIC sends oil products to the Port of Fujairah’s berths and the VLCC jetty, as applicable.
Blending Fees. Pursuant to the Phase II Customer Agreement, the Phase I & II Customer will be required to pay BPGIC a monthly fee based upon the total volume of oil products blended during the blending processes performed during an applicable month at the contracted rate per m3. The Phase I & II Customer is responsible for providing BPGIC with blend specifications, the component oil products and any additives in connection with any blend request. The revenue BPGIC generates from such service fees will vary based upon the activity levels of the Phase I & II Customer’s sublessee, the Phase II End User.
Heating Fees. Pursuant to the Phase II Customer Agreement, the Phase I & II Customer will be required to pay BPGIC a monthly fee based upon the total volume of oil products heated during an applicable month at the contracted rate per m3. The revenue BPGIC generates from such service fees will vary based upon the activity levels of the Phase I & II Customer’s sublessee, the Phase II End User.
Inter-Tank Transfer Fees. Pursuant to the Phase II Customer Agreement, the Phase I & II Customer is required to pay BPGIC a monthly fee based upon the total volume of oil products transferred between oil storage tanks during an applicable month at the contracted rate per m3. The revenue BPGIC generates from such service fees will vary based upon the activity levels of the Phase I & II Customer’s sublessee, the Phase II End User.
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The term of the Phase II Customer Agreement, which, subject to adjustment for construction delays, will commence on January 1, 2020, is five years and renews automatically for another five years. Pursuant to the Phase II Customer Agreement, following the Phase I & II Customer’s failure to cure a default for non-payment or the commencement of insolvency proceedings against it, BPGIC could terminate the agreement, prevent the Phase I & II Customer from discharging any oil products from the oil storage tanks and exercise any other remedies available at law or equity. Following a termination for default, the Phase I & II Customer would be required to pay BPGIC a termination fee equal to the aggregate amount that would have become due in respect of the storage fee (which is equal to the higher of the contracted floor price per m3 per month and the applicable market price, as determined solely by BPGIC) under the Phase II Customer Agreement until the date on which the Phase II Customer Agreement would have expired in accordance with its terms. In the event that insolvency proceedings are commenced against BPGIC or the expected completion time for the construction of Phase II, which is January 1, 2020, is exceeded by Audex and BPGIC fails to provide the Phase I & II Customer with regular updates on the readiness of Phase II well in advance of the expected construction completion time, the Phase I & II Customer would have the option to terminate the Phase II Customer Agreement. Any delays in or failures of performance by either party will not constitute a default or give rise to liability to the extent that such delays or failures are caused by events or circumstances that would be considered a “force majeure” event under the Phase II Customer Agreement. Force majeure events include events that are not within the reasonable control of the parties and that the parties may be unable to foresee or prevent, including acts of war, terrorism and certain natural disasters.
The Phase II Customer Agreement provides that any fees charged by the Port of Fujairah in respect of the Phase I & II Customer, including transportation, loading, unloading, use of berths, marine charges, administration charges, penalties and/or use of any of the Port of Fujairah’s facilities, shall be paid by the Phase I & II Customer.
Sublessees
The Phase II Customer Agreement contemplates that the Phase I & II Customer, subject to BPGIC’s prior approval, may enter into sublease agreements from time to time to assign its rights under the Phase II Customer Agreement to sublessees. By assuming BPGIC’s rights and obligations under the Phase II End User Agreement, the Phase I & II Customer subleased the Phase II facility to the Phase II End User. Notwithstanding the sublease to the Phase II End User, the Phase I & II Customer is responsible for both the storage fee and the ancillary service fee without regard to whether the Phase I & II Customer receives payment from the Phase II End User.
The fees under any such sublease agreements are generally expected to mirror the fees of the Phase II Customer Agreement. Sublessees may engage directly with BPGIC such that BPGIC delivers services to them and they pay applicable fees to BPGIC for such services. Sublessees may also interface directly with BPGIC to file complaints and to arrange any surveyor inspections.
Prior to doing any business with BPGIC, BPGIC expects that each potential sublessee will perform an intensive inspection of the BPGIC Terminal. The inspections generally entail an examination of various components of the terminal, including the oil storage tanks, jetty pipelines, internal manifold and operational control room, and various aspects of the operations, including flow rates, contamination rates, oil losses and process documentation.
BPGIC plans to perform a background check on all potential sublessees prior to accepting them as sublessees. BPGIC also plans to coordinate with a third party to perform such background checks and, among other things, confirm that any potential sublessee is not a sanctioned entity.
Pursuant to the Phase II Customer Agreement, the product specifications of the sublessee’s oil products must be approved by BPGIC before any sublessees can deliver any oil products to the BPGIC Terminal. Such oil products must also be in compliance with the Port of Fujairah’s environmental standards, the relevant tank specifications, and must not be considered “hazardous”. BPGIC also retains the right pursuant to the Phase II Customer Agreement to refuse any oil products that are proven to be sanctioned, poor quality or hazardous.
Security and Business Resilience
The BPGIC Terminal has a high degree of security. It has security cameras in various strategic locations inside and outside of the terminal. Fire alarm and detection systems are installed in all facilities and oil storage tanks. The terminal has firefighters on-site and conducts a fire drill every three months. The lighting system covers all areas of
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the facility on a 24-hour, seven day a week basis. The majority of the lights are solar powered and use LED lighting, reducing energy costs. The BPGIC Terminal is operational 24 hours a day and is pass-card protected. There are also multiple levels of clearance for employees and contractors.
BPGIC is committed to improving its security on an ongoing basis, while assuring quality service and continued customer satisfaction. BPGIC’s corporate security policy is designed to protect BPGIC’s personnel, assets, reputation and customers’ interests by employing the highest corporate, ethical and operational standards to meet BPGIC’s vision of excellence.
BPGIC’s security and business resilience objectives are met through the implementation of a planned set of security standards initiatives and internal programs. These are consistent with the relevant international security legislation and appropriately recognised and accredited quality management systems. All Phase I oil storage tanks are certified to the relevant NFPA and API industry and international standards. In accordance with NFPA standards, all Phase I oil storage tanks have been constructed to withstand high levels of radiation.
Environmental and Safety and Maintenance Matters
BPGIC is subject to laws and regulations relating to the protection of the environment and natural resources including, among other things, the management of hazardous substances, the storage and handling of hazardous waste, the control of air emissions and water discharges and the remediation of contaminated sites. BPGIC is also subject to health and safety regulations including, among other things, noise, workplace health and safety and regulations governing the handling, transport and packing of hazardous materials. Compliance with these laws and regulations may require the attainment of permits to conduct regulated activities; restrict the type, quantities and concentration of pollutants that may be emitted or discharged into or onto to the land, air and water; restrict the handling and disposal of solid and hazardous wastes; apply specific health and safety criteria addressing worker protection; and require remedial measures to mitigate pollution from former and on-going operations. While these laws and regulations affect BPGIC’s maintenance capital expenditures and net income, BPGIC believes it does not affect its competitive position, as the operations of its competitors are similarly affected.
BPGIC’s facilities are in substantial compliance with applicable environmental and other laws and regulations, including security and safety at work laws. However, these laws and regulations are subject to change by regulatory authorities, and continued or future compliance with such laws and regulations, or changes in the interpretation of such laws and regulations, may require BPGIC to incur expenditures. Failure to comply with these laws and regulations may result in the assessment of administrative, civil and criminal penalties, the imposition of remedial obligations, and the issuance of injunctions that may limit or prohibit some or all of BPGIC’s operations. Additionally, a discharge of hazardous waste into the environment could, to the extent that the event is not fully insured, subject BPGIC to substantial expenses, including costs to comply with applicable laws and regulations and to resolve claims made by third parties for claims for personal injury and property damage. These impacts could directly and indirectly affect BPGIC’s business, and have an adverse impact on its financial position, results of operations and liquidity. See “Risk Factors — Risks relating to BPGIC — BPGIC may incur significant costs to maintain compliance with, or address liabilities under, environmental, health and safety regulation applicable to its business”.
BPGIC has a corporate health and safety program to govern the way it conducts its operations at its facilities. Each of the employees and consultants is required to understand and follow the health and safety plan and have the necessary training for certain tasks performed at the facilities. BPGIC performs preventive and normal maintenance on all of its oil storage tanks and systems and makes repairs and replacements when necessary or appropriate. BPGIC also conducts routine and required inspections of such assets in accordance with applicable regulation. Most of the oil storage tanks are equipped with internal floating roofs in accordance with industry requirements to minimize regulated emissions and prevent potentially flammable vapor accumulation. The soil surrounding the oil storage tanks is capable of resisting oil penetration and has an oil leakage detection system in place, which is intended to minimize the effects of any oil leakage and potential oil pollution. The terminal facilities also have response plans, spill prevention and control plans, and other programs in place to respond to emergencies.
Information Technology and Operating Systems
The BPGIC Terminal’s IT systems, including the IT systems in BPGIC’s operational control room, are configured to remain in operation, including under abnormal conditions. Proper manual backup procedures and automatic processes have been devised to support the terminal’s operations in case of any unexpected system downtime or
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failure. The terminal’s four physical servers have redundant power supply sources and there is an on-site standby server to accommodate for a server shutdown. The majority of BPGIC’s IT systems have been provided by the ABB Group and Intelex Technologies, Inc.
In order to prevent both a disruption of BPGIC’s operations as well as to safeguard users’ data, automatic and manual data back-up procedures and recovery plans are in place to save and restore data and systems. System data and network device configurations are saved on external hard-disk drives and secured by third-party cloud service providers. The IT operations are maintained on a 24/7 basis, with automatic monitoring of all systems, emergency and standby duties, and third-party support and maintenance agreements in place where needed. The network infrastructure is periodically tested to ensure compliance with applicable security and performance requirements and appropriate tests are performed to ensure system security and performance are not compromised in connection with any updates to the IT infrastructure.
In order to ensure a high degree of IT security, BPGIC has procedures in place to prevent external threats to the IT systems. All files and emails exchanged over BPGIC’s network are scanned. A web filtering policy in the firewall prevents access to websites with vulnerabilities. A centrally managed anti-virus software with daily reporting of threats and vulnerabilities is installed in all user machines and servers at the BPGIC Terminal. In addition, the network is logically segmented between users, employees and network guests and provides different levels access to different users. For more information regarding the risks associated with BPGIC’s information technology and operating systems, see “Risk Factors — Risks relating to BPGIC — BPGIC is dependent on its IT and operational systems, which may fail or be subject to disruption”.
BPGIC plans to install an online ordering system in due course, which would enable users to place storage, heating and blending orders and track order statuses in real-time. For more information regarding the customer ordering process, see “Business of BPGIC — The BPGIC Terminal — Phase I — Customer Ordering Process”.
Employees
BPGIC is led by the Senior Management team that has extensive technical, operational and management experience in the oil storage terminal industry. As at June 30, 2019, BPGIC had employed 17 employees and 48 contractors. BPGIC commenced hiring of its experienced operational staff in the second half of 2017, so that it would have a full complement of staff ready when Phase I operations commenced in December 2017. The 48 contractors are engaged under third-party outsourcing contracts and the 16 employees are engaged under individual employment contracts.
All 48 of the contractors are contracted through Flowi Facility Management LLC (“Flowi”), a subsidiary of MUC. The 48 contractors serve in various roles in several of BPGIC’s departments, including operations, information technology and health and safety. Pursuant to BPGIC’s contract with Flowi, dated April 1, 2017, as extended, (the “Flowi Agreement”), Flowi is contractually obligated to release all 48 contractors from its employment and transfer them to BPGIC’s employment after contract completion. BPGIC management is currently considering whether to extend the Flowi Agreement for another year. For more information regarding Senior Management, see “Management of Pubco Following the Business Combination — Senior Managers”.
In addition to the BPGIC Terminal Office Building, BPGIC also has a small administrative office in the emirate of Abu Dhabi.
BPGIC believes that the material terms of its third-party sourcing contracts and employment agreements are customary for the UAE and the oil storage industry and that it has a good relationship with its employees.
The following table sets out the number of employees and contractors employed by BPGIC at June 30, 2019 by main location.
Location |
||||||
As at December 31, |
As at June 30,
|
|||||
2017 |
2018 |
|||||
Fujairah |
6 |
55 |
56 |
|||
Abu Dhabi |
3 |
8 |
9 |
|||
Total |
9 |
63 |
65 |
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Insurance
BPGIC’s operations and assets are insured under an insurance program administered by Lockton Insurance Brokers - Dubai, an insurance broker. The program covers the Phase I facilities and related assets, and the liabilities of the Phase I operations and BPGIC. The major elements of this program are property damage, business interruption, terrorism and political violence, worker’s compensation, environmental liability, employer liability, directors’ and officers’ liability insurance, personal injury and third-party liability, including that of terminal operators. BPGIC additionally maintains local insurance, including healthcare and other insurance required by BPGIC’s jurisdiction.
Premiums are allocated based on the insured values, history of claims and type of risk. BPGIC believes that the amount of coverage provided is comprehensive and appropriate for its business.
Legal Proceedings
From time to time, we may be involved in legal proceedings in the ordinary course of our business. We are currently not a party to any material legal or administrative proceedings.
Regulations of BPGIC
BPGIC’s operations are subject to various laws, standards and regulations relating to the oil and gas industry. BPGIC’s operations are extensively regulated by national and local authorities in the United Arab Emirates, including with respect to labor, health, safety, environment and licensing requirements. Additional requirements may also be imposed on BPGIC in connection with new or existing operations, including as a result of different or more stringent interpretation or enforcement of existing laws and regulations or a change in the laws and regulations. These additional requirements may not be anticipated by us. As a consequence, BPGIC may need to change its operations significantly or incur increased costs in order to comply with such requirements. Compliance with any additional environmental requirements may be costly and time-consuming. In addition, violations of any new or existing requirements could result in substantial fines or liabilities; delays in securing, or the inability to secure and maintain, permits, authorizations or licenses necessary for BPGIC’s business; injunctions; reputational damage; and other negative consequences, which may result in lost revenue and reputational damage.
Environmental standards
BPGIC is subject to laws and regulations relating to the protection of the environment and natural resources including, among other things, the management of hazardous substances, the storage and handling of hazardous waste, the control of air emissions and water discharges and the remediation of contaminated sites. Non-compliance with environmental regulations could result in severe fines, increased costs, and suspension or permanent shut down of activities. BPGIC’s operations are subject to the environmental risks inherent in the oil and gas sector. BPGIC’s operations are or may become subject to laws and regulations, including applicable international conventions, controlling the discharge of materials into the environment, pollution, contamination and hazardous waste disposal or otherwise relating to the protection of the environment.
Specifically, BPGIC is subject to environmental laws and regulations in the United Arab Emirates. Environmental laws and regulations applicable to BPGIC’s business activities, or which may become applicable, could impose significant liability on BPGIC for damages, clean-up costs, fines and penalties in the event of oil spills or similar discharges of pollutants or contaminants into the environment or improper disposal of hazardous waste generated in the course of operations. To date, such laws and regulations have not had a material adverse effect on BPGIC’s operating results, and BPGIC has not experienced an accident that has exposed it to material liability arising out of or relating to discharges of pollutants into the environment. However, there can be no assurance that such accidents will not occur in the future. Legislative, judicial and regulatory responses to such an incident could substantially increase BPGIC’s and/or BPGIC’s clients’ liabilities. In addition to potential increased liabilities, such legislative, judicial or regulatory action could impose increased financial, insurance or other requirements that may adversely impact the entire oil industry.
The legal frameworks in the United Arab Emirates for environmental protection are under continual development and, in time, relevant legislative bodies may impose stricter environmental regulations or apply existing regulations more strictly, including regulations regarding discharges into air and water, the handling and disposal of solid and hazardous waste, land use and reclamation and remediation of contamination. Compliance with environmental laws, regulations and standards, where applicable, may require BPGIC to make significant capital expenditures, such as the installation
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of costly equipment or operational changes. These costs could have a material adverse effect on BPGIC’s business, financial position, results of operation and prospects. Any failure to comply with applicable laws and regulations may result in reputational damage to us, administrative and civil penalties, criminal sanctions or the suspension or termination of BPGIC’s operations. Failure to comply with these statutes and regulations may subject BPGIC to civil or criminal enforcement action, which may not be covered by contractual indemnification or insurance and could have a material adverse effect on BPGIC’s financial position, operating results and cash flows. New laws and government regulations or changes to existing laws and government regulations may add to costs, limit BPGIC’s operations or reduce demand for BPGIC’s services.
Health and safety standards
BPGIC is subject to health and safety regulations in the United Arab Emirates including, among other things, noise, workplace health and safety and regulations governing the handling, transport and packing of hazardous materials. Compliance with these laws and regulations may require the attainment of permits to conduct regulated activities; restrict the handling and disposal of solid and hazardous wastes; and apply specific health and safety criteria addressing worker protection. These laws and regulations are subject to change by regulatory authorities, and continued or future compliance with such laws and regulations, or changes in the interpretation of such laws and regulations, may require BPGIC to incur expenditures. Failure to comply with these laws and regulations may result in the assessment of administrative, civil and criminal penalties, the imposition of remedial obligations, and the issuance of injunctions that may limit or prohibit some or all of BPGIC’s operations. These impacts could directly and indirectly affect BPGIC’s business, and have an adverse impact on its financial position, results of operations and liquidity.
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BPGIC’S MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion together with our financial statements and the related notes included elsewhere in this proxy statement/prospectus. This discussion contains forward looking statements about our business and operations. Our actual results may differ materially from those we currently anticipate as a result of many factors, including those we describe under “Risk Factors” and elsewhere in this proxy statement/prospectus. See “Special Note Regarding Forward Looking Statements.”
In this section, references to “we,” “us,” “BPGIC” and “our” are intended to refer to BPGIC, unless the context clearly indicates otherwise.
Our Management’s Discussion and Analysis of Financial Condition and Results of Operations is presented below in six sections:
• Overview
• Key Factors Affecting the Historical and Future Results of Operations
• Results of Operations
• Liquidity and Capital Resources
• Trend Information
• Related Party Transactions
• Other Risk Disclosures
OVERVIEW
BPGIC is an oil storage and service provider strategically located in the Port of Fujairah in the emirate of Fujairah in the UAE. BPGIC’s vision is to develop an oil storage business that differentiates itself from competitors by providing its customers with fast order processing times, excellent customer service and high accuracy blending services with low oil losses. BPGIC has a 60-year lease of land for its operations located in close proximity to the Port of Fujairah’s berth connection points. BPGIC is initially developing the BPGIC Terminal’s storage capacity in two phases, Phase I, which is already operational, and Phase II, which is under construction, and simultaneously in partnership with Sahara, is working on developing the Sahara Refinery, a modular refinery. Phase I commenced operations in December 2017, Phase II is currently under construction, and the Sahara Refinery is under development.
Tank storage facilities play a vital role in the business of refined petroleum products, crude oil and liquid chemicals. They serve as a critical logistical midstream link between the upstream (exploration and production) and the downstream (refining) segments of the refined petroleum product and crude oil industry. They are used to store primary, intermediate and end products and facilitate a continuous supply of the required feedstock to refineries and chemical plants in the processing industry on the one hand and absorb fluctuations in sales volumes on the other.
Key Factors Affecting Our Results of Operations
The following factors can affect the results of our operations:
End Users versus Customers
Commencing in August 2019, BPGIC’s sole contractual customer changed although the end-user of its facilities remained the same. In August 2019, BPGIC entered into a contract with Phase I & II Customer which became the direct customer of BPGIC. In turn, the Phase I & II Customer subleased BPGIC’s facilities to the existing end user.
Pursuant to the Phase I End User Agreement, the Phase I End User was the sole revenue generating customer of the Company until July 2019. From August 2019 forward, the Phase I End User remained the sole end user of the Phase I facilities, but the Phase I & II Customer became the sole customer of BPGIC.
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In August 2019, BPGIC executed the Phase I Customer Agreement, covering the Phase I facility and containing identical price terms and otherwise substantially the same terms as the previously existing Phase I End User Agreement with the Phase I End User. Immediately upon entering the Phase I Customer Agreement, the Phase I & II Customer subleased BPGIC’s Phase I facility back to the existing Phase I End User on terms substantially similar to the original terms.
In August 2019, BPGIC executed the Phase II Customer Agreement with the Phase I & II Customer, covering the Phase II facility and containing identical price terms and otherwise substantially the same terms as the previously existing Phase II End User Agreement with the Phase II End User. Immediately upon entering the Phase II Customer Agreement, the Phase I & II Customer subleased the BPGIC’s Phase II facility back to the existing Phase II End User on terms substantially similar to the original terms.
Pursuant to the Phase II End User Agreement, the Phase II End User is not expected to begin occupying the Phase II facility or using BPGIC’s services until the Phase II facility is operational which is currently estimated to occur in the Second Quarter of 2020. Once the Phase II facility is operational, the Phase II End User will utilize the facility as the sub-lessee of the Phase I & II Customer who will be the direct customer of BPGIC.
Upon operational commencement of the Sahara Refinery, currently anticipated to occur the First Quarter of 2020, a portion of BPGIC’s Phase I facilities covered by the Phase I Customer Agreement will be removed from that contract, so that BPGIC can utilize these facilities in support of the Sahara Refinery. The portion of Phase I to be so removed from the Phase I Customer Agreement is five storage tanks, comprising approximately 45% of the Phase I capacity. Thereafter, as a result, Sahara will become the customer and end user of those storage tanks in connection with the operations of the Sahara Refinery.
Customer Concentration
The Phase I & II Customer is currently BPGIC’s only customer, and BPGIC is currently reliant on it for all of its revenues. For the year ended December 31, 2018, the Phase I End User accounted for 100 percent of BPGIC’s revenues. For the six months ended June 30, 2019, the Phase I End User accounted for 100 percent of BPGIC’s revenues.
Historically, BPGIC’s monthly revenue was primarily driven by the monthly fixed storage fee it charged the Phase I End User to use all of Phase I’s storage capacity, which remained the same each month regardless of whether the Phase I End User used any storage capacity. This fixed storage fee, which is billed monthly in advance, represents the lease of storage capacity and the service provided to the customer for handling an agreed level of throughput of fuel oil and clean products. The fixed storage fee is allocated to the lease and service components based on their relative stand-alone selling price, which is based on an analysis of lease-related and service-related costs for the contract, adjusted for representative profit margins. The lease component is recognised on a straight-line basis over the term of the initial lease and the service component is recognised over time as the customer simultaneously receives and consumes the benefits provided by the Company’s performance. To a slightly lesser extent, BPGIC’s historical monthly revenue was impacted by the monthly variable ancillary service fees it charged the Phase I End User, which varied each month based on the Phase I End User’s usage of the ancillary services.
Currently, BPGIC’s monthly revenue is primarily driven by the monthly fixed storage fee it charges the Phase I & II Customer to use all of Phase I’s storage capacity, which remains the same each month irrespective of whether the Phase I & II Customer uses any storage capacity. This fixed storage fee, which is billed monthly in advance, represents the lease of storage capacity and the service provided to the customer for handling an agreed level of throughput of fuel oil and clean products. The fixed storage fee is allocated to the lease and service components based on their relative stand-alone selling price, which is based on an analysis of lease-related and service-related costs for the contract, adjusted for representative profit margins. The lease component is recognised on a straight-line basis over the term of the initial lease and the service component is recognised over time as the customer simultaneously receives and consumes the benefits provided by the Company’s performance. To a slightly lesser extent, BPGIC’s monthly revenue is impacted by the monthly variable ancillary service fees it charges the Phase I & II Customer, which vary each month based on the Phase I & II Customer’s usage of the following ancillary services: throughput, blending, heating and inter-tank transfers. BPGIC’s monthly revenue ultimately varies based on the Phase I End User’s usage of the ancillary services.
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In March 2019, BPGIC entered into the five-year Refinery and Services agreement with Sahara to operate the Sahara Refinery, a modular refinery to be developed, installed and owned by Sahara, or a wholly owned subsidiary of Sahara, at the BPGIC Terminal. Pursuant to the terms of the Refinery and Services Agreement, Sahara’s payment obligations thereunder will commence on the first date of operation of the Sahara Refinery, which is expected to occur during the First Quarter of 2020. BPGIC expects to provide to Sahara refinery operation services, usage of five Phase I storage tanks currently leased by the Phase I & II Customer, and ancillary services. Fees under the Refinery and Services Agreement are equal to the greater of (i) a fixed fee per barrel per day, and (ii) a minimum fee. BPGIC also expects to provide ancillary services to Sahara at the Phase I facility in connection with the Phase I storage capacity that Sahara will rent. To the extent BPGIC receives fees from Sahara, it would reduce BPGIC’s dependence on the Phase I & II Customer for revenues.
For more information regarding the terms of the Principal Customer Agreements, see the discussion of the Principal Customer Agreements contained in “Business of BPGIC — Phase I End User Agreement and the Phase I Customer Agreement” and “Business of BPGIC — Phase II End User Agreement and Phase II Customer Agreement” and for more information regarding the related risks, see “Risk Factors — Risks relating to BPGIC — BPGIC is currently reliant on the Phase I & II Customer for all of its revenues and any material non-payment or non-performance by the Phase I & II Customer would have a material impact on BPGIC’s business, financial condition and results of operations”, “Risk Factors — Risks relating to BPGIC—BPGIC will be become reliant on Sahara for all of its Sahara Refinery revenues, and the termination of the Refinery and Services Agreement would have a material adverse effect on BPGIC’s financial condition and results of operations.” “Risk Factors — Risks relating to BPGIC — BPGIC will be become reliant on the Phase I & II Customer for all of its Phase II revenues, and the termination of the Phase II Customer Agreement and the failure to find a replacement for the Phase I & II Customer would have a material adverse effect on BPGIC’s financial condition and results of operations.”
BPGIC’s Cost Structure and Margins
BPGIC’s revenues currently come, and are expected to continue to come, from two types of fees, fixed fees for storage and variable fees for ancillary services. Once the Sahara Refinery is operational, BPGIC’s revenues are expected to come from three types of fees, refinery operations fees, fixed fees for storage and variable fees for ancillary services. The mix of these fees affects revenues, operating margins and net income. In particular, the relatively high fixed price nature of the Company’s operations could result in lower profit margins if certain costs were to increase and BPGIC was not able to offset the increase in costs with sufficient increases in its storage or ancillary service fees or the end users’ utilization of BPGIC’s ancillary services.
BPGIC’s direct costs, which are comprised principally of employee costs with related benefits and depreciation along with indirect cost of land lease rentals generally remain stable across broad ranges of activity levels at the terminal and, as discussed above, its storage fee revenues are fixed or will be fixed, as the case may be, pursuant to the Principal Customer Agreements. Accordingly, changes in BPGIC’s operating margins are largely driven by the amount of ancillary services provided and the fees BPGIC earns for such services. For more information regarding the related risks, see “Risk Factors — Risks relating to BPGIC — The fixed cost nature of BPGIC’s operations could result in lower profit margins if certain costs were to increase and BPGIC were not able to offset such costs with sufficient increases in its storage or ancillary service fees or the Principal Customers’ utilisation of BPGIC’s ancillary services.”
Once the Sahara Refinery and Phase II facility are operational, our mix of relatively fixed revenue and variable revenue will also depend on ancillary service requirements of Sahara for the Sahara Refinery and the Phase II End User as the sub-lessee of the Phase II facility.
National and International Expansion
BPGIC’s future revenue growth and results of operations will depend on its ability to secure additional land and develop additional facilities or acquire existing facilities on commercially favourable terms both nationally and internationally. The Company operates in a capital-intensive industry that requires a substantial amount of capital and other long-term expenditures, including those relating to the expansion of existing terminal facilities and the development and acquisition of new terminal facilities. Accordingly, BPGIC’s successful expansion also depends on its ability to generate or obtain funds sufficient to make significant capital expenditures.
169
Oil Market Pricing Structure
Increases or decreases in the price of crude oil has some impact on end-user demand for our ancillary services, unlike demand for storage which is fully contractually committed at fixed rates. For instance, when the expected future price for an oil product is believed to be higher than the current market price for that product, it is said to be in a “contango market.” In such a market, oil traders are more likely to store the product and put a hold on processing the product via ancillary services, until there is an upward revision in prices. Vice versa if the expected future price for an oil product is believed to be lower than the current market price for that product, it is said to be in a “backwardation market.” In such a market, oil traders are more likely to process the product via ancillary services in order to sell at the current market price, rather than store the product when future prices are expected to be lower.
Phase III
BPGIC is in the early stages of pursuing a further major expansion near its existing facilities, which it refers to as Phase III. In July 2019, BPGIC executed an initial lease agreement to secure a new plot of land of approximately 450,000 m2 near its existing facilities. BPGIC currently intends to use such land to (i) further increase its capacity for crude oil storage and services by an additional capacity, and (ii) host the remaining 90% of the refinery facilities under the Refinery and Services Agreement and related agreements with Sahara. We expect that Phase III alone could be three (3) times the size of the Company’s projected operations post-Phase II and post-the initial refinery phase. The Company believes it could execute a final lease agreement for this land sometime in 2019, but there can be no assurances that this will occur. Concurrently, BPGIC is in discussions with top global oil majors, which have expressed interest in securing portions of the capacity of a Phase III facility. As of the date of this proxy statement/prospectus, BPGIC does not yet have any planned capital expenditures in connection with Phase III.
In addition to this specific land for Phase III, BPGIC will continue to pursue additional projects within the Fujairah market, either through partnerships with parties who have land leases or through efforts to secure additional land itself in Fujairah. BPGIC already has in place contracts with existing customers which have an existing need for more facilities. For instance, our partnership with Sahara with regards to the modular refinery is much larger than the initial phase under development. The modular refinery projected to commence operations in the First Quarter of 2020 has a maximum daily output of only 24,000 barrels, while our contract for Sahara is actually for output ten (10) times larger than this capacity, but is dependent upon us securing Phase III or other additional land and building additional storage facilities.
Recent Developments
Sahara Refinery
In March 2019, BPGIC entered into the five-year Refinery and Services Agreement with Sahara to operate the Sahara Refinery, a modular refinery to be developed, installed and owned by Sahara, or a wholly-owned subsidiary of Sahara, at the BPGIC Terminal adjacent to Phase I and the Phase II construction site on the remaining available land under the BPGIC Terminal Land Lease at minimal cost to BPGIC. Pursuant to the terms of the Refinery and Services Agreement, Sahara’s payment obligations thereunder will commence on the first date of operation of the Sahara Refinery. BPGIC expects to provide to the Sahara Refinery for its operation, usage of five Phase I storage tanks, currently leased by the Phase I & II Customer, and ancillary services. Fees under the Refinery and Services Agreement are equal to the greater of (i) a fixed fee per barrel per day, and (ii) a minimum fee. In addition, BPGIC will charge Sahara monthly variable fees based on Sahara’s usage of the ancillary services.
Phase II
In June 2018, BPGIC entered into the Phase II End User Agreement, a five-year lease and service agreement with the Phase II End User, an international commodities trading company. Pursuant to the Phase II End User Agreement, the term and the payment and performance obligations thereunder will commence upon the completion of Phase II facilities. Fees under the Phase II End User Agreement are comprised of (i) a monthly fixed fee to use BPGIC’s Phase II storage capacity (regardless of whether the Phase II End User uses any storage capacity) and (ii) monthly variable fees based on the Phase II End User’s usage of ancillary services comprising throughput, blending, heating and inter-tank transfers.
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RESULTS OF OPERATIONS
Description of Operations
We conduct our operations through a dedicated operation team at the BPGIC Terminal. Our operations are categorized into two reported business services; Storage and Ancillary services.
Storage. We own terminal and storage facilities in United Arab Emirates in the emirate of Fujairah, currently with 399,324 m3 storage capacity for storage of clean oil. Upon completion of Phase II, a crude oil storage facility, the capacity of the BPGIC Terminal will be expanded by 600,000 m3 increasing the total capacity of the BPGIC Terminal to approximately 1,000,000 m3. From December 2017 when the Company began its operations to February 28, 2018, BPGIC limited the availability of its storage capacity to 40 percent to allow management to test all systems and make any necessary adjustments. On March 1, 2018, BPGIC increased the availability of its storage capacity to approximately 70 percent, and on April 1, 2018, to 100 percent.
Ancillary Services. Ancillary services are further classified into 4 sub streams, Blending & Circulation, Heating, Throughput and Intertank Transfer. We began offering ancillary services in April 2018 after management had completed its initial tests of the facility.
BPGIC charges the Phase I & II Customer variable fees based on usage for the following ancillary services:
• Throughput Fees. Pursuant to the Phase I Customer Agreement, the Phase I & II Customer is required to pay BPGIC a monthly fee based upon the total volume of oil products delivered from the BPGIC Terminal to the Port of Fujairah’s berths or from the berths to the BPGIC Terminal during an applicable month at the contracted rate per m3. Each month the Phase I & II Customer is allocated an initial amount of throughput volume at no charge that corresponds with the monthly storage capacity leased by it, and since the Phase I & II Customer leases all the storage capacity of the Phase I, the amount is approximately 399,000 m3 each month. The revenue related to the services provided with respect to this throughput are disclosed separately from the lease revenue in our financial statements. The Phase I & II Customer is required to pay BPGIC throughput fees on throughput volume to the extent the aggregate amount of throughput volume provided by BPGIC exceeds such initial amount. The revenue BPGIC generates from such service fees varies based upon, among other factors, the volume of oil products exiting the BPGIC Terminal. As the Phase I & II Customer’s sub-lessee, the Phase I End User, utilizes the ancillary services, which involves sending and receiving oil products to and from the terminal, it will lead to corresponding increases in the throughput volumes delivered to the extent BPGIC sends oil products to the Port of Fujairah’s berths. Upon mutual agreement, BPGIC could charge the Phase I & II Customer a supplementary fee to the extent the Phase I & II Customer exceeds an agreed amount of throughput volume per annum.
• Blending Fees. Pursuant to the Phase I Customer Agreement, the Phase I & II Customer is required to pay BPGIC a monthly fee based upon the total volume of oil products blended during the blending processes performed during an applicable month at the contracted rate per m3. The Phase I & II Customer is responsible for providing BPGIC with blend specifications, the component oil products and any additives in connection with any blend request. The revenue BPGIC generates from such service fees varies based upon the activity levels of the Phase I & II Customer’s sub-lessee, the Phase I End User.
• Heating Fees. Pursuant to the Phase I Customer Agreement, the Phase I & II Customer is required to pay BPGIC a monthly fee based upon the total volume of oil products heated during an applicable month at the contracted rate per m3. The revenue BPGIC generates from such service fees varies based upon the activity levels of the Phase I & II Customer’s sub-lessee, the Phase I End User.
• Inter-Tank Transfer Fees. Pursuant to the Phase I Customer Agreement, the Phase I & II Customer is required to pay BPGIC a monthly fee based upon the total volume of oil products transferred between oil storage tanks during an applicable month at the contracted rate per m3. The revenue BPGIC generates from such service fees varies based upon the activity levels of the Phase I & II Customer’s sub-lessee, the Phase I End User.
171
Summary Financial Results
In USD |
For the Year Ended December 31, |
For the Six Months Ended June 30, |
||||||||||
2017 (Restated) |
2018 |
2018 |
2019 |
|||||||||
Revenue |
89,593 |
|
35,839,268 |
|
13,796,112 |
|
22,042,687 |
|
||||
Direct costs |
(2,295,809 |
) |
(9,607,360 |
) |
(4,765,900 |
) |
(4,955,436 |
) |
||||
GROSS (LOSS) PROFIT |
(2,206,216 |
) |
26,231,908 |
|
9,030,212 |
|
17,087,251 |
|
||||
General and administrative
|
(574,266 |
) |
(2,029,260 |
) |
1,048,846 |
|
(1,236,507 |
) |
||||
Finance costs |
(966,926 |
) |
(6,951,923 |
) |
(3,318,895 |
) |
(3,412,843 |
) |
||||
Changes in fair value of derivative financial instruments |
— |
|
(1,190,073 |
) |
— |
|
(484,603 |
) |
||||
(LOSS) PROFIT FOR THE PERIOD |
(3,747,408 |
) |
16,060,652 |
|
4,662,471 |
|
11,953,298 |
|
||||
(LOSS) PROFIT % to Revenue |
— |
|
45 |
% |
34 |
% |
54 |
% |
In the Fourth Quarter of 2017, we began testing operations of the Phase I facilities. In the First Quarter of 2018, we began commercial operations of Phase I facilities at reduced storage capacity with no ancillary services to further test systems and make necessary adjustments. In the Second Quarter of 2018, we began operating at full storage capacity with complete ancillary services.
Revenue
For the Year Ended December 31, |
For the Six Months Ended June 30, |
|||||||||||
Revenue Breakup |
2017 (Restated) |
2018 |
2018 |
2019 |
||||||||
Fixed consideration – leasing component |
62,995 |
|
14,586,315 |
|
6,162,630 |
|
8,423,241 |
|
||||
Fixed consideration – service component |
26,598 |
|
6,158,667 |
|
2,602,000 |
|
3,556,479 |
|
||||
Ancillary services |
— |
|
15,094,286 |
|
5,031,482 |
|
10,062,967 |
|
||||
Total Revenue |
89,593 |
|
35,839,268 |
|
13,796,112 |
|
22,042,687 |
|
||||
Revenue Break Up % |
|
|
|
|
||||||||
Storage fee |
100 |
% |
58 |
% |
67 |
% |
54 |
% |
||||
Ancillary Services fee |
— |
|
42 |
% |
36 |
% |
46 |
% |
Year Ended December 31, 2017 Compared to Year Ended December 31, 2018
Our revenue increased from $0.1 million in 2017 to $35.8 million in 2018 as a result of Phase I facilities becoming commercially operational in the First Quarter of 2018.
Our storage fee revenue increased from $0.1 million in 2017 to $20.7 million in 2018 as a result of Phase I’s storage capacity becoming commercially operational in the First Quarter of 2018.
Our ancillary services fee revenue increased from nil in 2017 to $15.1 million in 2018 as a result of Phase I’s ancillary services becoming commercially operational in the Second Quarter of 2018.
For 2017, storage fees comprised 100% of our total revenue. For 2018, storage fees comprised 54.3% of our total revenue and ancillary services fees comprised 42% of our total revenue as a result of Phase I’s ancillary services becoming commercially operational in the Second Quarter of 2018.
Six Months Ended June 30, 2018 Compared to Six Months Ended June 30, 2019
Our revenue increased by 59.8% from $13.8 million in the six months ended June 30, 2018 to $22 million in the six months ended June 30, 2019 primarily because we operated Phase I at full storage capacity with ancillary services for the six months ended June 30, 2019 whereas we operated Phase I at reduced storage capacity and no ancillary services in the First Quarter of 2018.
Our storage fee revenue increased by 35.2% from $8.8 million in the six months ended June 30, 2018 to $12.0 million in the six months ended June 30, 2019.
Our ancillary fee revenue increased by 102% from $5.0 million in the six months ended June 30, 2018 to $10.1 million in the six months ended June 30, 2019.
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Storage fee revenue mix decreased from 67% of total revenue for the six months ended June 30, 2018 to 54.3% of total revenue for the six months ended June 30, 2019 while ancillary services fee revenue mix increased from 36% of total revenue for the six months ended June 30, 2018 to 46% of total revenue for the six months ended June 30, 2019. This change in revenue mix is primarily driven by the fact that only storage revenue was generated in the First Quarter of 2018 whereas both storage and ancillary services revenue were generated in the First Quarter of 2019.
Direct Costs
The Company’s direct costs are comprised principally of employee costs and related benefits, depreciation and, to a lesser extent, insurance and certain other miscellaneous operating costs.
Employee costs and related benefits consist of compensation to employees who provide customer support and services and external contractor costs.
Depreciation expenses consist of depreciation on Phase I’s oil storage tanks, administrative buildings and installations. The Company depreciates these assets using the straight-line depreciation method assuming an average useful life of 50 years for the tanks and 20 to 25 years for the buildings and installations. The Company expects its depreciation expenses will increase following the completion of Phase II and to remain a significant non-cash expense in the future, given the capital-intensive nature of its business.
For the Year Ended December 31, |
For the Six Months Ended June 30, |
|||||||
Direct Costs USD for |
2017 (Restated) |
2018 |
2018 |
2019 |
||||
Employee costs and related benefits |
1,518,794 |
2,808,702 |
1,391,241 |
1,436,320 |
||||
Depreciation |
692,528 |
5,716,063 |
2,876,873 |
2,899,881 |
||||
Spare parts and consumables used |
50,891 |
592,471 |
281,233 |
361,914 |
||||
Insurance |
31,304 |
377,053 |
178,679 |
161,111 |
||||
Other expenses |
2,292 |
113,071 |
37,874 |
96,210 |
||||
Total Direct Costs |
2,295,809 |
9,607,360 |
4,765,900 |
4,955,436 |
Year ended December 31, 2017 Compared to Year ended December 31, 2018
Direct costs increased by 318.5% from $2.3 million in 2017 to $9.6 million in 2018 as a result of Phase I facilities becoming commercially operational in the First Quarter of 2018.
The most significant component of direct costs is depreciation which increased from $0.7 million in 2017 to $5.7 million because construction of Phase I facilities was completed in Fourth Quarter of 2017 and thus depreciation for the facilities was only recorded for 43 days in 2017 but for was recorded for the full year in 2018.
Employee costs & related benefits increased by 84.9% from $1.5 million in 2017 to $2.8 million in 2018 due to, amongst other things, additional employees associated with the commencement of Phase I operations in 2018 as compared to 2017 when the plant was under construction for the first 11 months of the year, though the operations staff was mobilized beginning in June 2017 for training etc. so that there would not be any loss of hours and to ensure enhanced productivity once Phase I went operational.
Six Months Ended June 30, 2018 Compared to Six Months Ended June 30, 2019
Direct costs were consistent in the six months ended June 30, 2019 as compared to the six months ended June 30, 2019 primarily because there was not much change in operation team headcount, which drives employee costs & related benefits, or depreciation which are the major contributors to direct costs. The relative stability of direct costs is the reason that the increase in revenue for the six months ended June 30, 2019 over the six months ended June 30, 2018 resulted in an increase in gross profit margins of the Company.
173
Gross (Loss) Profit
Year ended December 31, 2017 Compared to Year ended December 31, 2018
Following a gross loss of $2.2 million in 2017, BPGIC had a gross profit of $26.2 million in 2018. The transition from gross loss to gross profit is primarily attributable to the Phase I facility becoming operational from the First Quarter of 2018.
Six Months Ended June 30, 2018 Compared to Six Months Ended June 30, 2019
Gross profit increased by 90% from $9.0 million in the six months ended June 30, 2018 to $17.1 million in the six months ended June 30, 2019 primarily because the Company operated Phase I at full capacity for the six months ended June 30, 2019 as compared to reduced capacity in the First Quarter of 2018 while direct costs remained relatively steady.
General and Administrative Expenses
The Company’s general and administrative expenses include costs not directly attributable to the operations of the BPGIC Terminal and consist primarily of compensation costs for its executive, financial, human resources, and administrative functions. Other significant expenses include outside legal counsel, independent auditors and other outside consultants, recruiting, travel, rent and advertising.
For the Year Ended December 31, |
For the Six Months Ended June 30, |
|||||||
General & Administrative Expenses USD |
2017 (Restated) |
2018 |
2018 |
2019 |
||||
Employee costs and related benefits |
287,481 |
1,178,919 |
475,044 |
720,681 |
||||
Consultancy expenses |
54,529 |
337,491 |
197,919 |
184,011 |
||||
Recruitment expenses |
53,912 |
33,362 |
25,728 |
1,361 |
||||
Travel and related expenses |
16,544 |
11,515 |
3,352 |
7,611 |
||||
Rent Expenses |
43,380 |
22,325 |
22,325 |
2,178 |
||||
Advertisement and subscriptions |
37,223 |
116,495 |
3,807 |
11,541 |
||||
Printing and stationery |
12,636 |
22,713 |
6,249 |
17,323 |
||||
License costs |
22,872 |
19,249 |
3,822 |
4,343 |
||||
Communication expenses |
9,379 |
19,773 |
6,266 |
16,883 |
||||
Other expenses |
36,310 |
267,418 |
304,334 |
270,575 |
||||
Total G&A Expenses |
574,266 |
2,029,260 |
1,048,846 |
1,236,507 |
Year ended December 31, 2017 Compared to Year ended December 31, 2018
General and administrative expenses increased by 253.4% from $0.6 million in 2017 to $2.0 million in 2018. The increased expenses consisted primarily of $1.2 million in employee costs and related benefits, with the balance of the increase attributable to consultancy, recruitment and other working capital expenses. Employee costs increased in 2018 because of an increased headcount including appointments of a CFO, Finance Manager, Legal Secretary, FP&A Manager.
Six Months Ended June 30, 2018 Compared to Six Months Ended June 30, 2019
General and administrative expenses increased by 17.9%, from $1 million for the six months ended June 30, 2018 to $1.2 million for the six months ended June 30, 2019, primarily due to the increased employee costs associated with the greater headcount necessary for operation of the Phase I facility at full capacity. Employee costs increased approximately $0.2 million from $0.5 million for the six months ended June 30, 2018 to $0.7 million for the six months ended June 30, 2019 because a majority of the new employees were recruited subsequent to June 30, 2018. Pay revisions in the six months ended June 30, 2019 also contributed to the increase.
174
Finance Costs
The Company’s finance costs consist of amortization of lease liability interest and interest expense under its Financing Facilities (as defined below).
The BPGIC Terminal Land Lease entered into in March 2013 has an initial term of 30 years, which is extendable for another 30 years. The Company has concluded that it has the right to use of the land and, accordingly, recorded a lease liability in accordance with IFRS 16. Given the Company’s use of the land, it is reasonably certain that it will continue to lease the land until the end of lease period (i.e. 60 years) and, accordingly, the lease rental amounts cover a period up to 60 years and are discounted at the rate of 9.5% as the incremental borrowing rate of the Company over 60 years.
For the Year Ended December 31, |
For the Six Months Ended June 30, |
|||||||
Finance Cost (USD) for |
2017 (Restated) |
2018 |
2018 |
2019 |
||||
Interest on lease liability |
318,957 |
1,387,612 |
687,212 |
706,314 |
||||
Finance costs on term loan |
647,969 |
5,564,311 |
2,631,683 |
2,706,529 |
||||
Total Finance Cost |
966,926 |
6,951,923 |
3,318,895 |
3,412,843 |
Year ended December 31, 2017 Compared to Year ended December 31, 2018 2017 Compared to 2018
Finance costs increased from $1.0 million in 2017 to $7.0 million in 2018. In 2018, finance costs consisted almost entirely of $5.6 million in finance costs on term loans under the Phase I Financing Facilities and $1.4 million in interest on lease liability.
During 2017, the interest on lease liability and interest on term loans during the repayment period were capitalized and added to the cost of construction of the Phase I facility and, as a result, the finance costs recorded within the Company’s statement of comprehensive income for the year ended December 31, 2017 were only for the period from November 19, 2017, the date on which Phase I was ready for its intended use, through December 31, 2017. For the year ended December 31, 2018, the majority of finance costs accrued over the period were recorded within the statement of comprehensive income resulting in the high variance between finance costs for the year ended December 31, 2018 as compared to the year ended December 31, 2017.
Six Months Ended June 30, 2018 Compared to Six Months Ended June 30, 2019
Finance costs increased 2.8% from $3.3 million for the six months ended June 30, 2018 to $3.4 million for the six months ended June 30, 2019. The increased interest on lease liability was in line with Land Lease Liability computed at a 9.5% discount rate for 60 years and the finance cost on terms loans was as per the repayment schedule for interest settled on term loans during the six months ended June 30, 2019.
Net (Loss) Profit
Year ended December 31, 2017 Compared to Year ended December 31, 2018 2017 Compared to 2018
Following a net loss of $3.7 million in 2017, BPGIC had a net profit of $16.1 million in 2018. The transition from net loss to net profit is primarily attributable to the Phase I facility becoming operational in the First Quarter of 2018.
Six Months Ended June 30, 2018 Compared to Six Months Ended June 30, 2019
Net profit increased from $4.7 million in the six months ended June 30, 2018 to $12.0 million in the six months ended June 30, 2019 primarily because the Company operated Phase I at full capacity for the six months ended June 30, 2019 as compared to reduced capacity in the First Quarter of 2018 while direct costs remained relatively steady and general and administrative expenses and finance costs increased at a lower rate than revenue.
Adjusted EBITDA
We define Adjusted EBITDA as profit (loss) before finance costs, income tax expense (currently not applicable in the UAE but included here for reference purposes), depreciation and adjusted for selected items that we believe impact the comparability of financial results between reporting periods. In addition to non-cash items, we have selected items for adjustment to EBITDA which management feels decrease the comparability of our results among periods. These items are identified as those which are generally outside of the results of day-to-day operations of the business. These items are not considered non-recurring, infrequent or unusual, but do erode comparability among periods in
175
which they occur with periods in which they do not occur or occur to a greater or lesser degree. Historically, we have selected items such as Lease rental finance cost recognized in accordance with IFRS16, and changes in fair value of derivative financial instruments. Management believes these types of items can make comparability of the results of day to day operations among periods difficult and have chosen to add back these items to profit (loss) to arrive at the Adjusted EBITDA. We expect to adjust for similar types of items in the future. Although we present selected items that we consider in evaluating our performance, you should be aware that the items presented do not represent all items that affect comparability between the periods presented.
Note About Non-IFRS Financial Measures
Our Adjusted EBITDA improved from negative $2.1 million for the year ended December 31, 2017 to $29.9 million for the year ended December 31, 2018 because of operations during the year 2018.
Our adjusted EBITDA improved from $10.9 million for 6 months ended June 30, 2018 to $18.8 million for 6 months ended June 30, 2019 because during 2019 the plant operated at full capacity as compared to 2018 where for the first 3 months the storage operations were at reduced capacity with nil ancillary services.
Adjusted EBITDA is not a financial measure presented in accordance with IFRS. Adjusted EBITDA should not be considered in isolation or as a substitute for or superior to analysis of our results, including net income, prepared in accordance with IFRS. Because Adjusted EBITDA is a non-IFRS measure, it may be defined differently by other companies in our industry, our definition of this Non-IFRS financial measure may not be comparable to similarly titled measures of other companies, thereby diminishing the utility. We encourage investors and others to review our financial information in its entirety and not rely on a single financial measure.
We present Adjusted EBITDA as a supplemental performance measure because we believe that the presentation of this non-IFRS financial measure will provide useful information to investors in assessing our financial condition and results of operations. Profit (loss) is the IFRS measure most directly comparable to Adjusted EBITDA. Adjusted EBITDA has important limitations as an analytical tool because it excludes some, but not all, items that affect net income. Some limitations of Adjusted EBITDA are:
• Adjusted EBITDA does reflect finance costs of, or the cash requirements necessary to service interest on our debts; and
• Adjusted EBITDA excludes depreciation and although these are non-cash charges, the assets being depreciated may have to be replaced in the future.
Management compensates for the limitations of Adjusted EBITDA as an analytical tool by reviewing the comparable IFRS measure, understanding the difference between Adjusted EBITDA and profit (loss) and incorporating this knowledge into its decision-making processes. We believe that investors benefit from having access to the same financial measures that our management uses in evaluating our operating results.
The following table presents a reconciliation of net income to Adjusted EBITDA, the most directly comparable IFRS financial measure for the various periods:
For the Year Ended December 31, |
For the Six Months Ended June 30, |
|||||||||||
USD |
2017 Restated |
2018 |
2018 |
2019 |
||||||||
Profit (loss) for the year/period |
(3,747,408 |
) |
16,060,652 |
|
4,662,471 |
|
11,953,298 |
|
||||
Adjustments for |
|
|
|
|
||||||||
Depreciation charge |
692,528 |
|
5,716,063 |
|
2,876,873 |
|
2,899,881 |
|
||||
Finance costs |
966,926 |
|
6,951,923 |
|
3,318,895 |
|
3,412,843 |
|
||||
Changes in fair value of derivative instruments |
— |
|
1,190,073 |
|
— |
|
484,603 |
|
||||
Total Adjustments |
1,659,454 |
|
13,858,059 |
|
6,195,768 |
|
6,797,327 |
|
||||
Adjusted EBITDA |
(2,0857,954 |
) |
29,918,711 |
|
10,858,239 |
|
18,750,625 |
|
||||
Revenues |
89,593 |
|
35,839,268 |
|
13,796,112 |
|
22,042,687 |
|
||||
Adjusted EBITDA % of Revenues |
— |
|
83.48 |
% |
78.70 |
% |
85.06 |
% |
176
LIQUIDITY AND CAPITAL RESOURCES
Overview
Our capital requirements have primarily been for capital expenditures related to the development of Phase I and Phase II, debt service, operating expenses, and shareholder distributions. Historically, we have funded our capital requirements through the Financing Facilities and equity contributions. We anticipate funding our future capital requirements and debt service payments with cash generated from our operations, funds received through the business combination and future borrowings. To the extent we choose to seek additional financing in the future (whether for development, acquisition opportunities as they arise or the refinancing of the Financing Facilities when due at more favorable terms), we expect to fund such activities through cash generated from operations and through securing further debt financing from banks and the capital markets.
On December 31, 2018, we had a bank overdraft position due to ongoing discussions with our bank regarding the restructuring of our loan facilities, and on June 30, 2019, we had cash of $6.7 million. As of June 30, 2019, we had (i) the Phase I Financing Facility, a term loan facility for an aggregate amount of $84.6 million which we primarily used to fund a portion of the construction cost of the Phase I facility, (ii) the Phase I Admin Building Facility, a term loan facility for an aggregate of $11.1 million which we primarily used to fund a portion of the construction cost of an administrative building in Fujairah, (iii) the Phase I Short Term Financing Facility, a term loan facility for an aggregate of $3.5 million which we primarily used to settle certain accrued interest on the Phase I Financing Facility, and (iv) the Phase II Financing Facility, a term loan facility for up to an aggregate of $95.3 million. Each facility is a Shari’a compliant financing arrangement. As of June 30, 2019, we had $81.7 million outstanding under the Phase I Financing Facility, $9.6 million outstanding under the Phase I Admin Building Facility, $1.2 million outstanding under the Phase I Short Term Financing Facility, and no borrowings outstanding under the Phase II Financing Facility.
Cash Flows for the Years Ended
The following table summarizes our cash flows from operating, investing and financing activities in USD.
Dec-17
|
Dec-18 |
H1June-18 |
H1Jun-19 |
|||||||||
Operating activities |
(2,252,917 |
) |
27,896,721 |
|
9,025,516 |
|
19,542,322 |
|
||||
Investing activity |
(21,924,553 |
) |
(271,403 |
) |
(119,200 |
) |
(38,247,281 |
) |
||||
Financing activities |
24,319,059 |
|
(31,617,070 |
) |
(7,868,228 |
) |
29,144,485 |
|
||||
NET INCREASE (DECREASE) IN CASH |
141,589 |
|
(3,991,752 |
) |
1,038,088 |
|
10,439,526 |
|
Operating Activities
Net cash provided by operating activities for the year ended December 31, 2018 of $27.9 million compared to net cash used in operating activities of $2.3 million for the year ended December 31, 2017, primarily due to operating cash flow from the Phase I facility which became commercially operational in 2018. Our working capital increased by $2.0 million for the year ended December 31, 2018, compared to an increase of $0.2 million for the year ended December 31, 2017.
Net cash provided by operating activities for the six months ended June 30, 2019 was $19.5 million as compared to $9.0 million for six months ended June 30, 2018 primarily due to the Phase I facility not being used at full capacity in 2018, with no ancillary business for the First Quarter of 2018.
Investing Activities
Net cash used in investing activities for the year ended December 31, 2018 decreased to $0.3 million from $21.9 million for the year ended December 31, 2017, primarily due to the completion of the Phase I facility in early 2018 without a ramp-up in cash used for Phase II during the year. Net cash used in 2017 consisted primarily of $22.5 million relating to the construction of the Phase I facility which was completed on November 19, 2017.
Net cash used in investing activities in the six months ended June 30, 2019 was $38.2 million and in the six months ended June 30, 2018 was $0.1 million, primarily due to Phase II construction expenses recorded as capital work in progress in the 2019 period to the extent of $8.9 million and an advance of $29.4 million to the main contractor for construction of Phase II.
177
Financing Activities
Net cash used in financing activities for the year ended December 31, 2018 was $31.6 million as compared to net cash provided by financing activities of $24.3 million for the year ended December 31, 2017, primarily due to an increase in distributions to shareholders, increase in payments of interest and principal, and a reduction of additional borrowings. For the year ended December 31, 2018, net cash used in financing activities consisted primarily of $25.0 million in distributions to shareholders, $7.2 million in interest payments, and $3.5 million in principal repayments, partially offset by $4 million in proceeds from term loans. For the year ended December 31, 2017, net cash provided by financing activities consisted primarily of $16.7 million in proceeds from term loans and $11.2 million in proceeds from shareholder contributions, partially offset by payments of $3.4 million of interest and $0.1 million of financing transaction costs.
Net cash provided by financing activities in the six months ended June 30, 2019 was $29.1 million as compared to net cash used in financing activities in the six months ended June 30, 2018 of $7.9 million, primarily due to shareholder distributions in the six month period ended June 30, 2018. In the six month period ended June 30, 2019, net shareholder contributions totaled $31.6 million, which was partially offset by $2.4 million in loan repayments.
Working Capital
Before analyzing the working capital, it is crucial to note the following:
Under the Phase I Financing Facilities, BPGIC is subject to certain covenants requiring amongst other things, the maintenance of:
(i) a minimum debt service coverage ratio (“DSCR”) of 150% at all times and if the ratio decreases to 120% or less, it results in an event of default; and
(ii) an amount equivalent to one quarterly instalment including interest in a debt service reserve account (“DSRA”) at all times.
Year Ended December 31, 2018
As of December 31, 2018, BPGIC had negative working capital of $108.5 million. This was due to the following:
a. During the year there was a net cash outflow of $25.0 million to the shareholders from its operating cash flow and another $10.7 million cash outflow for loan repayment.
b. In 2018, BPGIC was in discussions with the lender to restructure the Phase I Financing Facilities on more favorable terms in line with the current market rates and lending criteria. As of December 31, 2018, discussions were still in progress, and a payment in the amount of $3.8 million was due to the bank as an installment payment consisting of $2.7 million in principal repayment and $1.0 million in interest. As discussions were ongoing, the payment was processed from BPGIC’s bank account creating an overdraft in its current bank account, which was reflected as the bank overdraft in the December 31, 2018 statement of financial position.
In addition to the circumstances described in subparagraph b above, BPGIC did not comply with the first and second covenant listed above. Even though the lender did not declare an event of default under the Phase I Financing Facilities, the lender could have done so as a result of the breach of the covenants described above and could have required immediate repayment of the amounts outstanding. Accordingly, the December 31, 2018 statement of financial position classifies all of the Company’s bank loans as current liabilities. The Company’s lender has not requested any immediate repayment of these loans and the loan agreements have been amended on September 10, 2019, including a revised repayments schedule. (Please refer to note 13 of BPGIC’s financial statements as of December 31, 2017 and 2018 for further information).
178
Year Ended December 31, 2017
As of December 31, 2017, the Company had negative working capital of $100.5 million. This was due to the following:
a. During the year 2017, BPGIC had no operating income which is a primary requirement for computing DSCR. Further, the Phase I Construction Facilities were not fully drawn which is a primary requirement for determining the amount of one quarterly installment including interest to be placed in the DSRA. As such, BPGIC did not comply with the DSCR and DSRA covenants.
b. These breaches constituted an event of default and could have resulted in the lender requiring immediate repayment of the amounts outstanding. Accordingly, the Company has classified the entire amount outstanding of $94.2 million as of December 31, 2017 as a current liability based on the non-compliance.
Six Months Ended June 30, 2019
As of June 30, 2019, the Company had a negative working capital of $101.5 million.
At the end of June 2019, a payment in the amount of $6.3 million was due to the bank as an installment payment consisting of $3.7 million of principal and $2.5 million of interest. Similar to the treatment as of December 31, 2018, the full term loan balance of $92.6 million as of June 30, 2019 is treated by BPGIC as repayable on demand. Accordingly, BPGIC has classified the full amounts as a current liability in this period.
As a result of the amendments to the Financing Facilities executed on September 10, 2019, we expect a significant portion of the outstanding borrowings to be reclassified as a non-current liability from current liability by the Third Quarter of 2019. This is expected to reduce our working capital deficiency.
For the historical periods above, BPGIC’s negative working capital was funded by its shareholders enabling the Company to meet its short-term obligations. In the six months ended June 30, 2019, shareholders contributed net $32.5 million towards meeting BPGIC’s working capital commitments and are expected to contribute additional funds if necessary during the second half of 2019. In the future, management expects the Company to meet future working capital needs from the operating cash flows, including increases resulting from the Sahara Refinery and the Phase II facility commencing operations in the Second Quarter of 2020.
Capital Expenditures
In 2018, we made capital expenditures of $0.2 million primarily in connection with construction of Phase II. These expenditures were financed by cash from operations. In 2017, we made capital expenditures of $21.9 million in connection with the construction of the Phase I facility. These expenditures were primarily funded through drawdowns on the Phase I Construction Facilities in the amount of $16.7 million with the remaining expenditures funded by equity contributions.
In the six months ended June 30, 2019, we made capital expenditures of $8.9 million in connection with construction of Phase II. These capital expenditures were financed by cash from operations.
Our additional capital expenditures for the Third and Fourth quarters of 2019 are expected to be approximately $105 million, which we expect to fund primarily through cash from operations, shareholder contributions, the proceeds of the Business Combination, and drawdowns on the Phase II Financing Facility. These planned capital expenditures will consist primarily of expenditures related to the construction of the Phase II facility.
Management expects capital expenditures for 2020 to be approximately $16.5 million in relation to construction of the Phase II facility.
179
Debt Sources of Liquidity
Current (USD) |
Terms |
Due |
Dec-17
|
Dec-18 |
H1Jun-19 |
|||||
Term loan(1) |
3 month EIBOR + 3% margin |
2019 |
83,424,947 |
82,245,595 |
81,728,959 |
|||||
Term loan(2) |
3 month EIBOR + 3% margin |
2019 |
10,738,804 |
10,165,703 |
9,635,648 |
|||||
Term loan(3) |
2 month EIBOR + 2% margin |
2019 |
— |
2,380,790 |
1,194,421 |
|||||
94,163,751 |
94,792,088 |
92,559,028 |
||||||||
Non-Current |
||||||||||
Term loan(1) |
3 month EIBOR + 3% margin |
Jul-30 |
— |
— |
— |
|||||
Term loan(2) |
3 month EIBOR + 3% margin |
Jul-23 |
— |
— |
— |
|||||
— |
— |
— |
||||||||
Total Loan as on |
94,163,751 |
94,792,088 |
92,559,028 |
Note on Breach of Covenant:
Under the Phase I Financing Facilities, the Company is subject to certain covenants requiring amongst other things, the maintenance of:
(i) a minimum debt service coverage ratio of 150% at all times and if the ratio decreases to 120% or less, it results in an event of default; and
(ii) an amount equivalent to one quarterly instalment including interest in a debt service reserve account at all times.
As of December 31, 2018:
The Company did not maintain a DSRA account and was not in compliance with the minimum debt service coverage ratio resulting in a breach of debt covenants requirement described above. Even though the lender did not declare an event of default under the loan agreement, these breaches constituted an event of default and could have resulted in the lender requiring immediate repayment of the loan. As a result of this non-compliance and in accordance with guidance related to the classification of obligations that are callable by the lender, the December 31, 2018 statement of financial position classifies all of the Company’s bank loans as current liabilities. The Company’s lender has not requested any immediate repayment of these loans and the loan agreements have been amended on September 10, 2019, including a revised repayments schedule. (Please refer to note 13 of BPGIC’s Financial Statements as of December 31, 2017 and 2018 for further information).
As December 31, 2017:
During the year 2017, BPGIC had no operating income which is a primary requirement for computing DSCR. Further, the Phase I Construction Facilities were not fully drawn which is a primary requirement for determining the amount of one quarterly installment including interest to be placed in the DSRA. As such, BPGIC did not comply with the DSCR and DSRA covenants. These breaches constituted an event of default and could have resulted in the lender requiring immediate repayment of the amounts outstanding.
Phase I Construction Facility
In 2014, the Company obtained the Phase I Construction Facility, a secured Shari’a compliant financing arrangement, in an aggregate amount of $84.6 million from First Abu Dhabi Bank PJSC (as successor to National Bank of Abu Dhabi PJSC) (“FAB”) to partially finance construction of Phase I. The loan has a notional amount of AED 310.7 million. During the year ended December 31, 2018, the Company drew down an additional $0.6 million from this facility. The loan was originally repayable in 48 quarterly instalments beginning 27 months after start of construction with final maturity not later than March 31, 2028 and is stated net of prepaid finance cost of $0.6 million.
180
In 2018, the Company entered into an agreement to amend the Phase I Construction Facility to provide that the facility is now to be repayable in 48 quarterly installments starting October 2018 with final maturity in July 2030. As amended, the facility has an interest rate equal to 3 month EIBOR + 3% as compared to interest at 6 month EIBOR + 3.5% previously.
On September 10, 2019, the Company entered into a restructuring agreement with FAB to amend the Phase I Construction Facility. The Phase I Construction Facility is now payable in 45 instalments starting October 31, 2019 with final maturity on July 30, 2030. One of the instalments of the Phase I Construction Facility includes a one-time lump sum repayment of 5.7 million, which represents the cumulative instalments including interest outstanding from periods prior to this amendment of $5.5 million and an amendment fee of $0.2 million. All securities and covenants under the original Phase I Financing Facilities remain in effect under the amended agreements. Under the amended agreements, the Phase I Construction Facilities are also secured by assignment of the proceeds from operation of the tanks. In addition, the current owners committed to partially pre-settle by December 31, 2019 AED 100 million (USD 27.2 million — translated using the exchange rate as of September 26, 2019) of the Phase I Construction Facilities from the proceeds of the Business Combination.
The security granted includes the Phase I oil storage tanks, pledges over the earnings, an assignment of contracts, and a commercial mortgage over equipment of BPGIC including oil storage tanks. The financiers are entitled to enforce their security if there is an event of default under the financing documents which is continuing. The facility contains customary covenants and events of default, including covenants that may limit BPGIC’s ability to incur additional indebtedness and create liens, and covenants that limit BPGIC’s ability to consolidate, merge or dispose of all or substantially all of its assets.
Phase I Admin Building Facility
In 2017, the Company obtained the Phase I Admin Building Facility, a secured Shari’a compliant financing arrangement, in an aggregate total commitment amount of $11.1 million from FAB for the construction of an administrative building in Fujairah. The loan has a notional amount of AED 40.8 million. The Company drew down a total of $10.8 million on this facility during 2017. The loan was originally repayable over a maximum of 20 quarterly instalments starting after a 6 months’ grace period commencing in April 2017 and is stated net of prepaid finance cost of $0.1 million. The loan was drawn down in AED.
In 2018, the Company entered into an agreement to amend the Phase I Admin Building Facility. The facility is now repayable in over a maximum of 20 quarterly installments starting in October 2018 with final maturity in July 2023.As amended, the facility has an interest rate equal to 3 month EIBOR + 3% as compared to interest at 3 month EIBOR + 3.5% previously.
The security granted includes the Phase I oil storage tanks and the administrative building, an assignment of rental income generated from our administrative building in Fujairah, an advance payment guarantee and a performance guarantee. The financiers are entitled to enforce their security if there is an event of default under the financing documents which is continuing. The facility contains customary covenants and events of default, including covenants that limit BPGIC’s ability to incur additional indebtedness and create liens, and covenants that limit BPGIC’s ability to consolidate, merge or dispose of all or substantially all of its assets and enter into transactions with affiliates.
Phase I Short Term Financing Facility
In 2018, the Company obtained the Phase I Short Term Financing Facility, a secured Shari’a compliant financing arrangement, with the bank to settle accrued interest on the Phase I Construction Facility in an aggregate amount of $3.5 million. The loan is denominated in UAE currency and is notionally AED 13.0 million in amount. The new LME Murabaha facility carries interest at 1 month EIBOR + 2% margin and is repayable in 15 equal monthly installments commencing from date of disbursement. The security granted includes the security granted for the Phase I Construction Facility, the Phase I Admin Building Facility. The financiers are entitled to enforce their security if there is an event of default under the financing documents which is continuing. The facility contains customary covenants and events of default, including covenants that limit BPGIC’s ability to incur additional indebtedness and create liens, and covenants that limit BPGIC’s ability to consolidate, merge or dispose of all or substantially all of its assets and enter into transactions with affiliates.
181
Note on Going Concern
As of June 30, 2019 and December 31, 2018, the Company had not paid $6,277,709 and $3,747,537 respectively of principal and accrued interest that was due under the Company’s Phase I Financing Facilities. Also, as of June 30, 2019 and December 31, 2018, the Company was not in compliance with its debt covenants, including the debt service coverage ratio contained in the Company’s Phase I Financing Facilities. Even though the lender did not declare an event of default under the loan agreements, these breaches constituted events of default and could have resulted in the lender requiring immediate repayment of the loans. Accordingly, as of June 30, 2019 and December 31, 2018, the Company has classified its debt balance of $92,559,028 and $94,792,088 as a current liability. As of June 30, 2019 and December 31, 2018, the Company’s current liabilities exceeded its current assets by $101,547,022 and $108,536,113, respectively. All of the above represents a material uncertainty that casts significant doubt upon the Company’s ability to continue as a going concern.
On September 10, 2019, the Company entered into an agreement with its lender to amend the Phase I Construction Facility. The principal and accrued interest of $5,494,063 outstanding under this facility as of July 31, 2019 as per the original repayment schedule will now be due on November 30, 2019. The Phase I Construction Facility is now payable in 45 instalments starting October 31, 2019 with final maturity on July 30, 2030. The Phase I Admin Building Financing Facility were not amended as part of the September 10, 2019 agreement to amend the Phase I Construction Facility. Subsequent to the period end, the Company had repaid $5,646,206 due under the Phase I Admin Building Facility and the Phase I Short Term Financing Facility. As such, all instalments related to Phase I Admin Building Facility and the Phase I Short Term Financing Facility due under the original repayment schedules up to September 10, 2019 were repaid. In addition, the Company agreed to assign to the lender all proceeds from the operation of the tanks and to pre-settle by December 31, 2019 AED 100,000,000 (($27,225,701) translated using the exchange rate as of June 30, 2019) of principal under the Phase I Construction Facilities from the proceeds received from the Business Combination.
During 2018, the Company signed the Phase II End User Agreement to provide storage and ancillary services to the Phase II End User, an international commodity trading company. Phase II operations are scheduled to start in the Second Quarter of 2020 and management expects this will generate significant operating cash flows. Further, in 2019, the Company entered into the Refinery and Services Agreement with Sahara to develop and operate the Sahara Refinery at the BPGIC Terminal. The Company expects to provide operation, storage and ancillary services to Sahara. Refinery operations are scheduled to start in the First Quarter of 2020. Based on the above, management expects the Company will generate sufficient cash flows from its operations to meet its liabilities as and when the loan instalments fall due. Further, the owners intend to provide further financial support to enable the Company to meet its financial obligations as and when required.
The annual and interim condensed financial statements have been prepared assuming that the Company will continue as a going concern. Accordingly, the annual and interim condensed financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, the amounts and classification of liabilities, or any other adjustments that might result in the event the Company is unable to continue as a going concern.
Phase II Financing Facility
During the year 2018, the Company obtained a new facility, the Phase II Financing Facility, from a commercial bank in the UAE amounting to USD 95.3 million (AED 350.0 million) to partially finance the construction of Phase II. The new facility carries interest at 3 month EIBOR + 3% margin.
The Phase II Financing Facility is secured by a mortgage on the Phase II storage tanks, step-in right to the leased land and assignment of the proceeds from operation of the tanks and insurance policies. The term loan is also secured by guarantees from Al Brooge Capital providing for Oil and Gas LLC and Emirates Investment LLC FZC.
Under the Phase II Financing Facility, the Company is subject to certain covenants requiring amongst other things, the maintenance of (i) a minimum facility service coverage ratio of 1.25:1, (ii) a participations to value ratio not exceeding 1.50:1 at all times, (iii) a participations to cost ratio not exceeding 57% at any date, and (iv) an amount equivalent to one instalment including interest in a facility service reserve account at all times or in the event of an initial public offering, the amount should be equivalent to the next two instalments including interest. The facility service coverage ratio is calculated as revenues minus expenses from the Phase II storage tanks divided by the current debt commitments
182
on the Phase II Financing Facility including interest. The participations to value ratio at any date is calculated as total debt commitments on the Phase II Financing Facility as of that date divided by the most recent valuation of the Phase II storage tanks. The participations to cost ratio at any date is calculated as the total debt commitments on the Phase II Financing Facility as of that date as a percentage of the sum of actual constructions costs plus project expenses paid as of that date on the Phase II storage tanks.
The Phase II Financing Facility includes an initial condition precedent that requires evidence of initial equity contribution by the Company towards the Phase II storage tanks before the loan facility can be utilized. The Company has not made any drawings on the Phase II Financing Facility as of the date of issuance of these financial statements.
TREND INFORMATION
Stable Revenue & Margins
The Company began operation of the Phase I facility in December 2017 at reduced capacity while management undertook tests of the facility. As a result, the Phase I facility did not begin operating at full capacity, or performing ancillary services until April 2018. Since the Phase I facility became fully operational, BPGIC’s revenue, and revenue split between storage fees and ancillary services fees, have been relatively stable. This stability is largely attributable to the fixed storage fees, and relatively stable usage history we have experienced from our Phase I End User. As a result, since commencing full operations from April 2018 through June 2019, the company has operated at fairly stable margins, averaging around 54% net margin and 85% Adjusted EBITDA margin.
Management expects the Company’s operating margins to remain stable until the commencement of operations by the Sahara Refinery and the Phase II facility. In both cases, management anticipates margins will increase over a short period and then remain stable again at the higher levels.
Diversify Operations and Customer Concentration via Managing Refinery
In early 2019, the Company signed the Refinery and Services Agreement with Sahara to manage the Sahara Refinery to be developed and constructed by Sahara on the remaining land at the BPGIC Terminal adjacent to the Phase I facility and the Phase II site. In connection with its use of the Sahara Refinery, Sahara will occupy approximately 179,000 m3 in approximately five Phase I storage tanks, reducing approximately 45% of the storage capacity leased to the Phase I & II Customer. The result of the Sahara Refinery will be to diversify our operations and customer concentration. The Sahara Refinery is contractually required to pay us $0.9 million per month. With respect to those five tanks, the amount of ancillary services revenue will depend on the extent to which Sahara makes use of our ancillary services once the Sahara Refinery is operational. Although such use may be greater or lesser than, and the fees generated by such use may be greater or lesser than, the fees currently received from the Phase I & II Customer based on the usage of the Phase I End User, management believe the refinery will provide an operating financial benefit to the Company.
Completion of Phase II
The Company expects the construction of Phase II to be completed in 2020. The Company plans to focus Phase II’s operations primarily on the storage and blending of crude oil and thereby capitalize on the demand for crude oil storage. The Company expects to generate additional revenues and expenses in connection with Phase II’s operations. Similar to the commencement of operations for Phase I, the Company may initially commence operations of Phase II in accordance with certain required safety measures and ramp up utilization of its storage capacity and ancillary services over time to mitigate any potential operational risks. This would impact the amount of storage and ancillary service fees the Company would earn during the first quarter of operations under the Phase II Customer Agreement.
183
Contractual Obligations
As of June 30, 2019 |
Total |
<1 year |
1-3 years |
3-5 years |
>5 years |
|||||
Contractual Obligations |
||||||||||
Term Loans |
93,155,712 |
93,155,712 |
— |
— |
— |
|||||
Lease Payments |
226,905,861 |
2,336,457 |
4,814,035 |
5,008,522 |
214,746,847 |
|||||
Total |
320,061,573 |
95,492,169 |
4,814,035 |
5,008,522 |
214,746,847 |
|||||
As of December 31, 2018 |
Total |
<1 year |
1-3 years |
3-5 years |
>5 years |
|||||
Contractual Obligations |
||||||||||
Term Loans |
95,428,301 |
95,428,301 |
— |
— |
— |
|||||
Lease Payments |
228,062,523 |
2,313,323 |
4,766,371 |
4,958,933 |
216,023,896 |
|||||
Total |
323,490,824 |
97,741,624 |
4,766,371 |
4,958,933 |
216,023,896 |
Off Balance Sheet Commitments and Arrangements
The Company does not have any off balance sheet commitments and arrangements.
Inflation
Inflation in the UAE has not materially affected our results of operations in recent years. Although we have not been affected by inflation in the past, we may be affected if any of the countries in which we do business now, or in the future, experience high rates of inflation.
Environmental, Health and Safety
Our operations are subject to extensive international, federal, state and local environmental laws and regulations, in the UAE, including those relating to the discharge of materials into the environment, waste management, remediation, the characteristics and composition of fuels, climate change and greenhouse gases. Our operations are also subject to extensive health, safety and security laws and regulations, including those relating to worker and pipeline safety, pipeline and storage tank integrity and operations security. Because more stringent environmental and safety laws and regulations are continuously being enacted or proposed, the level of expenditures required for environmental, health and safety matters is expected to increase in the future.
The Company does not have any exposure to environmental matters as of and for the years ended December 31, 2018 and 2017 and half year ending June 2019.
Contingencies
We are not subject to any loss contingencies as we do not have any claims or any ongoing disputes or legal suits with any of the parties. Hence we believe that there would not be any material adverse effect on our results of operations, financial position or liquidity of the company as on any of the period ends in discussion nor in future.
RELATED PARTY TRANSACTIONS
During the six month period ending June 30, 2019, the shareholders of the Company transferred their ownership in the Company to the Seller, Brooge Petroleum and Gas Investment Company plc, a company incorporated under the laws of England and Wales and owned by the same shareholders that previously owned the Company and in the same ownership proportion. Upon the change of ownership, the Company changed its name from Brooge Petroleum and Gas Investment Company FZC to Brooge Petroleum and Gas Investment Company FZE. As a result of the above, the Seller became the parent of the Company. The owners have made net cash contributions to the extent of USD 32.6 million.
See the section titled “Certain Relationships And Related Party Transactions — BPGIC Related Person Transactions and Policies” for information concerning other related party transactions in which BPGIC has participated.
184
OTHER RISK DISCLOSURES
A. Market Risk Disclosures
The main risks arising from the Company’s financial instruments are capital risk, interest rate risk, credit risk, currency risk and liquidity risk. The Senior Management team reviews and agrees policies for managing each of these risks which are summarized below.
B. Capital Risk
The Company’s objective when managing capital is to safeguard its ability to continue as a going concern in order to provide returns for holders of Ordinary Shares and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
The Company’s capital structure consists of shareholders’ equity and debt, which as disclosed in the unaudited financial information for the six months ended June 30, 2019 includes the borrowings under the Financing Facilities while excluding derivative financial liabilities.
Consistent with others in the industry, the Company monitors its debt levels including covenants contained within the Financing Facilities.
C. Interest Rate Risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company’s exposure to the risk of changes in market interest rates relates primarily to the Financing Facilities and the other interest-bearing assets and liabilities (including bank balances, short-term deposits and bank overdrafts).
Based on a sensitivity analysis covering the exposure to interest rates as at December 31, 2018, a 40 basis point increase or decrease represents Senior Management’s assessment of a reasonably possible change in interest rates. If interest rates had been 40 basis points higher and all other variables were constant, profit before tax for the year ended December 31, 2018 would have decreased by $0.4 million.
D. Credit Risk
Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. The Company is exposed to credit risk on bank balances and trade and other receivables as reflected in the statement of financial position, with a maximum exposure equal to the carrying amount of these instruments.
The Company seeks to limit its credit risk with respect to banks by dealing only with reputable banks and with respect to customers including related parties by monitoring outstanding receivables.
E. Currency Risk
The Company does not have any significant exposure to currency risk as most of its contracts, cash activities and financing arrangements are denominated in USD or AED, which is the currency of the UAE and pegged to the USD.
F. Liquidity Risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company’s approach to minimizing liquidity risk is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to its reputation.
The Company ensures that it has sufficient cash on demand to meet expected operational expenses and service expected financial obligations by assessing and monitoring its projected financing requirements, projected cash during future operational periods and outstanding bank facilities and commitments. This assessment excludes the potential impact of extreme circumstances that cannot reasonably be predicted.
Refer to section on liquidity and capital resources for further details on the Company’s loan arrangements.
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G. Operations Risk
The Company’s operations and assets are insured under an insurance program administered by Lockton Insurance Brokers - Dubai, an insurance broker. The program covers the Phase I facilities and related assets, and the liabilities of the Phase I operations and the Company. The major elements of this program are property damage, business interruption, terrorism and political violence, worker’s compensation, environmental liability, employer liability, directors’ and officers’ liability insurance, personal injury and third-party liability, including that of terminal operators. The Company additionally maintains local insurance, including healthcare and other insurance required by the Company’s jurisdiction.
Premiums are allocated based on the insured values, history of claims and type of risk. Management believes that the amount of coverage provided is comprehensive and appropriate for the Company’s type of business and meets the standard requirements to comply with all statutory requirements.
Critical Accounting Policies
Management’s discussion and analysis of our results of operations and liquidity and capital resources are based on our audited financial information. Our audited financial statements have been prepared in accordance with IFRS. We describe our significant accounting policies in Note 2 - Significant Accounting Policies, of the Notes to Financial Statements included in this report. Of particular significance are following policies:
Revenue recognition
The Company generates revenue by charging fees for the storage, throughput and handling of fuel oil and clean products for its sole customer. Additional revenue is generated by charging fees for other ancillary services (excess throughput, heating, blending and other services).
The contract contains a lease and a service component. The lease component is accounted for under IFRS 16 and the service component is accounted for under IFRS 15. The contract has a minimum fixed monthly payment for both the lease and non-lease service components. The fixed consideration is allocated to the lease and service components based on their relative stand-alone selling price, which is based on an analysis of lease-related and service-related costs for the contract, adjusted for representative profit margins. The lease component is recognised on a straight-line basis over the term of the initial lease and the service component is recognised over time as the customer simultaneously receives and consumes the benefits provided by the Company’s performance. The contract also contains variable elements in the form of the other ancillary services. Revenue from the variable element of the contract is recognised based on the actual volumes transported, stored and processed in the period in which the services are provided. These services are generally billed the month after the services are performed.
Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.
All other borrowing costs are recognised in the statement of comprehensive income (within profit and loss) in the period during which they are incurred.
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Capital work under progress is stated at cost and subsequently transferred to assets when it is available for use. Cost of an item of property plant and equipment comprises its acquisition cost including borrowing cost and all directly attributable costs of bringing the asset to working condition for its intended use. Such cost includes the cost of replacing part of the plant and equipment when that cost is incurred, if the recognition criteria are met. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment
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as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in the statement of comprehensive income (within profit and loss) as incurred. Depreciation is computed using the straight-line method based on the estimated useful lives of assets as follows:
Buildings |
25 years |
|
Tanks |
50 years |
|
Installation (Pipeline, pumps and other equipment) |
20 – 25 years |
|
Other equipment |
5 years |
|
Right-of-use asset – Land |
60 years |
The assets’ residual values and useful lives are reviewed and adjusted if appropriate, at each financial year end to determine whether there is an indication of impairment. If any such indication exists, an impairment loss is recognised in the statement of comprehensive income (within profit and loss). For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units).
The carrying amounts are reviewed at each reporting date to assess whether they are recorded in excess of their recoverable amounts, and where carrying values exceed this estimated recoverable amount, assets are written down to their recoverable amount, being the higher of their fair value less costs to sell and their value in use.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of comprehensive income (within profit and loss) in the year the asset is derecognised.
Leasing
At inception of a contract, the Company assesses whether the contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
For a contract that is, or contains, a lease, the Company accounts for each lease component within the contract as a lease separately from non-lease components of the contract.
The Company determines the lease term as the non-cancellable period of a lease, together with both:
a) periods covered by an option to extend the lease if the lessee is reasonably certain to exercise that option; and
b) periods covered by an option to terminate the lease if the lessee is reasonably certain not to exercise that option.
In assessing whether a lessee is reasonably certain to exercise an option to extend a lease, or not to exercise an option to terminate a lease, the Company considers all relevant facts and circumstances that create an economic incentive for the lessee to exercise the option to extend the lease, or not to exercise the option to terminate the lease. The Company revises the lease term if there is a change in the non-cancellable period of a lease.
Company as a lessor
Leases where the Company does not transfer substantially all the risks and benefits of ownership of the asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same bases as rental income. Contingent rents are recognised as revenue in the period in which they are earned.
Company as a lessee
For a contract that contains a lease component and one or more additional lease or non-lease components, the Company allocates the consideration in the contract to each lease component on the basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the non-lease components.
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The relative stand-alone price of lease and non-lease components is determined on the basis of the price the lessor, or a similar supplier, would charge an entity for that component, or a similar component, separately. If an observable stand-alone price is not readily available, the Company estimates the stand-alone price, maximising the use of observable information.
For determination of the lease term, the Company reassesses whether it is reasonably certain to exercise an extension option, or not to exercise a termination option, upon the occurrence of either a significant event or a significant change in circumstances that:
a) is within the control of the Company; and
b) affects whether the Company is reasonably certain to exercise an option not previously included in its determination of the lease term, or not to exercise an option previously included in its determination of the lease term.
At the commencement date, the Company recognises a right-of-use asset classified within property, plant and equipment and a lease liability classified separately on the statement of financial position.
Short-term leases and leases of low-value assets
The Company has elected not to recognise right-of-use assets and lease liabilities for short-term leases that have a lease of 12 months or less and leases of low-value assets of USD 5,000 or less when new. The Company recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term.
Right-of-use assets
The right-of-use asset is initially recognised at cost comprising of:
a) the amount of the initial measurement of the lease liability;
b) any lease payments made at or before the commencement date, less any lease incentives received;
c) any initial direct costs incurred by the Company; and d) an estimate of costs to be incurred by the Company in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease. These costs are recognised as part of the cost of the right-of-use asset when the Company incurs an obligation for these costs. The obligation for these costs is incurred either at the commencement date or as a consequence of having used the underlying asset during a particular period.
After initial recognition, the Company amortises the right-of-use asset over the term of the lease. In addition the right of use asset is periodically reduced by impairment losses, if any, and adjusted for certain re-measurements of the lease liability.
Lease liability
The lease liability is initially recognised at the present value of the lease payments that are not paid at the commencement date. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the Company uses its incremental borrowing rate.
After initial recognition, the lease liability is measured by (a) increasing the carrying amount to reflect interest on the lease liability; (b) reducing the carrying amount to reflect the lease payments made; and (c) remeasuring the carrying amount to reflect any reassessment or lease modifications or to reflect revised in-substance fixed lease payments.
Where, (a) there is a change in the lease term as a result of the reassessment of certainty to exercise an option, or not to exercise a termination option as discussed above; or (b) there is a change in the assessment of an option to purchase the underlying asset, assessed considering the events and circumstances in the context of a purchase option, the Company remeasures the lease liabilities to reflect changes to lease payments by discounting the revised lease payments using a revised discount rate. The Company determines the revised discount rate as the interest rate implicit in the lease for the remainder of the lease term, if that rate can be readily determined, or its incremental borrowing rate at the date of reassessment, if the interest rate implicit in the lease cannot be readily determined.
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Where, (a) there is a change in the amounts expected to be payable under a residual value guarantee; or (b) there is a change in future lease payments resulting from a change in an index or a rate used to determine those payments, including a change to reflect changes in market rental rates following a market rent review, the Company remeasures the lease liabilities by discounting the revised lease payments using an unchanged discount rate, unless the change in lease payments results from a change in floating interest rates. In such case, the Company uses a revised discount rate that reflects changes in the interest rate.
The Company recognises the amount of the re-measurement of the lease liability as an adjustment to the right-of-use asset. Where the carrying amount of the right-of-use asset is reduced to zero and there is a further reduction in the measurement of the lease liability, the Company recognises any remaining amount of the re-measurement in the statement of comprehensive income (within profit and loss).
The Company accounts for a lease modification as a separate lease if both:
a) the modification increases the scope of the lease by adding the right to use one or more underlying assets; and
b) the consideration for the lease increases by an amount commensurate with the stand-alone price for the increase in scope and any appropriate adjustments to that stand-alone price to reflect the circumstances of the particular contract.
Critical Accounting Estimates
Certain of our accounting policies require that management apply significant judgments in defining the appropriate assumptions integral to financial estimates. On an ongoing basis, management reviews the accounting policies, assumptions, estimates and judgments to ensure that our financial statements are presented fairly and in accordance with IFRS. Judgments are based on historical experience, terms of existing contracts, industry trends and information available from outside sources, as appropriate. However, by their nature, judgments are subject to an inherent degree of uncertainty, and, therefore, actual results could differ from our estimates. We describe our significant accounting policies in Note 2.5 — significant accounting estimates and judgements, of the Notes to Financial Statements included in this report. Of particular significance are the following estimates:
Useful lives of property, plant and equipment
The Company’s management determines the estimated useful lives of its property, plant and equipment for calculating depreciation. This estimate is determined after considering the expected usage of the asset or physical wear and tear and the impact of expected residual value. Management reviews the useful lives annually and the future depreciation charge would be adjusted where management believes that the useful lives differ from previous estimates. The depreciation period of the right-of-use asset has been determined to be over the lease term on the basis that the land is expected to be used for the whole period of the lease considering the existing assets and future expansion on the land.
Discount rate used for initial measurement of lease liability
The Company, as a lessee, measures the lease liability at the present value of the unpaid lease payments at the commencement date. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the Company on initial recognition of the lease uses its incremental borrowing rate. Incremental borrowing rate is the rate of interest that the Company would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use assets in similar economic environment. The Company determined its incremental borrowing rate at 9.5% in respect of the lease liability.
Decommissioning liabilities
As part of the land lease agreement between FOIZ and the Company, the Company has a legal obligation to remove the plant at the end of its lease term. The Company initially records a provision for asset retirement obligations at the best estimate of the present value of the expenditure required to settle the obligation at the time a legal (or constructive) obligation is incurred, if the liability can be reliably estimated. When the provision is initially recorded, the carrying
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amount of the related asset is increased by the amount of the liability. Provisions are adjusted at each balance sheet date to reflect the current best estimate. The unwinding of the discount is recognised as finance cost. The Company’s operating assets generally consist of storage tanks and related facilities. These assets can be used for an extended period of time as long as they are properly maintained and/or upgraded. It is the Company’s current intent to maintain its assets and continue making improvements to those assets based on technological advances. There is no data or information that can be derived from past practice, industry practice or the Company’s intentions that could be used to make a reliable estimate of the decommissioning cost. Accordingly, the Company has not recorded a liability or corresponding asset as the amounts of such potential future costs are not reliably determinable.
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MANAGEMENT OF PUBCO FOLLOWING THE BUSINESS COMBINATION
As contemplated by the Business Combination Agreement, Pubco’s board of directors following the Business Combination will be comprised of six directors.
Our Amended and Restated Memorandum and Articles of Association will provide that persons standing for election as directors at a duly constituted general meeting with requisite quorum shall be elected by an Ordinary Resolution as a matter of Cayman Islands law.
The officers of BPGIC will remain the same following the transaction, and will also be appointed as executive officers of Pubco following the transactions, as set forth in the table below.
The following sets forth certain information concerning the persons who are expected to serve as Pubco’s directors and executive officers following the consummation of the Business Combination:
Directors and Executive Officers |
Age |
Position/Title |
||
Dr. Yousef Alassaf |
58 |
Chairman |
||
Abu Bakar Chowdhury |
53 |
Director |
||
Nicolaas Paardenkooper |
56 |
Chief Executive Officer and Director |
||
Saleh Yammout |
31 |
Chief Financial Officer and Director |
||
Sa’eb El-Zein |
60 |
Director |
||
Dr. Simon Madgwick |
51 |
Director |
||
Lina S. Saheb |
36 |
Chief Strategy Officer |
||
Faisal Selim |
45 |
Chief Marketing Officer |
Biographical information concerning the directors and executive officers listed above is set forth below.
Dr. Yousef Alassaf
Dr. Yousef Alassaf will be the Chairman of the board and Chair of the Nomination Committee. Dr. Alassaf joined the Company in October 2018. Dr. Alassaf is also the President of the Rochester Institute of Technology (Dubai). Prior to this, Dr. Alassaf held a range of other academic positions over the last 30 years, most recently as the Dean of the College of Engineering at the American University of Sharjah (from 2006 to 2013), which he joined as an Associate Professor in 1991. Dr. Alassaf started his academic career as a Research and Teaching Assistant at Oxford University from 1985 to 1987. Dr. Alassaf holds a BSc from Sussex University in Electrical Engineering, a PhD from Oxford University and completed the Executive Leadership Certificate Program from Cornell University in 2008.
Abu Bakar Chowdhury
Mr. Chowdhury is the Managing Director and Chief Financial Officer at ASMA Capital Partners B.S.C.(c). He is a member of the Management Committee and is responsible for the finance function at ASMA Capital. He is also a member of the Board of Directors of a number of investee companies of the Fund. Previously, Mr. Chowdhury was a Managing Partner at EMP Bahrain and was responsible for managing IDBIF I. Prior to EMP Bahrain, Mr. Chowdhury was with Credit Suisse and Deutsche Bank where he was responsible for managing and structuring Infrastructure and Asset-Backed Investments.
Nicolaas Paardenkooper
Nicolaas Paardenkooper is the Chief Executive Officer of BPGIC and will hold the same position with Pubco. Mr. Paardenkooper joined BPGIC in May 2017. Mr. Paardenkooper has over 30 years of experience in the oil and gas mid and downstream sector. Prior to joining the Company he was Terminal Manager at Oiltanking Odfjell Terminal, Oman since October 2014. Prior to that, Mr. Paardenkooper worked in various positions at Emirates National Oil Company from 2010 to 2014 (including as Manager Terminal UAE and Operations Manager) and worked for 21 years at Vopak in various roles. Mr. Paardenkooper started his career in various nautical positions on several types of vessels, mainly tankers, and has a nautical and maritime educational background, complemented with dedicated oil and gas mid and downstream diplomas.
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Saleh Yammout
Saleh Yammout is the Chief Financial Officer of BPGIC and will hold the same position with Pubco. Mr. Yammout joined the Company in October 2018. Mr. Yammout served as the Vice President (Finance & Administration) at the Rochester Institute of Technology (Dubai), having joined in 2014. Prior to this, he was a Senior Consultant at PwC from 2012 to 2014, and an Analyst at Al Hilal Bank from 2011 to 2012. Mr. Yammout holds a BSc in Economics with a concentration on International Relations from the Rochester Institute of Technology in New York.
Sa’eb El-Zein, Independent Non-Executive Director
Saeb El-Zein will be an Independent Non-Executive Director of Pubco and Chair of the Audit Committee. Mr. El-Zein joined the Company in October 2018. Mr. El-Zein is also an independent director of BLOM Bank S.A.L, an independent director of BLOMINVEST Bank S.A.L, and a member of the Board Risk Management and the Consulting, Strategy and Corporate Governance Committee of both. Mr. El-Zein is also a member of the Nomination and Remuneration Committee of BLOMINVEST Bank S.A.L. He was the advisor and Board Member of Spinnaker Global Emerging Markets Fund. From 2008 to 2018 he was the Managing Partner for Spinnaker Capital (Middle East). Mr. El-Zein has nearly forty years of experience in the global financial industry. From 1994 to 2008, he worked at Credit Suisse (London), becoming a Managing Director in the Investment Banking and Capital Markets divisions. Prior to this, he was a Director at Deutsche Bank AG (London) from 1988 to 1994 and worked as a portfolio manager at Arab International Finance (London) from 1982 to 1988. Mr. El-Zein started his career as an Analyst at the Central Bank of Lebanon. Mr. El-Zein holds a BBA and an MBA from the American University of Beirut.
Dr. Simon Madgwick, Independent Non-Executive Director
Dr. Simon Madgwick will be an Independent Non-Executive Director of Pubco and a member of the Audit and Compensation Committees. Dr. Madgwick joined the Company in October 2018. Dr. Madgwick is also a partner of Portinate Consulting since 2017 and managing director of Protank Ltd since 2014. Prior to joining the Company, Dr. Madgwick was the Group Director of Strategy at LBC Tank Terminals Group until 2014, before which he was the Director of Asset Management at the Challenger Infrastructure Fund, a Principal in the London-based private equity team of Nikko Principal Investments Ltd and a Senior Manager at Celerant Consulting. Dr. Madgwick started his career at Pall Europe as an Engineer and Manager between 1990 and 1998. Dr. Madgwick holds a Bachelor of Engineering in Manufacturing Systems Engineering from the University of Portsmouth and a PhD in Change Management from Cranfield University. He also holds a qualification in corporate finance regulation from the Securities and Investment Institute.
Lina Saheb, Chief Strategy Officer
Lina Saheb is the Chief Strategy Officer for BPGIC and will hold the same position with Pubco. Ms. Saheb joined BPGIC in 2013. Prior to joining BPGIC, Ms. Saheb worked with the initial shareholders of BPGIC on many different ventures including which establishment of BPGIC in Fujairah in 2010. Ms. Saheb has a Bachelor’s degree in Software Engineering from Mansour University, and a finished a course in Banking and Finance from Emirates College of Technology and is pursuing a Master’s degree in International Business Law at Paris Sorbonne University Abu Dhabi, in the United Arab Emirates.
Faisal Selim, Chief Marketing Officer
Faisal Selim will become the Chief Marketing Officer for BPGIC in December 2019 and will hold the same position with Pubco. Mr. Selim holds a Bachelor of Commerce from Al Shams University and is a Certified Public Accountant. From 2011 to 2019 he served as a CFO Consultant for Mega Group LLC. Prior to this, he worked for Al Brooge Securities as a Finance Manager from 2006 to 2010 and as a Documentation Control Manager-Credit Administration for Abu Dhabi Commercial Bank from 2004 to 2006. Mr. Selim served as a Credit Policy Supervisor at First Gulf Bank from 2000 to 2004 and at Oriflame from 1999 to 2000.
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Family Relationships
There are no family relationships between any of the executive officers and directors.
Independence of Directors
As a result of its Ordinary Shares being listed on NASDAQ following consummation of the Business Combination, Pubco will adhere to the rules of NASDAQ in determining whether a director is independent. The board of directors of Pubco has consulted, and will consult, with its counsel to ensure that the board’s determinations are consistent with those rules and all relevant securities and other laws and regulations regarding the independence of directors. The NASDAQ listing standards define an “independent director” as a person, other than an executive officer of a company or any other individual having a relationship which, in the opinion of the issuer’s board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.
Board Leadership Structure and Role in Risk Oversight
Upon consummation of the Business Combination, Dr. Yousef Alassaf will be appointed as Chairman of the Board and Nicolaas Paardenkooper as Chief Executive Officer of Pubco. Pubco has determined that this structure, with separate Chairman and CEO roles, is in the best interests of Pubco at this time. A number of factors support this leadership structure, including, among others:
• The planned separation of the Chairman and CEO roles will allow the CEO to focus his time and energy on operating and managing Pubco and BPGIC and leverage the experience and perspectives of the Chairman.
• The Chairman serves as a liaison between the board and senior management but having an independent chairman also enables non-management Directors to raise issues and concerns for Board consideration without immediately involving management.
• The Chairman sets the agenda for, and presides over, board meetings and independent sessions and coordinates the work of the committees of our Board, providing independent oversight and streamlining the CEO’s duties.
Pubco also believes in the importance of independent oversight. Pubco will look to ensure that this oversight is truly independent and effective through a variety of means.
Meetings and Committees of the Board of Directors
Upon consummation of the Business Combination, Pubco will establish a separately standing audit committee and compensation committee.
Audit Committee Information
Effective upon consummation of the Business Combination, Pubco will establish an audit committee comprised of independent directors. It is expected that the audit committee will initially consist of Sa’ab El-Zein, Dr. Simon Madgwick and Abu Bakar Chowdhury. Each of the members of the audit committee will be independent under the applicable NASDAQ listing standards. The audit committee will have a written charter. The purpose of the audit committee will be, among other things, to appoint, retain, set compensation of, and supervise Pubco’s independent accountants, review the results and scope of the audit and other accounting related services and review Pubco’s accounting practices and systems of internal accounting and disclosure controls.
Financial Experts on Audit Committee
The audit committee will at all times be composed exclusively of “independent directors,” as defined for audit committee members under the NASDAQ listing standards and the rules and regulations of the SEC, who are “financially literate,” as defined under NASDAQ’s listing standards. NASDAQ’s listing standards define “financially literate” as being able to read and understand fundamental financial statements, including a company’s balance sheet, income statement
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and cash flow statement. In addition, Pubco will be required to certify to NASDAQ that the committee has, and will continue to have, at least one member who has past employment experience in finance or accounting, requisite professional certification in accounting, or other comparable experience or background that results in the individual’s financial sophistication.
Mr. Saeb El-Zein will serve as a financial expert on the audit committee.
Compensation Committee Information
Effective upon consummation of the Business Combination, the board of directors of Pubco will establish a compensation committee. It is expected that the Compensation Committee will initially consist of Dr. Yousef Alassaf, Dr. Simon Madgwick and Abu Bakar Chowdhury. The compensation committee will have a written charter. The purpose of the compensation committee will be to review and approve compensation paid to Pubco’s officers and directors and to administer Pubco’s incentive compensation plans, including authority to make and modify awards under such plans.
The Compensation Committee assists the Board in determining its responsibilities in relation to remuneration, including, amongst other matters, making recommendations to the Board on the Company’s policy on executive compensation, determining the individual remuneration and benefits package of each of the Executive Directors and recommending and monitoring the remuneration of senior management below Board level.
The Compensation Committee Charter provides that the Compensation Committee should consist of at least three members.
The membership of the Compensation Committee includes two Independent Non-Executive Directors (Dr. Simon Madgwick and Abu Bakar Chowdhury). The chairman of the Compensation Committee is Dr. Simon Madgwick.
The Compensation Committee will meet formally three times a year and otherwise as required.
Corporate Governance Practices
As a foreign private issuer, Pubco may generally follow home country practice with respect to certain matters of corporate governance in lieu of the comparable governance provisions of the NASDAQ Listing Rules, except for certain matters including the composition and responsibilities of the audit committee and the independence of its members within the meaning of the rules and regulations of the SEC.
Pubco intends to follow home country practice in lieu of NASDAQ corporate governance requirements with respect to the following NASDAQ requirements:
• Executive Sessions. We will not be required to and, in reliance on home country practice, we may not, comply with certain NASDAQ rules requiring Pubco’s independent directors to meet in regularly scheduled executive sessions at which only independent directors are present. Pubco will follow Cayman Islands practice which does not require independent directors to meet regularly in executive sessions separate from the full board of directors.
• Nomination of Directors. Pubco’s director nominees may not be selected or recommended for the board of director’s selection by either (i) independent directors constituting a majority of the board’s independent directors in a vote in which only independent directors participate, or (ii) a nominations committee comprised solely of independent directors, as required under NASDAQ rules. Pubco will follow Cayman Islands practice which does not require director nominations to be made or recommended solely by independent directors. Further, Pubco will not have a formal written charter or board resolution addressing the director nominations process. Pubco will follow Cayman Islands practice which does not require Pubco to have a formal written charter or board resolution addressing the director nominations process.
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• Proxy Statements. We will not be required to and, in reliance on home country practice, we may not, comply with certain NASDAQ rules regarding the provision of proxy statements for general meetings of shareholders. Pubco will follow Cayman Islands practice which does not impose a regulatory regime for the solicitation of proxies.
• Shareholder Approval. Pubco will not be required to and, in reliance on home country practice, it does not intend to, comply with certain NASDAQ rules regarding shareholder approval for certain issuances of securities under NASDAQ Rule 5635. In accordance with the provisions of Pubco’s Amended and Restated Memorandum and Articles of Association, Pubco’s board of directors is authorized to issue securities, including ordinary shares, warrants and convertible notes.
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Twelve Seas Executive Officer and Director Compensation
Twelve Seas is an “emerging growth company,” as defined in the Jumpstart our Business Startups Act of 2012, or JOBS Act, and the following is intended to comply with the scaled disclosure requirements applicable to emerging growth companies. No executive officer or director of Twelve Seas has received any compensation for services rendered to Twelve Seas. No fees of any kind, including finders, consulting or other similar fees, will be paid to any of Twelve Seas’ existing shareholders, including its officers and directors, or any of their respective affiliates, prior to, or for any services they render in order to effectuate, the consummation of the Business Combination. Since its formation, Twelve Seas has not granted any stock options, stock appreciation rights, or any other equity or equity-based awards under long-term incentive plans to any of its executive officers or directors.
Twelve Seas’ executive officers are reimbursed for any out-of-pocket expenses incurred in connection with activities on Twelve Seas’ behalf such as identifying potential target businesses and performing due diligence on suitable business combinations. There is no limit on the amount of these out-of-pocket expenses and there will be no review of the reasonableness of the expenses by anyone other than Twelve Seas’ board of directors, which includes persons who may seek reimbursement, or a court of competent jurisdiction if such reimbursement is challenged. Because of the foregoing, Twelve Seas generally does not have the benefit of independent directors examining the propriety of expenses incurred on its behalf and subject to reimbursement. As of the date of this proxy statement/prospectus, all expenses of Twelve Seas officers and directors relating to the Business Combination have been paid by Twelve Seas and there are no unpaid reimbursable expenses.
BPGIC Executive Officer and Director Compensation
Compensation
In the year ended December 31, 2018, USD677,301 was paid as remuneration to the Senior Managers in their capacity as executive officers.
Name |
Fees/basic
|
Bonus
|
Benefits
|
Total
|
||||
Executive Officers |
||||||||
Nicolaas Paardenkooper(1) |
130,683 |
78,410 |
141,029 |
350,122 |
||||
Lina S. Saheb |
81,677 |
— |
144,405 |
226,082 |
||||
Douglas MacLennan(2) |
25,411 |
— |
29,042 |
54,453 |
||||
Kamal Goyal(2) |
22,990 |
— |
23,654 |
46,644 |
____________
(1) Mr. Paardenkooper joined BPGIC in June 2017. In July 2018 he was paid a bonus of USD 78,410 upon completion of one full year of service.
(2) As of June 30, 2019, Mr. Douglas MacLennan and Mr. Kamal Goyal were no longer employed by Brooge Petroleum and Gas Investment Company FZE.
Other than end of service gratuity amounts required to be set aside pursuant to UAE labor laws, at December 31, 2018 no amounts were set aside or accrued by BPGIC to provide pension, retirement or other benefits to the Directors or the Senior Managers.
Pubco Executive Officer and Director Compensation Following the Business Combination
The policies of Pubco with respect to the compensation of its executive officers and following the Business Combination will be administered by Pubco’s board in consultation with its compensation committee (as described
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above). The compensation policies followed by Pubco will be intended to provide for compensation that is sufficient to attract, motivate and retain executives of BPGIC and potential other individuals and to establish an appropriate relationship between executive compensation and the creation of shareholder value. To meet these goals, the compensation committee will be charged with recommending executive compensation packages to Pubco’s board of directors.
It is anticipated that performance-based and equity-based compensation will be an important foundation in executive compensation packages as Pubco believes it is important to maintain a strong link between executive incentives and the creation of shareholder value. Pubco believes that performance and equity-based compensation can be an important component of the total executive compensation package for maximizing shareholder value while, at the same time, attracting, motivating and retaining high-quality executives. Following consummation of the Business Combination, Pubco will adopt a long-term incentive plan which will reflect what Pubco believes is a focus on performance- and equity-based compensation. Since Pubco will not have a compensation committee until completion of the Business Combination, it has not yet adopted any formal guidelines for allocating total compensation between equity compensation and cash compensation for executives hired in the future.
Pubco intends to be competitive with other similarly situated companies in its industry following completion of the Business Combination.
The compensation decisions regarding Pubco’s executives will be based on Pubco’s need to attract individuals with the skills necessary for Pubco to achieve its business plan, to reward those individuals fairly over time, and to retain those individuals who continue to perform at or above Pubco’s expectations.
Since Pubco’s compensation committee will not be formed until consummation of the Business Combination, Pubco has not adopted any formal or informal policies or guidelines for allocating compensation between long-term and currently paid out compensation, between cash and non-cash compensation, or among different forms of compensation.
In addition to the guidance provided by its compensation committee, Pubco may utilize the services of third parties from time to time in connection with the hiring and compensation awarded to executive employees. This could include subscriptions to executive compensation surveys and other databases.
Pubco’s compensation committee will be charged with performing an annual review of Pubco’s executive officers’ cash compensation and equity holdings to determine whether they provide adequate incentives and motivation to executive officers and whether they adequately compensate the executive officers relative to comparable officers in other companies.
Compensation Components
Base Salary. Upon consummation of the Business Combination, Pubco intends to preserve the cash compensation of its executive officers, until the compensation committee has adequate opportunity to assess its executive’s compensation. Pubco will seek to maintain base salary amounts at or near the industry norms, while avoiding paying amounts in excess of what it believes is necessary to motivate executives to meet corporate goals. It is anticipated that base salaries will generally be reviewed annually, subject to terms of employment agreements, and that the compensation committee and board will seek to adjust base salary amounts to realign such salaries with industry norms after taking into account individual responsibilities, performance and experience.
Annual Bonuses. Pubco intends to utilize cash incentive bonuses for executives to focus them on achieving key operational and financial objectives within a yearly time horizon. Near the beginning of each year, the board, upon the recommendation of the compensation committee and subject to any applicable employment agreements, will determine performance parameters for appropriate executives. At the end of each year, the board and compensation committee will determine the level of achievement for each corporate goal.
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Equity Awards. Pubco intends to establish an equity incentive plan to incentivize its employees.
Severance Benefit. Pubco currently has no severance benefits plan. Pubco may consider the adoption of a severance plan for executive officers and other employees in the future.
Director Compensation. Pubco currently does not have a definitive compensation plan for its future directors. Pubco, working with the compensation committee, anticipates setting director compensation at a level comparable with those directors with similar positions at comparable companies.
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BENEFICIAL OWNERSHIP OF SECURITIES
Security Ownership of Certain Beneficial Owners and Management of Twelve Seas
The following table sets forth information regarding the beneficial ownership of ordinary shares of Twelve Seas as of the date of this proxy statement/prospectus based on information obtained from the persons named below:
• each person known by Twelve Seas to be the beneficial owner of more than 5% of Twelve Seas’ outstanding ordinary shares;
• each of Twelve Seas’ executive officers and directors that beneficially owns ordinary shares of Twelve Seas; and
• all Twelve Seas’ executive officers and directors as a group.
Unless otherwise indicated, Twelve Seas believes that all persons named in the table have sole voting and investment power with respect to all ordinary shares beneficially owned by them.
In the table below, percentage ownership is based on 26,779,000 ordinary shares outstanding. Voting power represents the voting power of the ordinary shares owned beneficially by such person. On all matters to be voted upon, the holders of the ordinary shares vote together as a single class.
Name and Address of Beneficial Owner(1) |
Number
|
% of
|
||
Twelve Seas Sponsors I LLC(2) |
5,604,000 |
20.9 |
||
Neil Richardson(3) |
— |
0 |
||
Dimitri Elkin(3) |
5,604,000 |
20.9 |
||
Stephen A. Vogel(3) |
— |
0 |
||
Bryant B. Edwards(3) |
— |
0 |
||
Stephen N. Cannon(3) |
— |
0 |
||
Gregory Stoupnitzky(4) |
50,000 |
* |
||
Suneel G. Kaji |
50,000 |
* |
||
All executive officers and directors as a group (7 individuals) |
5,704,000 |
21.3 |
||
Polar Asset Management LLC(5) |
1,937,601 |
7.24 |
____________
* Less than 1%.
(1) Unless otherwise noted, the business address of each of the following entities or individuals is 135 E 57th St. 18th Floor, New York, New York 10022.
(2) Interests shown consist of currently held 5,075,000 Founder Shares and 529,000 private shares. Does not reflect (i) the forfeiture of 1,035,000 Founder Shares at Closing, (ii) the 50,000 Private Placement Units issuable if the Sponsor elects to convert the Sponsor loan at Closing and (iii) shares issuable at Closing upon conversion of the Rights contained in the Private Placement Units.
(3) These shares represent the shares held by our Sponsor. Currently, Dimitri Elkin, our Chief Executive Officer, is the sole managing member of our Sponsor. Consequently, he may be deemed the beneficial owner of the shares held by our Sponsor and has sole voting and dispositive control over such securities. Mr. Elkin disclaims beneficial ownership of any shares other than to the extent he may have a pecuniary interest therein, directly or indirectly. In addition, each of Bryant B. Edwards and Stephen A. Vogel has the right to designate a managing member in addition to Mr. Elkin or to replace Mr. Elkin, pursuant to the operating agreement of the Sponsor. Each of Neil Richardson, Stephen A. Vogel, Bryant B. Edwards and Stephen N. Cannon is a member of Sponsor. All such individuals disclaim beneficial ownership of any shares other than to the extent they may have a pecuniary interest therein.
(4) Gregory A. Stoupnitzky, one of our directors, holds such interests through CIS Capital LLC, of which he is the sole managing member and has sole voting and dispositive power over the shares held thereby.
(5) According to a Schedule 13G filed with the SEC on February 11, 2019, Polar Asset Management Partners Inc., a company incorporated under the laws of Ontario, Canada serves as the investment advisor to Polar Multi-Strategy Master Fund, a Cayman Islands exempted company (“PMSMF”) and certain managed accounts (together with PMSMF, the “Polar Vehicles”), with respect to the ordinary shares of the Company directly held by the Polar Vehicles. The address of the principal business office of the reporting person is 401 Bay Street, Suite 1900, PO Box 19, Toronto, Ontario M5H 2Y4, Canada.
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The table above does not include the ordinary shares underlying the Public Warrants, or the private placement Warrants included in the Private Placement Units held or to be held by Twelve Seas’ officers or Sponsor, because these securities are not exercisable within 60 days of this proxy statement/prospectus.
Security Ownership of BPGIC
There are issued and outstanding 100 shares of BPGIC. BPGIC’s shares are held by one shareholder, and are not publicly traded.
Security Ownership of Certain Beneficial Owners and Management of Pubco
The following tables sets forth information regarding the beneficial ownership of Pubco Ordinary Shares as of the Record Date and immediately following consummation of the Business Combination by:
• each person known by Pubco to be the beneficial owner of more than 5% of Pubco’s outstanding ordinary shares upon the consummation of the Business Combination;
• each of Twelve Seas’ current executive officers and directors;
• all of Twelve Seas’ current executive officers and directors as a group;
• each person who will become an executive officer or a director of Pubco upon consummation of the Business Combination; and
• all of Pubco’s executive officers and directors as a group upon the consummation of the Business Combination.
Pre-Business Combination |
Post-Business Combination |
||||||||||
Name and Address of Beneficial Owner |
Number
|
% of Class |
Number
|
% of Class(16) |
|||||||
Directors and Executive Officers of Twelve Seas |
|
|
|
||||||||
Neil Richardson |
— |
0 |
|
— |
|
0 |
|
||||
Dimitri Elkin |
— |
0 |
|
4,621,900 |
|
3.6 |
% |
||||
Stephen A. Vogel |
— |
0 |
|
— |
|
0 |
|
||||
Bryant B. Edwards |
— |
0 |
|
— |
|
0 |
|
||||
Stephen N. Cannon |
— |
0 |
|
— |
|
0 |
|
||||
Gregory Stoupnitzky |
— |
0 |
|
50,000 |
|
* |
|
||||
Suneel G. Kaji |
— |
0 |
|
50,000 |
|
* |
|
||||
All executive officers and directors as a group (7 individuals) |
— |
0 |
|
4,721,900 |
|
3.7 |
% |
||||
Directors and Executive Officers of Pubco Pre-Business Combination |
|
|
|
||||||||
Meclomen Maramot |
1 |
100 |
% |
— |
|
0 |
|
||||
Five Percent Holders of Pubco Pre-Business Combination |
|
|
|
||||||||
Meclomen Maramot |
1 |
100 |
% |
— |
|
0 |
|
||||
Directors and Exeuctive Officers of Pubco Post-Business Combination |
|
|
|
||||||||
Dr. Yousef Alassaf |
— |
0 |
|
— |
|
0 |
|
||||
Abu Bakar Chowdhury |
— |
0 |
|
— |
|
0 |
|
||||
Nicolaas Paardenkooper |
— |
0 |
|
100,000,000 |
(1) |
78.2 |
% |
||||
Saleh Yammout |
— |
0 |
|
— |
|
0 |
|
||||
Sa’eb El-Zein |
— |
0 |
|
— |
|
0 |
|
||||
Dr. Simon Madgwick |
— |
0 |
|
— |
|
0 |
|
||||
Lina S. Saheb |
— |
0 |
|
— |
|
0 |
|
||||
Faisal Selim |
— |
0 |
|
— |
|
0 |
|
||||
All executive officers and directors as a group (8 individuals) |
— |
0 |
|
100,000,000 |
|
78.2 |
% |
200
Pre-Business Combination |
Post-Business Combination |
||||||||
Name and Address of Beneficial Owner |
Number
|
% of Class |
Number
|
% of Class(16) |
|||||
Five Percent Holders Post-Business Combination |
|
||||||||
[BPGIC Holdings Limited](2) |
— |
— |
100,000,000 |
78.2 |
% |
||||
[SBD International Limited Partnership](3) |
— |
— |
60,000,000 |
46.9 |
% |
||||
[S Holdings Limited](4) |
— |
— |
60,000,000 |
46.9 |
% |
||||
[General Investments](5) |
— |
— |
60,000,000 |
46.9 |
% |
||||
Salman Dawood Salman Al-Ameri(6) |
— |
— |
69,800,000 |
54.6 |
% |
||||
[HBS Investments Limited Partnership](7) |
— |
— |
9,800,000 |
7.7 |
% |
||||
[O2 Investments Limited)(8) |
— |
— |
9,800,000 |
7.7 |
% |
||||
[H Capital Limited Partnership](9) |
— |
— |
10,200,000 |
8.0 |
% |
||||
[Gyan Investments Limited](10) |
— |
— |
10,200,000 |
8.0 |
% |
||||
[Hind Mohamed Muktar Ahmed](11) |
— |
— |
10,200,000 |
8.0 |
% |
||||
[Cayman LP 1](12) |
— |
— |
20,000,000 |
15.6 |
% |
||||
[Cayman Limited 1](13) |
— |
— |
20,000,000 |
15.6 |
% |
||||
[Cayman Trust 1](14) |
— |
— |
20,000,000 |
15.6 |
% |
||||
Twelve Seas Sponsors I LLC |
— |
— |
4,621,900 |
3.6 |
% |
||||
[ASMA Capital](15) |
— |
— |
8,333,333 |
6.5 |
% |
||||
Polar Asset Management LLC |
— |
— |
1,937,601 |
1.5 |
% |
____________
* less than 1%.
(1) Represents the shares that will be held by BPGIC Holdings Limited, following the Business Combination. Mr. Paardenkooper will be the CEO of BPGIC Holdings Limited, consequently, he may be deemed the beneficial owner of 100% of the shares held by BPGIC Holdings Limited. Mr. Paardenkooper disclaims beneficial ownership of any shares other than to the extent he may have a pecuniary interest therein.
(2) 20,000,000 Ordinary Shares beneficially owned by BPGIC Holdings Limited will be held in escrow and subject to forfeiture until Pubco satisfies certain milestones.
(3) [SBD International Limited Partnership] holds a controlling interest in BPGIC Holdings Limited. Its pro rata percentage of the Pubco Ordinary Shares will be 60%, i.e., 60,000,000 Ordinary Shares. Similarly, [SBD International Limited Partnership’s] pro rata portion of the Ordinary Shares held in escrow will be 60%.
(4) Represents the interest of SBD International Limited Partnership in the shares held by BPGIC Holdings Limited. Following the Business Combination, S Holdings Limited will be general partner of SBD International Limited Partnership, consequently, it may be deemed the beneficial owner of 60% of the shares held by BPGIC Holdings Limited. S Holdings Limited disclaims beneficial ownership of any shares other than to the extent it may have a pecuniary interest therein.
(5) Represents the interest of SBD International Limited Partnership in the shares held by BPGIC Holdings Limited. Following the Business Combination, General Investments will be sole shareholder of S Holdings Limited, the general partner of SBD International Limited Partnership, consequently, it may be deemed the beneficial owner of 60% of the shares held by BPGIC Holdings Limited. General Investments disclaims beneficial ownership of any shares other than to the extent it may have a pecuniary interest therein.
(6) Represents the interests of SBD International Limited Partnership and HBS Investments Limited Partnership in the shares held by BPGIC Holdings Limited. Following the Business Combination, Salman Dawood Salman Al-Ameri will be sole shareholder of General Investments (following the Business Combination, the sole shareholder of S Holdings Limited, the general partner of SBD International Limited Partnership) and the sole shareholder of O2 Investments Limited (following the Business Combination the general partner of HBS Investments Limited Partnership). Consequently, Mr. Al-Ameri may be deemed the beneficial owner of 69.8% of the shares held by BPGIC Holdings Limited. Mr. Al-Ameri disclaims beneficial ownership of any shares other than to the extent he may have a pecuniary interest therein.
(7) [HBS Investments Limited Partnership]’s pro rata portion of the Ordinary Shares held will be escrow is 9.8%.
(8) Represents the interests of HBS Investments Limited Partnership in the shares held by BPGIC Holdings Limited. Following the Business Combination, O2 Investments Limited will be general partner of HBS Investments Limited Partnership, consequently, it may be deemed the beneficial owner of 9.8% of the shares held by BPGIC Holdings Limited. O2 Investments Limited disclaims beneficial ownership of any shares other than to the extent it may have a pecuniary interest therein.
(9) [H Capital Limited Partnership]’s pro rata portion of the Ordinary Shares held will be escrow is 10.2%.
(10) Represents the interests of H Capital Limited Partnership in the shares held by BPGIC Holdings Limited. Following the Business Combination, Gyan Investments Limited is the general partner of H Capital Limited Partnership, consequently, it
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may be deemed the beneficial owner of 10.2% of the shares held by BPGIC Holdings Limited. Gyan Investments Limited disclaims beneficial ownership of any shares other than to the extent it may have a pecuniary interest therein.
(11) Represents the interest of H Capital Limited Partnership in the shares held by BPGIC Holdings Limited. Following the Business Combination, Mrs. Hind Mohamed Muktar Ahmed will be sole shareholder of Gyan Holdings Limited, the general partner of H Capital Limited Partnership, consequently, it may be deemed the beneficial owner of 10.2% of the shares held by BPGIC Holdings Limited. Mrs. Hind Mohamed Muktar Ahmed disclaims beneficial ownership of any shares other than to the extent she may have a pecuniary interest therein.
(12) [Cayman LP 1]’s pro rata portion of the Ordinary Shares held in escrow will be 20%.
(13) Represents the interests of [Cayman LP 1] in the shares held by BPGIC Holdings Limited. Following the Business Combination, [Cayman Limited 1] Investments Limited will be general partner of [Cayman LP 1], consequently, it may be deemed the beneficial owner of 20% of the shares held by BPGIC Holdings Limited. [Cayman Limited 1] disclaims beneficial ownership of any shares other than to the extent it may have a pecuniary interest therein.
(14) Represents the interest of [Cayman LP 1] in the shares held by BPGIC Holdings Limited. Following the Business Combination, [Cayman Trust 1] will be the sole shareholder of [Cayman Limited 1], the general partner of [Cayman LP 1], consequently, it may be deemed the beneficial owner of 20% of the shares held by BPGIC Holdings Limited. [Cayman Trust 1] disclaims beneficial ownership of any shares other than to the extent it may have a pecuniary interest therein.
(15) Following the Business Combination, [ASMA Capital] will hold convertible securities in BPGIC Holdings Limited that will entitle it to convert its securities in BPGIC Holdings Limited into 8,333,333 Ordinary Shares of Pubco that will be owned by BPGIC Holdings Limited.
(16) Based on 127,866,900 Ordinary Shares outstanding immediately after the Closing, which reflects: (i) the forfeiture of 1,035,000 Founder Shares by Initial Shareholders, (ii) the issuance of 52,900 shares underlying the Rights contained in the Private Placement Units, (iii) the issuance of 2,070,000 shares underlying the Rights contained in the Units, and (iv) the issuance of 100,000,000 shares to the Seller. Does not reflect the 50,000 Private Placement Units issuable if the Sponsor elects to convert the Sponsor loan at Closing.
At any time prior to the Meeting, during a period when they are not then aware of any material nonpublic information regarding Twelve Seas or its securities, the Twelve Seas Initial Shareholders, officers and directors as well as BPGIC and/or their affiliates, may enter into a written plan to purchase Twelve Seas securities pursuant to Rule 10b5-1 of the Exchange Act, and may engage in other public market purchases, as well as private purchases, of securities. The ownership percentages listed below do not include any such shares that may be purchased after the Record Date.
At any time prior to the Meeting, during a period when they are not then aware of any material nonpublic information regarding Twelve Seas or its securities, the Twelve Seas Initial Shareholders, officers and directors as well as BPGIC or BPGIC’s shareholders and/or their respective affiliates may purchase shares from institutional and other investors who vote, or indicate an intention to vote, against the Business Combination Proposal, or execute agreements to purchase such shares from them in the future, or they may enter into transactions with such persons and others to provide them with incentives to acquire ordinary shares of Twelve Seas or vote their shares in favor of the Business Combination Proposal. The purpose of such share purchases and other transactions would be to increase the likelihood of satisfaction of the requirements that the shareholders of Twelve Seas approve the Business Combination Proposal and the Merger Proposal, that Twelve Seas will have at least $5,000,001 of net tangible assets upon the consummation of the Business Combination after taking into account holders of Public Shares that properly demanded Redemption of their Public Shares into cash, when it appears that such requirements would otherwise not be met, and that Pubco and Twelve Seas will have Closing Net Cash of at least $125,000,000 as of the Closing taking into account Redemptions of Public Shares and the proceeds of any private placement. While the exact nature of any such incentives has not been determined as of the date of this proxy statement/prospectus, they might include, without limitation, arrangements to protect such investors or holders against potential loss in value of their shares, including the granting of put options and the transfer to such investors or holders of shares or Warrants owned by the Twelve Seas Initial Shareholders for nominal value.
Entering into any such arrangements may have a depressive effect on the ordinary shares of Twelve Seas. For example, as a result of these arrangements, an investor or holder may have Twelve Seas, BPGIC or their respective affiliates effectively purchase shares at a price lower than market and may therefore be more likely to sell the shares it owns, either prior to or immediately after the Meeting.
As of the date of this proxy statement/prospectus, there have been no such discussions and no agreements to such effect have been entered into with any such investor or holder. Twelve Seas will file a Current Report on Form 8-K to disclose arrangements entered into or significant purchases made by any of the aforementioned persons that would affect the vote on the proposals included herein or the Redemption threshold. Any such report will include descriptions of any arrangements entered into or significant purchases by any of the aforementioned persons.
202
Twelve Seas Related Party Transactions
Founders Shares
In December 2017, our Initial Shareholders purchased an aggregate of 4,312,500 ordinary shares, which we refer to throughout this proxy statement/prospectus as the “Founder Shares,” for an aggregate purchase price of $25,000, or approximately $0.006 per share. In December 2017, our Sponsor transferred 50,000 of such Founder Shares to each of Messrs. Stoupnitzky and Kaji at cost. On June 1, 2018, our Sponsor returned 1,437,500 ordinary shares to us for cancellation resulting in an aggregate of 2,875,000 Founder Shares being outstanding and held by our Initial Shareholders. On June 8, 2018, we effectuated a 1.5-for-1 dividend of our ordinary shares resulting in an aggregate of 4,312,500 Founder Shares outstanding and held by our Initial Shareholders. On June 19, 2018, we effectuated a 1.2-for-1 dividend of our ordinary shares resulting in an aggregate of 5,175,000 Founder Shares outstanding and held by our Initial Shareholders.
The 5,175,000 Founders Shares included an aggregate of up to 675,000 shares which were subject to forfeiture by the Sponsor to the extent that the underwriters’ over-allotment option was not exercised in full or in part so that the Sponsor would own, on an as-converted basis, 20.0% of Twelve Seas’ issued and outstanding shares after the Initial Public Offering (excluding the placement shares and representative shares). As a result of the underwriters’ election to exercise their over-allotment option in full on June 28, 2018, the 675,000 Founder Shares were no longer subject to forfeiture. However, the Initial Shareholders have agreed to forfeit 1,035,000 Founder Shares at Closing.
The Initial Shareholders have agreed that, subject to certain limited exceptions, 50% of their Founders Shares will not be transferred, assigned or sold until one year after the date of the consummation of a business combination or earlier if, subsequent to a business combination, the last sales price of Twelve Seas’ ordinary shares (or equivalent securities) equals or exceeds $12.50 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period, and the remaining 50% of its Founders Shares will not be transferred, assigned or sold until one year after the date of the consummation of a business combination.
Placement Units
Simultaneously with Twelve Seas’ Initial Public Offering, the Sponsor purchased an aggregate of 475,000 Private Placement Units at a price of $10.00 per Unit (for an aggregate purchase price of $4,750,000). In addition, on June 28, 2018, Twelve Seas consummated the sale of an additional 54,000 Private Placement Units at a price of $10.00 per Unit, which were purchased by the Sponsor, generating gross proceeds of $540,000. Each Private Placement Unit consists of one placement share, one placement Right and one placement Warrant. The proceeds from the Private Placement Units were added to the proceeds from Twelve Seas’ Initial Public Offering held in the trust account. If Twelve Seas does not complete a business combination by December 22, 2019, the proceeds of the sale of the Private Placement Units will be used to fund the Redemption of the Public Shares (subject to the requirements of applicable law) and the placement Rights and placement Warrants will expire worthless.
The Private Placement Units are identical to the Units sold in the Initial Public Offering except that the underlying placement Warrants: (i) are not be redeemable by us and (ii) may be exercised for cash or on a cashless basis, so long as they are held by the initial purchaser or any of their permitted transferees. The placement Warrants will be redeemable by us and exercisable by the holders on the same basis as the Warrants included in the Units sold in the Initial Public Offering if they are held by someone other than the initial purchasers or any of their permitted transferees. The initial purchasers have agreed not to transfer, assign or sell any of the Private Placement Units or their underlying securities, including the ordinary shares issuable upon conversion of the placement Rights or exercise of the placement Warrants (except to certain permitted transferees), until after the completion of Twelve Seas’ initial business combination.
Related Party Advances
As of December 31, 2018 and June 30, 2019, the amount due to related parties was $124,293 and $57,692, respectively. The amounts include unpaid reimbursements for travel and business expenses incurred by the directors and officers on behalf of Twelve Seas and accrued administrative service fees to an affiliate of the Sponsor.
203
For the period from November 30, 2017 through December 31, 2017, a related party, on behalf of the Sponsor, had advanced to Twelve Seas an aggregate of $46,500 in regards to the formation costs and costs associated with the Initial Public Offering. On May 22, 2018, the Sponsor advanced to Twelve Seas an additional $150,000. On June 1, 2018, two related parties, on behalf of the Sponsor, advanced to Twelve Seas an aggregate of $60,000. On June 18, 2018, the Sponsor advanced to Twelve Seas an additional $43,500. The loans were non-interest bearing, unsecured and due on demand. Twelve Seas repaid the Sponsor in full with $300,000 from the proceeds of the Initial Public Offering not placed in the trust account on June 22, 2018.
Administrative Services Agreement
Twelve Seas entered into an agreement whereby, commencing on June 20, 2018 through the earlier of the consummation of a business combination or its liquidation, Twelve Seas will pay the Sponsor a monthly fee of $10,000 for office space, utilities and administrative support. As of December 31, 2018 and June 30, 2019, Twelve Seas had a payable of $20,000 and $0, respectively, included in due to related parties, and incurred $63,000 and $0 for the administrative service fee for the year ended December 31, 2018 and six months ended June 30, 2019, respectively.
Related Party Loans
On April 4, 2019, Twelve Seas issued an unsecured promissory note in the principal amount of up to $500,000 to the Sponsor. Such note is non-interest bearing, unsecured and repayable in full on the earlier of the consummation of Twelve Seas’ business combination or its liquidation. The loan may also be converted into Units of the post-business combination entity at a price of $10.00 per Unit. On April 5, 2019, the Sponsor funded $200,000 of such note. As of August 21, 2019, the Sponsor funded an aggregate of $500,000 of such note.
Related Party Policy
Our Code of Ethics requires us to avoid, wherever possible, all related party transactions that could result in actual or potential conflicts of interests, except under guidelines approved by the board of directors (or the audit committee). Related-party transactions are defined as transactions in which (1) the aggregate amount involved will or may be expected to exceed $120,000 in any calendar year, (2) we or any of our subsidiaries is a participant, and (3) any (a) executive officer, director or nominee for election as a director, (b) greater than 5% beneficial owner of our ordinary shares, or (c) immediate family member of the persons referred to in clauses (a) and (b), has or will have a direct or indirect material interest (other than solely as a result of being a director or a less than 10% beneficial owner of another entity). A conflict of interest situation can arise when a person takes actions or has interests that may make it difficult to perform his or her work objectively and effectively. Conflicts of interest may also arise if a person, or a member of his or her family, receives improper personal benefits as a result of his or her position.
We also require each of our directors and executive officers to complete a directors’ and officers’ questionnaire that elicits information about related party transactions.
Our audit committee, pursuant to its written charter, is responsible for reviewing and approving related-party transactions to the extent we enter into such transactions. All ongoing and future transactions between us and any of our officers and directors or their respective affiliates will be on terms believed by us to be no less favorable to us than are available from unaffiliated third parties. Such transactions will require prior approval by our audit committee and a majority of our uninterested independent directors, or the members of our board who do not have an interest in the transaction, in either case who had access, at our expense, to our attorneys or independent legal counsel. We will not enter into any such transaction unless our audit committee and a majority of our disinterested “independent” directors determine that the terms of such transaction are no less favorable to us than those that would be available to us with respect to such a transaction from unaffiliated third parties. Additionally, we require each of our directors and executive officers to complete a directors’ and officers’ questionnaire that elicits information about related party transactions.
204
These procedures are intended to determine whether any such related party transaction impairs the independence of a director or presents a conflict of interest on the part of a director, employee or officer.
To further minimize potential conflicts of interest, we have agreed not to consummate a business combination with an entity which is affiliated with any of our Initial Shareholders unless we obtain an opinion from an independent investment banking firm that the Business Combination is fair to our unaffiliated shareholders from a financial point of view. Furthermore, in no event will any of our existing officers, directors or Initial Shareholders, or any entity with which they are affiliated, be paid any finder’s fee, consulting fee or other compensation prior to, or for any services they render in order to effectuate, the consummation of a business combination.
BPGIC Related Party Transactions and Policies
The Phase I & II Customer Al Brooge International Advisory LLC is partially owned by Mrs. Hind Muktar. Mrs. Hind Muktar will also be a limited partner of H Capital Limited Partnership and the sole shareholder of Gyan Investments Limited, the general partner of H Capital Limited Partnership. H Capital Limited Partnership will be the successor entity to a current indirect stockholder of BPGIC. The Phase I Customer Agreement provides for Al Brooge International Advisory LLC to lease all 14 Phase I storage tanks for a fixed fee per cubic meter per month payable in advance on a monthly basis. The Phase I Customer Agreement also provides that Al Brooge International Advisory LLC shall pay BPGIC a fixed fee per cubic meter per month for product throughput with a supplementary fee per metric ton of throughput in excess of agreed volume, a fixed blending fee per cubic meter per month, a fixed inter tank transfer fee per cubic meter per month, and a fixed heating fee of per cubic meter per month. Further, BPGIC is entitled to pass through any tariffs, additional charges or fees imposed by the Port of Fujairah. BPGIC is entitled to review and seek to amend the fees every two years. This adjustment can result only in the fees remaining constant or increasing. BPGIC believes that the terms of this agreement are no less favorable to BPGIC than would result from a similar transaction with an unaffiliated third party. Al Brooge International Advisory LLC is only allowed to sublease the Phase I storage tanks with BPGIC’s prior approval. H Capital Limited Partnership is a minority stakeholder in BPGIC and following a planned sale of Mrs. Muktar’s shares in Al Brooge International Advisory LLC, Al Brooge International Advisory LLC will no longer be a related party.
The Phase I & II Customer Al Brooge International Advisory LLC is partially owned by Mrs. Hind Muktar. Mrs. Hind Muktar will also be a limited partner of H Capital Limited Partnership and the sole shareholder of Gyan Investments Limited, the general partner of H Capital Limited Partnership. H Capital Limited Partnership will be the successor entity to a current indirect stockholder of BPGIC. The Phase II Customer Agreement provides for Al Brooge International Advisory LLC to lease all 8 Phase II storage tanks for a fixed fee per cubic meter per month payable in advance on a monthly basis. The Phase II Customer Agreement also provides that Al Brooge International Advisory LLC shall pay BPGIC a fixed fee per cubic meter per month for product throughput with a supplementary fee per metric ton of throughput in excess of agreed volume, a fixed blending fee per cubic meter per month, a fixed inter tank transfer fee per cubic meter per month, and a fixed heating fee per cubic meter per month. Further, BPGIC is entitled to pass through any tariffs, additional charges or fees imposed by the Port of Fujairah. BPGIC is entitled to review and seek to amend the fees every two years. This adjustment can result only in the fees remaining constant or increasing. BPGIC believes that the terms of this agreement are no less favorable to BPGIC than would result from a similar transaction with an unaffiliated third party. Al Brooge International Advisory LLC is only allowed to sublease the Phase II storage tanks with BPGIC’s prior approval. H Capital Limited Partnership is a minority stakeholder in BPGIC and following a planned sale of Mrs. Muktar’s shares in Al Brooge International Advisory LLC, Al Brooge International Advisory LLC will no longer be a related party.
205
DESCRIPTION OF PUBCO SECURITIES
The following description of the material terms of the share capital of Pubco following the transactions includes a summary of specified provisions of the Amended and Restated Memorandum and Articles of Association of Pubco that will be in effect upon completion of the transactions. This description is qualified by reference to Pubco’s Amended and Restated Memorandum and Articles of Association as will be in effect upon consummation of the transactions, copies of which are attached to this proxy statement/prospectus as Annex B and is incorporated in this proxy statement/prospectus by reference. References in this section to “we,” “us” or the “Company” refer to Pubco.
General
The Constitutional Documents of Pubco will provide for the issuance of 450,000,000 Ordinary Shares, par value $.0001, and 50,000,000 preferred shares, par value $.0001.
In the Merger, Pubco will issue its Ordinary Shares in exchange for the outstanding securities of Twelve Seas as follows:
• each ordinary share of Twelve Seas will be exchanged for one Ordinary Share of Pubco, except for Public Shares that have been converted into a pro rata portion of Twelve Seas’ Trust Account;
• each Twelve Seas Warrant will remain outstanding but will be deemed converted into one warrant of Pubco; and
• each Twelve Seas Right shall be automatically converted into the number of Ordinary Shares of Pubco as if the Right has been converted into its underlying ordinary shares of Twelve Seas immediately prior to the Closing.
This proxy statement/prospectus covers an aggregate of 26,779,000 Ordinary Shares, 21,229,000 warrants, and 23,351,900 Ordinary Shares issuable upon exercise of warrants and Rights, all of which will be issued by Pubco as a result of the Merger in exchange for the outstanding securities of Twelve Seas.
In the Share Exchange, the holders of BPGIC’s securities will receive approximately 100 million Ordinary Shares of Pubco.
Ordinary Shares
The holders of Ordinary Shares will be entitled to one vote for each share held of record on all matters to be voted on by shareholders.
There is no cumulative voting with respect to the election of directors, with the result that the holders of more than 50% of the shares voted for the election of directors can elect all of the directors.
Holders of Pubco’s Ordinary Shares will not have any conversion, preemptive or other subscription rights and there will be no sinking fund or Redemption provisions applicable to the ordinary shares.
Preferred Shares
The amended and restated memorandum and articles of association of Pubco, as amended, will authorize the issuance of up to 50,000,000 blank check preferred shares with such designations, rights and preferences as may be determined from time to time by Pubco’s board of directors. Accordingly, Pubco’s board of directors will be empowered, without shareholder approval, to issue preferred shares with dividend, liquidation, conversion, voting or other rights which could adversely affect the voting power or other rights of the holders of Ordinary Shares. In addition, the preferred shares could be utilized as a method of discouraging, delaying or preventing a change in control of Pubco.
Warrants
Upon the Closing, each outstanding Warrant of Twelve Seas shall automatically represent the right to purchase one Ordinary Share of Pubco in lieu of one ordinary share of Twelve Seas at a price of $11.50 per share, subject to adjustment as discussed below. However, no Pubco warrants to be issued in exchange for Public Warrants will be exercisable for cash unless we have an effective and current registration statement covering the Ordinary Shares
206
issuable upon exercise of the warrants and a current prospectus relating to such Ordinary Shares. Notwithstanding the foregoing, if a registration statement covering the shares issuable upon exercise of such warrants is not effective within a specified period following the Closing, warrant holders may, until such time as there is an effective registration statement and during any period when we shall have failed to maintain an effective registration statement, exercise warrants on a cashless basis in the same manner as if we called the warrants for Redemption and required all holders to exercise their warrants on a “cashless basis.” In such event, each holder would pay the exercise price by surrendering the warrants for that number of Ordinary Shares equal to the quotient obtained by dividing (x) the product of the number of shares underlying the warrants, multiplied by the difference between the exercise price of the warrants and the “fair market value” (defined below) by (y) the fair market value. The “fair market value” for this purpose will mean the average reported last sale price of the Ordinary Shares for the ten (10) trading days ending on the trading day prior to the date of exercise. The Pubco warrants will become exercisable thirty (30) days after the Closing and will expire on the fifth anniversary of the Closing.
The Pubco warrants to be issued in exchange for private warrants are identical to warrants to be issued in exchange for the Public Warrants, except that such private warrants will be exercisable for cash (even if a registration statement covering the Ordinary Shares issuable upon exercise of such warrants is not effective) or on a cashless basis, at the holder’s option, and will not be redeemable by us, in each case so long as they are still held by the initial purchasers or their affiliates.
We may call the warrants for Redemption (excluding the private warrants), in whole and not in part, at a price of $0.01 per warrant,
• at any time while the warrants are exercisable;
• upon not less than 30 days’ prior written notice of Redemption to each warrant holder;
• if, and only if, the reported last sale price of the Ordinary Shares equals or exceeds $18.00 per share, for any 20 trading days within a 30-day trading period ending on the third business day prior to the notice of Redemption to warrant holders; and
• if, and only if, there is a current registration statement in effect with respect to the Ordinary Shares underlying such warrants commencing five business days prior to the 30-day trading period and continuing each day thereafter until the date of Redemption.
The right to exercise will be forfeited unless the warrants are exercised prior to the date specified in the notice of Redemption. On and after the Redemption date, a record holder of a warrant will have no further rights except to receive the Redemption price for such holder’s warrant upon surrender of such warrant.
The Redemption criteria for Pubco’s warrants have been established at a price which is intended to provide warrant holders a reasonable premium to the initial exercise price and provide a sufficient differential between the then-prevailing share price and the warrant exercise price so that if the share price declines as a result of our Redemption call, the Redemption will not cause the share price to drop below the exercise price of the warrants.
If we call the warrants for Redemption as described above, our management will have the option to require all holders that wish to exercise warrants to do so on a “cashless basis.” In such event, each holder would pay the exercise price by surrendering the warrants for that number of Ordinary Shares equal to the quotient obtained by dividing (x) the product of the number of Ordinary Shares underlying the warrants, multiplied by the difference between the exercise price of the warrants and the “fair market value” (defined below) by (y) the fair market value. In this case, the “fair market value” shall mean the average reported last sale price of the Ordinary Shares for the 10 trading days ending on the third trading day prior to the date on which the notice of Redemption is sent to the holders of warrants. Whether we will exercise our option to require all holders to exercise their warrants on a “cashless basis” will depend on a variety of factors including the price of our Ordinary Shares at the time the warrants are called for Redemption, our cash needs at such time and concerns regarding dilutive stock issuances.
The exercise price and number of Ordinary Shares issuable on exercise of the warrants may be adjusted in certain circumstances including in the event of a share dividend, extraordinary dividend or our recapitalization, reorganization, merger or consolidation. However, the warrants will not be adjusted for issuances of Ordinary Shares at a price below their respective exercise prices.
207
The warrants may be exercised upon surrender of the warrant certificate on or prior to the expiration date at the offices of the warrant agent, with the exercise form on the reverse side of the warrant certificate completed and executed as indicated, accompanied by full payment of the exercise price, by certified or official bank check payable to us, for the number of warrants being exercised. The warrant holders do not have the rights or privileges of holders of Ordinary Shares and any voting rights until they exercise their warrants and receive Ordinary Shares. After the issuance of Ordinary Shares upon exercise of the warrants, each holder will be entitled to one vote for each share held of record on all matters to be voted on by shareholders.
Warrant holders may elect to be subject to a restriction on the exercise of their warrants such that an electing warrant holder would not be able to exercise their warrants to the extent that, after giving effect to such exercise, such holder would beneficially own in excess of 9.8% of the Ordinary Shares outstanding.
No fractional shares will be issued upon exercise of the warrants. If, upon exercise of the warrants, a holder would be entitled to receive a fractional interest in a share, we will, upon exercise, round up or down to the nearest whole number the number of Ordinary Shares to be issued to the warrant holder.
Dividends
Twelve Seas has not paid any cash dividends on its ordinary shares to date and does not intend to pay dividends prior to the completion of the Business Combination. The payment of dividends subsequent to the Business Combination will be entirely within the discretion of Pubco’s then board of directors and will be contingent upon Pubco’s revenues and earnings, if any, capital requirements and general financial condition subsequent to completion of the Business Combination.
Pubco’s Transfer Agent
The transfer agent for Pubco’s Ordinary Shares following the Business Combination will be is Continental Stock Transfer & Trust Company, 1 State Street, 30th Floor, New York, NY 10004-1561.
Holders
As of the date of this proxy statement/prospectus, there were [ ] holders of record of ordinary shares of Twelve Seas, [ ] holders of record of Twelve Seas’ Public Warrants, [ ] holders of record of Twelve Seas’ Rights, and [ ] holders of record of Twelve Seas’ Units.
208
Twelve Seas shareholders are entitled to give notice to Twelve Seas prior to the Meeting that they wish to dissent to the Business Combination to the effect of which would be that such dissenting shareholders would be entitled to the payment of fair market value of his or her shares of Twelve Seas if they follow the procedures set out in the Companies Law. It is Twelve Seas’ view that such fair market value would equal the amount which Twelve Seas shareholders would obtain if they exercise their redemption rights as described herein.
If the Business Combination is consummated and Pubco holds a 2019 annual general meeting, it will provide notice of or otherwise publicly disclose the date on which the 2019 annual meeting will be held. If the 2019 annual general meeting is held, shareholder proposals will be eligible for consideration by the directors for inclusion in the proxy statement for Pubco’s 2019 annual general meeting in accordance with Rule 14a-8 under the Exchange Act.
OTHER SHAREHOLDER COMMUNICATIONS
Shareholders and interested parties may communicate with Twelve Seas board of directors, any committee chairperson or the non-management directors as a group by writing to the board or committee chairperson in care of Twelve Seas Investment Company, 135 East 57th Street, 18th Floor, New York, NY 10022. Following the Business Combination, such communications should be sent in care of [ ]. Each communication will be forwarded, depending on the subject matter, to the board of directors, the appropriate committee chairperson or all non-management directors.
209
The financial statements of Brooge Petroleum and Gas Investment Company FZE at 31 December 2018 and 2017 and for each of the two years in the period ended 31 December 2018, appearing in this proxy statement/prospectus and registration statement have been audited by Ernst & Young, independent registered public accounting firm, as set forth in their report (which contains an explanatory paragraph describing conditions that raise substantial doubt about Brooge Petroleum and Gas Investment Company FZE’s ability to continue as a going concern as described in Note 2.2 to the financial statements) appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.
Prior to the engagement of Ernst & Young (“EY”) as Brooge Petroleum and Gas Investment Company FZE’s (“BPGIC” or the “Company”) independent registered public accounting firm under the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), EY provided a loan staffing service whereby an employee of EY inputted data into Company analyses under the direction and supervision of BPGIC management for a three-week period in July 2018 to assist the Company in their assessment of whether they met certain metrics for a potential transaction (the “service”). The service is not permitted under the auditor independence rules of the U.S. Securities and Exchange Commission (“SEC”) and the PCAOB. The transaction did not ultimately materialize and, as a result, the Company did not use the results generated from this service and the service did not affect the financial statements of BPGIC nor EY’s related audits. Fees for the service were not significant to EY or BPGIC. The professional who provided the service is not a member of the EY audit engagement team with respect to the audits of BPGIC’s financial statements.
After careful consideration of the facts and circumstances and the applicable independence rules, EY has concluded that (i) the aforementioned matter does not impair EY’s ability to exercise objective and impartial judgment in connection with its audits of BPGIC’s financial statements and (ii) a reasonable investor with knowledge of all relevant facts and circumstances would conclude that EY has been and is capable of exercising objective and impartial judgement on all issues encompassed within its audits of BPGIC’s financial statements. After considering this matter, BPGIC’s management and those charged with governance over BPGIC concur with EY’s conclusions.
The financial statements of Twelve Seas for the periods from November 30, 2017 (inception) through December 31, 2017 and for the year ended December 31, 2018, appearing in this proxy statement/prospectus have been audited by UHY LLP, independent registered public accounting firm, as set forth in their report thereon appearing elsewhere in this proxy statement/prospectus, and are included in reliance on such report given on the authority of such firm as an expert in accounting and auditing.
The financial statements of Brooge Holdings Limited at 30 June 2019 and for the period from 12 April 2019 (inception) to 30 June 2019, appearing in this proxy statement/prospectus and registration statement have been audited by Ernst & Young, independent registered public accounting firm, as set forth in their report appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.
The legality of the Pubco securities offered hereby will be passed upon for Pubco by Maples and Calder.
210
DELIVERY OF DOCUMENTS TO SHAREHOLDERS
Pursuant to the rules of the SEC, Twelve Seas and services that it employs to deliver communications to its shareholders are permitted to deliver to two or more shareholders sharing the same address a single copy of each of Twelve Seas’ annual report to shareholders and Twelve Seas’ proxy statement. Upon written or oral request, Twelve Seas will deliver a separate copy of the annual report to shareholder and/or proxy statement to any shareholder at a shared address to which a single copy of each document was delivered and who wishes to receive separate copies of such documents. Shareholders receiving multiple copies of such documents may request that Twelve Seas deliver single copies of such documents in the future. Shareholders may notify Twelve Seas of their requests by calling or writing Twelve Seas at its principal executive offices at Twelve Seas Investment Company, 135 East 57th Street, 18th Floor, New York, NY 10022. Following the Business Combination, such requests should be made by calling or writing BPGIC at P.O. Box 50170, Fujairah, UAE and its telephone number is +971 2 633 3149.
WHERE YOU CAN FIND MORE INFORMATION
Twelve Seas files reports, proxy statements and other information with the SEC as required by the Exchange Act. You may access information on Twelve Seas at the SEC web site containing reports, proxy statements and other information at: http://www.sec.gov.
Information and statements contained in this proxy statement/prospectus or any annex to this proxy statement/prospectus are qualified in all respects by reference to the copy of the relevant contract or other annex filed as an exhibit to this proxy statement/prospectus.
All information contained in this document relating to Twelve Seas has been supplied by Twelve Seas, and all such information relating to BPGIC has been supplied by BPGIC. Information provided by one entity does not constitute any representation, estimate or projection of the other entity.
If you would like additional copies of this document or if you have questions about the Business Combination, you should contact via phone or in writing:
Mr. Stephen N. Cannon
Twelve Seas Investment Company
135 East 57th Street, 18th Floor
New York, NY 10022
Tel. (917) 208-6200
211
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of
Twelve Seas Investment Company
Opinion on the Financial Statements
We have audited the accompanying balance sheets of Twelve Seas Investment Company (the “Company”) as of December 31, 2018 and 2017, and the related statements of operations, changes in shareholders’ equity, and cash flows for the year ended December 31, 2018 and the period from November 30, 2017 to December 31, 2017, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2018 and 2017, and the results of its operations and its cash flows for the year ended December 31, 2018 and the period from November 30, 2017 to December 31, 2017, in conformity with accounting principles generally accepted in the United States of America.
Substantial Doubt about the Company’s Ability to Continue as a Going Concern
The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 to the financial statements, if the Company is unable to raise additional capital, it may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit of its business plan, and reducing overhead expenses. The Company cannot provide any assurance that new financing will be available to it on commercially acceptable terms, if at all. In addition, if the Company is not able to consummate a business combination before December 22, 2019, the Company will commence an automatic winding up, dissolution and liquidation unless it seeks and receives the consent of its shareholders to otherwise extend the life of the Company. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ UHY LLP |
||
We have served as the Company’s auditor since 2017. |
||
New York, New York |
||
March 29, 2019 |
F-2
TWELVE SEAS INVESTMENT COMPANY
BALANCE SHEETS
December 31, |
|||||||
2018 |
2017 |
||||||
Assets |
|
|
|
||||
Cash |
$ |
252,927 |
$ |
1,500 |
|
||
Prepaid assets |
|
15,000 |
|
— |
|
||
Deferred offering costs |
|
— |
|
173,437 |
|
||
Total Current Assets |
|
267,927 |
|
174,937 |
|
||
|
|
|
|||||
Cash and securities held in Trust Account |
|
209,228,292 |
|
— |
|
||
Total assets |
$ |
209,496,219 |
$ |
174,937 |
|
||
|
|
|
|||||
Liabilities and Shareholders’ Equity |
|
|
|
||||
Accounts payable and accrued expense |
$ |
65,603 |
$ |
131,950 |
|
||
Deferred legal fees |
|
29,613 |
|
— |
|
||
Due to related parties |
|
124,293 |
|
— |
|
||
Due to Sponsor |
|
— |
|
46,500 |
|
||
Total current liabilities |
|
219,509 |
|
178,450 |
|
||
|
|
|
|||||
Commitments |
|
|
|
||||
Ordinary shares subject to possible redemption, 20,427,670 and 0 shares at redemption value at December 31, 2018 and 2017, respectively |
|
204,276,700 |
|
— |
|
||
|
|
|
|||||
Shareholders’ Equity (Deficit): |
|
|
|
||||
Preferred shares, $0.0001 par value; 2,000,000 shares authorized; no shares issued and outstanding |
|
— |
|
— |
|
||
Ordinary shares, $0.0001 par value; 200,000,000 shares authorized; 6,351,330 shares (excluding 20,427,670 shares subject to possible redemption) and 4,312,500 shares issued and outstanding at December 31, 2018 and 2017, respectively |
|
635 |
|
431 |
|
||
Additional paid-in capital |
|
3,194,541 |
|
24,569 |
|
||
Accumulated earnings (deficit) |
|
1,804,834 |
|
(28,513 |
) |
||
Total shareholders’ equity (deficit) |
|
5,000,010 |
|
(3,513 |
) |
||
|
|
|
|||||
Total Liabilities and Shareholders’ Equity |
$ |
209,496,219 |
$ |
174,937 |
|
The accompanying notes are an integral part of these financial statements.
F-3
TWELVE SEAS INVESTMENT COMPANY
STATEMENTS OF OPERATIONS
For the Year Ended
|
For the
|
||||||
Formation and operating costs |
$ |
394,961 |
$ |
28,513 |
|
||
Loss from operations |
|
394,961 |
|
28,513 |
|
||
|
|
|
|||||
Other income |
|
|
|
||||
Interest income |
|
2,228,308 |
|
— |
|
||
Total other income |
|
2,228,308 |
|
— |
|
||
|
|
|
|||||
Net income (loss) |
$ |
1,833,347 |
$ |
(28,513 |
) |
||
|
|
|
|||||
Weighted average shares outstanding, basic and diluted |
|
16,197,597 |
|
2,540,323 |
|
||
|
|
|
|||||
Basic and diluted net income (loss) per ordinary share |
$ |
0.11 |
$ |
(0.01 |
) |
The accompanying notes are an integral part of these financial statements.
F-4
TWELVE SEAS INVESTMENT COMPANY
STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
Ordinary Shares(1)
|
Par Value |
Additional
|
Accumulated Earnings
|
Total
|
|||||||||||||||
Issuance of ordinary shares to director upon formation |
1 |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
|||||
Cancellation of ordinary shares to director |
(1 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|||||
Issuance of ordinary shares to Initial Shareholders |
4,312,500 |
|
|
431 |
|
|
24,569 |
|
|
— |
|
|
25,000 |
|
|||||
Net loss |
|
|
|
|
|
|
|
|
|
(28,513 |
) |
|
(28,513 |
) |
|||||
Balance as of December 31, 2017 |
4,312,500 |
|
$ |
431 |
|
$ |
24,569 |
|
$ |
(28,513 |
) |
$ |
(3,513 |
) |
|||||
|
|
|
|
|
|
|
|
|
|||||||||||
Return of Insider Shares in connection with the downsized offering on June 1, 2018 |
(1,437,500 |
) |
|
(144 |
) |
|
144 |
|
|
— |
|
|
— |
|
|||||
Effectuation of a 1.5-for-1 stock dividend in connection with the upsized offering on June 8, 2018 |
1,437,500 |
|
|
144 |
|
|
(144 |
) |
|
— |
|
|
— |
|
|||||
Effectuation of a 1.2-for-1 stock dividend in connection with the upsized offering on June 19, 2018 |
862,500 |
|
|
86 |
|
|
(86 |
) |
|
— |
|
|
— |
|
|||||
Sale of 18,000,000 Units on June 22, 2018 through public offering |
18,000,000 |
|
|
1,800 |
|
|
179,998,200 |
|
|
— |
|
|
180,000,000 |
|
|||||
Sale of 475,000 Private Placement Units on June 22, 2018 |
475,000 |
|
|
48 |
|
|
4,749,952 |
|
|
— |
|
|
4,750,000 |
|
|||||
Issuance of Representative Shares on June 22, 2018 |
375,000 |
|
|
38 |
|
|
3,749,962 |
|
|
|
|
3,750,000 |
|
||||||
Sale of Over-Allotment units to underwriters on June 28, 2018 |
2,700,000 |
|
|
270 |
|
|
26,999,730 |
|
|
— |
|
|
27,000,000 |
|
|||||
Sale of Private Placement Units on June 28, 2018 |
54,000 |
|
|
5 |
|
|
539,995 |
|
|
— |
|
|
540,000 |
|
|||||
Underwriters’ discount |
— |
|
|
— |
|
|
(4,140,000 |
) |
|
— |
|
|
(4,140,000 |
) |
|||||
Other offering expenses |
— |
|
|
— |
|
|
(4,453,124 |
) |
|
— |
|
|
(4,453,124 |
) |
|||||
Reclassification of ordinary shares subject to possible redemption |
(20,427,670 |
) |
|
(2,043 |
) |
|
(204,274,657 |
) |
|
— |
|
|
(204,276,700 |
) |
|||||
Net income |
— |
|
|
— |
|
|
— |
|
|
1,833,347 |
|
|
1,833,347 |
|
|||||
Balance as of December 31, 2018 |
6,351,330 |
|
$ |
635 |
|
$ |
3,194,541 |
|
$ |
1,804,834 |
|
$ |
5,000,010 |
|
____________
(1) This number excludes 20,427,670 and 0 ordinary shares subject to possible redemption at December 31, 2018 and 2017, respectively.
The accompanying notes are an integral part of these financial statements.
F-5
TWELVE SEAS INVESTMENT COMPANY
STATEMENTS OF CASH FLOWS
For the
|
For the
|
|||||||
Cash Flows from Operating Activities: |
|
|
|
|
||||
Net income |
$ |
1,833,347 |
|
$ |
(28,513 |
) |
||
Adjustments to reconcile net income (loss) to net cash used in operating activities: |
|
|
|
|
||||
Formation costs paid by sponsor |
|
|
|
5,000 |
|
|||
Interest earned on investment held in Trust Account |
|
(2,228,307 |
) |
|
— |
|
||
Changes in current assets and current liabilities: |
|
|
|
|
||||
Prepaid assets |
|
(15,000 |
) |
|
— |
|
||
Accounts payable and accrued expense |
|
71,703 |
|
|
23,513 |
|
||
Due to related parties |
|
123,071 |
|
|
— |
|
||
Net cash used in operating activities |
|
(215,186 |
) |
|
— |
|
||
|
|
|
|
|||||
Cash Flows from Investing Activities: |
|
|
|
|
||||
Proceeds from sale and redemption of investment held in Trust Account |
|
209,072,253 |
|
|
— |
|
||
Purchase of investment held in Trust Account |
|
(416,072,238 |
) |
|
— |
|
||
Net cash used in investing activities |
|
(206,999,985 |
) |
|
— |
|
||
|
|
|
|
|||||
Cash Flows from Financing Activities: |
|
|
|
|
||||
Proceeds from sale of ordinary shares to Initial Shareholders |
|
— |
|
|
25,000 |
|
||
Proceeds from initial public offering, net of underwriters’ discount |
|
203,400,000 |
|
|
— |
|
||
Proceeds from private placement |
|
4,750,000 |
|
|
— |
|
||
Proceeds from Sponsor loan |
|
253,500 |
|
|
1,500 |
|
||
Repayment of Sponsor loan |
|
(300,000 |
) |
|
— |
|
||
Payments of offering costs |
|
(636,902 |
) |
|
(25,000 |
) |
||
Net cash provided by financing activities |
|
207,466,598 |
|
|
1,500 |
|
||
|
|
|
|
|||||
Net Increase in Cash |
|
251,427 |
|
|
1,500 |
|
||
Cash – Beginning |
|
1,500 |
|
|
— |
|
||
Cash – Ending |
$ |
252,927 |
|
$ |
1,500 |
|
||
|
|
|
|
|||||
Supplemental Disclosure of Non-cash Financing Activities: |
|
|
|
|
||||
Increase in accrued expenses for deferred offering costs |
$ |
— |
|
$ |
108,437 |
|
||
Payments of deferred offering cost made by sponsor |
$ |
— |
|
$ |
40,000 |
|
||
Value of ordinary shares subject to possible redemption |
$ |
204,276,700 |
|
$ |
— |
|
||
Increase in due to related party for offering costs charged to additional paid in capital |
$ |
1,222 |
|
$ |
— |
|
The accompanying notes are an integral part of these financial statements.
F-6
TWELVE SEAS INVESTMENT COMPANY
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2018
Note 1 — Organization and Business Operations
Organization and General
Twelve Seas Investment Company (the “Company”) is a blank check company incorporated on November 30, 2017, under the laws of the Cayman Islands for the purpose of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination with one or more businesses or entities (a “Business Combination”). The Company’s efforts to identify a prospective target business are not limited to a particular industry or geographic location.
As of December 31, 2018, the Company had not yet commenced any operations generating revenue. All activity through December 31, 2018 relates to the Company’s formation, the Initial Public Offering (as defined below) and the search for prospective targets to effect a Business Combination. The Company has selected December 31 as its fiscal year end.
Financing
The registration statements for the Company’s initial public offering (“Initial Public Offering”) were declared effective on June 19, 2018. On June 22, 2018, the Company consummated the Initial Public Offering of 18,000,000 units (“Units” or “Public Units” and, with respect to the ordinary shares included in the Public Units being offered, the “Public Shares”), generating gross proceeds of $180,000,000, which is described in Note 3.
Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of 475,000 units (the “Private Units”) at a price of $10.00 per Unit in a private placement to the Company’s sponsor (the “Sponsor”), generating gross proceeds of $4,750,000, which is described in Note 4.
Contained in the underwriting agreement for the Public Offering is an overallotment option allowing the underwriters to purchase from the Company up to an additional 2,700,000 Public Units and the sale to the Sponsor of an additional 54,000 Private Units at $10.00 per Unit (as described in Note 3 — Initial Public Offering and Note 4 — Private Placement).
On June 28, 2018, the underwriters exercised the option in full and purchased 2,700,000 Public Units, which were sold at $10.00 per Unit, generating gross proceeds of $27,000,000. Simultaneously with the sale of the over-allotment Public Units, the Company consummated the private placement of an additional 54,000 Private Units, purchased by the Sponsor, at a price of $10.00 per Unit, generating total additional gross proceeds of $540,000.
Trust Account
Following the closing of the Initial Public Offering on June 22, 2018, an amount of $180,000,000 ($10.00 per Unit) from the net proceeds of the sale of the Public Units in the Initial Public Offering and the Private Units was placed in a trust account (“Trust Account”). Following the closing of underwriters’ exercise of over-allotment option on June 28, 2018, an additional $27,000,000 of net proceeds ($10.00 per Unit) was placed in the Trust Account, bringing the aggregate proceeds held in the Trust Account to $207,000,000.
The funds in the Trust Account are invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), with a maturity of 180 days or less or in any open-ended investment company that holds itself out as a money market fund meeting the conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the consummation of a Business Combination or (ii) the distribution of the Trust Account as described below, except that interest earned on the Trust Account can be released to pay the Company’s income or other tax obligations.
Initial Business Combination
The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the Private Units, although substantially all of the net proceeds are intended to be generally applied toward consummating a Business Combination. The Company’s Business Combination must be with one or
F-7
TWELVE SEAS INVESTMENT COMPANY
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2018
Note 1 — Organization and Business Operations (cont.)
more target businesses that together have a fair market value equal to at least 80% of the balance in the Trust Account (as defined below) (net of taxes payable) at the time of the signing an agreement to enter into a Business Combination. However, the Company will only complete a Business Combination if the post-Business Combination company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act. There is no assurance that the Company will be able to successfully effect a Business Combination.
The Company will provide its shareholders with the opportunity to redeem all or a portion of their shares included in the Public Units sold in the Initial Public Offering (the “Public Shares”) upon the completion of a Business Combination either (i) in connection with a shareholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek shareholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The shareholders will be entitled to redeem their shares for a pro rata portion of the amount then on deposit in the Trust Account (initially approximately $10.00 per share, plus any pro rata interest earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations).
The ordinary shares subject to redemption are recorded at a redemption value and classified as temporary equity upon the completion of the Initial Public Offering, in accordance with Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” The Company will proceed with a Business Combination if the Company has net tangible assets of at least $5,000,001 upon consummation of such a Business Combination and a majority of the issued and outstanding shares voted are voted in favor of the Business Combination. If a shareholder vote is not required by law and the Company does not decide to hold a shareholder vote for business or other legal reasons, the Company will, pursuant to its Amended and Restated Memorandum and Articles of Association, conduct the redemptions pursuant to the tender offer rules of the Securities and Exchange Commission (“SEC”), and file tender offer documents with the SEC prior to completing a Business Combination. If, however, a shareholder approval of the transaction is required by law, or the Company decides to obtain shareholder approval for business or other legal reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. If the Company seeks shareholder approval in connection with a Business Combination, the Initial Shareholders (defined in Note 5 — Related Party Transactions) have agreed to vote their initial shares and private shares, as well as any public shares acquired in or after this offering, in favor of any proposed business combination. Additionally, each public shareholder may elect to redeem their Public Shares irrespective of whether they vote for or against the proposed transaction.
The Company will have until December 22, 2019 to consummate a Business Combination (the “Combination Period”). If the Company is unable to complete a Business Combination within the Combination Period, it will trigger the automatic winding up, dissolution and liquidation pursuant to the terms of the Amended and Restated Memorandum and Articles of Association. The amount in the Trust Account (less the aggregate nominal par value of the shares of the Company’s public shareholders) under the Companies Law will be treated as share premium which is distributable under the Companies Law provided that immediately following the date on which the proposed distribution is proposed to be made, the Company is able to pay the debts as they fall due in the ordinary course of business. If the Company is forced to liquidate the Trust Account, the public shareholders would be distributed the amount in the Trust Account calculated as of the date that is two days prior to the distribution date (including any accrued interest).
The Initial Shareholders have agreed to (i) waive their conversion rights with respect to their Initial Shares, private shares and Public Shares in connection with the consummation of a Business Combination, (ii) to waive their rights to liquidating distributions from the Trust Account with respect to their initial shares and private placement shares if the Company fails to consummate a Business Combination within the Combination Period and (iii) not to propose an amendment to the Company’s Amended and Restated Memorandum and Articles of Association that would affect the substance or timing of the Company’s obligation to redeem 100% of its Public Shares if the Company does not complete a Business Combination, unless the Company provides the public shareholders with the opportunity to redeem their shares in conjunction with any such amendment.
F-8
TWELVE SEAS INVESTMENT COMPANY
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2018
Note 1 — Organization and Business Operations (cont.)
Liquidation
The holders of the initial shares will not participate in any liquidation distribution with respect to such securities. In the event of such distribution, it is possible that the per share value of the residual assets remaining available for distribution (including Trust Account assets) will be less than the $10.00 per Unit in the Initial Public Offering. In order to protect the amounts held in the Trust Account, Dimitri Elkin, the Company’s Chief Executive Officer, has contractually agreed, pursuant to a written agreement to the Company, that if the Company liquidates the Trust Account prior to the consummation of a Business Combination, he will be liable to ensure that the proceeds in the Trust Account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by the Company for services rendered or contracted for or products sold to the Company. This liability will not apply with respect to any claims by a third party who executed a waiver of any right, title, interest or claim of any kind in or to any monies held in the Trust Account. Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, then Dimitri Elkin will not be responsible to the extent of any liability for such third party claims. The Company will seek to reduce the possibility that Dimitri Elkin will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers (other than the Company’s independent auditors), prospective target businesses or other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.
The Company will pay the costs of liquidating the trust account from the remaining assets outside of the trust account. If such funds are insufficient, Bryant Edwards, the Company’s COO, has contractually agreed to advance the Company the funds necessary to complete such liquidation (currently anticipated to be no more than approximately $20,000) and has contractually agreed not to seek repayment for such expenses.
Liquidity
As of December 31, 2018, the Company had cash outside the Trust Account of $252,927 available for working capital needs. All remaining cash and securities were held in the Trust Account and is generally unavailable for the Company’s use, prior to an initial Business Combination, and is restricted for use either in a Business Combination or to redeem Public Shares. As of December 31, 2018, none of the amount on deposit in the Trust Account was available to be withdrawn as described above.
Through December 31, 2018, the Company’s liquidity needs were satisfied through receipt of $25,000 from the sale of the insider shares, advances from the Sponsor in an aggregate amount of $300,000 which were repaid upon the IPO (as described in Note 5) and the remaining net proceeds from the IPO and Private Placement (as described in Note 3 and 4).
The Company anticipates that the $252,927 outside of the Trust account as of December 31, 2018, will not be sufficient to allow the Company to operate for at least the next 12 months, assuming that a Business Combination is not consummated during that time. The Company anticipates that it will be able to mitigate this risk through loans by its initial shareholders, officers, directors or their affiliates when the need arises.
As part of the Company’s IPO filings, the Company publicly disclosed that its initial shareholders, officers, directors or their affiliates may, but are not obligated to loan the Company funds as needed. Each loan would be evidenced by a promissory note (“Working Capital Loans”, which is described in Note 5). The notes would either be paid upon consummation of its initial Business Combination, without interest, or, at the lender’s discretion, up to $500,000 of the notes may be converted upon consummation of its Business Combination into private units at a price of $10.00 per unit (which, for example, would result in the holders being issued units to acquire 55,000 ordinary shares (which includes 5,000 shares issuable upon conversion of rights) and warrants to purchase 50,000 ordinary shares if $500,000 of notes were so converted). The Company’s shareholders have approved the issuance of the units and underlying securities upon conversion of such notes, to the extent the holder wishes to so convert them at the time of the consummation of the Company’s initial Business Combination. If the Company does not complete a Business Combination, the loans will not be repaid.
F-9
TWELVE SEAS INVESTMENT COMPANY
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2018
Note 1 — Organization and Business Operations (cont.)
Until consummation of its Business Combination, the Company will be using the funds not held in the Trust Account, and any additional Working Capital Loans from the Initial Shareholders, the Sponsor, the Company’s officers and directors, or their respective affiliates, for identifying and evaluating prospective acquisition candidates, performing business due diligence on prospective target businesses, traveling to and from the offices, plants or similar locations of prospective target businesses, reviewing corporate documents and material agreements of prospective target businesses, selecting the target business to acquire and structuring, negotiating and consummating the Business Combination.
The Company believes that it will be able to raise additional funds from its initial shareholders, officers, directors or their affiliates in order to meet the expenditures required for operating its business. However, none of the Sponsor, officers or directors are under any obligation to advance funds to, or to invest in, the Company. If the Company is unable to raise additional capital, it may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit of its business plan, and reducing overhead expenses. In addition, if the Company is not able to consummate a business combination before December 22, 2019, the Company will commence an automatic winding up, dissolution and liquidation unless it seeks and receives the consent of its shareholders to otherwise extend the life of the Company. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements have been prepared assuming that the Company will continue as a going concern and, accordingly, do not include any adjustments that might result from the outcome of this uncertainty.
Note 2 — Significant Accounting Policies
Basis of Presentation
The accompanying financial statements of the Company are presented in conformity with accounting principles generally accepted in the United States of America (“US GAAP”) and pursuant to the rules and regulations of the SEC. In the opinion of management, all adjustments (consisting of normal recurring adjustments) have been made that are necessary to present fairly the financial position, and the results of its operations and its cash flows.
Emerging Growth Company Status
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended, (the “Securities Act”), as modified by the Jumpstart our Business Startups Act of 2012, (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
F-10
TWELVE SEAS INVESTMENT COMPANY
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2018
Note 2 — Significant Accounting Policies (cont.)
Offering Costs
The Company complies with the requirements of the ASC 340-10-S99-1 and SEC Staff Accounting Bulletin (“SAB”) Topic 5A — “Expenses of Offering”. Offering costs consist principally of professional and registration fees incurred through the balance sheet date that are related to the Public Offering and that were charged to shareholders’ equity upon the completion of the Initial Public Offering. Accordingly, offering costs totaling $8,593,124 have been charged to shareholders’ equity (consisting of $4,140,000 in underwriters’ fees, plus $703,124 of other cash expenses, and a non-cash charge of $3,750,000 to record the fair value of the representative shares (as described in Note 7 — Commitments & Contingencies)).
Use of Estimates
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company has $252,927 of cash held outside of the Trust Account as of December 31, 2018 and $1,500 as of December 31, 2017. The Company did not have any cash equivalents as of December 31, 2018 and 2017.
Investment Held in Trust Account
Investment consists of United States Money Market and United States Treasury securities. The Company classifies its United States Treasury securities as held-to-maturity in accordance with FASB ASC Topic 320 “Investments — Debt and Equity Securities.” Held-to-maturity securities are those securities which the Company has the ability and intent to hold until maturity. Held-to-maturity treasury securities are recorded at amortized cost and adjusted for the amortization or accretion of premiums or discounts.
A decline in the market value of held-to-maturity securities below cost that is deemed to be other than temporary, results in an impairment that reduces the carrying costs to such securities’ fair value. The impairment is charged to earnings and a new cost basis for the security is established. To determine whether an impairment is other than temporary, the Company considers whether it has the ability and intent to hold the investment until a market price recovery and considers whether evidence indicating the cost of the investment is recoverable outweighs evidence to the contrary. Evidence considered in this assessment includes the reasons for the impairment, the severity and the duration of the impairment, changes in value subsequent to year-end, forecasted performance of the investee, and the general market condition in the geographic area or industry the investee operates in.
Premiums and discounts are amortized or accreted over the life of the related held-to-maturity security as an adjustment to yield using the effective-interest method. Such amortization and accretion is included in the “interest income” line item in the condensed statements of operations. Interest income is recognized when earned.
Fair Value Measurements
FASB ASC Topic 820 “Fair Value Measurements and Disclosures” defines fair value, the methods used to measure fair value and the expanded disclosures about fair value measurements. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between the buyer and the seller at the measurement date. In determining fair value, the valuation techniques consistent with the market approach, income approach and cost approach shall be used to measure fair value. FASB ASC Topic 820 establishes a fair value hierarchy for inputs,
F-11
TWELVE SEAS INVESTMENT COMPANY
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2018
Note 2 — Significant Accounting Policies (cont.)
which represent the assumptions used by the buyer and seller in pricing the asset or liability. These inputs are further defined as observable and unobservable inputs. Observable inputs are those that buyer and seller would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs reflect the Company’s assumptions about the inputs that the buyer and seller would use in pricing the asset or liability developed based on the best information available in the circumstances.
The fair value hierarchy is categorized into three levels based on the inputs as follows:
Level 1 |
— |
Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Valuation adjustments and block discounts are not being applied. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these securities does not entail a significant degree of judgment. |
||||
Level 2 |
— |
Valuations based on (i) quoted prices in active markets for similar assets and liabilities, (ii) quoted prices in markets that are not active for identical or similar assets, (iii) inputs other than quoted prices for the assets or liabilities, or (iv) inputs that are derived principally from or corroborated by market through correlation or other means. |
||||
Level 3 |
— |
Valuations based on inputs that are unobservable and significant to the overall fair value measurement. |
The fair value of the Company’s certain assets and liabilities, which qualify as financial instruments under ASC 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the condensed balance sheet. The fair values of cash and cash equivalents, prepaid assets, accounts payable and accrued expenses, due to related parties are estimated to approximate the carrying values as of December 31, 2018 due to the short maturities of such instruments.
The following table presents information about the Company’s assets and liabilities that were measured at fair value on a recurring basis as of December 31, 2018, and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value.
Description |
December 31,
|
Quoted Prices
|
Significant
|
Significant
|
||||||||
Assets: |
|
|
|
|
||||||||
U.S. Money Market held in Trust Account |
$ |
764 |
$ |
764 |
$ |
— |
$ |
— |
||||
U.S. Treasury Securities held in Trust Account |
|
209,227,528 |
|
— |
|
209,227,528 |
|
— |
||||
$ |
209,228,292 |
$ |
764 |
$ |
209,227,528 |
$ |
— |
Ordinary Shares Subject to Possible Redemption
The Company accounts for its ordinary shares subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Ordinary shares subject to mandatory redemption (if any) are classified as a liability instrument and are measured at fair value. Conditionally redeemable ordinary shares (including ordinary shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, ordinary shares are classified as shareholders’ equity. The Company’s ordinary shares feature certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly, at December 31, 2018, ordinary shares subject to possible redemption are presented as temporary equity, outside of the shareholders’ equity section of the Company’s condensed balance sheet.
F-12
TWELVE SEAS INVESTMENT COMPANY
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2018
Note 2 — Significant Accounting Policies (cont.)
Warrants and Rights
Since the Company is not required to net cash settle the Warrants and Rights (as defined in Note 3 — Initial Public Offering) and the Warrants and Rights are exercisable or convertible upon the consummation of an initial Business Combination, the management determined that the Warrants and Rights will be classified within shareholders’ equity as “Additional paid-in capital” upon their issuance in accordance with ASC 815-40. The proceeds from the sale will be allocated to Public Shares, Warrants, and Rights based on the relative fair value of the securities in accordance with 470-20-30. The value of the Public Shares, Warrants, and Rights will be based on the closing price paid by investors.
Net Income per Ordinary Share
The Company complies with accounting and disclosure requirements ASC Topic 260, “Earnings Per Share.” Net income per ordinary share is computed by dividing net income by the weighted average number of ordinary shares issued and outstanding for the periods. In accordance with SAB Topic 4.D and ASC 260-10-55-12, weighted average shares were retrospectively stated for the 1,437,500 ordinary shares cancelled on June 1, 2018, effectuation of a 1.5-for-1 stock dividend on June 8, 2018, and effectuation of a 1.2-for-1 stock dividend on June 19, 2018 (see Note 5). In accordance with ASC 260-10-45-13, weighted average shares were reduced for the effect of up to an aggregate of 50,000 ordinary shares that are subject to forfeiture by the underwriter on a pro rata basis with the initial shareholders in the event that the initial shareholders are required to forfeit or transfer any Insider Shares to third parties for no consideration or otherwise restructure the terms of such shares in connection with the initial Business Combination (see Note 7), and an aggregate of up to 675,000 shares subject to forfeiture to the extent that the underwriters’ over-allotment is not exercised in full or in part was included in the computation of the number of weighted average shares as of June 28, 2018 when they are no longer subject to forfeiture (See Note 5). At December 31, 2018, the Company did not have any dilutive securities and other contracts that could, potentially, be exercised or converted into ordinary shares and then share in the income of the Company. As a result, diluted income per ordinary share is the same as basic income per ordinary shares for the periods presented.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution, which at times, may exceed the Federal depository insurance coverage of $250,000. The Company has not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.
Income Taxes
The Company accounts for income taxes under ASC 740 Income Taxes (“ASC 740”). ASC 740 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statement and tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. ASC 740 additionally requires a valuation allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized.
ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim period, disclosure and transition. The Company has identified the Cayman Islands as its only “major” tax jurisdiction, as defined. Based on the Company’s evaluation, it has been concluded that there are no significant uncertain tax positions requiring recognition in the Company’s financial statements. Since the Company was incorporated on November 30, 2017, the evaluation was
F-13
TWELVE SEAS INVESTMENT COMPANY
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2018
Note 2 — Significant Accounting Policies (cont.)
performed through 2018 tax year. The Company believes that its income tax positions and deductions would be sustained on audit and does not anticipate any adjustments that would result in a material changes to its financial position. The Company’s policy for recording interest and penalties associated with audits is to record such items as a component of income tax expense.
Recent Accounting Pronouncements
Management does not believe that any recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on the Company’s financial statements.
Note 3 — Initial Public Offering
Pursuant to the Initial Public Offering on June 22, 2018, the Company sold 18,000,000 Units at a purchase price of $10.00 per Unit. On June 28, 2018, in connection with the underwriters’ exercise of their over-allotment option in full, the Company consummated the sale of an additional 2,700,000 Public Units at $10.00 per Unit. Each Unit consists of one ordinary share, one redeemable warrant (“Public Warrant”), and one right (“Public Right”). Each redeemable warrant entitles the holder to purchase one ordinary share at an exercise price of $11.50 (see Note 8). Each holder of a right will automatically receive one-tenth (1/10) of an ordinary share upon consummation of a Business Combination (see Note 8).
Note 4 — Private Placements
Simultaneously with the Initial Public Offering, the Sponsor purchased an aggregate of 475,000 Private Units at $10.00 per Unit (for a total purchase price of $4,750,000). On June 28, 2018, in connection with the underwriters’ exercise of their over-allotment option in full, the Company consummated the sale of an additional 54,000 Private Units at $10.00 per Unit (for a total purchase price of $540,000).
The Private Units are identical to the units sold in the Initial Public Offering except the Private Warrants (as defined in Note 8) will be non-redeemable and may be exercised on a cashless basis. The purchasers of the Private Units have agreed not to transfer, assign or sell any of the Private Units or underlying securities (except to the same permitted transferees as the insider shares) until the completion of the Business Combination.
If the Company does not complete a Business Combination within the Combination Period, the proceeds of the sale of the Private Units will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law).
Note 5 — Related Party Transactions
Insider Shares
On December 11, 2017, the Company issued 4,312,500 shares (“Insider Shares”) to the Sponsor and certain officers and directors (“Initial Shareholders”) for an aggregate amount of $25,000. On June 1, 2018, the Initial Shareholders returned 1,437,500 ordinary shares to the Company for cancellation. On June 8, 2018, the Company effectuated a 1.5-for-1 dividend of its ordinary shares in connection with the upsized Initial Public Offering, resulting in 4,312,500 Insider Shares outstanding and held by the Initial Shareholders. On June 19, 2018, the Company effectuated a 1.2-for-1 dividend of its ordinary shares resulting in an aggregate of 5,175,000 Insider Shares outstanding and held by the Initial Shareholders. None of the transactions mentioned above materially impacts the market value of the shares presented in the Company’s historical financial statements, nor do they impact the market value of $10.00 per Unit regardless of the number of shares outstanding. Therefore, according to accounting literature ASC 505-20-25, this transaction is not a stock split in substance, and no retroactive adjustments to the shares outstanding presented in prior periods is required. As a result of the underwriters’ over-allotment option exercised in full on June 28, 2018, 675,000 Insider Shares are no longer subject to forfeiture and the initial shareholders maintained 20% of the Company’s issued and outstanding shares after the Initial Public Offering and the exercise of the over-allotment.
F-14
TWELVE SEAS INVESTMENT COMPANY
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2018
Note 5 — Related Party Transactions (cont.)
The Initial Shareholders have agreed not to transfer, assign or sell any of the Insider Shares (except to certain permitted transferees) until (1) with respect to 50% of the Insider Shares, the earlier of one year after the date of the consummation of the Business Combination and the date on which the closing price of the ordinary shares equals or exceeds $12.50 per share (as adjusted for share splits, share capitalizations, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period commencing after the Business Combination and (2) with respect to the remaining 50% of the Insider Shares, one year after the date of the consummation of the Business Combination, or earlier, in either case, if, subsequent to the Business Combination, the Company consummates a liquidation, merger, stock exchange or other similar transaction which results in all of the shareholders having the right to exchange their ordinary shares for cash, securities or other property.
Related Party Advances
As of December 31, 2018, the amount due to related parties was $124,293. The amount includes unpaid reimbursements for travel and business expenses incurred by the directors and officers on behalf of the Company and accrued administrative service fees to an affiliate of the Sponsor.
For the period from November 30, 2017 through December 31, 2017, a related party, on behalf of the Sponsor, had advanced to the Company an aggregate of $46,500 in regards to the formation costs and costs associated with the Initial Public Offering. On May 22, 2018, the Sponsor advanced to the Company an additional $150,000. On June 1, 2018, two related parties, on behalf of the sponsor, advanced to the Company an aggregate of $60,000. On June 18, 2018, the Sponsor advanced to the Company an additional $43,500. The loans were non-interest bearing, unsecured and due on demand. The Company repaid the Sponsor in full with $300,000 from the proceeds of the Initial Public Offering not being placed in the Trust Account on June 22, 2018.
Related Party Loans
In order to finance transaction costs in connection with a Business Combination, Initial Shareholders, the Company’s officers and directors, or their respective affiliates may, but are not obligated to, loan the Company funds from time to time or at any time (“Working Capital Loans”). Each Working Capital Loan would be evidenced by a promissory note. The Working Capital Loans would either be paid upon consummation of a Business Combination, without interest, or, at the holder’s discretion, up to $500,000 of the Working Capital Loans may be converted upon consummation of a Business Combination into Private Units at a price of $10.00 per unit (which, for example, would result in the holders being issued units to acquire 55,000 ordinary shares (which includes 5,000 ordinary shares issuable upon exercise of rights) and warrants to purchase 50,000 ordinary shares if $500,000 of notes were so converted). If the Company does not complete the Business Combination, the loans would not be repaid. There was no outstanding balance under Working Capital Loans from related party as of December 31, 2018 and 2017.
Administrative Service Fee
The Company has agreed to pay an affiliate of the Sponsor, a monthly fee of an aggregate of $10,000 for general and administrative services (commencing June 20, 2018) including office space, utilities and secretarial support. This arrangement will terminate upon completion of a Business Combination or the distribution of the trust account to the public shareholders. As of December 31, 2018, the Company had a payable of $20,000 included in due to related parties and incurred $63,000 for the administrative service fee for the year ended December 31, 2018.
Note 6 — Investment Held in Trust Account
As of December 31, 2018, investment in the Company’s Trust Account consisted of $764 in U.S. Money Market and $209,227,528 in U.S. Treasury Securities. The Company classifies its United States Treasury Bills and equivalent securities as held-to-maturity in accordance with FASB ASC 320 “Investments — Debt and Equity Securities”. Held-to-maturity treasury securities are recorded at amortized cost and adjusted for the amortization or accretion of premiums or discounts. The Company considers all investments with original maturities of more than three months but
F-15
TWELVE SEAS INVESTMENT COMPANY
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2018
Note 6 — Investment Held in Trust Account (cont.)
less than one year to be short-term investments. The carrying value approximates the fair value due to the short term maturity. As of December 31, 2018 and 2017, cash and investments held in trust account are $209,228,292 and $0, respectively. The carrying value, excluding gross unrealized holding gain and fair value of held to maturity securities on December 31, 2018 are as follows:
Carrying
|
Gross
|
Fair Value
|
|||||||
U.S. Money Market |
$ |
764 |
$ |
— |
$ |
764 |
|||
U.S. Treasury Securities |
|
209,227,528 |
|
25,362 |
|
209,252,890 |
|||
$ |
209,228,292 |
$ |
25,362 |
$ |
209,253,654 |
In December 2018, the Company redeemed the expired Treasury Securities for total cash proceeds of approximately $209,073,000 and re-invested in U.S. Treasury Securities.
Note 7 — Commitments & Contingencies
Deferred Legal Fees
The Company has committed to pay its attorney deferred legal fees upon the consummation of the Initial Business Combination relating to legal services performed in connection with the proposed business combination. An amount of $29,613 has been accrued in the accompanying balance sheet as of December 31, 2018 and is due and payable upon consummation of business combination.
Registration Rights
Pursuant to a registration rights agreement entered into on June 19, 2018, the holders of the Insider Shares, Private Units (and their underlying securities), Representative Shares (as a defined below) and any Units that may be issued upon conversion of the Working Capital Loans (and their underlying securities) will be entitled to registration rights. The holders of a majority of these securities are entitled to make up to two demands, that the Company register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion of a Business Combination. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriters Agreement
The Company granted the underwriters a 45-day option to purchase up to 2,700,000 additional Units to cover over-allotments at the Initial Public Offering price, less the underwriting discounts and commissions. On June 28, 2018, the underwriters exercised its full over-allotment option of 2,700,000 units.
The underwriters were paid a cash underwriting discount of two percent (2.0%) of the gross proceeds of the Initial Public Offering, or $3,600,000. In relation to the additional 2,700,000 units the underwriters purchased via the over-allotment option, an additional amount of $540,000 was paid to the underwriters.
In addition, the Company issued EarlyBirdCapital “EBC”, the underwriter, and/or its designees 375,000 ordinary shares (the “Representative Shares”) upon the consummation of the Initial Public Offering. The Company accounted for the Representative Shares as an expense of the Initial Public Offering resulting in a charge directly to shareholders’ equity. The Company determined the fair value of Representative Shares is $3,750,000 based upon the offering price of the Units of $10.00 per Unit. The underwriter has agreed not to transfer, assign or sell any such shares until the completion of a Business Combination. In addition, the underwriter (and/or its designees) has agreed (i) to waive its redemption rights with respect to such shares in connection with the completion of a Business Combination and (ii) to waive its rights to liquidating distributions from the Trust Account with respect to such shares if the Company fails
F-16
TWELVE SEAS INVESTMENT COMPANY
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2018
Note 7 — Commitments & Contingencies (cont.)
to complete a Business Combination within the Combination Period. In the event that the Initial Shareholders are required to forfeit or transfer any Insider Shares to third parties for no consideration or otherwise restructure the terms of such shares in connection with the initial Business Combination, the underwriter (and/or its designees) has agreed to forfeit up to an aggregate of 50,000 ordinary shares on a pro rata basis with the Initial Shareholders.
The shares have been deemed compensation by FINRA and are therefore subject to a lock-up for a period of 180 days pursuant to Rule 5110(g)(1) of FINRA’s NASD Conduct Rules. Pursuant to FINRA Rule 5110(g)(1), these securities will not be the subject of any hedging, short sale, derivative, put or call transaction that would result in the economic disposition of the securities by any person for a period of 180 days immediately following the date of the Initial Public Offering, nor may they be sold, transferred, assigned, pledged or hypothecated for a period of 180 days immediately following the Initial Public Offering except to any underwriter and selected dealer participating in the Initial Public Offering and their bona fide officers or partners.
Business Combination Marketing Agreement
The Company has engaged EBC as an advisor in connection with a Business Combination to assist the Company in holding meetings with its shareholders to discuss a potential Business Combination and the target business’ attributes, introduce the Company to potential investors that are interested in purchasing securities, assist the Company in obtaining shareholder approval for the Business Combination and assist the Company with its press releases and public filings in connection with an Business Combination. The Company will pay EBC a cash fee equal to 3.5% of the gross proceeds raised in the offering for such services upon the consummation of the Business Combination (exclusive of any applicable finders’ fees which might become payable). The Company may allocate up to 1% of the 3.5% fee to other firms who assist in connection with the Business Combination.
Note 8 — Shareholder’s Equity
Ordinary Shares — The Company is authorized to issue a total of 200,000,000 ordinary shares of a par value of $0.0001 each. As of December 31, 2018 and 2017, the Company has issued an aggregate of 6,351,330 and 4,312,500 ordinary shares, respectively, excluding 20,427,670 and 0 shares of ordinary shares subject to possible redemption.
Preferred Shares — The Company is authorized to issue a total of 2,000,000 preferred shares of a par value of $0.0001 each. At December 31, 2018 and 2017, there were no shares of preferred shares issued or outstanding.
Warrants — Each Public Warrant is at $11.50 per share and exercisable for one ordinary share. The warrants will become exercisable on the later of the completion of a Business Combination and 12 months from the date of the prospectus. If a registration statement covering the ordinary shares issuable upon exercise of the public warrants is not effective within 90 days following the consummation of the Business Combination, public warrant holders may, until such time as there is an effective registration statement and during any period when we shall have failed to maintain an effective registration statement, exercise warrants on a cashless basis pursuant to an available exemption from registration under the Securities Act. In such event, each holder would pay the exercise price by surrendering the warrants for that number of ordinary shares equal to the quotient obtained by dividing (x) the product of the number of ordinary shares underlying the warrants, multiplied by the difference between the exercise price of the warrants and the “fair market value” (defined below) by (y) the fair market value. The “fair market value” shall mean the average reported last sale price of the ordinary shares for the 10 trading days ending on the day prior to the date of exercise.
The warrants underlying the Private Units (“Private Warrants”) are identical to the Public Warrants sold in this offering except the Private Warrants will be non-redeemable and may be exercised on a cashless basis, in each case so long as they continue to be held by the initial purchasers or their permitted transferees.
F-17
TWELVE SEAS INVESTMENT COMPANY
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2018
Note 8 — Shareholder’s Equity (cont.)
The Company may redeem the outstanding warrants (excluding the Private Warrants), in whole and not in part, at a price of $0.01 per warrant:
• at any time while the warrants are exercisable,
• upon a minimum of 30 days’ prior written notice of redemption,
• if, and only if, the last sales price of the ordinary shares equals or exceeds $18.00 per share for any 20 trading days within a 30 trading day period ending three business days before we send the notice of redemption, and
• if, and only if, there is a current registration statement in effect with respect to the ordinary shares underlying such warrants at the time of redemption and for the entire 30-day trading period referred to above and continuing each day thereafter until the date of redemption.
If the Company calls the warrants for redemption as described above, the management will have the option to require all holders that wish to exercise warrants to do so on a “cashless basis.”
Rights — Except in cases where the Company is not the surviving company in a Business Combination, each holder of a right will automatically receive one-tenth (1/10) of an ordinary share upon consummation of the initial Business Combination, even if the holder of a Public Right converted all ordinary shares held by him, her or it in connection with the initial Business Combination or an amendment to the Company’s memorandum and articles of association with respect to its pre-business combination activities. In the event that the Company will not be the surviving company upon completion of the initial Business Combination, each holder of a right will be required to affirmatively convert his, her or its rights in order to receive the one-tenth (1/10) of a share underlying each right upon consummation of the Business Combination. No additional consideration will be required to be paid by a holder of rights in order to receive his, her or its additional ordinary shares upon consummation of an initial Business Combination. The shares issuable upon exchange of the rights will be freely tradable (except to the extent held by affiliates of the Company). If the Company enters into a definitive agreement for a Business Combination in which the Company will not be the surviving entity, the definitive agreement will provide for the holders of rights to receive the same per share consideration the holders of ordinary shares will receive in the transaction on an as-converted into ordinary shares basis.
The Company will not issue fractional shares in connection with an exchange of rights. Fractional shares will either be rounded down to the nearest whole share or otherwise addressed in accordance with the applicable provisions of the Cayman Islands law. As a result, the holders of the rights must hold rights in multiples of 10 in order to receive shares for all of the holders’ rights upon closing of a Business Combination. If the Company is unable to complete an initial Business Combination within the required time period and the Company liquidates the funds held in the trust account, holders of rights will not receive any of such funds with respect to their rights, nor will they receive any distribution from the Company’s assets held outside of the trust account with respect to such rights, and the rights will expire worthless. Further, there are no contractual penalties for failure to deliver securities to the holders of the rights upon consummation of an initial Business Combination. Additionally, in no event will the Company be required to net cash settle the rights. Accordingly, the rights may expire worthless.
F-18
TWELVE SEAS INVESTMENT COMPANY
CONDENSED BALANCE SHEETS
June 30,
|
December 31,
|
|||||
(Unaudited) |
||||||
Assets |
|
|
||||
Cash |
$ |
66,596 |
$ |
252,927 |
||
Prepaid assets |
|
35,694 |
|
15,000 |
||
Total Current Assets |
|
102,290 |
|
267,927 |
||
|
|
|||||
Cash and securities held in Trust Account |
|
211,727,689 |
|
209,228,292 |
||
Total assets |
$ |
211,829,979 |
$ |
209,496,219 |
||
|
|
|||||
Liabilities and Shareholders’ Equity |
|
|
||||
Accounts payable and accrued expense |
$ |
75,347 |
$ |
65,603 |
||
Deferred fees |
|
359,952 |
|
29,613 |
||
Due to related parties |
|
57,692 |
|
124,293 |
||
Sponsor loans |
|
400,000 |
|
— |
||
Total current liabilities |
|
892,991 |
|
219,509 |
||
|
|
|||||
Commitments |
|
|
||||
Ordinary shares subject to possible redemption, 20,593,698 and 20,427,670 shares at redemption value at June 30, 2019 and December 31, 2018, respectively |
|
205,936,980 |
|
204,276,700 |
||
|
|
|||||
Shareholders’ Equity: |
|
|
||||
Preferred shares, $0.0001 par value; 2,000,000 shares authorized; no shares issued and outstanding |
|
— |
|
— |
||
Ordinary shares, $0.0001 par value; 200,000,000 shares authorized; 6,185,302 shares (excluding 20,593,698 shares subject to possible redemption) and 6,351,330 shares (excluding 20,427,670 shares subject to possible redemption) outstanding at June 30, 2019 and December 31, 2018, respectively |
|
618 |
|
635 |
||
Additional paid-in capital |
|
1,534,278 |
|
3,194,541 |
||
Accumulated earnings |
|
3,465,112 |
|
1,804,834 |
||
Total shareholders’ equity |
|
5,000,008 |
|
5,000,010 |
||
|
|
|||||
Total Liabilities and Shareholders’ Equity |
$ |
211,829,979 |
$ |
209,496,219 |
The accompanying notes are an integral part of these unaudited condensed financial statements.
F-19
TWELVE SEAS INVESTMENT COMPANY
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
For the Three Months Ended
|
For the Six Months Ended
|
|||||||||||
2019 |
2018 |
2019 |
2018 |
|||||||||
Formation and operating costs |
$ |
722,588 |
$ |
6,424 |
$ |
839,119 |
$ |
7,198 |
||||
Loss from operations |
|
722,588 |
|
6,424 |
|
839,119 |
|
7,198 |
||||
|
|
|
|
|||||||||
Other income |
|
|
|
|
||||||||
Dividend income |
|
882,925 |
|
— |
|
882,925 |
|
— |
||||
Interest income |
|
351,407 |
|
42,422 |
|
1,616,472 |
|
42,422 |
||||
Total other income |
|
1,234,332 |
|
42,422 |
|
2,499,397 |
|
42,422 |
||||
|
|
|
|
|||||||||
Net income |
$ |
511,744 |
$ |
35,998 |
$ |
1,660,278 |
$ |
35,224 |
||||
|
|
|
|
|||||||||
Weighted average shares outstanding, basic and diluted |
|
26,729,000 |
|
6,472,385 |
|
26,729,000 |
|
5,491,641 |
||||
|
|
|
|
|||||||||
Basic and diluted net income per ordinary share |
$ |
0.02 |
$ |
0.01 |
$ |
0.06 |
$ |
0.01 |
The accompanying notes are an integral part of these unaudited condensed financial statements.
F-20
TWELVE SEAS INVESTMENT COMPANY
CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
SIX MONTHS ENDED JUNE 30, 2019 AND 2018
(Unaudited)
Additional
|
Accumulated
|
Total Shareholders’
|
||||||||||||||||
Ordinary Shares |
||||||||||||||||||
Shares |
Par Value |
|||||||||||||||||
Balance as of January 1, 2019 |
6,351,330 |
|
$ |
635 |
|
$ |
3,194,541 |
|
$ |
1,804,834 |
$ |
5,000,010 |
|
|||||
Reclassification of ordinary shares subject to possible redemption |
(166,028 |
) |
|
(17 |
) |
|
(1,660,263 |
) |
|
|
(1,660,280 |
) |
||||||
Net income |
|
|
|
|
|
|
|
|
|
1,660,278 |
|
1,660,278 |
|
|||||
|
|
|
|
|
|
|
|
|||||||||||
Balance as of June 30, 2019 |
6,185,302 |
|
$ |
618 |
|
$ |
1,534,278 |
|
$ |
3,465,112 |
$ |
5,000,008 |
|
Additional
|
Accumulated
|
Total Shareholders’
|
|||||||||||||||||
Ordinary Shares |
|||||||||||||||||||
Shares |
Par Value |
||||||||||||||||||
Balance as of January 1, 2018 |
4,312,500 |
|
$ |
431 |
|
$ |
24,569 |
|
$ |
(28,513 |
) |
$ |
(3,513 |
) |
|||||
Return of Insider Shares in connection with the downsized offering on June 1, 2018 |
(1,437,500 |
) |
|
(144 |
) |
|
144 |
|
|
— |
|
|
— |
|
|||||
Effectuation of a 1.5-for-1 stock dividend in connection with the upsized offering on
|
1,437,500 |
|
|
144 |
|
|
(144 |
) |
|
— |
|
|
— |
|
|||||
Effectuation of a 1.2-for-1 stock dividend in connection with the upsized offering on
|
862,500 |
|
|
86 |
|
|
(86 |
) |
|
— |
|
|
— |
|
|||||
Sale of 18,000,000 Units on
|
18,000,000 |
|
|
1,800 |
|
|
179,998,200 |
|
|
— |
|
|
180,000,000 |
|
|||||
Sale of 475,000 Private Placement Units on June 22, 2018 |
475,000 |
|
|
48 |
|
|
4,749,952 |
|
|
— |
|
|
4,750,000 |
|
|||||
Issuance of Representative Shares on June 28, 2018 |
375,000 |
|
|
38 |
|
|
3,749,962 |
|
|
— |
|
|
3,750,000 |
|
|||||
Sale of Over-Allotment Units to underwriters on June 28, 2018 |
2,700,000 |
|
|
270 |
|
|
26,999,730 |
|
|
— |
|
|
27,000,000 |
|
|||||
Sale of Private Units on June 28, 2018 |
54,000 |
|
|
5 |
|
|
539,995 |
|
|
— |
|
|
540,000 |
|
|||||
Underwriters’ discount |
— |
|
|
— |
|
|
(4,140,000 |
) |
|
— |
|
|
(4,140,000 |
) |
|||||
Other offering expenses |
— |
|
|
— |
|
|
(4,453,124 |
) |
|
— |
|
|
(4,453,124 |
) |
|||||
Reclassification of ordinary shares subject to possible redemption |
(20,247,858 |
) |
|
(2,025 |
) |
|
(202,476,555 |
) |
|
— |
|
|
(202,478,580 |
) |
|||||
Net income |
|
|
|
|
|
|
|
|
|
35,224 |
|
|
35,224 |
|
|||||
Balance as of June 30, 2018 |
6,531,142 |
|
$ |
653 |
|
$ |
4,992,643 |
|
$ |
6,711 |
|
$ |
5,000,007 |
|
The accompanying notes are an integral part of these unaudited condensed financial statements.
F-21
TWELVE SEAS INVESTMENT COMPANY
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Six Months
|
For the
|
|||||||
Cash Flows from Operating Activities: |
|
|
|
|
||||
Net income |
$ |
1,660,278 |
|
$ |
35,224 |
|
||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: |
|
|
|
|
||||
Interest received (earned) on investment held in Trust Account |
|
154,618 |
|
|
(42,422 |
) |
||
Changes in current assets and current liabilities: |
|
|
|
|
||||
Prepaid assets |
|
(20,694 |
) |
|
(35,000 |
) |
||
Accounts payable and accrued expense |
|
9,744 |
|
|
(20,619 |
) |
||
Deferred fees |
|
330,339 |
|
|
— |
|
||
Due to related parties |
|
(66,601 |
) |
|
3,000 |
|
||
Net cash provided by (used in) in operating activities |
|
2,067,684 |
|
|
(59,817 |
) |
||
|
|
|
|
|||||
Cash Flows from Investing Activities: |
|
|
|
|
||||
Proceeds from sale and redemption of investment held in Trust Account |
|
209,072,910 |
|
|
— |
|
||
Purchase of investment held in Trust Account |
|
(211,726,925 |
) |
|
(206,999,990 |
) |
||
Net cash used in investing activities |
|
(2,654,015 |
) |
|
(206,999,990 |
) |
||
|
|
|
|
|||||
Cash Flows from Financing Activities: |
|
|
|
|
||||
Proceeds from initial public offering, net of underwriters’ fees |
|
— |
|
|
203,400,000 |
|
||
Proceeds from private placement |
|
— |
|
|
4,750,000 |
|
||
Proceeds from Sponsor loan |
|
400,000 |
|
|
253,500 |
|
||
Repayment of Sponsor loan |
|
— |
|
|
(300,000 |
) |
||
Payments of offering costs |
|
— |
|
|
(581,043 |
) |
||
Net cash provided by financing activities |
|
400,000 |
|
|
207,522,457 |
|
||
|
|
|
|
|||||
Net Change in Cash |
|
(186,331 |
) |
|
462,650 |
|
||
Cash – Beginning |
|
252,927 |
|
|
1,500 |
|
||
Cash – Ending |
$ |
66,596 |
|
$ |
464,150 |
|
||
|
|
|
|
|||||
Supplemental Disclosure of Non-cash Financing Activities: |
|
|
|
|
||||
Increase in accrued expenses for offering costs charged to additional paid in capital |
$ |
— |
|
$ |
55,859 |
|
||
Increase in due to related parties for offering costs charged to additional paid in capital |
$ |
— |
|
$ |
1,222 |
|
||
Reclassification of ordinary shares subject to possible conversion |
$ |
1,660,280 |
|
$ |
202,478,580 |
|
The accompanying notes are an integral part of these unaudited condensed financial statements.
F-22
TWELVE SEAS INVESTMENT COMPANY
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2019
(Unaudited)
Note 1 — Organization and Business Operations
Organization and General
Twelve Seas Investment Company (the “Company”) is a blank check company incorporated on November 30, 2017, under the laws of the Cayman Islands for the purpose of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination with one or more businesses or entities (a “Business Combination”). The Company’s efforts to identify a prospective target business are not limited to a particular industry or geographic location.
As of June 30, 2019, the Company had not yet commenced any operations generating revenue. All activity through June 30, 2019 relates to the Company’s formation, the Initial Public Offering (as defined below), the search for prospective targets to effect a Business Combination, and consummating the aforementioned Business Combination (as described in Initial Business Combination section of Note 1). The Company has selected December 31 as its fiscal year end.
Financing
The registration statements for the Company’s initial public offering (“Initial Public Offering”) were declared effective on June 19, 2018. On June 22, 2018, the Company consummated the Initial Public Offering of 18,000,000 units (“Units” or “Public Units” and, with respect to the ordinary shares included in the Public Units being offered, the “Public Shares”), generating gross proceeds of $180,000,000, which is described in Note 3.
Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of 475,000 units (the “Private Units”) at a price of $10.00 per Unit in a private placement to the Company’s sponsor (the “Sponsor”), generating gross proceeds of $4,750,000, which is described in Note 4.
Contained in the underwriting agreement for the Public Offering is an overallotment option allowing the underwriters to purchase from the Company up to an additional 2,700,000 Public Units and the sale to the Sponsor of an additional 54,000 Private Units at $10.00 per Unit (as described in Note 3 — Initial Public Offering and Note 4 - Private Placement).
On June 28, 2018, the underwriters exercised the option in full and purchased 2,700,000 Public Units, which were sold at $10.00 per Unit, generating gross proceeds of $27,000,000. Simultaneously with the sale of the over-allotment Public Units, the Company consummated the private placement of an additional 54,000 Private Units, purchased by the Sponsor, at a price of $10.00 per Unit, generating total additional gross proceeds of $540,000.
Trust Account
Following the closing of the Initial Public Offering on June 22, 2018, an amount of $180,000,000 ($10.00 per Unit) from the net proceeds of the sale of the Public Units in the Initial Public Offering and the Private Units was placed in a trust account (“Trust Account”). Following the closing of underwriters’ exercise of over-allotment option on June 28, 2018, an additional $27,000,000 of net proceeds ($10.00 per Unit) was placed in the Trust Account, bringing the aggregate proceeds held in the Trust Account to $207,000,000.
The funds in the Trust Account are invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), with a maturity of 180 days or less or in any open-ended investment company that holds itself out as a money market fund meeting the conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the consummation of a Business Combination or (ii) the distribution of the Trust Account as described below, except that interest earned on the Trust Account can be released to pay the Company’s income or other tax obligations.
F-23
TWELVE SEAS INVESTMENT COMPANY
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2019
(Unaudited)
Note 1 — Organization and Business Operations (cont.)
Initial Business Combination
The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the Private Units, although substantially all of the net proceeds are intended to be generally applied toward consummating a Business Combination. The Company’s Business Combination must be with one or more target businesses that together have a fair market value equal to at least 80% of the balance in the Trust Account (as defined below) (net of taxes payable) at the time of the signing an agreement to enter into a Business Combination. However, the Company will only complete a Business Combination if the post-Business Combination company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act. There is no assurance that the Company will be able to successfully effect a Business Combination.
The Company will provide its shareholders with the opportunity to redeem all or a portion of their shares included in the Public Units sold in the Initial Public Offering (the “Public Shares”) upon the completion of a Business Combination either (i) in connection with a shareholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek shareholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The shareholders will be entitled to redeem their shares for a pro rata portion of the amount then on deposit in the Trust Account (initially approximately $10.00 per share, plus any pro rata interest earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations).
The ordinary shares subject to redemption are recorded at a redemption value and classified as temporary equity upon the completion of the Initial Public Offering, in accordance with Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” The Company will proceed with a Business Combination if the Company has net tangible assets of at least $5,000,001 upon consummation of such a Business Combination and a majority of the issued and outstanding shares voted are voted in favor of the Business Combination. If a shareholder vote is not required by law and the Company does not decide to hold a shareholder vote for business or other legal reasons, the Company will, pursuant to its Amended and Restated Memorandum and Articles of Association, conduct the redemptions pursuant to the tender offer rules of the Securities and Exchange Commission (“SEC”), and file tender offer documents with the SEC prior to completing a Business Combination. If, however, a shareholder approval of the transaction is required by law, or the Company decides to obtain shareholder approval for business or other legal reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. If the Company seeks shareholder approval in connection with a Business Combination, the Initial Shareholders (defined in Note 5- Related Party Transactions) have agreed to vote their initial shares and private shares, as well as any public shares acquired in or after this offering, in favor of any proposed business combination. Additionally, each public shareholder may elect to redeem their Public Shares irrespective of whether they vote for or against the proposed transaction.
The Company will have until December 22, 2019 to consummate a Business Combination (the “Combination Period”). If the Company is unable to complete a Business Combination within the Combination Period, it will trigger the automatic winding up, dissolution and liquidation pursuant to the terms of the Amended and Restated Memorandum and Articles of Association. The amount in the Trust Account (less the aggregate nominal par value of the shares of the Company’s public shareholders) under the Companies Law will be treated as share premium which is distributable under the Companies Law provided that immediately following the date on which the proposed distribution is proposed to be made, the Company is able to pay the debts as they fall due in the ordinary course of business. If the Company is forced to liquidate the Trust Account, the public shareholders would be distributed the amount in the Trust Account calculated as of the date that is two days prior to the distribution date (including any accrued interest).
The Initial Shareholders have agreed to (i) waive their conversion rights with respect to their Initial Shares, private shares and Public Shares in connection with the consummation of a Business Combination, (ii) to waive their rights to liquidating distributions from the Trust Account with respect to their initial shares and private placement shares if
F-24
TWELVE SEAS INVESTMENT COMPANY
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2019
(Unaudited)
Note 1 — Organization and Business Operations (cont.)
the Company fails to consummate a Business Combination within the Combination Period and (iii) not to propose an amendment to the Company’s Amended and Restated Memorandum and Articles of Association that would affect the substance or timing of the Company’s obligation to redeem 100% of its Public Shares if the Company does not complete a Business Combination, unless the Company provides the public shareholders with the opportunity to redeem their shares in conjunction with any such amendment.
On April 15, 2019, the Company entered into a Business Combination Agreement (the “Business Combination Agreement”) with Brooge Holdings Limited, a Cayman Islands exempted company (“Pubco”), Brooge Merger Sub Limited, a Cayman Islands exempted company and a wholly-owned subsidiary of Pubco (“Merger Sub”), Brooge Petroleum And Gas Investment Company FZE, a company formed under the laws of the Fujairah Free Zone, UAE (“BPGIC”), and each of the holders of BPGIC’s outstanding capital shares that become parties to the Business Combination Agreement by executing a joinder agreement to the Business Combination Agreement (a “Joinder”). On May 10, 2019, BPGIC’s sole shareholder, Brooge Petroleum and Gas Investment Company (BPGIC) PLC (“Seller”), executed and delivered to the Company, BPGIC and Pubco, a Joinder.
On April 15, 2019, the Company changed the ticker symbols for the Company’s units, ordinary shares, warrants and rights trading on the NASDAQ Capital Market from “TWLVU,” “TWLV,” “TWLVW” and “TWLVR,” respectively, to “BROGU,” “BROG,” “BROGW,” and “BROGR,” respectively.
Pursuant to the Business Combination Agreement, at the closing of the transactions contemplated by the Business Combination Agreement (the “Closing”), (a) the Company will merge with Merger Sub, with the Company continuing as the surviving entity, and with all holders of the Company’s securities receiving substantially identical securities of Pubco, and (b) Pubco will acquire all of the issued and outstanding ordinary shares of BPGIC in exchange for ordinary shares of Pubco, with BPGIC becoming a wholly-owned subsidiary of Pubco.
The total consideration to be paid by Pubco to Seller will be 100,000,000 Pubco ordinary shares, subject to reduction to the extent that BPGIC elects for the Sellers to receive a portion of the consideration for the purchased shares as cash in lieu of receiving Pubco ordinary shares in an amount not to exceed 40% of the Closing Net Cash (as defined in the Business Combination Agreement); provided that 20,000,000 of the Pubco shares otherwise issuable to Seller at the Closing will be set aside in escrow and delivered to the escrow agent at the Closing, with such escrow shares subject to vesting and potential forfeiture based on terms set forth in an escrow agreement mutually agreed by the Company and BPGIC (the “Escrow Agreement). In addition, the Initial Shareholders of the Company have agreed to forfeit 20% of their Founder shares at the Closing and escrow 30% of their Founder shares at the Closing, subject to the same vesting and forfeiture conditions as the Seller.
On April 30, 2019, the Company and BPGIC entered into a letter agreement pursuant to which (a) the due date was extended from April 30, 2019 to May 10, 2019 (or such later date prior to the Closing as mutually agreed by the Company and BPGIC) for (i) Pubco, Seller and the escrow agent to enter into the Escrow Agreement, (ii) BPGIC to deliver the Company Schedules (as defined in the Business Combination Agreement), and (iii) BPGIC to deliver the Joinder Documents (as defined in the Business Combination Agreement) for each shareholder of BPGIC, and (b) the date on and after which the Company has a right to terminate the Business Combination Agreement if the deliverables specified in clause (a) above are not timely provided was also extended from April 30, 2019 to May 10, 2019 (or such later date prior to the Closing as mutually agreed by the Company and BPGIC.)
On May 10, 2019 as required by the Business Combination Agreement, (i) Pubco, Seller and Continental Stock Transfer and Trust Company, as escrow agent, entered into the Escrow Agreement, (ii) BPGIC timely delivered to the Company the Company Schedules, and (iii) as noted above, Seller delivered the Joinder and the other Joinder Documents.
On June 13, 2019 the Company and BPGIC filed an investor presentation with the SEC to be used in connection with the transactions contemplated by the Business Combination Agreement.
F-25
TWELVE SEAS INVESTMENT COMPANY
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2019
(Unaudited)
Note 1 — Organization and Business Operations (cont.)
Liquidation
The holders of the initial shares will not participate in any liquidation distribution with respect to such securities. In the event of such distribution, it is possible that the per share value of the residual assets remaining available for distribution (including Trust Account assets) will be less than the $10.00 per Unit in the Initial Public Offering. In order to protect the amounts held in the Trust Account, Dimitri Elkin, the Company’s Chief Executive Officer, has contractually agreed, pursuant to a written agreement to the Company, that if the Company liquidates the Trust Account prior to the consummation of a Business Combination, he will be liable to ensure that the proceeds in the Trust Account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by the Company for services rendered or contracted for or products sold to the Company. This liability will not apply with respect to any claims by a third party who executed a waiver of any right, title, interest or claim of any kind in or to any monies held in the Trust Account. Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, then Dimitri Elkin will not be responsible to the extent of any liability for such third party claims. The Company will seek to reduce the possibility that Dimitri Elkin will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers (other than the Company’s independent auditors), prospective target businesses or other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.
The Company will pay the costs of liquidating the trust account from the remaining assets outside of the trust account. If such funds are insufficient, Bryant Edwards, the Company’s COO, has contractually agreed to advance the Company the funds necessary to complete such liquidation (currently anticipated to be no more than approximately $20,000) and has contractually agreed not to seek repayment for such expenses.
Liquidity
As of June 30, 2019, the Company had cash outside the Trust Account of $66,596 available for working capital needs. All remaining cash and securities were held in the Trust Account and is generally unavailable for the Company’s use, prior to an initial Business Combination, and is restricted for use either in a Business Combination or to redeem Public Shares. As of June 30, 2019, none of the amount on deposit in the Trust Account was available to be withdrawn as described above.
Through June 30, 2019, the Company’s liquidity needs were satisfied through receipt of $25,000 from the sale of the insider shares, advances from the Sponsor in an aggregate amount of $300,000 which were repaid upon the IPO (as described in Note 5) and the remaining net proceeds from the IPO and Private Placement (as described in Note 3 and 4). On April 4, 2019, the Company issued a Note (as described in Note 5) in the principal amount of up to $500,000 to the Sponsor, the balance of which will be repaid promptly after the date on which the Company consummates a Business Combination. In the event that the Company is unable to consummate a business combination, as described in the prospectus relating to the IPO, the loans must be repaid to the extent that the Company is financially able to do so with cash at its disposable outside of the Trust. As of June 30, 2019, the Sponsor had funded an aggregate amount of $400,000 to the Company in pursuant to the Note.
The Company anticipates that the $66,596 outside of our trust account as of June 30, 2019, combined with up to $100,000 of the remaining Sponsor loans available in pursuant to the Note issued on April 4, 2019, will not be sufficient to allow the Company to operate before a business combination is consummated or automatic winding up, dissolution and liquidation.
Until consummation of its Business Combination, the Company will be using the funds not held in the Trust Account, and any additional Working Capital Loans from the Initial Shareholders, the Sponsor, the Company’s officers and directors, or their respective affiliates, for identifying and evaluating prospective acquisition candidates, performing business due diligence on prospective target businesses, traveling to and from the offices, plants or similar locations of
F-26
TWELVE SEAS INVESTMENT COMPANY
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2019
(Unaudited)
Note 1 — Organization and Business Operations (cont.)
prospective target businesses, reviewing corporate documents and material agreements of prospective target businesses, selecting the target business to acquire and structuring, negotiating and consummating the Business Combination.
The Company currently estimates that it has insufficient funds available to both operate its business and consummate its initial business combination. The Company may need to obtain additional financing either to consummate its initial business combination or because it becomes obligated to redeem a significant number of its public shares upon consummation of its initial business combination, in which case the Company may issue additional securities or incur debt in connection with such business combination. Subject to compliance with applicable securities laws, the Company would only consummate such financing simultaneously with the consummation of its initial business combination. Following the Company’s initial business combination, if cash on hand is insufficient, the Company may need to obtain additional financing in order to meet its obligations but there is no assurance that new financing will be available to the Company on commercially acceptable terms. Furthermore, if the Company is not able to consummate a business combination by December 22, 2019, it will trigger the Company’s automatic winding up, liquidation and dissolution. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements have been prepared assuming that the Company will continue as a going concern and, accordingly, do not include any adjustments that might result from the outcome of this uncertainty.
Note 2 — Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed financial statements of the Company are presented in U.S. dollars in conformity with accounting principles generally accepted in the United States of America (“US GAAP”) and pursuant to the accounting and disclosure rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”). In the opinion of management, all adjustments (consisting of normal recurring adjustments) have been made that are necessary to present fairly the financial position, and the results of its operations and its cash flows. Operating results as presented are not necessarily indicative of the results to be expected for a full year.
Emerging Growth Company Status
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended, (the “Securities Act”), as modified by the Jumpstart our Business Startups Act of 2012, (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
F-27
TWELVE SEAS INVESTMENT COMPANY
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2019
(Unaudited)
Note 2 — Significant Accounting Policies (cont.)
Offering Costs
The Company complies with the requirements of the ASC 340-10-S99-1 and SEC Staff Accounting Bulletin (“SAB”) Topic 5A — “Expenses of Offering”. Offering costs consist principally of professional and registration fees incurred through the balance sheet date that are related to the Public Offering and that were charged to shareholders’ equity upon the completion of the Initial Public Offering. Accordingly, offering costs totaling $8,593,124 have been charged to shareholders’ equity (consisting of $4,140,000 in underwriters’ fees, plus $703,124 of other cash expenses, and a non-cash charge of $3,750,000 to record the fair value of the representative shares (as described in Note 7 — Commitments & Contingencies)).
Use of Estimates
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company has $66,596 of cash held outside of the Trust Account as of June 30, 2019 and $252,927 as of December 31, 2018. The Company did not have any cash equivalents as of June 30, 2019 and December 31, 2018.
Investment Held in Trust Account
Investment consists of United States Money Market, United States Treasury securities and United States Money Market Fund. The Company classifies its United States Treasury securities as held-to-maturity in accordance with FASB ASC Topic 320 “Investments — Debt and Equity Securities.” Held-to-maturity securities are those securities which the Company has the ability and intent to hold until maturity. Held-to-maturity treasury securities are recorded at amortized cost and adjusted for the amortization or accretion of premiums or discounts.
A decline in the market value of held-to-maturity securities below cost that is deemed to be other than temporary, results in an impairment that reduces the carrying costs to such securities’ fair value. The impairment is charged to earnings and a new cost basis for the security is established. To determine whether an impairment is other than temporary, the Company considers whether it has the ability and intent to hold the investment until a market price recovery and considers whether evidence indicating the cost of the investment is recoverable outweighs evidence to the contrary. Evidence considered in this assessment includes the reasons for the impairment, the severity and the duration of the impairment, changes in value subsequent to year-end, forecasted performance of the investee, and the general market condition in the geographic area or industry the investee operates in.
Premiums and discounts are amortized or accreted over the life of the related held-to-maturity security as an adjustment to yield using the effective-interest method. Such amortization and accretion is included in the “interest income” line item in the condensed statements of operations. Interest income is recognized when earned.
Fair Value Measurements
FASB ASC Topic 820 “Fair Value Measurements and Disclosures” defines fair value, the methods used to measure fair value and the expanded disclosures about fair value measurements. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between the buyer and the seller at the measurement date. In determining fair value, the valuation techniques consistent with the market approach, income approach and
F-28
TWELVE SEAS INVESTMENT COMPANY
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2019
(Unaudited)
Note 2 — Significant Accounting Policies (cont.)
cost approach shall be used to measure fair value. FASB ASC Topic 820 establishes a fair value hierarchy for inputs, which represent the assumptions used by the buyer and seller in pricing the asset or liability. These inputs are further defined as observable and unobservable inputs. Observable inputs are those that buyer and seller would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs reflect the Company’s assumptions about the inputs that the buyer and seller would use in pricing the asset or liability developed based on the best information available in the circumstances.
The fair value hierarchy is categorized into three levels based on the inputs as follows:
Level 1 |
— |
Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Valuation adjustments and block discounts are not being applied. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these securities does not entail a significant degree of judgment. |
||||
Level 2 |
— |
Valuations based on (i) quoted prices in active markets for similar assets and liabilities, (ii) quoted prices in markets that are not active for identical or similar assets, (iii) inputs other than quoted prices for the assets or liabilities, or (iv) inputs that are derived principally from or corroborated by market through correlation or other means. |
||||
Level 3 |
— |
Valuations based on inputs that are unobservable and significant to the overall fair value measurement. |
The fair value of the Company’s certain assets and liabilities, which qualify as financial instruments under ASC 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the condensed balance sheet. The fair values of cash and cash equivalents, prepaid assets, accounts payable and accrued expenses, due to related parties and Sponsor loans are estimated to approximate the carrying values as of June 30, 2019 due to the short maturities of such instruments.
The following table presents information about the Company’s assets and liabilities that were measured at fair value on a recurring basis as of June 30, 2019 and December 31, 2018 and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value as of June 30, 2019.
Description |
June 30,
|
Quoted Prices
|
Significant
|
Significant
|
||||||||
Assets: |
|
|
|
|
||||||||
U.S. Money Market Fund held in Trust Account |
$ |
211,727,689 |
|
211,727,689 |
|
— |
|
— |
||||
$ |
211,727,689 |
$ |
211,727,689 |
$ |
— |
$ |
— |
Description |
December 31,
|
Quoted Prices
|
Significant
|
Significant
|
||||||||
Assets: |
|
|
|
|
||||||||
Cash held in Trust Account |
$ |
764 |
$ |
764 |
$ |
— |
$ |
— |
||||
U.S. Treasury Securities held in Trust Account |
|
209,227,528 |
|
— |
|
209,227,528 |
|
— |
||||
$ |
209,228,292 |
$ |
764 |
$ |
209,227,528 |
$ |
— |
F-29
TWELVE SEAS INVESTMENT COMPANY
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2019
(Unaudited)
Note 2 — Significant Accounting Policies (cont.)
Ordinary Shares Subject to Possible Redemption
The Company accounts for its ordinary shares subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Ordinary shares subject to mandatory redemption (if any) are classified as a liability instrument and are measured at fair value. Conditionally redeemable ordinary shares (including ordinary shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, ordinary shares are classified as shareholders’ equity. The Company’s ordinary shares feature certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly, at June 30, 2019 and December 31, 2018, ordinary shares subject to possible redemption are presented as temporary equity, outside of the shareholders’ equity section of the Company’s condensed balance sheets.
Warrants and Rights
Since the Company is not required to net cash settle the Warrants and Rights (as defined in Note 3 – Initial Public Offering) and the Warrants and Rights are exercisable or convertible upon the consummation of an initial Business Combination, the management determined that the Warrants and Rights will be classified within shareholders’ equity as “Additional paid-in capital” upon their issuance in accordance with ASC 815-40. The proceeds from the sale will be allocated to Public Shares, Warrants, and Rights based on the relative fair value of the securities in accordance with 470-20-30. The value of the Public Shares, Warrants, and Rights will be based on the closing price paid by investors.
Net Income per Ordinary Share
The Company complies with accounting and disclosure requirements ASC Topic 260, “Earnings Per Share.” Net income per ordinary share is computed by dividing net income by the weighted average number of ordinary shares issued and outstanding for the periods. In accordance with SAB Topic 4.D and ASC 260-10-55-12, weighted average shares were retrospectively stated for the 1,437,500 ordinary shares cancelled on June 1, 2018, effectuation of a 1.5-for-1 stock dividend on June 8, 2018, and effectuation of a 1.2-for-1 stock dividend on June 19, 2018 (see Note 5). In accordance with ASC 260-10-45-13, weighted average shares were reduced for the effect of up to an aggregate of 50,000 ordinary shares that are subject to forfeiture by the underwriter on a pro rata basis with the initial shareholders in the event that the initial shareholders are required to forfeit or transfer any Insider Shares to third parties for no consideration or otherwise restructure the terms of such shares in connection with the initial Business Combination. At June 30, 2019, the Company did not have any dilutive securities and other contracts that could, potentially, be exercised or converted into ordinary shares and then share in the income of the Company. As a result, diluted income per ordinary share is the same as basic income per ordinary shares for the periods presented.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution, which at times, may exceed the Federal depository insurance coverage of $250,000. The Company has not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.
Income Taxes
The Company accounts for income taxes under ASC 740 Income Taxes (“ASC 740”). ASC 740 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statement and tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. ASC 740 additionally requires a valuation allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized.
F-30
TWELVE SEAS INVESTMENT COMPANY
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2019
(Unaudited)
Note 2 — Significant Accounting Policies (cont.)
ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim period, disclosure and transition. The Company has identified the Cayman Islands as its only “major” tax jurisdiction, as defined. Based on the Company’s evaluation, it has been concluded that there are no significant uncertain tax positions requiring recognition in the Company’s financial statements. Since the Company was incorporated on November 30, 2017, the evaluation was performed for the 2018 tax year which will be the only period subject to examination. The Company believes that its income tax positions and deductions would be sustained on audit and does not anticipate any adjustments that would result in a material changes to its financial position. The Company’s policy for recording interest and penalties associated with audits is to record such items as a component of income tax expense.
Recent Accounting Pronouncements
Management does not believe that any recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on the Company’s financial statements.
Note 3 — Initial Public Offering
Pursuant to the Initial Public Offering on June 22, 2018, the Company sold 18,000,000 Units at a purchase price of $10.00 per Unit. On June 28, 2018, in connection with the underwriters’ exercise of their over-allotment option in full, the Company consummated the sale of an additional 2,700,000 Public Units at $10.00 per Unit. Each Unit consists of one ordinary share, one redeemable warrant (“Public Warrant”), and one right (“Public Right”). Each redeemable warrant entitles the holder to purchase one ordinary share at an exercise price of $11.50 (see Note 8). Each holder of a right will automatically receive one-tenth (1/10) of an ordinary share upon consummation of a Business Combination (see Note 8).
Note 4 — Private Placements
Simultaneously with the Initial Public Offering, the Sponsor purchased an aggregate of 475,000 Private Units at $10.00 per Unit (for a total purchase price of $4,750,000). On June 28, 2018, in connection with the underwriters’ exercise of their over-allotment option in full, the Company consummated the sale of an additional 54,000 Private Units at $10.00 per Unit (for a total purchase price of $540,000).
The Private Units are identical to the units sold in the Initial Public Offering except the Private Warrants (as defined in Note 8) will be non-redeemable and may be exercised on a cashless basis. The purchasers of the Private Units have agreed not to transfer, assign or sell any of the Private Units or underlying securities (except to the same permitted transferees as the insider shares) until the completion of the Business Combination.
If the Company does not complete a Business Combination within the Combination Period, the proceeds of the sale of the Private Units will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law).
Note 5 — Related Party Transactions
Insider Shares
On December 11, 2017, the Company issued 4,312,500 shares (“Insider Shares”) to the Sponsor and certain officers and directors (“Initial Shareholders”) for an aggregate amount of $25,000. On June 1, 2018, the Initial Shareholders returned 1,437,500 ordinary shares to the Company for cancellation. On June 8, 2018, the Company effectuated a 1.5-for-1 dividend of its ordinary shares in connection with the upsized Initial Public Offering, resulting in 4,312,500 Insider Shares outstanding and held by the Initial Shareholders. On June 19, 2018, the Company effectuated a 1.2-for-1
F-31
TWELVE SEAS INVESTMENT COMPANY
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2019
(Unaudited)
Note 5 — Related Party Transactions (cont.)
dividend of its ordinary shares resulting in an aggregate of 5,175,000 Insider Shares outstanding and held by the Initial Shareholders. None of the transactions mentioned above materially impacts the market value of the shares presented in the Company’s historical financial statements, nor do they impact the market value of $10.00 per Unit regardless of the number of shares outstanding. Therefore, according to accounting literature ASC 505-20-25, this transaction is not a stock split in substance, and no retroactive adjustments to the shares outstanding presented in prior periods is required. As a result of the underwriters’ over-allotment option exercised in full on June 28, 2018, 675,000 Insider Shares are no longer subject to forfeiture and the initial shareholders maintained 20% of the Company’s issued and outstanding shares after the Initial Public Offering and the exercise of the over-allotment.
The Initial Shareholders have agreed not to transfer, assign or sell any of the Insider Shares (except to certain permitted transferees) until (1) with respect to 50% of the Insider Shares, the earlier of one year after the date of the consummation of the Business Combination and the date on which the closing price of the ordinary shares equals or exceeds $12.50 per share (as adjusted for share splits, share capitalizations, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period commencing after the Business Combination and (2) with respect to the remaining 50% of the Insider Shares, one year after the date of the consummation of the Business Combination, or earlier, in either case, if, subsequent to the Business Combination, the Company consummates a liquidation, merger, stock exchange or other similar transaction which results in all of the shareholders having the right to exchange their ordinary shares for cash, securities or other property.
Related Party Advances
As of June 30, 2019, the amount due to related parties was $57,692. The amount includes unpaid reimbursements for travel and business expenses incurred by the officers on behalf of the Company.
For the period from November 30, 2017 through December 31, 2017, a related party, on behalf of the Sponsor, had advanced to the Company an aggregate of $46,500 in regards to the formation costs and costs associated with the Initial Public Offering. On May 22, 2018, the Sponsor advanced to the Company an additional $150,000. On June 1, 2018, two related parties, on behalf of the sponsor, advanced to the Company an aggregate of $60,000. On June 18, 2018, the Sponsor advanced to the Company an additional $43,500. The loans were non-interest bearing, unsecured and due on demand. The Company repaid the Sponsor in full with $300,000 from the proceeds of the Initial Public Offering not being placed in the Trust Account on June 22, 2018.
Related Party Loans
In order to finance transaction costs in connection with a Business Combination, the Sponsor, or the Company’s officers and directors, or their respective affiliates may, but are not obligated to, loan the Company funds from time to time or at any time (“Working Capital Loans”). Each Working Capital Loan, other than as described below, would be evidenced by a promissory note. The Working Capital Loans would either be paid upon consummation of a Business Combination, without interest, or, at the holder’s discretion, up to $500,000 of the Working Capital Loans may be converted upon consummation of a Business Combination into Private Units at a price of $10.00 per unit (which, for example, would result in the holders being issued units to acquire 55,000 ordinary shares (which includes 5,000 ordinary shares issuable upon exercise of rights) and warrants to purchase 50,000 ordinary shares for $11.50 per share if $500,000 of notes were so converted).
On April 4, 2019, the Company issued an unsecured promissory note (the “Note”) in the principal amount of up to $500,000 to the Sponsor. The Note bears no interest and is repayable in full upon consummation of the Company’s initial Business Combination. In the event that the Company is unable to consummate a Business Combination, as described in the prospectus relating to the IPO, the loans must be repaid to the extent that the Company is financially able to do so with cash at its disposable outside of the Trust. The Sponsor has the option to convert any unpaid balance of the Note into units, each unit consisting of one ordinary share of the Company, one warrant exercisable for one
F-32
TWELVE SEAS INVESTMENT COMPANY
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2019
(Unaudited)
Note 5 — Related Party Transactions (cont.)
ordinary share of the Company and one right to receive one-tenth (1/10) of one ordinary share of the Company upon the consummation of an initial Business Combination, based on a conversion price of $10.00 per unit. The terms of any such units shall be identical to the terms of the units issued pursuant to the private placement that was consummated by the Company in connection with the Company’s Initial Public Offering.
As of June 30, 2019, the Sponsor had funded an aggregate amount of $400,000 to the Company pursuant to the Note.
Administrative Service Fee
The Company has agreed to pay an affiliate of the Sponsor, a monthly fee of an aggregate of $10,000 for general and administrative services (commencing June 20, 2018) including office space, utilities and secretarial support. As of January 1, 2019, the Company has terminated this arrangement. As of March 31, 2019, the Company has paid off all outstanding payables to the affiliate of the Sponsor.
Note 6 — Investment Held in Trust Account
The Company received $210,844,000 from investment in U.S. Treasury Securities which were matured on April 25, 2019. The proceeds received were reinvested in the Money Market Funds. As of June 30, 2019, investment in the Company’s Trust Account consisted of $211,727,689 in Money Market Fund. As of December 31, 2018, investment in the Company’s Trust Account consisted of $764 in U.S. Money Market and $209,227,528 in U.S. Treasury Securities. The carrying value, excluding gross unrealized holding gain and fair value of held to maturity securities on June 30, 2019 and December 31, 2018 are as follows:
Carrying
|
Gross
|
Fair Value
|
|||||||
Money Market Fund |
$ |
211,727,689 |
$ |
— |
$ |
211,727,689 |
|||
$ |
211,727,689 |
$ |
— |
$ |
211,727,689 |
Carrying
|
Gross Unrealized Holding Gain |
Fair Value
|
|||||||
Cash held in Trust Account |
$ |
764 |
$ |
— |
$ |
764 |
|||
U.S. Treasury Securities |
|
209,227,528 |
|
25,362 |
|
209,252,890 |
|||
$ |
209,228,292 |
$ |
25,362 |
$ |
209,253,654 |
Note 7 — Commitments & Contingencies
Deferred Fees
The Company has committed to pay its attorney deferred legal fees upon the consummation of the Initial Business Combination relating to legal services performed in connection with the proposed business combination. An amount of $359,952 has been accrued in the accompanying balance sheet as of June 30, 2019 and is due and payable upon consummation of business combination. In the event that the Company is unable to consummate a business combination, as described in the prospectus relating to the IPO, the deferred fees will not be paid.
Registration Rights
Pursuant to a registration rights agreement entered into on June 19, 2018, the holders of the Insider Shares, Private Units (and their underlying securities), Representative Shares (as a defined below) and any Units that may be issued upon conversion of the Working Capital Loans (and their underlying securities) will be entitled to registration rights.
F-33
TWELVE SEAS INVESTMENT COMPANY
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2019
(Unaudited)
Note 7 — Commitments & Contingencies (cont.)
The holders of a majority of these securities are entitled to make up to two demands, that the Company register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion of a Business Combination. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriters Agreement
The Company granted the underwriters a 45-day option to purchase up to 2,700,000 additional Units to cover over-allotments at the Initial Public Offering price, less the underwriting discounts and commissions. On June 28, 2018, the underwriters exercised its full over-allotment option of 2,700,000 units.
The underwriters were paid a cash underwriting discount of two percent (2.0%) of the gross proceeds of the Initial Public Offering, or $3,600,000. In relation to the additional 2,700,000 units the underwriters purchased via the over-allotment option, an additional amount of $540,000 was paid to the underwriters.
In addition, the Company issued EarlyBirdCapital “EBC”, the underwriter, and/or its designees 375,000 ordinary shares (the “Representative Shares”) upon the consummation of the Initial Public Offering. The Company accounted for the Representative Shares as an expense of the Initial Public Offering resulting in a charge directly to shareholders’ equity. The Company determined the fair value of Representative Shares is $3,750,000 based upon the offering price of the Units of $10.00 per Unit. The underwriter has agreed not to transfer, assign or sell any such shares until the completion of a Business Combination. In addition, the underwriter (and/or its designees) has agreed (i) to waive its redemption rights with respect to such shares in connection with the completion of a Business Combination and (ii) to waive its rights to liquidating distributions from the Trust Account with respect to such shares if the Company fails to complete a Business Combination within the Combination Period. In the event that the Initial Shareholders are required to forfeit or transfer any Insider Shares to third parties for no consideration or otherwise restructure the terms of such shares in connection with the initial Business Combination, the underwriter (and/or its designees) has agreed to forfeit up to an aggregate of 50,000 ordinary shares on a pro rata basis with the Initial Shareholders.
The shares have been deemed compensation by FINRA and are therefore subject to a lock-up for a period of 180 days pursuant to Rule 5110(g)(1) of FINRA’s NASD Conduct Rules. Pursuant to FINRA Rule 5110(g)(1), these securities will not be the subject of any hedging, short sale, derivative, put or call transaction that would result in the economic disposition of the securities by any person for a period of 180 days immediately following the date of the Initial Public Offering, nor may they be sold, transferred, assigned, pledged or hypothecated for a period of 180 days immediately following the Initial Public Offering except to any underwriter and selected dealer participating in the Initial Public Offering and their bona fide officers or partners.
Business Combination Marketing Agreement
The Company has engaged EBC as an advisor in connection with a Business Combination to assist the Company in holding meetings with its shareholders to discuss a potential Business Combination and the target business’ attributes, introduce the Company to potential investors that are interested in purchasing securities, assist the Company in obtaining shareholder approval for the Business Combination and assist the Company with its press releases and public filings in connection with an Business Combination. The Company will pay EBC a cash fee equal to 3.5% of the gross proceeds raised in the offering for such services upon the consummation of the Business Combination (exclusive of any applicable finders’ fees which might become payable). The Company may allocate up to 1% of the 3.5% fee to other firms who assist in connection with the Business Combination.
F-34
TWELVE SEAS INVESTMENT COMPANY
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2019
(Unaudited)
Note 8 — Shareholder’s Equity
Ordinary Shares — The Company is authorized to issue a total of 200,000,000 ordinary shares of a par value of $0.0001 each. As of June 30, 2019 and December 31, 2018, the Company has issued an aggregate of 6,185,302 and 6,351,330 ordinary shares, respectively, excluding 20,593,698 and 20,427,670 shares of ordinary shares subject to possible redemption.
Preferred Shares — The Company is authorized to issue a total of 2,000,000 preferred shares of a par value of $0.0001 each. At June 30, 2019 and December 31, 2018, there were no shares of preferred shares issued or outstanding.
Warrants — Each Public Warrant is at $11.50 per share and exercisable for one ordinary share. The warrants will become exercisable on the later of the completion of a Business Combination and 12 months from the date of the prospectus. If a registration statement covering the ordinary shares issuable upon exercise of the public warrants is not effective within 90 days following the consummation of the Business Combination, public warrant holders may, until such time as there is an effective registration statement and during any period when we shall have failed to maintain an effective registration statement, exercise warrants on a cashless basis pursuant to an available exemption from registration under the Securities Act. In such event, each holder would pay the exercise price by surrendering the warrants for that number of ordinary shares equal to the quotient obtained by dividing (x) the product of the number of ordinary shares underlying the warrants, multiplied by the difference between the exercise price of the warrants and the “fair market value” (defined below) by (y) the fair market value. The “fair market value” shall mean the average reported last sale price of the ordinary shares for the 10 trading days ending on the day prior to the date of exercise.
The warrants underlying the Private Units (“Private Warrants”) are identical to the Public Warrants sold in this offering except the Private Warrants will be non-redeemable and may be exercised on a cashless basis, in each case so long as they continue to be held by the initial purchasers or their permitted transferees.
The Company may redeem the outstanding warrants (excluding the Private Warrants), in whole and not in part, at a price of $0.01 per warrant:
• at any time while the warrants are exercisable,
• upon a minimum of 30 days’ prior written notice of redemption,
• if, and only if, the last sales price of the ordinary shares equals or exceeds $18.00 per share for any 20 trading days within a 30 trading day period ending three business days before we send the notice of redemption, and
• if, and only if, there is a current registration statement in effect with respect to the ordinary shares underlying such warrants at the time of redemption and for the entire 30-day trading period referred to above and continuing each day thereafter until the date of redemption.
• If the Company calls the warrants for redemption as described above, the management will have the option to require all holders that wish to exercise warrants to do so on a “cashless basis.”
Rights — Except in cases where the Company is not the surviving company in a Business Combination, each holder of a right will automatically receive one-tenth (1/10) of an ordinary share upon consummation of the initial Business Combination, even if the holder of a Public Right converted all ordinary shares held by him, her or it in connection with the initial Business Combination or an amendment to the Company’s memorandum and articles of association with respect to its pre-business combination activities. In the event that the Company will not be the surviving company upon completion of the initial Business Combination, each holder of a right will be required to affirmatively convert his, her or its rights in order to receive the one-tenth (1/10) of a share underlying each right upon consummation of the Business Combination. No additional consideration will be required to be paid by a holder of rights in order to
F-35
TWELVE SEAS INVESTMENT COMPANY
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2019
(Unaudited)
Note 8 — Shareholder’s Equity (cont.)
receive his, her or its additional ordinary shares upon consummation of an initial Business Combination. The shares issuable upon exchange of the rights will be freely tradable (except to the extent held by affiliates of the Company). If the Company enters into a definitive agreement for a Business Combination in which the Company will not be the surviving entity, the definitive agreement will provide for the holders of rights to receive the same per share consideration the holders of ordinary shares will receive in the transaction on an as-converted into ordinary shares basis.
The Company will not issue fractional shares in connection with an exchange of rights. Fractional shares will either be rounded down to the nearest whole share or otherwise addressed in accordance with the applicable provisions of the Cayman Islands law. As a result, the holders of the rights must hold rights in multiples of 10 in order to receive shares for all of the holders’ rights upon closing of a Business Combination. If the Company is unable to complete an initial Business Combination within the required time period and the Company liquidates the funds held in the trust account, holders of rights will not receive any of such funds with respect to their rights, nor will they receive any distribution from the Company’s assets held outside of the trust account with respect to such rights, and the rights will expire worthless. Further, there are no contractual penalties for failure to deliver securities to the holders of the rights upon consummation of an initial Business Combination. Additionally, in no event will the Company be required to net cash settle the rights. Accordingly, the rights may expire worthless.
F-36
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Brooge Petroleum and Gas Investment Company FZE
Opinion on the Financial Statements
We have audited the accompanying statements of financial position of Brooge Petroleum and Gas Investment Company FZE (the Company) as of 31 December 2018 and 2017, the related statements of comprehensive income, changes in equity and cash flows for each of the two years in the period ended 31 December 2018, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company at 31 December 2018 and 2017, and the results of its operations and its cash flows for each of the two years in the period ended 31 December 2018, in conformity with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board.
The Company’s Ability to Continue as a Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in note 2.2 to the financial statements, the Company has a working capital deficiency and has not complied with certain covenants included in its bank loan agreements. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s evaluation of the events and conditions and management’s plans regarding these matters also are described in note 2.2. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.
Restatement of 2017 Financial Statements
As discussed in note 2.4 to the financial statements, the 2017 financial statements have been restated to correct a number of misstatements.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Ernst & Young
We have served as the Company’s auditor since 2018.
Abu Dhabi, United Arab Emirates
27 September 2019
F-37
Brooge Petroleum and Gas Investment Company FZE
STATEMENT OF COMPREHENSIVE INCOME
(Restated)
|
||||||||
Notes |
2018 |
2017 |
||||||
USD |
USD |
|||||||
Revenue |
3 |
35,839,268 |
|
89,593 |
|
|||
Direct costs |
4 |
(9,607,360 |
) |
(2,295,809 |
) |
|||
|
|
|||||||
GROSS PROFIT (LOSS) |
26,231,908 |
|
(2,206,216 |
) |
||||
General and administrative expenses |
5 |
(2,029,260 |
) |
(574,266 |
) |
|||
Finance costs |
6 |
(6,951,923 |
) |
(966,926 |
) |
|||
Changes in fair value of derivative financial instruments |
16 |
(1,190,073 |
) |
— |
|
|||
|
|
|||||||
PROFIT (LOSS) AND TOTAL COMPREHENSIVE INCOME (LOSS) FOR THE YEAR |
16,060,652 |
|
(3,747,408 |
) |
The attached notes 1 to 22 form part of these financial statements.
F-38
Brooge Petroleum and Gas Investment Company FZE
STATEMENT OF FINANCIAL POSITION
Notes |
31 December 2018 |
(Restated)
|
(Restated)
|
|||||||
USD |
USD |
USD |
||||||||
ASSETS |
|
|
||||||||
Non-current assets |
|
|
||||||||
Property, plant and equipment |
7 |
197,629,114 |
195,438,871 |
|
169,733,274 |
|
||||
Advances to contractors |
— |
231,571 |
|
838,154 |
|
|||||
197,629,114 |
195,670,442 |
|
170,571,428 |
|
||||||
Current assets |
|
|
||||||||
Inventories |
8 |
147,090 |
176,651 |
|
— |
|
||||
Trade and other receivables |
9 |
2,123,077 |
— |
|
— |
|
||||
Bank balances and cash |
10 |
37,351 |
284,055 |
|
142,466 |
|
||||
2,307,518 |
460,706 |
|
142,466 |
|
||||||
TOTAL ASSETS |
199,936,632 |
196,131,148 |
|
170,713,894 |
|
|||||
EQUITY AND LIABILITIES |
|
|
||||||||
Equity |
|
|
||||||||
Share capital |
11 |
1,361,285 |
1,361,285 |
|
1,361,285 |
|
||||
Owners’ accounts |
47,717,763 |
70,421,436 |
|
57,039,100 |
|
|||||
General reserve |
12 |
680,643 |
— |
|
— |
|
||||
Retained earnings (accumulated losses) |
11,218,242 |
(4,161,767 |
) |
(414,359 |
) |
|||||
Total equity |
60,977,933 |
67,620,954 |
|
57,986,026 |
|
|||||
Non-current liabilities |
|
|
||||||||
Lease liability |
14 |
28,108,801 |
27,599,475 |
|
27,096,507 |
|
||||
Provisions |
15 |
6,267 |
651 |
|
286 |
|
||||
28,115,068 |
27,600,126 |
|
27,096,793 |
|
||||||
Current liabilities |
|
|
||||||||
Bank overdraft |
10 |
3,745,048 |
— |
|
— |
|
||||
Term loans |
13 |
94,792,088 |
94,163,751 |
|
77,497,507 |
|
||||
Accounts payable, accruals and other payables |
17 |
9,003,798 |
4,675,117 |
|
6,102,980 |
|
||||
Derivative financial instruments |
16 |
1,190,073 |
— |
|
— |
|
||||
Lease liability |
14 |
2,112,624 |
2,071,200 |
|
2,030,588 |
|
||||
110,843,631 |
100,910,068 |
|
85,631,075 |
|
||||||
Total liabilities |
138,958,699 |
128,510,194 |
|
112,727,868 |
|
|||||
|
|
|||||||||
TOTAL EQUITY AND LIABILITIES |
199,936,632 |
196,131,148 |
|
170,713,894 |
|
The attached notes 1 to 22 form part of these financial statements.
F-39
Brooge Petroleum and Gas Investment Company FZE
STATEMENT OF CHANGES IN EQUITY
Share
|
Owners’ accounts |
General reserve |
Retained earnings (accumulated losses) |
Total |
|||||||||
USD |
USD |
USD |
USD |
USD |
|||||||||
Balance at 1 January 2017 (restated) |
1,361,285 |
57,039,100 |
|
— |
(414,359 |
) |
57,986,026 |
|
|||||
Net contribution from the owners (note 18) |
— |
13,382,336 |
|
— |
— |
|
13,382,336 |
|
|||||
Total comprehensive loss for the year |
— |
— |
|
— |
(3,747,408 |
) |
(3,747,408 |
) |
|||||
|
|
|
|||||||||||
Balance at 31 December 2017 (restated) |
1,361,285 |
70,421,436 |
|
— |
(4,161,767 |
) |
67,620,954 |
|
|||||
|
|
|
|||||||||||
Balance at 1 January 2018 (restated) |
1,361,285 |
70,421,436 |
|
— |
(4,161,767 |
) |
67,620,954 |
|
|||||
Transfer to general reserve |
— |
— |
|
680,643 |
(680,643 |
) |
— |
|
|||||
Net distributions to the owners (note 18) |
— |
(22,703,673 |
) |
— |
— |
|
(22,703,673 |
) |
|||||
Total comprehensive income for the year |
— |
— |
|
— |
16,060,652 |
|
16,060,652 |
|
|||||
|
|
|
|||||||||||
Balance at 31 December 2018 |
1,361,285 |
47,717,763 |
|
680,643 |
11,218,242 |
|
60,977,933 |
|
The attached notes 1 to 22 form part of these financial statements.
F-40
Brooge Petroleum and Gas Investment Company FZE
STATEMENT OF CASH FLOWS
(Restated)
|
||||||||
Notes |
2018 |
2017 |
||||||
USD |
USD |
|||||||
OPERATING ACTIVITIES |
|
|
||||||
Profit (loss) for the year |
16,060,652 |
|
(3,747,408 |
) |
||||
Adjustments to reconcile net profit (loss) to net cash provided by (used in) operating activities: |
|
|
||||||
Depreciation charge |
4 |
5,716,063 |
|
692,528 |
|
|||
Finance costs |
6 |
6,951,923 |
|
966,926 |
|
|||
Net changes in fair value of derivative financial instruments |
16 |
1,190,073 |
|
— |
|
|||
Working capital changes: |
|
|
||||||
Decrease (increase) in inventories |
29,561 |
|
(176,651 |
) |
||||
Increase in trade and other receivables |
(2,123,077 |
) |
(618,700 |
) |
||||
Increase in provisions |
5,616 |
|
365 |
|
||||
Increase in accounts payable, accruals and other payables |
65,910 |
|
630,023 |
|
||||
Net cash flows from (used in) operating activities |
27,896,721 |
|
(2,252,917 |
) |
||||
INVESTING ACTIVITY |
|
|
||||||
Purchase of property, plant and equipment |
(271,403 |
) |
(21,924,553 |
) |
||||
Net cash flows used in investing activity |
(271,403 |
) |
(21,924,553 |
) |
||||
FINANCING ACTIVITIES |
|
|
||||||
Proceeds from term loans |
13 |
4,038,024 |
|
16,700,441 |
|
|||
Repayment of term loans |
13 |
(3,487,876 |
) |
— |
|
|||
Interest paid on term loans |
(7,195,581 |
) |
(3,429,143 |
) |
||||
Payment of transaction costs on loans |
— |
|
(111,081 |
) |
||||
Net (distributions to) contribution from the owners |
(24,971,637 |
) |
11,158,842 |
|
||||
Net cash flows (used in) from financing activities |
(31,617,070 |
) |
24,319,059 |
|
||||
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS |
(3,991,752 |
) |
141,589 |
|
||||
Cash and cash equivalents at 1 January |
284,055 |
|
142,466 |
|
||||
CASH AND CASH EQUIVALENTS AT 31 DECEMBER |
10 |
(3,707,697 |
) |
284,055 |
|
The attached notes 1 to 22 form part of these financial statements.
F-41
Brooge Petroleum and Gas Investment Company FZE
NOTES TO THE FINANCIAL STATEMENTS
1 ACTIVITIES
Brooge Petroleum and Gas Investment Company FZE, (the “Company” or “BPGIC”), formerly known as Brooge Petroleum and Gas Investment Company FZC, is a free zone company registered and incorporated on 10 February 2013 in Fujairah, United Arab Emirates (“UAE”). The free zone is income tax free without a set time limit. The Company is an oil storage and service provider located in the Port of Fujairah in the emirate of Fujairah in the UAE. The Company currently operates Phase I, comprising 14 tanks of total capacity of 399,324 cbm, fully operational for storage and other ancillary processes of clean oil. The Company’s Phase II is under construction, which will comprise 8 tanks of total capacity of 600,000 cbm for storage and other ancillary services of crude oil. Brooge Petroleum and Gas Investment Company FZC’s share capital was divided amongst three shareholders (referred to as the owners or shareholders). Emirates Investment LLC FZC was the parent company.
On 25 February 2019, the shareholders of Brooge Petroleum and Gas Investment Company FZC transferred their ownership in the Company to Brooge Petroleum and Gas Investment Company plc (the “Seller”), a company incorporated under the laws of England and Wales and owned by the same shareholders that previously owned Brooge Petroleum and Gas Investment Company FZC and in the same ownership proportion. Upon the change of ownership, Brooge Petroleum and Gas Investment Company FZC changed its name to Brooge Petroleum and Gas Investment Company FZE. As a result of the above, the Seller became the parent of the Company.
On 15 April 2019, the Company entered into a business combination agreement with Twelve Seas Investment Company (“Twelve Seas”), Brooge Holdings Limited, Brooge Merger Sub Limited, a subsidiary of Brooge Holdings Limited, and the Company’s shareholders. On 10 May 2019, the Seller became party to the business combination agreement by execution of a joinder thereto. Pursuant to the business combination agreement, subject to the terms and conditions set forth therein, at the closing of the transactions contemplated by the business combination agreement, Twelve Seas will merge with Brooge Merger Sub Limited, with Twelve Seas continuing as the surviving entity and with holders of Twelve Seas securities receiving securities of Brooge Holdings Limited, and Brooge Holdings Limited will acquire all of the issued and outstanding ordinary shares of the Company from the Seller in exchange for ordinary shares of Brooge Holdings Limited, with the Company becoming a wholly-owned subsidiary of Brooge Holdings Limited.
The registered office is at P.O Box 50170 Al-Sodah, Khorr Fakkan Road, Fujairah, United Arab Emirates.
The financial statements of the Company for the year ended 31 December 2018 were authorised for issue by the Board of Directors on 26 September 2019.
2.1 BASIS OF PREPARATION
The financial statements have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (IASB).
The financial statements have been presented in US Dollars (“USD”) which is the functional and presentation currency of the Company.
The financial statements are prepared under the historical cost convention, except for re-measurement at fair value of derivative financial instruments.
2.2 FUNDAMENTAL ACCOUNTING CONCEPT
As of 31 December 2018, the Company had not paid USD 3,747,537 of principal and accrued interest that was due under the Company’s Phase I Financing Facilities. Also, as of 31 December 2018 and 2017, the Company was not in compliance with its debt covenants, including the debt service coverage ratio contained in the Company’s Phase I Financing Facilities. Even though the lender did not declare an event of default under the loan agreements, these breaches constituted events of default and could have resulted in the lender requiring immediate repayment of the loans. Accordingly, as of 31 December 2018 and 2017, the Company has classified its debt balance of USD 94,792,088 and
F-42
Brooge Petroleum and Gas Investment Company FZE
NOTES TO THE FINANCIAL STATEMENTS
2.2 FUNDAMENTAL ACCOUNTING CONCEPT (cont.)
USD 94,163,751 as a current liability. As of 31 December 2018 and 2017, the Company’s current liabilities exceeded its current assets by USD 108,536,113 and USD 100,449,361, respectively. All of the above represents a material uncertainty that casts significant doubt upon the Company’s ability to continue as a going concern.
On 10 September 2019, the Company entered into an agreement with its lender to amend the Phase I Construction Facility (note 13). The principal and accrued interest of USD 5,494,063 outstanding under this facility as of 31 July 2019 as per the original repayment schedule will now be due on 30 November 2019. The Phase I Construction Facility is now payable in 45 instalments starting 31 October 2019 with final maturity on 30 July 2030. The Phase I Admin Building Facility and the Phase I Short Term Financing Facility were not amended as part of the 10 September 2019 agreement to the Phase I Construction Facility. Subsequent to the year end, the Company had repaid USD 5,646,206 due under the Phase I Admin Building Facility and the Phase I Short Term Financing Facility. As such, all instalments related to the Phase I Admin Building Facility and the Phase I Short Term Financing Facility due under the original repayment schedule up to 10 September 2019 were repaid. In addition, the Company agreed to assign to the lender all proceeds from the operation of the tanks and to pre-settle by 31 December 2019 AED 100,000,000 (USD 27,225,701) translated using the exchange rate as of 31 December 2018) of principal under the Phase I Construction Facilities from the proceeds received from the transaction described in note 1.
During 2018, the Company signed the Phase II End User Agreement to provide storage and ancillary services to the Phase II End User, an international commodity trading company. Phase II operations are scheduled to start in the second quarter of 2020 and management expects this will generate significant operating cash flows. Further, in 2019, the Company entered into the Refinery and Services Agreement with Sahara to develop and operate the Sahara Refinery at the BPGIC terminal. The Company expects to provide operation, storage and ancillary services to Sahara. Refinery operations are scheduled to start in first quarter of 2020. Based on the above, management expects the Company will generate sufficient cash flows from its operations to meet its liabilities as and when the loan instalments fall due. Further, the owners intend to provide further financial support to enable the Company to meet its financial obligations as and when required. Subsequent to 31 December 2018, the shareholder made net contributions of USD 26,471,424.
The financial statements have been prepared assuming that the Company will continue as a going concern. Accordingly, the financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, the amounts and classification of liabilities, or any other adjustments that might result in the event the Company is unable to continue as a going concern.
2.3 CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES
New and amended standards and interpretations
The Company applied certain standards, interpretations and amendments for the first time, which are effective for annual periods beginning on or after 1 January 2018. Except for IFRS 16, which was early adopted during the year ended 31 December 2016, the Company has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.
Although these new standards and amendments are applied for the first time in 2018, the application of these new standards and amendments, did not have a material impact on the financial statements of the Company.
• IFRS 9 Financial Instruments;
• IFRIC Interpretation 22 Foreign Currency Transactions and Advance Considerations;
• Amendments to IAS 40 Transfers of Investment Property;
• Amendments to IFRS 2 Classification and Measurement of Share-based Payment Transactions;
F-43
Brooge Petroleum and Gas Investment Company FZE
NOTES TO THE FINANCIAL STATEMENTS
2.3 CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES (cont.)
• Amendments to IFRS 4 Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts;
• Amendments to IAS 28 Investments in Associates and Joint Ventures — Clarification that measuring investees at fair value through profit or loss is an investment-by-investment choice; and
• Amendments to IFRS 1 First-time Adoption of International Financial Reporting Standards — Deletion of short-term exemptions for first-time adopters.
2.4 RESTATMENT OF FINANCIAL STATEMENTS
Subsequent to the issuance of the Company’s 2017 financial statements, the Company’s management identified errors in the financial statements for the year ended 31 December 2017 and determined that the 2017 financial statements should be restated. The errors comprised the following:
• Use of incorrect discount rate
The Company erroneously used a 10% discount rate for the measurement of its land lease liability and the corresponding right of use asset instead of using its incremental borrowing rate of 9.5%. The correction of this error resulted in an increase in the lease liability and the right-of-use asset (recorded within property, plant and equipment). There correction also resulted in an increase in depreciation expense and finance costs for the year ended 31 December 2017.
• Incorrect classification of term loans
As of 31 December 2017 and 1 January 2017, the Company had erroneously classified its debt balance of USD 86,314,012 and USD 77,497,507, respectively, as a non-current liability. As of 31 December 2017 and 1 January 2017, the Company was not in compliance with its debt covenants contained in the Company’s Phase I Construction Facilities (note 13). As a result of this non-compliance, the Phase I Financing Facilities should be classified as a current liability. To correct the error, the Company reclassified its debt balance to current.
• Incorrect calculation of accrued interest
As of 31 December 2017, management identified an error in the calculation of accrued interest on the Phase I Construction Facility. The correction of this error resulted in a decrease in the amount of interest capitalised (recorded within property, plant and equipment), a decrease in finance costs and a decrease in accrued interest (recorded within accounts payable, accruals and other payables).
• Incorrect determination of functional currency
The Company incorrectly concluded that its functional currency was the UAE Dirham. The UAE Dirham has been pegged to the US Dollar for all periods since the Company’s inception. Thus, the correction of this error has no impact on the 2017 financial statements or prior periods.
• Incorrect classification of advances to contractors in the statement of cash flows
The Company incorrectly presented the movement in advances to contractors within net cash flow used in operating activities. The correction of this error resulted in a decrease in operating cash flows and an increase in investing cash flows.
F-44
Brooge Petroleum and Gas Investment Company FZE
NOTES TO THE FINANCIAL STATEMENTS
2.4 RESTATMENT OF FINANCIAL STATEMENTS (cont.)
The aforementioned changes were accounted for retrospectively in accordance with IAS 8 and, accordingly the prior years’ financial statements have been restated as follows:
As previously reported |
Restatement adjustments |
Restated |
||||||||||||||||
31 December 2017 |
1 January
|
31 December
|
1 January
|
31 December
|
1 January
|
|||||||||||||
USD |
USD |
USD |
USD |
USD |
USD |
|||||||||||||
STATEMENT OF COMPREHENSIVE INCOME |
|
|
|
|
|
|
||||||||||||
Direct costs |
(2,292,082 |
) |
|
(3,727 |
) |
|
(2,295,809 |
) |
|
|||||||||
Gross loss |
(2,202,489 |
) |
|
(3,727 |
) |
|
(2,206,216 |
) |
|
|||||||||
Finance costs |
(1,007,305 |
) |
|
40,379 |
|
|
(966,926 |
) |
|
|||||||||
Loss and total comprehensive loss for the year |
(3,784,060 |
) |
|
36,652 |
|
|
(3,747,408 |
) |
|
|||||||||
STATEMENT OF FINANCIAL POSITION |
|
|
|
|
|
|
||||||||||||
Property, plant and equipment |
193,987,928 |
|
168,024,215 |
|
1,450,943 |
|
1,709,059 |
|
195,438,871 |
|
169,733,274 |
|
||||||
Non-current assets |
194,219,499 |
|
168,862,369 |
|
1,450,943 |
|
1,709,059 |
|
195,670,442 |
|
170,571,428 |
|
||||||
Total assets |
194,680,205 |
|
169,004,835 |
|
1,450,943 |
|
1,709,059 |
|
196,131,148 |
|
170,713,894 |
|
||||||
Accumulated losses |
(4,198,419 |
) |
(414,359 |
) |
36,652 |
|
— |
|
(4,161,767 |
) |
(414,359 |
) |
||||||
Total equity |
67,584,302 |
|
57,986,026 |
|
36,652 |
|
— |
|
67,620,954 |
|
57,986,026 |
|
||||||
Term loans (non-current portion) |
86,314,012 |
|
77,497,507 |
|
(86,314,012 |
) |
(77,497,507 |
) |
— |
|
— |
|
||||||
Lease liability (non-current portion) |
25,874,560 |
|
25,396,678 |
|
1,724,915 |
|
1,699,829 |
|
27,599,475 |
|
27,096,507 |
|
||||||
Non-current liabilities |
112,189,223 |
|
102,894,471 |
|
(84,589,097 |
) |
(75,797,678 |
) |
27,600,126 |
|
27,096,793 |
|
||||||
Term loans (current portion) |
7,849,739 |
|
— |
|
86,314,012 |
|
77,497,507 |
|
94,163,751 |
|
77,497,507 |
|
||||||
Accounts payable, accruals and other payables |
4,995,156 |
|
6,102,980 |
|
(320,039 |
) |
— |
|
4,675,117 |
|
6,102,980 |
|
||||||
Lease liability (current portion) |
2,061,785 |
|
2,021,358 |
|
9,415 |
|
9,230 |
|
2,071,200 |
|
2,030,588 |
|
||||||
Current liabilities |
14,906,680 |
|
8,124,338 |
|
86,003,388 |
|
77,506,737 |
|
100,910,068 |
|
85,631,075 |
|
||||||
Total liabilities |
127,095,903 |
|
111,018,809 |
|
1,414,291 |
|
1,709,059 |
|
128,510,194 |
|
112,727,868 |
|
||||||
Total equity and liabilities |
194,680,205 |
|
169,004,835 |
|
1,450,943 |
|
1,709,059 |
|
196,131,148 |
|
170,713,894 |
|
||||||
STATEMENT OF CASH FLOWS |
|
|
|
|
|
|
||||||||||||
Loss for the year |
(3,784,060 |
) |
|
36,652 |
|
|
|
(3,747,408 |
) |
|||||||||
Adjustment for: |
|
|
|
|
|
|
||||||||||||
Depreciation charge |
688,801 |
|
|
3,727 |
|
|
|
692,528 |
|
|||||||||
Finance costs |
1,007,305 |
|
|
(40,379 |
) |
|
|
966,926 |
|
|||||||||
Working capital changes: |
|
|
|
|
|
|
||||||||||||
Increase in trade and other receivables |
(12,117 |
) |
|
(606,583 |
) |
|
|
(618,700 |
) |
|||||||||
Net cash flow used in operating activities |
(1,646,334 |
) |
|
(643,235 |
) |
|
|
(2,252,917 |
) |
|||||||||
Investing activity |
|
|
|
|
|
|
||||||||||||
Purchase of property, plant and equipment |
(22,531,136 |
) |
|
606,583 |
|
|
|
(21,924,553 |
) |
|||||||||
Net cash flow used in investing activity |
(22,531,136 |
) |
|
606,583 |
|
|
|
(21,924,553 |
) |
F-45
Brooge Petroleum and Gas Investment Company FZE
NOTES TO THE FINANCIAL STATEMENTS
2.5 SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS
The preparation of the Company’s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of expenses, assets and liabilities, and the disclosure of contingent liabilities, at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future.
Estimation and assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:
Useful lives of property, plant and equipment
The Company’s management determines the estimated useful lives of its property, plant and equipment for calculating depreciation. This estimate is determined after considering the expected usage of the asset or physical wear and tear and the impact of expected residual value. Management reviews the useful lives annually and the future depreciation charge would be adjusted where management believes that the useful lives differ from previous estimates. The depreciation period of the right-of-use asset has been determined to be over the lease term on the basis that the land is expected to be used for the whole period of the lease considering the existing assets and future expansion on the land.
Asset retirement obligation
As part of the land lease agreement between FOIZ and the Company, the Company has a legal obligation to remove the plant at the end of its lease term. The Company initially records a provision for asset retirement obligations at the best estimate of the present value of the expenditure required to settle the obligation at the time a legal (or constructive) obligation is incurred, if the liability can be reliably estimated. When the provision is initially recorded, the carrying amount of the related asset is increased by the amount of the liability. Provisions are adjusted at each balance sheet date to reflect the current best estimate. The unwinding of the discount is recognised as finance cost. The Company’s operating assets generally consist of storage tanks and related facilities. These assets can be used for an extended period of time as long as they are properly maintained and/or upgraded. It is the Company’s current intent to maintain its assets and continue making improvements to those assets based on technological advances. There is no data or information that can be derived from past practice, industry practice or the Company’s intentions that could be used to make a reliable estimate of the decommissioning cost. Accordingly, the Company has not recorded a liability or corresponding asset as the amounts of such potential future costs are not reliably determinable.
Discount rate used for initial measurement of lease liability
The Company, as a lessee, measures the lease liability at the present value of the unpaid lease payments at the commencement date. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the Company on initial recognition of the lease uses its incremental borrowing rate. Incremental borrowing rate is the rate of interest that the Company would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use assets in similar economic environment. The Company determined its incremental borrowing rate at 9.5% (2017: 9.5%) in respect of the lease liability (note 14).
Impairment of trade receivables
The Company uses the simplified approach under IFRS 9 to assess impairment of its trade receivables and calculates expected credit losses (ECLs) based on lifetime expected credit losses. The Company calculates the ECL based on Company historical credit loss experience, adjusted for forward-looking factors specific to the customer and the economic environment.
F-46
Brooge Petroleum and Gas Investment Company FZE
NOTES TO THE FINANCIAL STATEMENTS
2.5 SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS (cont.)
Valuation of derivative financial instruments
The Company has entered into derivative financial instruments (interest rate swaps) with a financial institution with investment grade credit rating. Interest rate swaps are valued using valuation techniques, which employ the use of market observable inputs. The most frequently applied valuation techniques include swap models using present value calculations. The models incorporate various inputs including the credit quality of counterparties and interest rate curves. The changes in counterparty credit risk had no material effect on the derivative financial instruments recognised at fair value.
Judgements
In the process of applying the Company’s accounting policies, management has made the following judgements which have the most significant effect on the amounts recognised in the financial statements:
Functional currency
The Company’s operating costs and borrowings are primarily in UAE Dirham (“AED”) and are expected to remain principally denominated in AED in the future. However, the construction contract for phase1 and 2 and the current revenue contract of the Company are dominated in USD. Management has determined USD is the Company’s functional currency.
Operating lease commitments — Company as a lessor
The Company has entered into a five year storage rental agreement with a customer. Under the agreement, the Company has rented its full storage facility and receives fixed rental against the available storage capacity. The Company has determined the agreement to be a lease in accordance with IFRS 16 (Leases) and, based on the contractual arrangements in place, that it retains the principal risks and rewards of ownership of the storage facility and so accounts for the agreement as an operating lease.
2.6 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenue recognition
The Company elected to early adopt IFRS 15 ‘Revenue from Contracts with Customers’ and IFRS 16 ‘Leases’ for the year ended 31 December 2016 using the full retrospective method for both standards.
The Company generates revenue by charging fees for the storage, throughput and handling of fuel oil and clean products for its sole customer. Additional revenue is generated by charging fees for other ancillary services (excess throughput, heating, blending and other services).
The contract contains a lease and a service component. The lease component is accounted for under IFRS 16 and the service component is accounted for under IFRS 15. The contract has a minimum fixed monthly payment for both the lease and non-lease service components. The fixed consideration is allocated to the lease and service components based on their relative stand-alone selling price, which is based on an analysis of lease-related and service-related costs for the contract, adjusted for representative profit margins. The lease component is recognised on a straight-line basis over the term of the initial lease and the service component is recognised over time as the customer simultaneously receives and consumes the benefits provided by the Company’s performance. The fixed payment is billed monthly in advance.
The contract also contains variable elements in the form of the other ancillary services. Revenue from the variable element of the contract is recognised based on the actual volumes transported, stored and processed in the period in which the services are provided. These services are generally billed the month after the services are performed.
F-47
Brooge Petroleum and Gas Investment Company FZE
NOTES TO THE FINANCIAL STATEMENTS
2.6 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.
All other borrowing costs are recognised in the statement of comprehensive income (within profit and loss) in the period during which they are incurred.
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Capital work under progress is stated at cost and subsequently transferred to assets when it is available for use. Cost of an item of property plant and equipment comprises its acquisition cost including borrowing cost and all directly attributable costs of bringing the asset to working condition for its intended use. Such cost includes the cost of replacing part of the plant and equipment when that cost is incurred, if the recognition criteria are met. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in the statement of comprehensive income (within profit and loss) as incurred. Depreciation is computed using the straight-line method based on the estimated useful lives of assets as follows:
Buildings |
25 years |
|||||
Tanks |
50 years |
|||||
Installation (Pipeline, pumps and other equipment) |
20 – 25 years |
|||||
Other equipment |
5 years |
|||||
Right-of-use asset – Land |
60 years |
The assets’ residual values and useful lives are reviewed and adjusted if appropriate, at each financial year end to determine whether there is an indication of impairment. If any such indication exists, an impairment loss is recognised in the statement of comprehensive income (within profit and loss). For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units).
The carrying amounts are reviewed at each reporting date to assess whether they are recorded in excess of their recoverable amounts, and where carrying values exceed this estimated recoverable amount, assets are written down to their recoverable amount, being the higher of their fair value less costs to sell and their value in use.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of comprehensive income (within profit and loss) in the year the asset is derecognised.
Capital work in progress
Capital work in progress is stated at cost, which represents costs for the design, development, procurement, construction and commissioning of the asset under development. Cost includes borrowing cost capitalised and depreciation of the right of use asset during the construction phase. When the asset is in the location and condition necessary to operate in the manner intended by management, capital work in progress is transferred to the appropriate property, plant and equipment category and depreciated in accordance with the Company’s policies.
F-48
Brooge Petroleum and Gas Investment Company FZE
NOTES TO THE FINANCIAL STATEMENTS
2.6 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Impairment of non-financial assets
At each reporting date, the Company reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. Where a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest cash-generating units for which a reasonable and consistent allocation basis can be identified.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in the statement of comprehensive income (within profit and loss).
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash- generating unit) is increased to the revised estimate of its recoverable amount, such that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years.
Cash and cash equivalents
For the purpose of the statement of cash flows, cash and cash equivalents consist of cash in hand, bank balances and short-term deposits with original maturity of three months or less, net of bank overdraft.
Inventories
Inventories are valued at the lower of cost, determined on the basis of weighted average cost, and net realizable value. Costs are those expenses incurred in bringing each item to its present location and condition. Net realisable value is valued at selling prices net of selling costs.
Leasing
The Company had elected to early adopt IFRS 16 during the year ended 31 December 2016, from its lease commencement dates using the full retrospective method.
At inception of a contract, the Company assesses whether the contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
For a contract that is, or contains, a lease, the Company accounts for each lease component within the contract as a lease separately from non-lease components of the contract.
The Company determines the lease term as the non-cancellable period of a lease, together with both:
a) periods covered by an option to extend the lease if the lessee is reasonably certain to exercise that option; and
b) periods covered by an option to terminate the lease if the lessee is reasonably certain not to exercise that option.
F-49
Brooge Petroleum and Gas Investment Company FZE
NOTES TO THE FINANCIAL STATEMENTS
2.6 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
In assessing whether a lessee is reasonably certain to exercise an option to extend a lease, or not to exercise an option to terminate a lease, the Company considers all relevant facts and circumstances that create an economic incentive for the lessee to exercise the option to extend the lease, or not to exercise the option to terminate the lease. The Company revises the lease term if there is a change in the non-cancellable period of a lease.
Company as a lessor
Leases where the Company does not transfer substantially all the risks and benefits of ownership of the asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same bases as rental income. Contingent rents are recognised as revenue in the period in which they are earned.
Company as a lessee
For a contract that contains a lease component and one or more additional lease or non-lease components, the Company allocates the consideration in the contract to each lease component on the basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the non-lease components.
The relative stand-alone price of lease and non-lease components is determined on the basis of the price the lessor, or a similar supplier, would charge an entity for that component, or a similar component, separately. If an observable stand-alone price is not readily available, the Company estimates the stand-alone price, maximising the use of observable information.
For determination of the lease term, the Company reassesses whether it is reasonably certain to exercise an extension option, or not to exercise a termination option, upon the occurrence of either a significant event or a significant change in circumstances that:
a) is within the control of the Company; and
b) affects whether the Company is reasonably certain to exercise an option not previously included in its determination of the lease term, or not to exercise an option previously included in its determination of the lease term.
At the commencement date, the Company recognises a right-of-use asset classified within property, plant and equipment and a lease liability classified separately on the statement of financial position.
Short-term leases and leases of low-value assets
The Company has elected not to recognise right-of-use assets and lease liabilities for short-term leases that have a lease of 12 months or less and leases of low-value assets of USD 5,000 or less when new. The Company recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term.
Right-of-use assets
The right-of-use asset is initially recognised at cost comprising of:
a) the amount of the initial measurement of the lease liability;
b) any lease payments made at or before the commencement date, less any lease incentives received;
c) any initial direct costs incurred by the Company; and d) an estimate of costs to be incurred by the Company in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease. These costs are recognised as part of the cost of the right-of-use asset when the Company incurs an obligation for these costs. The obligation for these costs is incurred either at the commencement date or as a consequence of having used the underlying asset during a particular period.
F-50
Brooge Petroleum and Gas Investment Company FZE
NOTES TO THE FINANCIAL STATEMENTS
2.6 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
After initial recognition, the Company amortises the right-of-use asset over the term of the lease. In addition the right of use asset is periodically reduced by impairment losses, if any, and adjusted for certain re-measurements of the lease liability.
Lease liability
The lease liability is initially recognised at the present value of the lease payments that are not paid at the commencement date. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the Company uses its incremental borrowing rate.
After initial recognition, the lease liability is measured by (a) increasing the carrying amount to reflect interest on the lease liability; (b) reducing the carrying amount to reflect the lease payments made; and (c) remeasuring the carrying amount to reflect any reassessment or lease modifications or to reflect revised in-substance fixed lease payments.
Where, (a) there is a change in the lease term as a result of the reassessment of certainty to exercise an option, or not to exercise a termination option as discussed above; or (b) there is a change in the assessment of an option to purchase the underlying asset, assessed considering the events and circumstances in the context of a purchase option, the Company remeasures the lease liabilities to reflect changes to lease payments by discounting the revised lease payments using a revised discount rate. The Company determines the revised discount rate as the interest rate implicit in the lease for the remainder of the lease term, if that rate can be readily determined, or its incremental borrowing rate at the date of reassessment, if the interest rate implicit in the lease cannot be readily determined.
Where, (a) there is a change in the amounts expected to be payable under a residual value guarantee; or (b) there is a change in future lease payments resulting from a change in an index or a rate used to determine those payments, including a change to reflect changes in market rental rates following a market rent review, the Company remeasures the lease liabilities by discounting the revised lease payments using an unchanged discount rate, unless the change in lease payments results from a change in floating interest rates. In such case, the Company uses a revised discount rate that reflects changes in the interest rate.
The Company recognises the amount of the re-measurement of the lease liability as an adjustment to the right-of-use asset. Where the carrying amount of the right-of-use asset is reduced to zero and there is a further reduction in the measurement of the lease liability, the Company recognises any remaining amount of the re-measurement in the statement of comprehensive income (within profit and loss).
The Company accounts for a lease modification as a separate lease if both:
a) the modification increases the scope of the lease by adding the right to use one or more underlying assets; and
b) the consideration for the lease increases by an amount commensurate with the stand-alone price for the increase in scope and any appropriate adjustments to that stand-alone price to reflect the circumstances of the particular contract.
Financial assets
Classification and measurement
The Company initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs.
Under IFRS 9, debt financial instruments are subsequently measured at fair value through profit or loss (FVPL), amortised cost, or fair value through other comprehensive income (FVOCI). The classification is based on two criteria: the Company’s business model for managing the assets; and whether the instruments’ contractual cash flows represent ‘solely payments of principal and interest’ on the principal amount outstanding (the ‘SPPI criterion’).
F-51
Brooge Petroleum and Gas Investment Company FZE
NOTES TO THE FINANCIAL STATEMENTS
2.6 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
The classification and measurement of the Company’s debt financial assets are, as follows:
• Debt instruments at amortised cost for financial assets that are held within a business model with the objective to hold the financial assets in order to collect contractual cash flows that meet the SPPI criterion. This category includes the Company’s trade and other receivables.
• Debt instruments at FVOCI, with gains or losses recycled to profit or loss on derecognition. Financial assets in this category that meet the SPPI criterion and are held within a business model both to collect cash flows and to sell.
Derecognition
A financial asset (or, where applicable a part of a financial asset or part of a Company of similar financial assets) is derecognised when:
• The rights to receive cash flows from the asset have expired, or
• The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, and has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of the Company’s continuing involvement in the asset. In that case, the Company also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained. Continuing involvement that takes the form of a guarantee over the transferred asset, is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Company could be required to repay.
Impairment of financial assets
Under IFRS 9, the Company records an allowance for Expected Credit Loss (ECL) for all loans and debt financial assets not held at FVPL.
ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Company expects to receive. The shortfall is then discounted at an approximation to the asset’s original effective interest rate.
For trade and other receivables, the Company has applied the standard’s simplified approach and has calculated ECLs based on lifetime expected credit losses. The Company calculates the ECL based on the Company’s historical credit loss experience, adjusted for forward-looking factors specific to the customer and the economic environment.
The Company considers a financial asset in default when contractual payments are 90 days past due. However, in certain cases, the Company may also consider a financial asset to be in default when internal or external information indicates that the Company is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Company.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company comprising of share capital and owners’ accounts are recorded at the proceeds received, net of direct issue costs.
F-52
Brooge Petroleum and Gas Investment Company FZE
NOTES TO THE FINANCIAL STATEMENTS
2.6 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Financial liabilities
Initial recognition
Financial liabilities within the scope of IFRS 9 are classified as financial liabilities at fair value through profit or loss, loans and borrowings, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. The Company determines the classification of its financial liabilities at initial recognition.
Financial liabilities are recognised initially at fair value and in the case of loans and borrowings fair value of the consideration received less directly attributable transaction costs.
The Company’s financial liabilities include trade and other payables, lease liability and term loans.
Subsequent measurement
The measurement of financial liabilities depends on their classification as follows:
Accounts payable
Liabilities are recognised for amounts to be paid in the future for goods and services received, whether billed by the supplier or not.
Loans and borrowings
All loans and borrowings are initially recognised at the fair values less directly attributable transaction costs. After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method. Gains and losses are recognised in the statement of comprehensive income (within profit and loss) when liabilities are derecognised.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in the statement of comprehensive income (within profit and loss).
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount reported in the statement of financial position if, and only if, there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.
Amortised cost of financial instruments
Amortised cost is computed using the effective interest method less any allowance for impairment and principal repayment or reduction. The calculation takes into account any premium or discount on acquisition and includes transaction costs and fees that are an integral part of the effective interest rate.
Derivative financial instruments
The Company uses derivative financial instruments, interest rate swaps, to hedge its interest risks. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
F-53
Brooge Petroleum and Gas Investment Company FZE
NOTES TO THE FINANCIAL STATEMENTS
2.6 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Any gains or losses arising from changes in the fair value of derivatives are taken directly to the statement of comprehensive income (with in profit and loss) as the Company has not designated derivative financial instruments under hedging arrangements.
Provisions
Provisions are recognised when the Company has a legal or constructive obligation as a result of a past event, it is probable that an outflow of resources will be required to settle the obligation, and the amount can be reliably estimated.
Provisions are measured at the present value of the expenditures expected to be required to settle the obligation at the end of the reporting period, using a rate that reflects current market assessments of the time value of money and the risks specific to the obligation.
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that a reimbursement will be received and the amount of the receivable can be measured reliably.
Decommissioning liabilities
As part of the land lease agreement between FOIZ and the Company, the Company has a legal obligation to remove the plant at the end of its lease term. The Company initially records a provision for asset retirement obligations at the best estimate of the present value of the expenditure required to settle the obligation at the time a legal (or constructive) obligation is incurred, if the liability can be reliably estimated. When the provision is initially recorded, the carrying amount of the related asset is increased by the amount of the liability. Provisions are adjusted at each balance sheet date to reflect the current best estimate. The unwinding of the discount is recognised as finance cost. The Company’s operating assets generally consist of storage tanks and related facilities. These assets can be used for an extended period of time as long as they are properly maintained and/or upgraded. It is the Company’s current intent to maintain its assets and continue making improvements to those assets based on technological advances. There is no data or information that can be derived from past practice, industry practice or the Company’s intentions that could be used to make a reliable estimate of the decommissioning cost. Accordingly, the Company has not recorded a liability or corresponding asset as the amounts of such potential future costs are not reliably determinable.
Value added tax
Expenses and assets are recognised net of the amount of value added tax, except:
• When the value added tax incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case, the value added tax is recognised as part of the cost of acquisition of the asset or as part of the expense item, as applicable
• When receivables and payables are stated with the amount of value added tax included
The net amount of value added tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statement of financial position.
Foreign currencies
Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the reporting date. All differences are taken to the statement of comprehensive income (within profit and loss). Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined.
F-54
Brooge Petroleum and Gas Investment Company FZE
NOTES TO THE FINANCIAL STATEMENTS
2.6 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Employees’ end of service benefits
The Company provides end of service benefits to its employees. The entitlement to these benefits is based upon the employees’ final salary and length of service, subject to the completion of a minimum service period. The expected costs of these benefits are accrued over the period of employment.
Fair value
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
• In the principal market for the asset or liability, or
• In the absence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible to the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
• Level 2 inputs, other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and
• Level 3 inputs are unobservable inputs for the asset or liability.
Current versus non-current classification
The Company presents assets and liabilities in statement of financial position based on current/non-current classification. An asset is current when it is:
• Expected to be realised or intended to be sold or consumed in a normal operating cycle
• Held primarily for the purpose of trading
• Expected to be realised within twelve months after the reporting period,
Or
• Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period
F-55
Brooge Petroleum and Gas Investment Company FZE
NOTES TO THE FINANCIAL STATEMENTS
2.6 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
All other assets are classified as non-current.
A liability is current when it is:
• Expected to be settled in normal operating cycle
• Held primarily for the purpose of trading
• Due to be settled within twelve months after the reporting period,
Or
• There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period
The Company classifies all other liabilities as non-current.
2.7 FUTURE CHANGES IN ACCOUNTING POLICIES — STANDARDS ISSUED BUT NOT YET EFFECTIVE
The standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Group’s consolidated financial statements are disclosed below. The Group intends to adopt these standards, if applicable, when they become effective:
• IFRIC Interpretation 23 Uncertainty over Income Tax Treatments
• IFRS 17 Insurance Contracts
• Amendments to IFRS 9 Prepayment Features with Negative Compensation
• Amendments to IAS 19 Plan Amendment, Curtailment or Settlement
• Amendments to IAS 28 Long-term Interests in Associates and Joint Ventures
• Amendments to IFRS 10 and IAS 28 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
Annual improvements
• IFRS 3 Business Combinations - Previously held Interests in a joint operation
• IFRS 11 Joint Arrangements - Previously held Interests in a joint operation
• IAS 12 Income Taxes - Income tax consequences of payments on financial instruments classified as equity
• IAS 23 Borrowing Costs - Borrowing costs eligible for capitalisation
The Company does not expect these new standards and amendments to have any material impact on the financial statements, when implemented in future periods.
F-56
Brooge Petroleum and Gas Investment Company FZE
NOTES TO THE FINANCIAL STATEMENTS
3 REVENUE
2018 |
(Restated)
|
|||
USD |
USD |
|||
Revenue recognised under IFRS 16 |
||||
Fixed consideration – leasing component |
14,586,315 |
62,995 |
||
Revenue recognised under IFRS 15 |
||||
Fixed consideration – service component |
6,158,667 |
26,598 |
||
Ancillary services |
15,094,286 |
— |
||
21,252,953 |
26,598 |
|||
Total revenue |
35,839,268 |
89,593 |
The Company has only one segment at the reporting date. Revenue generation from leasing of storage capacity of tanks and other ancillary services started in December 2017.
Operating lease commitments — Company as lessor
Future storage fee income to be received by the Company under the sales agreement based on projected storage availability are as follows:
2018 |
(Restated)
|
|||
USD |
USD |
|||
Within one year |
23,959,440 |
23,869,847 |
||
After one year but not more than 5 years |
71,878,320 |
95,837,760 |
||
95,837,760 |
119,707,607 |
4 DIRECT COSTS
2018 |
(Restated)
|
|||
USD |
USD |
|||
Employee costs and related benefits |
2,808,702 |
1,518,794 |
||
Depreciation (note 7) |
5,716,063 |
692,528 |
||
Spare parts and consumables used (note 8) |
592,471 |
50,891 |
||
Insurance |
377,053 |
31,304 |
||
Others |
113,071 |
2,292 |
||
9,607,360 |
2,295,809 |
5 GENERAL AND ADMINISTRATIVE EXPENSES
2018 |
(Restated)
|
|||
USD |
USD |
|||
Employee costs and related benefits |
1,178,919 |
287,481 |
||
Consultancy expenses |
337,491 |
54,529 |
||
Recruitment expenses |
33,362 |
53,912 |
||
Travel and related expenses |
11,515 |
16,544 |
||
Rent expense |
22,325 |
43,380 |
||
Advertisement and subscriptions |
116,495 |
37,223 |
||
Printing and stationery |
22,713 |
12,636 |
||
Licence costs |
19,249 |
22,872 |
||
Communication expenses |
19,773 |
9,379 |
||
Other expenses |
267,418 |
36,310 |
||
2,029,260 |
574,266 |
F-57
Brooge Petroleum and Gas Investment Company FZE
NOTES TO THE FINANCIAL STATEMENTS
6 FINANCE COSTS
2018 |
(Restated)
|
|||
USD |
USD |
|||
Interest on lease liability |
1,387,612 |
318,957 |
||
Finance costs on term loans |
5,564,311 |
647,969 |
||
6,951,923 |
966,926 |
7 PROPERTY, PLANT AND EQUIPMENT
Buildings |
Tanks |
Installations |
Other equipment |
Right-of-use asset (land) |
Capital work in progress |
Total |
|||||||||
USD |
USD |
USD |
USD |
USD |
USD |
USD |
|||||||||
2018 |
|
||||||||||||||
Cost: |
|
||||||||||||||
At 1 January 2018 (restated) |
28,037,886 |
76,100,795 |
65,860,351 |
79,645 |
27,540,969 |
294,403 |
|
197,914,049 |
|||||||
Additions |
— |
— |
7,895 |
134,198 |
— |
8,050,444 |
|
8,192,537 |
|||||||
At 31 December 2018 |
28,037,886 |
76,100,795 |
65,868,246 |
213,843 |
27,540,969 |
8,344,847 |
|
206,106,586 |
|||||||
Depreciation: |
|
||||||||||||||
At 1 January 2018 (restated) |
129,051 |
181,306 |
325,525 |
3,232 |
1,836,064 |
— |
|
2,475,178 |
|||||||
Charge for the year |
1,121,515 |
1,565,419 |
2,823,140 |
33,204 |
459,016 |
— |
|
6,002,294 |
|||||||
At 31 December 2018 |
1,250,566 |
1,746,725 |
3,148,665 |
36,436 |
2,295,080 |
— |
|
8,477,472 |
|||||||
Net carrying amount: |
|
||||||||||||||
At 31 December 2018 |
26,787,320 |
74,354,070 |
62,719,581 |
177,407 |
25,245,889 |
8,344,847 |
|
197,629,114 |
|||||||
2017 |
|
||||||||||||||
Cost: |
|
||||||||||||||
At 1 January 2017 (restated) |
— |
— |
— |
— |
27,540,969 |
143,569,308 |
|
171,110,277 |
|||||||
Additions |
— |
241,128 |
— |
79,645 |
— |
26,482,999 |
|
26,803,772 |
|||||||
Transfers |
28,037,886 |
75,859,667 |
65,860,351 |
— |
— |
(169,757,904 |
) |
— |
|||||||
At 31 December 2017 (restated) |
28,037,886 |
76,100,795 |
65,860,351 |
79,645 |
27,540,969 |
294,403 |
|
197,914,049 |
|||||||
Depreciation: |
|
||||||||||||||
At 1 January 2017 (restated) |
— |
— |
— |
— |
1,377,003 |
— |
|
1,377,003 |
|||||||
Charge for the year |
129,051 |
181,306 |
325,525 |
3,232 |
459,061 |
— |
|
1,098,175 |
|||||||
At 31 December 2017 (restated) |
129,051 |
181,306 |
325,525 |
3,232 |
1,836,064 |
— |
|
2,475,178 |
|||||||
Net carrying amount: |
|
||||||||||||||
At 31 December 2017 (restated) |
27,908,835 |
75,919,489 |
65,534,826 |
76,413 |
25,704,905 |
294,403 |
|
195,438,871 |
Capital work in progress at 31 December 2018 includes total amount capitalised relating to the construction of Phase II and includes an amount of USD 1,431,102 related to finance charge on lease liability and an amount of USD 286,231 related to depreciation charge on right-of-use asset capitalised.
During the year ended 31 December 2017, the Company capitalised finance costs related to its term loans of USD 4,662,181. The capitalisation rate used to determine these finance costs was 5%. No finance costs were capitalised in the year ended 31 December 2018.
F-58
Brooge Petroleum and Gas Investment Company FZE
NOTES TO THE FINANCIAL STATEMENTS
7 PROPERTY, PLANT AND EQUIPMENT (cont.)
Tanks and related assets with a carrying value of USD 164,038,378 (2017: USD 169,439,563) are mortgaged as security against loans obtained in 2014 and 2017 (note 13). Further, as security against the term loan (2), a step-in right to use the leased land, has been provided to the commercial bank.
The depreciation charge for the year is allocated to the statement of comprehensive income (within profit and loss) and capital work in progress as follows:
2018 |
(Restated)
|
|||
USD |
USD |
|||
Direct costs (note 4) |
5,716,063 |
692,528 |
||
Property, plant and equipment |
286,231 |
405,647 |
||
6,002,294 |
1,098,175 |
8 INVENTORIES
2018 |
(Restated)
|
|||
USD |
USD |
|||
Spare parts and consumables |
147,090 |
176,651 |
Cost of inventories recognised during the year amounted to USD 592,471 (2017: USD 50,891). No provision is required for inventories at 31 December 2018 (2017: nil).
9 TRADE AND OTHER RECEIVABLES
2018 |
(Restated)
|
|||
USD |
USD |
|||
Trade receivables |
1,877,887 |
— |
||
Other receivables |
245,190 |
— |
||
2,123,077 |
— |
At 31 December 2018, all trade receivables were neither past due nor impaired.
Receivables are due within 14 days of invoicing.
Unimpaired trade receivables are expected to be fully recoverable. It is not the practice of the Company to obtain collateral over receivables and the vast majority is, therefore, unsecured.
10 CASH AND CASH EQUIVALENTS
2018 |
(Restated)
|
||||
USD |
USD |
||||
Bank balances and cash |
37,351 |
|
284,055 |
||
Bank overdraft |
(3,745,048 |
) |
— |
||
Cash and cash equivalents |
(3,707,697 |
) |
284,055 |
Significant non-cash transactions, which have been excluded from the statement of cash flows, are as follows:
2018 |
(Restated)
|
|||
USD |
USD |
|||
Capital accruals |
5,972,230 |
— |
||
Purchase of property, plant and equipment financed through advances paid to contractors in prior period |
231,571 |
606,583 |
F-59
Brooge Petroleum and Gas Investment Company FZE
NOTES TO THE FINANCIAL STATEMENTS
11 SHARE CAPITAL
Authorised,
|
||||
2018 |
(Restated)
|
|||
USD |
USD |
|||
100 ordinary shares of USD 13,612.85 each (2017: 100 ordinary shares of USD 13,612.85 each) |
1,361,285 |
1,361,285 |
12 GENERAL RESERVE
As required by the Company’s Articles of Association, 10% of the profit for the year must be transferred to the general reserve. The Company has resolved to discontinue such annual transfers as the reserve has reached 50% of the issued share capital. The general reserve is not available for distribution to the shareholders.
13 TERM LOANS
Interest rate |
Maturity |
2018 |
(Restated)
|
|||||
USD |
USD |
|||||||
Current |
||||||||
Phase I Construction Facility |
3 month EIBOR + 3% margin |
On demand |
82,245,595 |
83,424,947 |
||||
Phase I Admin Building Facility |
3 month EIBOR + 3% margin |
On demand |
10,165,703 |
10,738,804 |
||||
Phase I Short Term Financing Facility |
1 month EIBOR + 2% margin |
On demand |
2,380,790 |
— |
||||
94,792,088 |
94,163,751 |
Phase I Construction Facility
In 2014, the Company obtained the Phase I Construction Facility amounting to USD 84,595,154 (AED 310,718,000) from a commercial bank in the UAE to partially finance the construction of Phase I (14 oil storage tanks in Fujairah). During the year 2018, the Company has drawn down an additional USD 550,445 (2017: USD 5,867,003) from this facility. The loan was repayable in 48 quarterly instalments, commencing 27 months after the start of the construction with final maturity not exceeding 31 March 2028 and is stated net of prepaid finance cost of USD 559,607 (2017: USD 619,768). The interest is due on a quarterly basis from the loan drawdown date. The loan was drawn down in AED.
During the year 2018, the Company has entered into an agreement to amend the Phase I Construction Facility. The loan is now repayable in 48 quarterly instalments starting October 2018 with final maturity in July 2030. The loan carries interest at 3 month EIBOR + 3% as compared to interest at 6 month EIBOR + 3.5% previously.
Phase I Admin Building Facility
During 2017, the Company obtained an additional Phase I Admin Building Facility of USD 11,108,086 (AED 40,800,000) from a commercial bank in the UAE for the construction of an administrative building in Fujairah. During the year 2018, the Company has drawn down an amount of USD nil (2017: USD 10,833,438) against the Phase I Admin Building Facility. The loan was repayable in 20 quarterly instalments starting after a 6 months grace period commencing in April 2017 and is stated net of prepaid finance cost of USD 76,606 (2017: USD 94,634). The interest is due on a quarterly basis from the loan drawdown date. The loan was drawn down in AED.
During the year 2018, the Company has entered in to an agreement to amend the Phase I Admin Building Facility. The loan is now repayable in 20 quarterly instalments starting October 2018 with final maturity in July 2023.The loan carries interest at 3 month EIBOR + 3% as compared to interest at 3 month EIBOR + 3.5% previously.
F-60
Brooge Petroleum and Gas Investment Company FZE
NOTES TO THE FINANCIAL STATEMENTS
13 TERM LOANS (cont.)
Phase I Construction Facilities
The Phase I Construction Facilities are secured by a mortgage on the tanks and the office/administration building, step-in right to the leased land and assignment of insurance policies. The Phase I Construction Facilities are also secured by corporate guarantees from the following owners: (i) Al Brooge Capital Providing for Oil and Gas LLC, and (ii) Emirates Investment Company LLC FZC.
Under the Phase I Construction Facilities, the Company is subject to certain covenants requiring amongst other things, the maintenance of:
(i) a minimum debt service coverage ratio of 150% at all times and if the ratio decreases to 120% or less, it results in an event of default; and
(ii) an amount equivalent to one quarterly instalment including interest in a debt service reserve account at all times.
As of 31 December 2018, the Company had not paid USD 2,300,875 of principal and USD 961,001 of accrued interest that was due under the Phase I Construction Facilities. Also, as of 31 December 2018 and 2017, the Company was in breach with both of its debt covenant requirements. Even though the lender did not declare an event of default under the loan agreement, these breaches constituted events of default and could have resulted in the lender requiring immediate repayment of the loan. As a result of this non-compliance and in accordance with guidance related to the classification of obligations that are callable by the lender, the Company has classified the respective bank loans as a current liability at the end of both periods.
On 10 September 2019, the Company entered into an agreement with the bank to amend the Phase I Construction Facility. The Phase I Construction Facility is now payable in 45 instalments starting 31 October 2019 with final maturity on 30 July 2030. One of the instalments of the Phase I Construction Facility includes a one-time lump sum repayment of USD 5,729,418, which represents the cumulative instalments including interest outstanding from periods prior to this amended agreement of USD 5,494,063 and an amendment fee of USD 235,355. All securities and covenants under the original agreements remain in effect under the amended agreement. Under this agreement, the Phase I Construction Facilities are also secured by assignment of the proceeds from operation of the tanks. In addition, the shareholders committed to partially pre-settle by 31 December 2019 AED 100,000,000 (USD 27,225,701 translated using the exchange rate as of 31 December 2018) of the Phase I Construction Facilities from the proceeds of the transaction described in note 1.
The Phase I Admin Building Facility was not amended as part of the 10 September 2019 agreement to the Phase I Construction Facility. Subsequent to the year end, the Company had repaid USD 7,426,485 due under the Phase I Admin Building Facility. As such, all instalments due under the original repayment schedule up to 10 September 2019 were repaid.
The 31 December 2018 statement of financial position classifies all of the Company’s bank loans as current liabilities, since the Company did not comply with all of the requirements of the respective term loans. The Company’s lender has not requested any immediate repayment of these loans and the loan agreements have been amended on 10 September 2019, including a revised repayments schedule.
Phase I Short Term Financing Facility
During the year 2018, the Company has obtained a new facility from a commercial bank in the UAE to settle accrued interest the Phase I Construction Facility amounting to USD 3,539,341(AED 13,000,000). The new facility carries interest at 1 month EIBOR + 2% margin and is repayable in 15 equal monthly instalments commencing from date of disbursement. The facility is due on 14 October 2019. The loan was drawn down in AED.
The Phase I Short Term Financing Facility is secured by a mortgage on the tanks and office/administration building, step-in right to the leased land and assignment of the proceeds from operation of the tanks and insurance policies. The term loan is also secured by guarantees from the following owners: (i) Al Brooge Capital Providing for Oil and Gas LLC, and (ii) Emirates Investment Company LLC FZC.
F-61
Brooge Petroleum and Gas Investment Company FZE
NOTES TO THE FINANCIAL STATEMENTS
13 TERM LOANS (cont.)
As of 31 December 2018, the Company had not paid USD 485,661 of principal and accrued interest that was due under the Phase I Short Term Financing Facility. Even though the lender did not declare an event of default under the loan agreement, this breach constituted an event of default and could have resulted in the lender requiring immediate repayment of the loan.
The Phase I Short Term Financing Facility was not amended as part of the 10 September 2019 agreement to the Phase I Construction Facility. Subsequent to the year end, the Company had repaid USD 1,942,643 due under the Phase I Short Term Financing Facility. As such, all instalments due under the original repayment schedule up to 10 September 2019 were repaid.
Phase II Financing Facility
During the year 2018, the Company obtained a new facility, the Phase II Financing Facility, from a commercial bank in the UAE amounting to USD 95,290,000 (AED 350,000,000) to partially finance the construction of Phase II. The Phase II Financing Facility carries interest at 3 month EIBOR + 3% margin and is repayable in 17 bi-annual instalments commencing 6 months after the date of completion of phase 2.
The Phase II Financing Facility is secured by a mortgage on the Phase II storage tanks, step-in right to the leased land and assignment of the proceeds from operation of the tanks and insurance policies. The Phase II Financing Facility is also secured by guarantees from the following owners: (i) Al Brooge Capital Providing for Oil and Gas LLC, and (ii) Emirates Investment Company LLC FZC.
Under the Phase II Financing Facility, the Company is subject to certain covenants requiring amongst other things, the maintenance of (i) a minimum facility service coverage ratio of 1.25:1, (ii) a participations to value ratio not exceeding 1.50:1 at all times, (iii) a participations to cost ratio not exceeding 57% at any date, and (iv) an amount equivalent to one instalment including interest in a facility service reserve account at all times or in the event of an initial public offering, the amount should be equivalent to the next two instalments including interest. The facility service coverage ratio is calculated as revenues minus expenses from the Phase II storage tanks divided by the current debt commitments on the Phase II Financing Facility including interest. The participations to value ratio at any date is calculated as total debt commitments on the Phase II Financing Facility as of that date divided by the most recent valuation of the Phase II storage tanks. The participations to cost ratio at any date is calculated as the total debt commitments on the Phase II Financing Facility as of that date as a percentage of the sum of actual constructions costs plus project expenses paid as of that date on the Phase II storage tanks.
The Phase II Financing Facility includes an initial condition precedent that requires evidence of initial equity contribution by the Company towards the Phase II storage tanks before the Phase II Financing Facility can be utilised. The Company has not made any drawdowns on the Phase II Financing Facility as of the date of issuance of these financial statements.
The Financing Facilities are repayable as follows:
2018 |
(Restated)
|
|||
USD |
USD |
|||
Payable within 1 year |
95,428,301 |
94,878,153 |
||
Payable within 1 and 2 years |
— |
— |
||
Payable within 2 and 5 years |
— |
— |
||
Payable after 5 years |
— |
— |
||
95,428,301 |
94,878,153 |
F-62
Brooge Petroleum and Gas Investment Company FZE
NOTES TO THE FINANCIAL STATEMENTS
13 TERM LOANS (cont.)
Changes in liabilities arising from term loans are as follows:
1 January |
Cash flows |
Other |
31 December |
||||||
USD |
USD |
USD |
USD |
||||||
2018 |
|
||||||||
Current: |
|
||||||||
Term loans |
94,163,751 |
550,148 |
78,189 |
|
94,792,088 |
||||
Non-current: |
|
||||||||
Term loans |
— |
— |
— |
|
— |
||||
Total |
94,163,751 |
550,148 |
78,189 |
|
94,792,088 |
||||
2017 |
|
||||||||
Current: |
|
||||||||
Term loans |
77,497,507 |
16,700,441 |
(34,197 |
) |
94,163,751 |
||||
Non-current: |
|
||||||||
Term loans |
— |
— |
— |
|
— |
||||
Total (restated) |
77,497,507 |
16,700,441 |
(34,197 |
) |
94,163,751 |
The ‘Other’ column includes the effect of amortisation of prepaid finance costs on term loans.
14 LEASE LIABILITY
During 2013, the Company entered into a land lease agreement with the Municipality of Fujairah for a period of 30 years, extendable for another 30 years at the option of the Company. The Company has concluded that they have the right-to-use of the asset and accordingly, recorded a lease liability as per the requirements of IFRS 16. Given the use of the land, it is reasonably certain that the Company will continue to lease the land till the end of the lease period (i.e. 60 years) and accordingly the below lease rentals cover a period up to 60 years discounted at the rate of 9.5% (2017: 9.5%) as an incremental borrowing rate for the Company. Annual lease rental is increased by 2% on an annual basis as per the agreement.
Changes in the lease liability are as follows:
2018 |
(Restated)
|
|||||
USD |
USD |
|||||
At 1 January |
29,670,675 |
|
29,127,095 |
|
||
Interest charge |
2,818,714 |
|
2,767,074 |
|
||
Amount paid during the year |
(2,267,964 |
) |
(2,223,494 |
) |
||
At 31 December |
30,221,425 |
|
29,670,675 |
|
The lease liability is classified in the statement of financial position as follows:
2018 |
(Restated)
|
|||
USD |
USD |
|||
Current |
2,112,624 |
2,071,200 |
||
Non-current |
28,108,801 |
27,599,475 |
||
At 31 December |
30,221,425 |
29,670,675 |
F-63
Brooge Petroleum and Gas Investment Company FZE
NOTES TO THE FINANCIAL STATEMENTS
14 LEASE LIABILITY (cont.)
The maturity of the lease liability is as follows:
Minimum lease payments |
Present value of
|
|||||||||
2018 |
(Restated)
|
2018 |
(Restated)
|
|||||||
USD |
USD |
USD |
USD |
|||||||
Not later than one year |
2,313,323 |
|
2,267,964 |
|
2,112,624 |
2,071,200 |
||||
Later than one year and not later than five years |
9,725,304 |
|
9,534,612 |
|
7,099,255 |
6,960,054 |
||||
Later than five years |
216,023,896 |
|
218,527,911 |
|
21,009,546 |
20,639,421 |
||||
228,062,523 |
|
230,330,487 |
|
30,221,425 |
29,670,675 |
|||||
Finance costs |
(197,841,098 |
) |
(200,659,812 |
) |
— |
— |
||||
Present value of minimum lease payments |
30,221,425 |
|
29,670,675 |
|
30,221,425 |
29,670,675 |
Additional information relating to the Company’s lease is provided in notes 6 and 7 to the financial statements.
15 PROVISIONS
2018 |
(Restated)
|
|||
USD |
USD |
|||
Provision for employees’ end of service benefits |
6,267 |
651 |
16 DERIVATIVE FINANCIAL INSTRUMENTS
2018 |
(Restated)
|
|||
USD |
USD |
|||
Interest rate swaps |
1,190,073 |
— |
During the year 2018, the Company entered into an interest rate swap with a commercial bank exchanging variable interest for fixed interest at specified dates on the Phase I Construction Facility (note 13). The interest rate swap matures in June 2023.
The details of these derivative financial instruments are as follows:
Notional
|
Fair value
|
Fair value liability |
||||
USD |
USD |
USD |
||||
31 December 2018 |
||||||
Designated at FVTPL |
||||||
Interest rate swaps |
83,855,305 |
— |
1,190,073 |
17 ACCOUNTS PAYABLE, ACCRUALS AND OTHER PAYABLES
2018 |
(Restated)
|
|||
USD |
USD |
|||
Accounts payable |
1,565,035 |
1,845,719 |
||
Accrued interest on term loans |
910,691 |
2,620,150 |
||
Advances from customer |
— |
166,022 |
||
Capital accruals |
5,972,230 |
— |
||
Accrued expenses |
555,842 |
43,226 |
||
9,003,798 |
4,675,117 |
F-64
Brooge Petroleum and Gas Investment Company FZE
NOTES TO THE FINANCIAL STATEMENTS
18 RELATED PARTY TRANSACTIONS AND BALANCES
Related parties represent associated companies, owners, directors and key management personnel of the Company, and entities controlled, jointly controlled or significantly influenced by such parties. Pricing policies and terms of these transactions are approved by the Company’s Chief Executive Officer.
Transactions with related parties
Movements in owners’ account are as follows
2018 |
(Restated)
|
||||
USD |
USD |
||||
Contributions by the owners |
951,539 |
|
3,878,302 |
||
Amounts paid on behalf of the Company by the owners* |
7,850,431 |
|
9,504,034 |
||
Amounts paid by the Company on behalf of the owners |
(2,296,354 |
) |
— |
||
Distributions to owners |
(29,209,289 |
) |
— |
||
(22,703,673 |
) |
13,382,336 |
These amounts are repayable at the discretion of the Chief Executive Officer of the Company and are interest free, therefore classified as part of equity.
____________
* These include expenses paid on behalf of the Company including lease liability payments and other operational expenses paid by the owners on behalf of the Company.
Changes in owners’ account is as follows:
2018 |
(Restated)
|
||||
USD |
USD |
||||
At 1 January |
70,421,436 |
|
57,039,100 |
||
Net (distributions) contributions during the year |
(22,703,673 |
) |
13,382,336 |
||
At 31 December |
47,717,763 |
|
70,421,436 |
A member of key management personnel was employed by the owners and her compensation amounting to USD 163,354 was borne by them for the year ended 31 December 2017. Key management remuneration for the year ended 31 December 2018 amounted to USD 677,291 (2017: USD 144,569), charged to statement of comprehensive income (within profit and loss).
Guarantees by related parties:
The owners have issued corporate guarantees to secure the Financing Facilities described in note 13.
19 COMMITMENTS
2018 |
(Restated)
|
|||
USD |
USD |
|||
Capital commitments |
||||
Within one year |
144,027,770 |
— |
||
More than 1 year and less than 5 years |
16,534,876 |
— |
||
At 31 December |
160,562,646 |
— |
Capital commitments relate to construction of Phase II which is expected to be completed by the second quarter of 2020.
Capital commitments include advances to suppliers which are contingent on an advance payment guarantee being issued by the supplier in favour of the Company, therefore not recognised at 31 December 2018.
F-65
Brooge Petroleum and Gas Investment Company FZE
NOTES TO THE FINANCIAL STATEMENTS
20 FAIR VALUE OF FINANCIAL INSTRUMENTS
Management considers that the fair value of financial assets and financial liabilities in the financial statements approximate their carrying amounts at the reporting date.
Fair value hierarchy
The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable.
Level 1 |
Level 2 |
Level 3 |
Total
|
|||||
USD |
USD |
USD |
USD |
|||||
Liabilities measured at fair value: |
||||||||
31 December 2018 |
||||||||
Derivative financial instruments |
— |
1,190,073 |
— |
1,190,073 |
21 FINANCIAL RISK MANAGEMENT AND POLICIES
The main risks arising from the Company’s financial instruments are interest rate risk, credit risk, currency risk and liquidity risk. The management reviews and agrees policies for managing each of these risks which are summarized below.
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.
The Company’s exposure to the risk of changes in market interest rates relates primarily to the Company’s balances with banks and interest bearing loans and borrowings at variable rates.
Interest rate sensitivity
The following table demonstrates the sensitivity to a reasonably possible change in interest rates, with other variables held constant, of the Company’s profit for one year corresponding to the impact of the floating rate borrowings for one year.
Effect
|
|||
USD |
|||
2018 |
|
||
+40 increase in basis points |
(381,713 |
) |
|
-40 decrease in basis points |
381,713 |
|
|
2017 (restated) |
|
||
+40 increase in basis points |
(379,513 |
) |
|
-40 decrease in basis points |
379,513 |
|
Currency risk
The Company does not have any significant exposure to currency risk as most of its assets and liabilities are denominated in USD or UAE Dirhams, which are pegged to the USD.
F-66
Brooge Petroleum and Gas Investment Company FZE
NOTES TO THE FINANCIAL STATEMENTS
21 FINANCIAL RISK MANAGEMENT AND POLICIES (cont.)
Credit risk
Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. The Company is exposed to credit risk on bank balances and receivables as reflected in the statement of financial position, with a maximum exposure equal to the carrying amount of these instruments.
The Company has a low credit risk exposure on its trade receivables based on established policy, procedures and controls relating to customer credit risk management. Credit quality of the customer is assessed as part of contract negotiations. Outstanding receivables are regularly monitored. The Company has only one customer as at 31 December 2018 (31 December 2017: one customer).
Liquidity risk
The Company monitors its risk to a shortage of funds using a recurring liquidity planning tool. This tool considers projected financing requirements of the Company during the construction phase and cash projections from operations with outstanding bank facilities and outstanding bank commitments as defined under the finance documents.
The Company manages its liquidity risk in relation to term loans to ensure compliance with all covenants for each specific facility. Refer note 2.2 for further details.
The table below summarizes the maturity profile of the Company’s financial liabilities at 31 December 2018 and 31 December 2017 based on contractual undiscounted payments.
On
|
Less than 3 months |
3 months to 1 year |
1 to 5
|
> 5 years |
Total |
|||||||
USD |
USD |
USD |
USD |
USD |
USD |
|||||||
31 December 2018 |
||||||||||||
Bank overdraft |
3,745,048 |
— |
— |
— |
— |
3,745,048 |
||||||
Term loans (including accrued interest) |
95,702,779 |
— |
— |
— |
— |
95,702,779 |
||||||
Lease liability |
— |
2,313,323 |
— |
9,725,304 |
216,023,896 |
228,062,523 |
||||||
Derivative financial instruments |
— |
— |
1,190,073 |
— |
— |
1,190,073 |
||||||
Accounts payable, accruals and other payables (excluding accrued interest) |
— |
2,120,877 |
5,972,230 |
— |
— |
8,093,107 |
||||||
Total |
99,447,827 |
4,434,200 |
7,162,303 |
9,725,304 |
216,023,896 |
336,793,530 |
||||||
31 December 2017 |
||||||||||||
Term loans (including accrued interest) |
96,783,901 |
— |
— |
— |
— |
96,783,901 |
||||||
Lease liability |
— |
2,267,964 |
— |
9,534,612 |
218,527,911 |
230,330,487 |
||||||
Accounts payable, accruals and other payables (excluding accrued interest) |
— |
1,888,945 |
— |
— |
— |
1,888,945 |
||||||
Total (restated) |
96,783,901 |
4,156,909 |
— |
9,534,612 |
218,527,911 |
329,003,333 |
Capital management
The primary objective of the Company’s capital management is to ensure that it maintains a healthy capital ratios in order to support its business and maximize shareholder’s value.
F-67
Brooge Petroleum and Gas Investment Company FZE
NOTES TO THE FINANCIAL STATEMENTS
21 FINANCIAL RISK MANAGEMENT AND POLICIES (cont.)
The Company manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Company may adjust future distribution policy to shareholders, issue new shares or shareholders’ contributions.
The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Company includes within net debt, the lease liability, term loans, and trade and other payables, less cash and cash equivalents. Capital includes share capital, owners’ accounts, general reserve and retained earnings (accumulated losses). Refer to note 13 for discussion on Company’s debt covenants.
2018 |
(Restated)
|
|||||
USD |
USD |
|||||
Term loans |
94,792,088 |
|
94,163,751 |
|
||
Lease liability |
30,221,425 |
|
29,670,675 |
|
||
Less: cash and cash equivalents |
3,707,697 |
|
(284,055 |
) |
||
Net debt |
128,721,210 |
|
123,550,371 |
|
||
Total capital |
60,977,933 |
|
67,620,954 |
|
||
Capital and net debt |
189,699,143 |
|
191,171,325 |
|
||
Gearing ratio |
68 |
% |
65 |
% |
22 SUBSEQUENT EVENTS
• On 25 February 2019, the shareholders of Brooge Petroleum and Gas Investment Company FZC transferred their ownership in the Company to the Seller, Brooge Petroleum and Gas Investment Company plc (refer note 1 for details).
• On 13 March 2019, the Company entered the Refinery and Services Agreement with Sahara to develop and operate the Sahara Refinery at the BPGIC terminal. The Company expects to provide operation, storage and ancillary services to Sahara (refer note 2 for details).
• On 31 March 2019, the Seller contributed USD 75,000,000 to the Company through the owners’ accounts.
• On 15 April 2019, the Company entered into a business combination agreement with Twelve Seas, Brooge Holdings Limited, Brooge Merger Sub Limited, a subsidiary of Brooge Holdings Limited, and the Company’s shareholders. On 10 May 2019, the Seller became party to the business combination agreement by execution of a joinder thereto (refer note 1 for details).
• On 10 September 2019, the Company entered into an agreement with its lender to amend the Phase I Construction Facility (refer note 13 for details).
F-68
Brooge Petroleum and Gas Investment Company FZE
INTERIM STATEMENT OF COMPREHENSIVE INCOME
For the periods ended 30 June 2019 and 30 June 2018 (Unaudited)
Note |
Six month
|
Six month
|
||||||
USD |
USD |
|||||||
Revenue |
3 |
22,042,687 |
|
13,796,112 |
|
|||
Direct costs |
(4,955,436 |
) |
(4,765,900 |
) |
||||
GROSS PROFIT |
17,087,251 |
|
9,030,212 |
|
||||
General and administrative expenses |
(1,236,507 |
) |
(1,048,846 |
) |
||||
Finance costs |
(3,412,843 |
) |
(3,318,895 |
) |
||||
Changes in fair value of derivative financial instruments |
(484,603 |
) |
— |
|
||||
PROFIT AND TOTAL COMPREHENSIVE INCOME FOR THE PERIOD |
11,953,298 |
|
4,662,471 |
|
The attached notes 1 to 12 form part of these interim condensed financial statements.
F-69
Brooge Petroleum and Gas Investment Company FZE
INTERIM STATEMENT OF FINANCIAL POSITION
At 30 June 2019 (Unaudited) and 31 December 2018 (audited)
Notes |
(Unaudited)
|
(Audited)
|
||||
USD |
USD |
|||||
ASSETS |
||||||
Non-current assets |
||||||
Property, plant and equipment |
4 |
205,919,914 |
197,629,114 |
|||
Advances to contractors |
4 |
29,377,827 |
— |
|||
235,297,741 |
197,629,114 |
|||||
Current assets |
||||||
Inventories |
175,030 |
147,090 |
||||
Trade and other receivables |
4,613,412 |
2,123,077 |
||||
Bank balances and cash |
5 |
6,731,829 |
37,351 |
|||
11,520,271 |
2,307,518 |
|||||
TOTAL ASSETS |
246,818,012 |
199,936,632 |
||||
EQUITY AND LIABILITIES |
||||||
Equity |
||||||
Share capital |
6 |
1,361,285 |
1,361,285 |
|||
Owners’ accounts |
9 |
80,363,942 |
47,717,763 |
|||
General reserve |
680,643 |
680,643 |
||||
Retained earnings |
23,171,540 |
11,218,242 |
||||
Total equity |
105,577,410 |
60,977,933 |
||||
Non-current liabilities |
||||||
Lease liability |
8 |
28,163,824 |
28,108,801 |
|||
Provisions |
9,485 |
6,267 |
||||
28,173,309 |
28,115,068 |
|||||
Current liabilities |
||||||
Bank overdraft |
5 |
— |
3,745,048 |
|||
Term loans |
7 |
92,559,028 |
94,792,088 |
|||
Accounts payable, accruals and other payables |
16,497,132 |
9,003,798 |
||||
Derivative financial instruments |
1,674,676 |
1,190,073 |
||||
Lease liability |
8 |
2,336,457 |
2,112,624 |
|||
113,067,293 |
110,843,631 |
|||||
Total liabilities |
141,240,602 |
138,958,699 |
||||
TOTAL EQUITY AND LIABILITIES |
246,818,012 |
199,936,632 |
The attached notes 1 to 12 form part of these interim condensed financial statements.
F-70
Brooge Petroleum and Gas Investment Company FZE
INTERIM STATEMENT OF CHANGES IN EQUITY
For the periods ended 30 June 2019 and 30 June 2018 (Unaudited)
Share
|
Owners’
|
General
|
(Accumulated losses)
|
Total |
|||||||||
USD |
USD |
USD |
USD |
USD |
|||||||||
Balance at 1 January 2018 (audited) |
1,361,285 |
70,421,436 |
|
— |
(4,161,767 |
) |
67,620,954 |
|
|||||
Net distributions to the owners (note 9) |
— |
(7,284,725 |
) |
— |
— |
|
(7,284,725 |
) |
|||||
Total comprehensive income for the period |
— |
— |
|
— |
4,662,471 |
|
4,662,471 |
|
|||||
Balance at 30 June 2018 (unaudited) |
1,361,285 |
63,136,711 |
|
— |
500,704 |
|
64,998,700 |
|
|||||
Balance at 1 January 2019 (audited) |
1,361,285 |
47,717,763 |
|
680,643 |
11,218,242 |
|
60,977,933 |
|
|||||
Net contribution by the owners (note 9) |
— |
32,646,179 |
|
— |
— |
|
32,646,179 |
|
|||||
Total comprehensive income for the period |
— |
— |
|
— |
11,953,298 |
|
11,953,298 |
|
|||||
Balance at 30 June 2019 (unaudited) |
1,361,285 |
80,363,942 |
|
680,643 |
23,171,540 |
|
105,577,410 |
|
The attached notes 1 to 12 form part of these interim condensed financial statements.
F-71
Brooge Petroleum and Gas Investment Company FZE
INTERIM STATEMENT OF CASH FLOWS
For the periods ended 30 June 2019 and 30 June 2018 (Unaudited)
Notes |
Six month
|
Six month
|
||||||
USD |
USD |
|||||||
OPERATING ACTIVITIES |
|
|
||||||
Profit for the period |
11,953,298 |
|
4,662,471 |
|
||||
Adjustments to reconcile net profit to net cash provided
|
|
|
||||||
Depreciation charge |
4 |
2,899,881 |
|
2,876,873 |
|
|||
Finance costs |
3,412,843 |
|
3,318,895 |
|
||||
Net changes in fair value of derivative financial instruments |
484,603 |
|
— |
|
||||
Working capital changes: |
|
|
||||||
(Increase) decrease in inventories |
(27,940 |
) |
24,904 |
|
||||
Increase in trade and other receivables |
(2,490,335 |
) |
(1,741,489 |
) |
||||
Increase in provisions |
3,218 |
|
175 |
|
||||
Increase (decrease) in accounts payable, accruals and
|
3,306,754 |
|
(116,313 |
) |
||||
Net cash flows from operating activities |
19,542,322 |
|
9,025,516 |
|
||||
INVESTING ACTIVITIES |
|
|
||||||
Purchase of property, plant and equipment |
(8,869,454 |
) |
(119,200 |
) |
||||
Advances paid to contractors |
(29,377,827 |
) |
— |
|
||||
Net cash flows used in investing activities |
(38,247,281 |
) |
(119,200 |
) |
||||
FINANCING ACTIVITIES |
|
|
||||||
Proceeds from term loans |
— |
|
550,445 |
|
||||
Repayment of term loans |
(2,272,589 |
) |
— |
|
||||
Interest paid |
(140,077 |
) |
— |
|
||||
Net contribution from (distributions to) the owners |
31,557,151 |
|
(8,418,673 |
) |
||||
Net cash flows from (used in) financing activities |
29,144,485 |
|
(7,868,228 |
) |
||||
NET INCREASE IN CASH AND CASH EQUIVALENTS |
10,439,526 |
|
1,038,088 |
|
||||
Cash and cash equivalents at 1 January |
(3,707,697 |
) |
284,055 |
|
||||
CASH AND CASH EQUIVALENTS AT 31 DECEMBER |
5 |
6,731,829 |
|
1,322,143 |
|
The attached notes 1 to 12 form part of these interim condensed financial statements.
F-72
Brooge Petroleum and Gas Investment Company FZE
NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS
For the periods 30 June 2019 and 2018 (Unaudited)
1 ACTIVITIES
Brooge Petroleum and Gas Investment Company FZE (the “Company” or “BPGIC”), formerly known as Brooge Petroleum and Gas Investment Company FZC, is a free zone company registered and incorporated on 10 February 2013 in Fujairah, United Arab Emirates (“UAE”). The free zone is income tax free without a set time limit. The Company is an oil storage and service provider located in the Port of Fujairah in the emirate of Fujairah in the UAE. The Company currently operates Phase I, comprising 14 tanks of total capacity of 399,324 cbm, fully operational for storage and other ancillary processes of clean oil. The Company’s Phase II is under construction, which will comprise 8 tanks of total capacity of 600,000 cbm for storage and other ancillary services of crude oil. Brooge Petroleum and Gas Investment Company FZC’s share capital was divided amongst three shareholders (referred to as the owners or shareholders). Emirates Investment LLC FZC was the ultimate parent company.
On 25 February 2019, the shareholders of Brooge Petroleum and Gas Investment Company FZC transferred their ownership in the company to Brooge Petroleum and Gas Investment Company plc (the “Seller”), a company incorporated under the laws of England and Wales and owned by the same shareholders that previously owned Brooge Petroleum and Gas Investment Company FZC and in the same ownership proportion. Upon the change of ownership, Brooge Petroleum and Gas Investment Company FZC changed its name to Brooge Petroleum and Gas Investment Company FZE. As a result of the above, the Seller became the parent of the Company.
On 15 April 2019, the Company entered into a business combination agreement with Twelve Seas Investment Company (“Twelve Seas”), Brooge Holdings Limited, Brooge Merger Sub Limited, a subsidiary of Brooge Holdings Limited, and the Company’s shareholders. On 10 May 2019, the Seller became party to the business combination agreement by execution of a joinder thereto. Pursuant to the business combination agreement, subject to the terms and conditions set forth therein, at the closing of the transactions contemplated by the business combination agreement, Twelve Seas will merge with Brooge Merger Sub Limited, with Twelve Seas continuing as the surviving entity and with holders of Twelve Seas securities receiving securities of Brooge Holdings Limited, and Brooge Holdings Limited will acquire all of the issued and outstanding ordinary shares of the Company from the Seller in exchange for ordinary shares of Brooge Holdings Limited, with the Company becoming a wholly-owned subsidiary of Brooge Holdings Limited.
The registered office is at P.O Box 50170 Al-Sodah, Khorr Fakkan Road, Fujairah, United Arab Emirates.
The accompanying interim condensed financial statements were authorized for issue by the Board of Directors on [date].
2.1 SIGNIFICANT ACCOUNTING POLICIES
The interim condensed financial statements for the six-month periods ended 30 June 2019 and 2018 have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting and applicable rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) required for interim financial statements.
The interim condensed financial statements have been presented in US Dollars (“USD”) which is the functional and presentation currency of the Company.
The interim condensed financial statements do not include all information and disclosures required for annual financial statements and should be read in conjunction with the Company’s audited financial statements as at 31 December 2018. In addition, the results for the six-month period ended 30 June 2019 are not necessarily indicative of the results that may be expected for the financial year ending 31 December 2019.
2.2 FUNDAMENTAL ACCOUNTING CONCEPT
As of 30 June 2019 and 31 December 2018, the Company had not paid USD 6,277,709 and USD 3,747,537 respectively of principal and accrued interest that was due under the Company’s Phase I Financing Facilities. Also, as of 30 June 2019 and 31 December 2018, the Company was not in compliance with its debt covenants, including the debt service coverage ratio contained in the Company’s Phase I Financing Facilities. Even though the lender did not declare an event of default under the loan agreements, these breaches constituted events of default and could have resulted in the lender requiring immediate
F-73
Brooge Petroleum and Gas Investment Company FZE
INTERIM STATEMENT OF COMPREHENSIVE INCOME
For the periods ended 30 June 2019 and 30 June 2018 (Unaudited)
2.2 FUNDAMENTAL ACCOUNTING CONCEPT (cont.)
repayment of the loans. Accordingly, as of 30 June 2019 and 31 December 2018, the Company has classified its debt balance of USD 92,559,028 and USD 94,792,088 as a current liability. As of 30 June 2019 and 31 December 2018, the Company’s current liabilities exceeded its current assets by USD 101,547,022 and USD 108,536,113, respectively. All of the above represents a material uncertainty that casts significant doubt upon the Company’s ability to continue as a going concern.
On 10 September 2019, the Company entered into an agreement with its lender to amend the Phase I Construction Facility (note 7). The principal and accrued interest of USD 5,494,063 outstanding under this facility as of 31 July 2019 as per the original repayment schedule will now be due on 30 November 2019. The Phase I Construction Facility is now payable in 45 instalments starting 31 October 2019 with final maturity on 30 July 2030. The Phase I Admin Building Facility and the Phase I Short Term Financing Facility were not amended as part of the 10 September 2019 agreement to amend the Phase I Construction Facility. Subsequent to the period end, the Company had repaid USD 5,646,206 due under the Phase I Admin Building Facility and the Phase I Short Term Financing Facility. As such, all instalments related to the Phase I Admin Building Facility and the Phase I Short Term Financing Facility due under the original repayment schedules up to 10 September 2019 were repaid. In addition, the Company agreed to assign to the lender all proceeds from the operation of the tanks and to pre-settle by 31 December 2019 AED 100,000,000 (USD 27,225,701) translated using the exchange rate as of 30 June 2019) of principal under the Phase I Construction Facilities from the proceeds received from the transaction described in note 1.
During 2018, the Company signed, the Phase II End User Agreement to provide storage and ancillary services to the Phase II End User, an international commodity trading company. Phase II operations are scheduled to start in the second quarter of 2020 and management expects this will generate significant operating cash flows. Further, in 2019, the Company entered into the Refinery and Services Agreement with Sahara to develop and operate the Sahara Refinery at the BPGIC terminal. The Company expects to provide operation, storage and ancillary services to Sahara. Refinery operations are scheduled to start in the first quarter of 2020. Based on the above, management expects the Company will generate sufficient cash flows from its operations to meet its liabilities as and when the loan instalments fall due. Further, the owners intend to provide further financial support to enable the Company to meet its financial obligations as and when required.
The interim condensed financial statements have been prepared assuming that the Company will continue as a going concern. Accordingly, the interim condensed financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, the amounts and classification of liabilities, or any other adjustments that might result in the event the Company is unable to continue as a going concern.
2.3 CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES
The accounting policies adopted in the preparation of the interim condensed financial statements are consistent with those followed in the preparation of the Company’s annual financial statements for the year ended 31 December 2018 except for the adoption of the new standards and interpretations effective as of 1 January 2019, noted below:
• IFRIC Interpretation 23 Uncertainty over Income Tax Treatments
• Amendments to IFRS 9 Prepayment Features with Negative Compensation
• Amendments to IAS 19 Plan Amendment, Curtailment or Settlement
• Amendments to IAS 28 Long-term Interests in Associates and Joint Ventures
Annual improvements 2015-2017 cycle
• IFRS 3 Business Combinations
• IFRS 11 Joint Arrangements
• IAS 12 Income Taxes
• IAS 23 Borrowing Costs
F-74
Brooge Petroleum and Gas Investment Company FZE
INTERIM STATEMENT OF COMPREHENSIVE INCOME
For the periods ended 30 June 2019 and 30 June 2018 (Unaudited)
2.3 CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES (cont.)
The application of these new standards and amendments, did not have a material impact on the interim condensed financial statements of the Company.
2.4 SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS
The preparation of the interim condensed financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and reported amounts of financial assets and liabilities and the disclosure of contingent liabilities. These judgments, estimates and assumptions also affect the revenue, expenses and provisions as well as fair value changes. Actual results may differ from these estimates.
In preparing these interim condensed financial statements, the significant judgments made by management in applying the Company’s accounting policies and the key sources of estimation uncertainty are the same as those applied to the financial statements as at and for the year ended 31 December 2018.
2.5 FUTURE CHANGES IN ACCOUNTING POLICIES — STANDARDS ISSUED BUT NOT YET EFFECTIVE
The standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Company’s interim condensed financial statements are disclosed below. The Company intends to adopt these standards, if applicable, when they become effective:
• IFRS 17 Insurance Contracts
• Amendments to IFRS 10 and IAS 28 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
• Amendments to IFRS 3: Definition of a Business
• Amendments to IAS 1 and IAS 8: Definition of Material
• IFRS 10 and IAS 28: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
The Company does not expect these new standards and amendments to have a material impact on the financial statements, when implemented in future periods.
3 REVENUE
Six month
|
Six month
|
|||
USD |
USD |
|||
Revenue recognised under IFRS 16 |
||||
Fixed consideration – leasing component |
8,423,241 |
6,162,630 |
||
Revenue recognised under IFRS 15 |
||||
Fixed consideration – service component |
3,556,479 |
2,602,000 |
||
Ancillary services |
10,062,967 |
5,031,482 |
||
13,619,446 |
7,633,482 |
|||
Total revenue |
22,042,687 |
13,796,112 |
The Company has only one segment at the reporting date. Revenue generation from leasing of storage capacity of tanks and other ancillary services, started in December 2017.
The Company operated Phase I at full capacity for the six months ended 30 June 2019 as compared to reduced capacity in the first quarter of 2018.
F-75
Brooge Petroleum and Gas Investment Company FZE
INTERIM STATEMENT OF COMPREHENSIVE INCOME
For the periods ended 30 June 2019 and 30 June 2018 (Unaudited)
3 REVENUE (cont.)
Operating lease commitments — Company as lessor
Future storage fee income to be received by the Company under the sales agreement based on projected storage availability are as follows:
(Unaudited) |
(Unaudited) |
|||
At 30 June
|
At 30 June
|
|||
USD |
USD |
|||
Within one year |
23,959,440 |
23,959,440 |
||
After one year but not more than 5 years |
59,898,600 |
83,858,040 |
||
83,858,040 |
107,817,480 |
4 PROPERTY, PLANT AND EQUIPMENT
Buildings |
Tanks |
Installations |
Other
|
Right-of- use
|
Capital
|
Total |
||||||||
USD |
USD |
USD |
USD |
USD |
USD |
USD |
||||||||
2019 |
||||||||||||||
Cost: |
||||||||||||||
At 1 January 2019 (audited) |
28,037,886 |
76,100,795 |
65,868,246 |
213,843 |
27,540,969 |
8,344,847 |
206,106,586 |
|||||||
Additions |
— |
— |
9,883 |
899 |
— |
11,289,155 |
11,299,937 |
|||||||
At 30 June 2019 (unaudited) |
28,037,886 |
76,100,795 |
65,878,129 |
214,742 |
27,540,969 |
19,634,002 |
217,406,523 |
|||||||
Depreciation: |
||||||||||||||
At 1 January 2019 (audited) |
1,250,566 |
1,746,725 |
3,148,665 |
36,436 |
2,295,080 |
— |
8,477,472 |
|||||||
Charge for the period |
560,758 |
782,709 |
1,421,138 |
21,422 |
223,110 |
— |
3,009,137 |
|||||||
At 30 June 2019 (unaudited) |
1,811,324 |
2,529,434 |
4,569,803 |
57,858 |
2,518,190 |
— |
11,486,609 |
|||||||
Net carrying amount: |
||||||||||||||
At 30 June 2019 (unaudited) |
26,226,562 |
73,571,361 |
61,308,326 |
156,884 |
25,022,779 |
19,634,002 |
205,919,914 |
|||||||
2018 |
||||||||||||||
Cost: |
||||||||||||||
At 1 January 2018 (audited) |
28,037,886 |
76,100,795 |
65,860,351 |
79,645 |
27,540,969 |
294,403 |
197,914,049 |
|||||||
Additions |
— |
— |
7,895 |
134,198 |
— |
8,050,444 |
8,192,537 |
|||||||
At 31 December 2018 (audited) |
28,037,886 |
76,100,795 |
65,868,246 |
213,843 |
27,540,969 |
8,344,847 |
206,106,586 |
|||||||
Depreciation: |
||||||||||||||
At 1 January 2018 (audited) |
129,051 |
181,306 |
325,525 |
3,232 |
1,836,064 |
— |
2,475,178 |
|||||||
Charge for the year |
1,121,515 |
1,565,419 |
2,823,140 |
33,204 |
459,016 |
— |
6,002,294 |
|||||||
At 31 December 2018 (audited) |
1,250,566 |
1,746,725 |
3,148,665 |
36,436 |
2,295,080 |
— |
8,477,472 |
|||||||
Net carrying amount: |
||||||||||||||
At 31 December 2018 (audited) |
26,787,320 |
74,354,070 |
62,719,581 |
177,407 |
25,245,889 |
8,344,847 |
197,629,114 |
F-76
Brooge Petroleum and Gas Investment Company FZE
INTERIM STATEMENT OF COMPREHENSIVE INCOME
For the periods ended 30 June 2019 and 30 June 2018 (Unaudited)
4 PROPERTY, PLANT AND EQUIPMENT (cont.)
Capital work in progress includes total amount capitalised relating to the construction of Phase II and includes an amount of USD 2,160,306 (31 December 2018: USD 1,431,102) related to finance charge on lease liability and an amount of USD 395,487 (31 December 2018: USD 286,231) related to depreciation charge on right-of-use asset capitalised.
Tanks and related assets with a carrying value of USD 161,546,547 (31 December 2018: USD 164,321,792) are mortgaged as security against loans obtained in 2014 and 2017 (note 7). Further, as security against the Phase I Admin Building Facility, a step-in right to use the leased land, has been provided to the commercial bank.
During the period, the Company paid an advance of USD 29,377,827 to contractors in relation to construction of Phase II.
The depreciation charge for the period is allocated to the interim statement of comprehensive income and capital work in progress as follows:
(Unaudited) |
(Unaudited) |
|||
Six month
|
Six month
|
|||
USD |
USD |
|||
Direct costs |
2,899,881 |
2,876,873 |
||
Property, plant and equipment |
109,256 |
109,781 |
||
3,009,137 |
2,986,654 |
5 CASH AND CASH EQUIVALENTS
(Unaudited) |
(Audited) |
||||
At 30 June
|
At 31 December
|
||||
USD |
USD |
||||
Bank balances and cash |
6,731,829 |
37,351 |
|
||
Bank overdraft |
— |
(3,745,048 |
) |
||
Cash and cash equivalents |
6,731,829 |
(3,707,697 |
) |
Significant non-cash transactions, which have been excluded from the interim statement of cash flows, are as follows:
(Unaudited) |
(Unaudited) |
|||
Six month
|
Six month
|
|||
USD |
USD |
|||
Capital accruals |
7,673,509 |
— |
6 SHARE CAPITAL
Authorised, issued and fully paid |
||||
(Unaudited) |
(Audited) |
|||
At 30 June
|
At 31 December
|
|||
USD |
USD |
|||
100 ordinary shares of USD 13,612.85 each
|
1,361,285 |
1,361,285 |
F-77
Brooge Petroleum and Gas Investment Company FZE
INTERIM STATEMENT OF COMPREHENSIVE INCOME
For the periods ended 30 June 2019 and 30 June 2018 (Unaudited)
7 TERM LOANS
(Unaudited) |
(Audited) |
|||||||
Interest rate |
Maturity |
At 30 June
|
At 31 December
|
|||||
USD |
USD |
|||||||
Current |
||||||||
Phase I Construction Facility |
3 month EIBOR + 3% margin |
On demand |
81,728,959 |
82,245,595 |
||||
Phase I Admin Building Facility |
3 month EIBOR + 3% margin |
On demand |
9,635,648 |
10,165,703 |
||||
Phase I Short Term Financing Facility |
1 month EIBOR + 2% margin |
On demand |
1,194,421 |
2,380,790 |
||||
92,559,028 |
94,792,088 |
Phase I Construction Facility
In 2014, the Company obtained the Phase I Construction Facility amounting to USD 84,595,154 (AED 310,718,000) from a commercial bank in the UAE to partially finance the construction of Phase I (14 oil storage tanks in Fujairah). The loan was repayable in 48 quarterly instalments, commencing 27 months after the start of the construction with final maturity not exceeding 31 March 2028 and is stated net of prepaid finance cost of USD 529,389 (31 December 2018: USD 559,607). The interest is due on a quarterly basis from the loan drawdown date. The loan was drawn down in AED.
During the year 2018 the Company entered into an agreement to amend the Phase I Construction Facility. The loan is now repayable in 48 quarterly instalments starting October 2018 with final maturity in July 2030. The loan carries interest rate at 3 month EIBOR + 3% as compared to interest at 6 month EIBOR + 3.5% previously.
Phase I Admin Building Facility
During 2017, the Company obtained an additional term loan facility, the Phase I Admin Building Facility, of USD 11,108,086 (AED 40,800,000) from a commercial bank in the UAE for the construction of an administrative building in Fujairah. The loan was repayable in 20 quarterly instalments starting after a 6 months grace period commencing in April 2017 and is stated net of prepaid finance cost of USD 76,606 (2017: USD 94,634). The interest is due on a quarterly basis from the loan drawdown date. The loan was drawn down in AED.
During the year 2018, the Company has entered in to an agreement to amend the Phase I Admin Building Facility. The loan is now repayable in 20 quarterly instalments starting October 2018 with final maturity in July 2023.The loan carries interest at 3 month EIBOR + 3% as compared to interest at 3 month EIBOR + 3.5% previously.
The Phase I Construction Facilities
The Phase I Construction Facilities are secured by a mortgage on the tanks and the office/administration building, step-in right to the leased land and assignment of insurance policies. The Phase I Construction Facilities are also secured by corporate guarantees from the following owners: (i) Al Brooge Capital Providing for Oil and Gas LLC, and (ii) Emirates Investment Company LLC FZC.
Under the Phase I Construction Facilities, the Company is subject to certain covenants requiring amongst other things, the maintenance of:
(i) a minimum debt service coverage ratio of 150% at all times and if the ratio decreases to 120% or less, it results in an event of default; and
(ii) an amount equivalent to one quarterly instalment including interest in a debt service reserve account at all times.
As of 30 June 2019 and 31 December 2018, the Company had not paid USD 3,515,827 and USD 2,300,875, respectively, of principal and USD 2,525,614 and USD 961,001, respectively, of accrued interest that was due under the Phase I Construction Facilities. Also, as of 30 June 2019 and 31 December 2018, the Company was in breach with both of its debt covenant requirements. Even though the lender did not declare an event of default under the loan agreement,
F-78
Brooge Petroleum and Gas Investment Company FZE
INTERIM STATEMENT OF COMPREHENSIVE INCOME
For the periods ended 30 June 2019 and 30 June 2018 (Unaudited)
7 TERM LOANS (cont.)
these breaches constituted events of default and could have resulted in the lender requiring immediate repayment of the loan. As a result of this non-compliance and in accordance with guidance related to the classification of obligations that are callable by the lender, the Company has classified the respective bank loans as a current liability at the end of both periods.
On 10 September 2019, the Company entered into an agreement with the bank to amend the Phase I Construction Facility. The Phase I Construction Facility is now payable in 45 instalments starting 31 October 2019 with final maturity on 30 July 2030. One of the instalments of the Phase I Construction Facility includes a one-time lump sum repayment of USD 5,729,418, which represents the cumulative instalments including interest outstanding from periods prior to this amended agreement of USD 5,494,063 and an amendment fee of USD 235,355. All securities and covenants under the original agreements remain in effect under the amended agreement. Under this agreement, the Phase I Construction Facilities are also secured by assignment of the proceeds from operation of the tanks. In addition, the shareholders committed to partially pre-settle by 31 December 2019 AED 100,000,000 (USD 27,225,701 translated using the exchange rate as of 30 June 2019) of the Phase I Construction Facilities from the proceeds of the transaction described in note 1.
The Phase I Admin Building Facility was not amended as part of the 10 September 2019 agreement to amend the Phase I Construction Facility. Subsequent to the period end, the Company had repaid USD 4,917,715 due under the Phase I Admin Building Facility. As such, all instalments due under the original repayment schedule up to 10 September 2019 were repaid.
The Phase I Short Term Financing Facility
During the year 2018, the Company has obtained a new facility from a commercial bank in the UAE to settle accrued interest on the Phase I Construction Facility amounting to USD 3,539,341(AED 13,000,000). The new facility carries interest at 1 month EIBOR + 2% margin and is repayable in 15 equal monthly instalments commencing from date of disbursement. The facility is due on 14 October 2019. The loan was drawn down in AED.
The Phase I Short Term Financing Facility is secured by a mortgage on the tanks and office/administration building, step-in right to the leased land and assignment of the proceeds from operation of the tanks and insurance policies. The Phase I Short Term Financing Facility is also secured by guarantees from the following owners: (i) Al Brooge Capital Providing for Oil and Gas LLC, and (ii) Emirates Investment Company LLC FZC.
As of 30 June 2019 and 31 December 2018, the Company had not paid USD 236,268 and USD 485,661, respectively of principal and accrued interest that was due under the Phase I Short Term Financing Facility. Even though the lender did not declare an event of default under the loan agreement, this breach constituted an event of default and could have resulted in the lender requiring immediate repayment of the loan.
The Phase I Short Term Financing Facility was not amended as part of the 10 September 2019 agreement to amend the Phase I Construction Facility. Subsequent to the period end, the Company had repaid USD 728,491 due under the Phase I Short Term Financing Facility. As such, all instalments due under the original repayment schedule up to 10 September 2019 were repaid.
The Phase II Financing Facility
During the year 2018, the Company obtained a new facility, the Phase II Financing Facility, from a commercial bank in the UAE amounting to USD 95,290,000 (AED 350,000,000) to partially finance the construction of Phase II. The new facility carries interest at 3 month EIBOR + 3% margin and is repayable in 17 bi-annual instalments commencing 6 months after the date of completion of phase 2.
F-79
Brooge Petroleum and Gas Investment Company FZE
INTERIM STATEMENT OF COMPREHENSIVE INCOME
For the periods ended 30 June 2019 and 30 June 2018 (Unaudited)
7 TERM LOANS (cont.)
The Phase II Financing Facility is secured by a mortgage on the Phase II storage tanks, step-in right to the leased land and assignment of the proceeds from operation of the tanks and insurance policies. The Phase II Financing Facility is also secured by guarantees from the following owners: (i) Al Brooge Capital Providing for Oil and Gas LLC, and (ii) Emirates Investment Company LLC FZC.
Under the Phase II Financing Facility, the Company is subject to certain covenants requiring amongst other things, the maintenance of (i) a minimum facility service coverage ratio of 1.25:1, (ii) a participations to value ratio not exceeding 1.50:1 at all times, (iii) a participations to cost ratio not exceeding 57% at any date, and (iv) an amount equivalent to one instalment including interest in a facility service reserve account at all times or in the event of an initial public offering, the amount should be equivalent to the next two instalments including interest. The facility service coverage ratio is calculated as revenues minus expenses from the Phase II storage tanks divided by the current debt commitments on the Phase II Financing Facility including interest. The participations to value ratio at any date is calculated as total debt commitments on the Phase II Financing Facility as of that date divided by the most recent valuation of the Phase II storage tanks. The participations to cost ratio at any date is calculated as the total debt commitments on the Phase II Financing Facility as of that date as a percentage of the sum of actual constructions costs plus project expenses paid as of that date on the Phase II storage tanks.
The Phase II Financing Facility includes an initial condition precedent that requires evidence of initial equity contribution by the Company towards the Phase II storage tanks before the loan facility can be utilised. The Company has not made any drawdowns on the Phase II Financing Facilities as of the date of issuance of these interim condensed financial statements.
The Financing Facilities are repayable as follows:
(Unaudited) |
(Audited) |
|||
At 30 June
|
At 31 December
|
|||
USD |
USD |
|||
Payable within 1 year |
93,155,712 |
95,428,301 |
||
Payable within 1 and 2 years |
— |
— |
||
Payable within 2 and 5 years |
— |
— |
||
Payable after 5 years |
— |
— |
||
93,155,712 |
95,428,301 |
8 LEASE LIABILITY
During 2013, the Company entered into a land lease agreement with the Municipality of Fujairah for a period of 30 years, extendable for another 30 years at the option of the Company. The Company has concluded that they have the right to use the asset and accordingly, recorded a lease liability as per the requirements of IFRS 16. Given the use of the land, it is reasonably certain that the Company will continue to lease the land till the end of lease period (i.e. 60 years) and accordingly the below lease rentals cover a period up to 60 years discounted at the rate of 9.5% (2018: 9.5%) as an incremental borrowing rate for the Company. Annual lease rental is increased by 2% on an annual basis as per the agreement.
F-80
Brooge Petroleum and Gas Investment Company FZE
INTERIM STATEMENT OF COMPREHENSIVE INCOME
For the periods ended 30 June 2019 and 30 June 2018 (Unaudited)
8 LEASE LIABILITY (cont.)
Changes in the lease liability is as follows:
(Unaudited) |
(Audited) |
|||||
At 30 June
|
At 31 December
|
|||||
USD |
USD |
|||||
At 1 January |
30,221,425 |
|
29,670,675 |
|
||
Interest charge |
1,435,518 |
|
2,818,714 |
|
||
Amount paid during the period/year |
(1,089,028 |
) |
(2,267,964 |
) |
||
Accrued rental |
(67,634 |
) |
— |
|
||
At 30 June/31 December |
30,500,281 |
|
30,221,425 |
|
The lease liability is classified in the interim statement of financial position as follows:
(Unaudited) |
(Audited) |
|||
At 30 June
|
At 31 December
|
|||
USD |
USD |
|||
Current |
2,336,457 |
2,112,624 |
||
Non-current |
28,163,824 |
28,108,801 |
||
At 30 June/31 December |
30,500,281 |
30,221,425 |
Maturity of lease liability is as follows:
Minimum lease payments |
Present value of
|
|||||||||
(Unaudited) |
(Audited) |
(Unaudited) |
(Audited) |
|||||||
At 30 June
|
At 31 December 2018 |
At 30 June
|
At 31 December 2018 |
|||||||
USD |
USD |
USD |
USD |
|||||||
Not later than one year |
2,336,457 |
|
2,313,323 |
|
2,133,750 |
2,112,624 |
||||
Later than one year and not later than five years |
9,822,557 |
|
9,725,304 |
|
7,170,248 |
7,099,255 |
||||
Later than five years |
214,746,847 |
|
216,023,896 |
|
21,196,283 |
21,009,546 |
||||
226,905,861 |
|
228,062,523 |
|
30,500,281 |
30,221,425 |
|||||
Finance costs |
(196,405,580 |
) |
(197,841,098 |
) |
— |
— |
||||
Present value of minimum lease payments |
30,500,281 |
|
30,221,425 |
|
30,500,281 |
30,221,425 |
9 RELATED PARTY TRANSACTIONS AND BALANCES
Related parties represent associated companies, owners, directors and key management personnel of the Company, and entities controlled, jointly controlled or significantly influenced by such parties. Pricing policies and terms of these transactions are approved by the Company’s Chief Executive Officer.
F-81
Brooge Petroleum and Gas Investment Company FZE
INTERIM STATEMENT OF COMPREHENSIVE INCOME
For the periods ended 30 June 2019 and 30 June 2018 (Unaudited)
9 RELATED PARTY TRANSACTIONS AND BALANCES (cont.)
Transactions with related parties
Movements in owners’ account are as follows
(Unaudited) |
(Unaudited) |
|||||
Six month period ended
|
Six month
|
|||||
USD |
USD |
|||||
Contributions by the owners |
75,238,701 |
|
262,728 |
|
||
Amounts paid on behalf of the Company |
882,296 |
|
3,191,864 |
|
||
Amounts paid by the Company on behalf of the owners |
(765,477 |
) |
— |
|
||
Distributions to owners |
(42,709,341 |
) |
(10,739,317 |
) |
||
32,646,179 |
|
(7,284,725 |
) |
These amounts are repayable at the discretion of the Chief Executive Officer of the Company and are interest free, therefore classified as part of equity.
Changes in owners’ account is as follows:
(Unaudited) |
(Audited) |
||||
At 30 June
|
At 31 December
|
||||
USD |
USD |
||||
At 1 January |
47,717,763 |
70,421,436 |
|
||
Net contributions (distributions) during the period/year |
32,646,179 |
(22,703,673 |
) |
||
At 30 June/31 December |
80,363,942 |
47,717,763 |
|
Key management remuneration for period ended 30 June 2019 amounted to USD 329,554 charged to the interim statement of comprehensive income (30 June 2018: USD 258,215).
Guarantees by related parties:
The owners have issued corporate guarantees to secure the Financing Facilities described in note 7.
10 COMMITMENTS
(Unaudited) |
(Audited) |
|||
At 30 June
|
At 31 December 2018 |
|||
USD |
USD |
|||
Capital commitments |
||||
Within one year |
128,263,854 |
144,027,770 |
||
More than 1 year and less than 5 years |
— |
16,534,876 |
||
At 30 June/31 December |
128,263,854 |
160,562,646 |
Capital commitments relate to construction of Phase II which is expected to be completed by second quarter of 2020.
F-82
Brooge Petroleum and Gas Investment Company FZE
INTERIM STATEMENT OF COMPREHENSIVE INCOME
For the periods ended 30 June 2019 and 30 June 2018 (Unaudited)
11 FAIR VALUE OF FINANCIAL INSTRUMENTS
Management considers that the fair value of financial assets and financial liabilities in the interim condensed financial statements approximate their carrying amounts at the reporting date.
Fair value hierarchy
The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable.
Level 1 |
Level 2 |
Level 3 |
Total
|
|||||
USD |
USD |
USD |
USD |
|||||
Liabilities measured at fair value: |
||||||||
30 June 2019 |
||||||||
Derivative financial instruments (unaudited) |
— |
1,674,676 |
— |
1,674,676 |
||||
31 December 2018 |
||||||||
Derivative financial instruments
|
— |
1,190,073 |
— |
1,190,073 |
12 SUBSEQUENT EVENTS
On 10 September 2019, the Company entered into an agreement with its lender to amend the Phase I Construction Facility (refer note 7 for details).
F-83
Report of independent registered public accounting firm
To the Shareholder and Director of Brooge Holdings Limited
Opinion on the Financial Statements
We have audited the accompanying consolidated statement of financial position of Brooge Holdings Limited (the Company) as of 30 June 2019, the related consolidated statements of comprehensive income, changes in equity and cash flows for the period from 12 April 2019 (inception) through 30 June 2019, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at 30 June 2019, and the results of its operations and its cash flows for the period from 12 April 2019 (inception) through 30 June 2019, in conformity with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
/s/ Ernst & Young
We have served as the Company’s auditor since 2019.
Abu Dhabi, United Arab Emirates
27 September 2019
F-84
Brooge Holdings Limited
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the period from 12 April 2019 (inception) through 30 June 2019
Note |
USD |
||||
General and administrative expenses |
3 |
(128,098 |
) |
||
LOSS AND TOTAL COMPREHENSIVE LOSS FOR THE PERIOD |
(128,098 |
) |
|||
|
|||||
Weighted average shares outstanding, basic and diluted |
1 |
|
|||
|
|||||
Basic and diluted loss per share |
(128,098 |
) |
The attached notes 1 to 4 form part of these consolidated financial statements.
F-85
Brooge Holdings Limited
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2019
Note |
USD |
||||
EQUITY AND LIABILITIES |
|
||||
Equity |
|
||||
Share capital |
4 |
1 |
|
||
Share subscription receivable |
(1 |
) |
|||
Accumulated losses |
(128,098 |
) |
|||
|
|||||
Total equity |
(128,098 |
) |
|||
|
|||||
Current liabilities |
|
||||
Accrued expenses |
128,098 |
|
|||
|
|||||
Total liabilities |
128,098 |
|
|||
|
|||||
TOTAL EQUITY AND LIABILITIES |
— |
|
The attached notes 1 to 4 form part of these consolidated financial statements.
F-86
Brooge Holdings Limited
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the period from 12 April 2019 (inception) to 30 June 2019
Share
|
Share
|
Accumulated
|
Total |
||||||||
USD |
USD |
USD |
USD |
||||||||
Balance at 12 April 2019 |
— |
— |
|
— |
|
— |
|
||||
|
|
|
|||||||||
Issuance of ordinary shares |
1 |
(1 |
) |
— |
|
— |
|
||||
Total comprehensive loss for the period |
— |
— |
|
(128,098 |
) |
(128,098 |
) |
||||
|
|
|
|||||||||
Balance at 30 June 2019 |
1 |
(1 |
) |
(128,098 |
) |
(128,098 |
) |
The attached notes 1 to 4 form part of these consolidated financial statements.
F-87
Brooge Holdings Limited
CONSOLIDATED STATEMENT OF CASH FLOWS
For the period from 12 April 2019 (inception) to 30 June 2019
USD |
|||
OPERATING ACTIVITIES |
|
||
Loss for the period |
(128,098 |
) |
|
|
|||
Adjustments to reconcile net loss to net cash from operating activities: |
|
||
Increase in accrued expenses |
128,098 |
|
|
|
|||
Net cash flows from operating activities |
— |
|
|
|
|||
NET INCREASE IN CASH AND CASH EQUIVALENTS |
— |
|
|
|
|||
Cash and cash equivalents at beginning of the period |
— |
|
|
|
|||
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD |
— |
|
The attached notes 1 to 4 form part of these consolidated financial statements.
F-88
Brooge Holdings Limited
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1 ACTIVITIES
Brooge Holdings Limited (the “Company”) is a company with limited liability registered as an exempted company in the Cayman Islands on 12 April 2019 (date of inception). The Company has a 100% shareholding in Brooge Merger Sub Limited (the “subsidiary”), an exempted company registered in the Cayman Islands. The Company and the subsidiary are together referred to as the Group.
On 15 April 2019, the Group entered into a business combination agreement with Twelve Seas Investment Company (“Twelve Seas”), Brooge Petroleum and Gas Investment Company FZE (“BPGIC”) and the shareholders of BPGIC. On 10 May 2019, BPGIC’s sole shareholder, Brooge Petroleum and Gas Investment Company plc (“BPGIC plc”), became party to the business combination agreement by execution of a joinder thereto. Pursuant to the business combination agreement, subject to the terms and conditions set forth therein, at the closing of the transactions contemplated by the business combination agreement, Twelve Seas will merge with the Company’s subsidiary, with Twelve Seas continuing as the surviving entity and with holders of Twelve Seas securities receiving securities of the Company. Twelve Seas will become a wholly-owned subsidiary of the Company. The Company will acquire all of the issued and outstanding ordinary shares of BPGIC from BPGIC plc in exchange for ordinary shares of the Company, with BPGIC becoming a wholly-owned subsidiary of the Company.
The registered office of the Company is at P.O Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands.
The consolidated financial statements of the Group as of 30 June 2019 and for the period from 12 April 2019 to 30 June 2019 were authorized for issue by the Company’s Director on _______________.
2 BASIS OF PREPARATION
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (IASB).
The consolidated financial statements have been presented in US Dollars (“USD”) which is the presentation currency of the Group and the functional currency of the Company.
he consolidated financial statements are prepared under the historical cost convention.
2.1 Basis of consolidation
The consolidated financial statements comprise those of the Company and its subsidiary as at 30 June 2019 listed below:
Name of subsidiary |
Ownership
|
Share of
|
Country of
|
|||||
Brooge Merger Sub Limited |
100 |
% |
100 |
% |
Cayman Islands |
All intercompany balances and transactions have been eliminated on consolidation.
The Company consolidates an entity’s financial statements when the Company has a controlling financial interest in the entity. Control is normally established when ownership interests exceed 50% in an entity.
2.2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of estimates
The preparation of consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.
F-89
Brooge Holdings Limited
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2.2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the consolidated financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from the Group’s estimates.
Ordinary shares
Ordinary shares are classified as equity.
2.3 FUTURE CHANGES IN ACCOUNTING POLICIES — STANDARDS ISSUED BUT NOT YET EFFECTIVE
Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Group’s consolidated financial statements.
3 GENERAL AND ADMINISTRATIVE EXPENSES
Includes expenses incurred for legal retainer fees and other travel and related expenses.
4 SHARE CAPITAL
The authorised share capital of the Company is 500,000,000 ordinary shares with a par value of $0.0001 per share. Holders of the Company’s ordinary shares are entitled to one vote for each share. On 12 April 2019, the Company issued 1 share at par value to its founder. As of 30 June 2019, the Company had not yet received payment for the share. Accordingly, the $1 payment due to the Company is recorded as share subscription receivable in the shareholders’ equity section of the consolidated statement of financial position.
F-90
PROSPECTUS FOR UP TO 28,901,900 ORDINARY SHARES, 21,229,000 WARRANTS AND
21,229,000 ORDINARY SHARES ISSUABLE UPON EXERCISE OF WARRANTS
OF
BROOGE HOLDINGS LIMITED
DEALER PROSPECTUS DELIVERY OBLIGATION
Until _______, all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers
Cayman Islands law does not limit the extent to which a company’s amended and restated memorandum and articles of association may provide for indemnification of officers and directors, except to the extent any such provision may be held by the Islands courts to be contrary to public policy, such as to provide indemnification against fraud or willful default or the consequences of committing a crime. Pubco’s amended and restated memorandum and articles of association provides for indemnification of our officers and directors to the maximum extent permitted by law, including for any liability incurred in their capacities as such, except through their own actual fraud, or willful default.
Pubco has or will maintain insurance on behalf of its directors and executive officers.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, we have been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is theretofore unenforceable.
Item 21. Exhibits and Financial Statement Schedules
Exhibit no |
Description |
|
2.1†* |
||
3.1* |
||
3.2* |
||
3.3 |
||
4.1 |
||
4.2 |
||
4.3 |
||
4.4 |
||
4.5** |
Specimen Ordinary Share Certificate of Pubco. |
|
4.6** |
Specimen Warrant Certificate of Pubco. |
|
4.7 |
||
5.1* |
||
5.2** |
Opinion of Ellenoff Grossman & Schole LLP. |
|
8.1** |
Tax Opinion of Ellenoff Grossman & Schole LLP. |
|
10.1 |
||
10.2 |
||
10.3 |
II-1
Exhibit no |
Description |
|
10.4 |
||
10.5 |
||
10.6 |
||
10.7 |
||
10.8 |
||
10.9 |
||
10.10 |
||
10.11 |
||
10.12 |
||
10.13 |
||
10.14** |
Form of Joinder Agreement. |
|
10.15** |
Registration Rights Agreement, dated as of [ ], 2019, by and among Twelve Seas and [ ]. |
|
10.16** |
[Form of Share Escrow Agreement Amendment] |
|
10.17 |
||
10.18 |
||
10.19 |
||
10.20*#† |
||
10.21*† |
||
10.22*#† |
||
10.23*# |
||
10.24* |
||
10.25* |
||
10.26* |
II-2
Exhibit no |
Description |
|
10.27*# |
||
10.28* |
||
10.29*#† |
||
10.30* |
||
10.31*† |
||
10.32*† |
||
10.33*#† |
||
10.34*† |
||
10.35*† |
||
10.36*#† |
||
10.37* |
||
10.38*† |
||
10.39*#† |
||
10.40*† |
||
10.41*# |
||
10.42* |
||
10.43*# |
||
10.44*#† |
||
10.45*# |
||
10.46* |
||
10.47* |
||
10.48* |
||
10.49* |
||
10.50*# |
||
10.51*† |
||
10.52* |
||
10.53* |
II-3
Exhibit no |
Description |
|
10.54*† |
||
10.55*#† |
||
10.56*† |
||
10.57*† |
||
10.58*#† |
||
10.59* |
||
10.60* |
||
10.61*# |
||
10.62* |
||
10.63* |
||
10.64* |
||
10.65* |
||
10.66* |
||
10.67*† |
||
10.68* |
||
10.69*# |
||
10.70* |
||
10.71* |
||
10.72*# |
||
21.1* |
||
23.1* |
||
23.2* |
||
23.3* |
||
23.4* |
Consent of Maples and Calder (to be included in Exhibit 5.1). |
|
23.5** |
Consent of Ellenoff Grossman & Schole LLP (to be included in Exhibit 5.2). |
|
99.1* |
||
99.2* |
||
99.3* |
||
99.4* |
||
99.5* |
||
99.6* |
||
99.7* |
____________
* Filed herewith
II-4
** To be filed by amendment
# Certain information has been redacted from this exhibit pursuant to Item 601(b)(10)(iv) of Regulation S-K because it is both not material and would likely cause competitive harm to the registrant if publicly disclosed. The Registrant hereby agrees to furnish an unredacted copy of the exhibit and its materiality and competitive harm analyses to the Commission upon request.
† Schedules to this exhibit have been omitted pursuant to Item 601(b)(2) of Registration S-K. The Registrant hereby agrees to furnish a copy of any omitted schedules to the Commission upon request.
Item 22. Undertakings
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
i. To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
ii. To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement.
iii. To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
(4) To file a post-effective amendment to the registration statement to include any financial statements required by Item 8.A of form 20-F at the start of any delayed offering or throughout a continuous offering.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes as follows: that prior to any public reoffering of the securities registered hereunder through use of a prospectus which is a part of this registration statement, by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c), the issuer undertakes that such reoffering prospectus will contain the information called for by the applicable registration form with respect to reofferings by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form.
The registrant undertakes that every prospectus: (i) that is filed pursuant to the immediately preceding paragraph, or (ii) that purports to meet the requirements of Section 10(a)(3) of the Act and is used in connection with an offering of securities subject to Rule 415, will be filed as a part of an amendment to the registration statement and will not
II-5
be used until such amendment is effective, and that, for purposes of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
The undersigned registrant hereby undertakes: (i) to respond to requests for information that is incorporated by reference into the prospectus pursuant to Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means, and (ii) to arrange or provide for a facility in the United States for the purposes of responding to such requestions. The undertaking in subparagraph (i) above include information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request.
The undersigned registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective.
II-6
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the emirate of Abu Dhabi, United Arab Emirates, on the 27th day of September, 2019.
BROOGE HOLDINGS LIMITED |
||||
By: |
/s/ Meclomen Maramot |
|||
Meclomen Maramot |
||||
Chief Executive Officer |
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.
Name |
Title |
Date |
||
/s/ Meclomen Maramot |
Chief Executive Officer and Director |
September 27, 2019 |
||
Meclomen Maramot |
(Principal Executive Officer and Principal Financial Officer) |
AUTHORIZED REPRESENTATIVE
Pursuant to the requirement of the Securities Act of 1933, the undersigned, the duly undersigned representative in the United States of Brooge Holdings Limited, has signed this registration statement in the City of Newark, State of Delaware, on September 27, 2019.
PUGLISI & ASSOCIATES |
||||
By: |
/s/ Donald J. Puglisi |
|||
Name: |
Donald J. Puglisi |
|||
Title: |
Managing Director |
II-7
Execution Copy
CONFIDENTIAL
BUSINESS COMBINATION AGREEMENT
by and among
TWELVE SEAS INVESTMENT COMPANY,
as Purchaser,
BROOGE HOLDINGS LIMITED,
as Pubco,
BROOGE MERGER SUB LIMITED,
as Merger Sub,
BROOGE PETROLEUM AND GAS INVESTMENT COMPANY FZE,
as the Company,
and
THE SHAREHOLDERS OF THE COMPANY WHO BECOME PARTIES HERETO,
as the Sellers
Dated as of April 15, 2019
TABLE OF CONTENTS
Page |
||
I. MERGER |
A-2 |
|
1.1. Merger |
A-2 |
|
1.2. Effective Time |
A-2 |
|
1.3. Effect of the Merger |
A-2 |
|
1.4. Organizational Documents of Surviving Company |
A-2 |
|
1.5. Directors and Officers of the Surviving Company |
A-2 |
|
1.6. Effect of Merger on Issued Securities of Purchaser |
A-2 |
|
1.7. Effect of Merger on Merger Sub and Pubco Capital Shares |
A-3 |
|
1.8. Surrender of Purchaser Certificates |
A-3 |
|
1.9. Lost, Stolen or Destroyed Purchaser Certificates |
A-3 |
|
1.10. Tax Consequences |
A-4 |
|
1.11. Taking of Necessary Action; Further Action |
A-4 |
|
Ii. SHARE EXCHANGE |
A-4 |
|
2.1. Exchange of Company Ordinary Shares |
A-4 |
|
2.2. Exchange Consideration |
A-4 |
|
2.3. Surrender of Company Ordinary Shares and Payment of Exchange Consideration |
A-5 |
|
2.4. Company Shareholder Consent |
A-5 |
|
2.5. Share Escrow |
A-5 |
|
III. CLOSING |
A-7 |
|
3.1. Closing |
A-7 |
|
IV. representations and warranties of purchaser |
A-7 |
|
4.1. Organization and Standing |
A-7 |
|
4.2. Authorization; Binding Agreement |
A-7 |
|
4.3. Governmental Approvals |
A-8 |
|
4.4. Non-Contravention |
A-8 |
|
4.5. Capitalization |
A-8 |
|
4.6. SEC Filings and Purchaser Financials |
A-9 |
|
4.7. Absence of Certain Changes |
A-9 |
|
4.8. Compliance with Laws |
A-10 |
|
4.9. Actions; Orders; Permits |
A-10 |
|
4.10. Taxes and Returns |
A-10 |
|
4.11. Employees and Employee Benefit Plans |
A-10 |
|
4.12. Properties |
A-10 |
|
4.13. Material Contracts |
A-10 |
|
4.14. Transactions with Affiliates |
A-11 |
|
4.15. Investment Company Act |
A-11 |
|
4.16. Finders and Brokers |
A-11 |
|
4.17. Certain Business Practices |
A-11 |
|
4.18. Insurance |
A-11 |
|
4.19. Trust Account |
A-11 |
|
4.20. Independent Investigation |
A-12 |
|
V. representations and warranties of pubco |
A-12 |
|
5.1. Organization and Standing |
A-12 |
|
5.2. Authorization; Binding Agreement |
A-12 |
|
5.3. Governmental Approvals |
A-12 |
|
5.4. Non-Contravention |
A-13 |
|
5.5. Capitalization |
A-13 |
i
Page |
||
5.6. Ownership of Exchange Shares |
A-13 |
|
5.7. Pubco and Merger Sub Activities |
A-13 |
|
5.8. Finders and Brokers |
A-13 |
|
5.9. Information Supplied |
A-13 |
|
5.10. Independent Investigation |
A-14 |
|
vI. representations and warranties of THE COMPANY |
A-14 |
|
6.1. Organization and Standing |
A-14 |
|
6.2. Authorization; Binding Agreement |
A-14 |
|
6.3. Capitalization |
A-15 |
|
6.4. Subsidiaries |
A-15 |
|
6.5. Governmental Approvals |
A-15 |
|
6.6. Non-Contravention |
A-16 |
|
6.7. Financial Statements |
A-16 |
|
6.8. Absence of Certain Changes |
A-17 |
|
6.9. Compliance with Laws |
A-17 |
|
6.10. Company Permits |
A-17 |
|
6.11. Litigation |
A-17 |
|
6.12. Material Contracts |
A-18 |
|
6.13. Intellectual Property |
A-19 |
|
6.14. Taxes and Returns |
A-20 |
|
6.15. Real Property |
A-21 |
|
6.16. Personal Property |
A-22 |
|
6.17. Title to and Sufficiency of Assets |
A-22 |
|
6.18. Employee Matters |
A-23 |
|
6.19. Benefit Plans |
A-23 |
|
6.20. Environmental Matters |
A-24 |
|
6.21. Oil and Gas Matters |
A-25 |
|
6.22. Transactions with Related Persons |
A-25 |
|
6.23. Insurance |
A-25 |
|
6.24. Top Customers and Suppliers |
A-26 |
|
6.25. Certain Business Practices |
A-26 |
|
6.26. Investment Company Act |
A-26 |
|
6.27. Finders and Brokers |
A-26 |
|
6.28. Information Supplied |
A-26 |
|
6.29. Disclosure |
A-27 |
|
6.30. Independent Investigation |
A-27 |
|
VII. COVENANTS |
A-27 |
|
7.1. Access and Information |
A-27 |
|
7.2. Conduct of Business of the Company, Pubco, Merger Sub and the Sellers |
A-28 |
|
7.3. Conduct of Business of Purchaser |
A-28 |
|
7.4. Annual and Interim Financial Statements |
A-30 |
|
7.5. Purchaser Public Filings |
A-30 |
|
7.6. No Solicitation |
A-30 |
|
7.7. No Trading |
A-31 |
|
7.8. Notification of Certain Matters |
A-31 |
|
7.9. Efforts |
A-31 |
|
7.10. Further Assurances |
A-32 |
|
7.11. The Registration Statement |
A-33 |
|
7.12. Public Announcements |
A-34 |
ii
Page |
||
7.13. Confidential Information |
A-34 |
|
7.14. Post-Closing Board of Directors and Executive Officers |
A-35 |
|
7.15. Board Observers |
A-36 |
|
7.16. Indemnification of Officers and Directors; Tail Insurance |
A-36 |
|
7.17. Use of Trust Account Proceeds |
A-36 |
|
7.18. Redemptions; PIPE Investment |
A-36 |
|
7.19. Nasdaq Ticker Symbol |
A-37 |
|
7.20. Company Schedules |
A-37 |
|
7.21. Joinder of Sellers |
A-37 |
|
7.22. Amendment to Business Combination Marketing Agreement |
A-37 |
|
VIII. Closing conditions |
A-37 |
|
8.1. Conditions of Each Party’s Obligations |
A-37 |
|
8.2. Conditions to Obligations of the Company, Pubco and the Sellers |
A-38 |
|
8.3. Conditions to Obligations of Purchaser |
A-39 |
|
8.4. Frustration of Conditions |
A-41 |
|
IX. TERMINATION AND EXPENSES |
A-41 |
|
9.1. Termination |
A-41 |
|
9.2. Effect of Termination |
A-42 |
|
9.3. Fees and Expenses |
A-43 |
|
9.4. Termination Fee |
A-43 |
|
X. WAIVERs and releases |
A-43 |
|
10.1. Waiver of Claims Against Trust |
A-43 |
|
10.2. Non-Recourse and Release |
A-44 |
|
xI. MISCELLANEOUS |
A-45 |
|
11.1. Survival |
A-45 |
|
11.2. Notices |
A-45 |
|
11.3. Binding Effect; Assignment |
A-46 |
|
11.4. Third Parties |
A-47 |
|
11.5. Arbitration |
A-47 |
|
11.6. Governing Law |
A-47 |
|
11.7. WAIVER OF JURY TRIAL |
A-47 |
|
11.8. Specific Performance |
A-47 |
|
11.9. Severability |
A-48 |
|
11.10. Amendment |
A-48 |
|
11.11. Waiver |
A-48 |
|
11.12. Entire Agreement |
A-48 |
|
11.13. Interpretation |
A-48 |
|
11.14. Counterparts |
A-49 |
|
11.15. Legal Representation |
A-49 |
|
XII DEFINITIONS |
A-49 |
|
12.1. Certain Definitions |
A-49 |
|
12.2. Section References |
A-57 |
INDEX OF EXHIBITS
Exhibit |
Description |
|
Exhibit A |
Founder Share Letter |
iii
BUSINESS COMBINATION AGREEMENT
This Business Combination Agreement (this “Agreement”) is made and entered into as of April 15, 2019 by and among (i) Twelve Seas Investment Company, a Cayman Islands exempted company (together with its successors, “Purchaser”), (ii) Brooge Holdings Limited, a Cayman Islands exempted company (“Pubco”), (iii) Brooge Merger Sub Limited, a Cayman Islands exempted company and a wholly-owned subsidiary of Pubco (“Merger Sub”), (iv) Brooge Petroleum And Gas Investment Company FZE, a company formed under the laws of the Fujairah Free Zone, UAE (the “Company”), and (v) each of the holders of the Company’s outstanding capital shares that become parties to this Agreement by executing and delivering to Purchaser, Pubco and the Company a Joinder (as defined below) (each a “Seller”). Purchaser, Pubco, Merger Sub, the Company and the Sellers are sometimes referred to herein individually as a “Party” and, collectively, as the “Parties”.
RECITALS:
A. The Company, directly and indirectly through its subsidiaries, engages in the business of providing oil storage and related services;
B. Each of Pubco and Merger Sub is a newly-incorporated Cayman Islands exempted company, with Pubco being owned entirely by an officer of the Company who is not a U.S. citizen or resident and with Merger Sub being owned entirely by Pubco;
C. The Parties desire and intend to effect a business combination transaction whereby (a) Purchaser will merge with and into Merger Sub, with Purchaser continuing as the surviving entity (the “Merger”), as a result of which, (i) Purchaser shall become a wholly-owned subsidiary of Pubco and (ii) each issued and outstanding security of Purchaser immediately prior to the Effective Time (as defined below) shall no longer be outstanding and shall automatically be cancelled, in exchange for the right of the holder thereof to receive a substantially equivalent security of Pubco, and (b) Pubco will acquire all of the issued and outstanding Company Ordinary Shares from the Sellers in exchange for ordinary shares of Pubco (the “Share Exchange” and, together with the Merger and the other transactions contemplated by this Agreement, the “Transactions”), all upon the terms and subject to the conditions set forth in this Agreement and in accordance with the applicable provisions of the Cayman Act (as defined herein);
D. After the execution of this Agreement on the date hereof by Purchaser, Pubco, Merger Sub and the Company, each shareholder of the Company will become a party to this Agreement as a Seller by executing and delivering to Purchaser, Pubco and the Company a joinder to this Agreement, in form and substance reasonably satisfactory to Purchaser and the Company (each, a “Joinder”) (and for the avoidance of doubt, if there is only one shareholder of the Company, any reference herein to the Sellers shall mean such sole shareholder);
E. The boards of directors of Purchaser, Pubco, Merger Sub and the Company have each (i) determined that the Transactions are fair, advisable and in the best interests of their respective companies and security holders, and (ii) approved this Agreement and the Transactions, upon the terms and subject to the conditions set forth herein; and
F. Simultaneously with the execution of this Agreement, Purchaser’s sponsor, Twelve Seas Sponsors I LLC, a Delaware limited liability company (the “Sponsor”), Gregory Stoupnitzky and Suneel G. Kaji (collectively with the Sponsor, the “Initial Purchaser Shareholders”) have entered into a letter agreement with Purchaser, Pubco and the Company (the “Founder Share Letter”), a copy of which is attached as Exhibit A hereto, pursuant to which the Initial Purchaser Shareholders have agreed effective upon the Closing (as defined herein), on a pro rata basis amongst the Initial Purchaser Shareholders based on the number of Founder Shares owned by each of them, to (i) forfeit twenty percent (20%) of the Founder Shares owned by the Initial Purchaser Shareholders and (ii) subject thirty percent (30%) of the Founder Shares owned by the Initial Purchaser Shareholders (including any Pubco Ordinary Shares issued in exchange therefor in the Merger) to potential vesting and forfeiture obligations that are substantially identical to those that apply to the Escrow Shares under Section 2.5 hereof.
F. Certain capitalized terms used herein are defined in Article XII hereof.
A-1
NOW, THEREFORE, in consideration of the premises set forth above, which are incorporated in this Agreement as if fully set forth below, and the representations, warranties, covenants and agreements contained in this Agreement, and intending to be legally bound hereby, the Parties hereto agree as follows:
Article I
MERGER
1.1 Merger. At the Effective Time, and subject to and upon the terms and conditions of this Agreement, and in accordance with the applicable provisions of the Cayman Act, Purchaser and Merger Sub shall consummate the Merger, pursuant to which Purchaser shall be merged with and into Merger Sub with Purchaser being the surviving entity, following which the separate corporate existence of Merger Sub shall cease and Purchaser shall continue as the surviving company. Purchaser, as the surviving corporation after the Merger, is hereinafter sometimes referred to as the “Surviving Company” (provided, that references to Purchaser for periods after the Effective Time shall include the Surviving Company). The Merger shall have the effects specified in the Cayman Act.
1.2 Effective Time. On the Closing Date, Merger Sub and Purchaser shall execute a plan of merger in form and substance reasonably acceptable to Purchaser and the Company (the “Plan of Merger”), and the Parties shall file the Plan of Merger and such other documents as required by the Cayman Act with the Registrar of Companies of the Cayman Islands as provided in Section 233 of the Cayman Act. The Merger shall become effective at the time on the Closing Date when the Plan of Merger is registered by the Registrar of Companies of the Cayman Islands (the “Effective Time”).
1.3 Effect of the Merger. At the Effective Time, the effect of the Merger shall be as provided in this Agreement, the Plan of Merger and the applicable provisions of the Cayman Act. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, all the property, rights, privileges, agreements, powers and franchises, debts, Liabilities, duties and obligations of Merger Sub and Purchaser shall become the property, rights, privileges, agreements, powers and franchises, debts, Liabilities, duties and obligations of the Surviving Company (including all rights and obligations with respect to the Trust Account), which shall include the assumption by the Surviving Company of any and all agreements, covenants, duties and obligations of Merger Sub and Purchaser set forth in this Agreement to be performed after the Effective Time.
1.4 Organizational Documents of Surviving Company. At the Effective Time, the Surviving Company shall adopt new memorandum and articles of association (the “Surviving Company Charter”) which are substantially in the form of the memorandum and articles of association of Merger Sub, as in effect immediately prior to the Effective Time, as the memorandum and articles of association of the Surviving Company; provided, that at the Effective Time, (a) references therein to the name of the Surviving Company shall be amended to be such name as reasonably determined by the Company, and (b) references therein to the authorized share capital of the Surviving Company shall be amended to refer to the authorized share capital of the Surviving Company as approved in the Plan of Merger, if necessary.
1.5 Directors and Officers of the Surviving Company. At the Effective Time, the board of directors and executive officers of the Surviving Company shall be the board of directors and executive officers of Pubco, after giving effect to Section 7.14, each to hold office in accordance with the Surviving Company Charter until their respective successors are duly elected or appointed and qualified.
1.6 Effect of Merger on Issued Securities of Purchaser. At the Effective Time, by virtue of the Merger and without any action on the part of any Party or the holders of securities of Purchaser, Pubco or Merger Sub:
(a) Purchaser Units. At the Effective Time, every issued and outstanding Purchaser Unit shall be automatically detached and the holder thereof shall be deemed to hold one Purchaser Ordinary Share, one Purchaser Warrant and one Purchaser Right in accordance with the terms of the applicable Purchaser Unit, which underlying Purchaser Securities shall be converted in accordance with the applicable terms of this Section 1.6 below.
(b) Purchaser Ordinary Shares. At the Effective Time, every issued and outstanding Purchaser Ordinary Share (other than those described in Section 1.6(e) below) shall be converted automatically into one Pubco Ordinary Share, following which, all Purchaser Ordinary Shares shall cease to be outstanding and shall automatically be canceled and shall cease to exist. The holders of certificates previously evidencing Purchaser Ordinary Shares outstanding immediately prior to the Effective Time shall cease to have any rights with respect to such shares, except as provided herein or by Law. Each certificate previously evidencing Purchaser Ordinary Shares shall be exchanged for a certificate (if requested) representing the same number of Pubco Ordinary Shares upon the surrender of such
A-2
certificate in accordance with Section 1.7. Each certificate formerly representing Purchaser Ordinary Shares (other those described in Section 1.6(e) below) shall thereafter represent only the right to receive the same number of Pubco Ordinary Shares.
(c) Purchaser Warrants. At the Effective Time, each outstanding Purchaser Public Warrant shall be converted into one Pubco Public Warrant and each outstanding Purchaser Private Warrant shall be converted into one Pubco Private Warrant. At the Effective Time, the Purchaser Warrants shall cease to be outstanding and shall automatically be canceled and retired and shall cease to exist. Each of the Pubco Public Warrants shall have, and be subject to, substantially the same terms and conditions set forth in the Purchaser Public Warrants, and each of the Pubco Private Warrants shall have, and be subject to, substantially the same terms and conditions set forth in the Purchaser Private Warrants, except that in each case they shall represent the right to acquire Pubco Ordinary Shares in lieu of Purchaser Ordinary Shares. At or prior to the Effective Time, Pubco shall take all corporate action necessary to reserve for future issuance, and shall maintain such reservation for so long as any of the Pubco Warrants remain outstanding, a sufficient number of Pubco Ordinary Shares for delivery upon the exercise of such Pubco Warrants.
(d) Purchaser Rights. At the Effective Time, each issued and outstanding Purchaser Right shall be automatically converted into the number of Pubco Ordinary Shares that would have been received by the holder thereof if the Purchaser Right had been converted upon the consummation of a Business Combination in accordance with Purchaser’s Organizational Documents, the IPO Prospectus and the Rights Agreement into Purchaser Ordinary Shares, but for such purposes treating it as if such Business Combination had occurred immediately prior to the Effective Time and the Purchaser Ordinary Shares issued upon conversion of the Purchaser Rights had then automatically been converted into Pubco Ordinary Shares in accordance with Section 1.6(b) above. At the Effective Time, the Purchaser Rights shall cease to be outstanding and shall automatically be canceled and retired and shall cease to exist. The holders of certificates previously evidencing Purchaser Rights outstanding immediately prior to the Effective Time shall cease to have any rights with respect to such Purchaser Rights, except as provided herein or by Law. Each certificate formerly representing Purchaser Rights shall thereafter represent only the right to receive Pubco Ordinary Shares as set forth herein.
(e) Cancellation of Capital Shares Owned by Purchaser. At the Effective Time, if there are any capital shares of Purchaser that are owned by Purchaser as treasury shares, such shares shall be canceled and extinguished without any conversion thereof or payment therefor.
(f) Transfers of Ownership. If any certificate for securities of Purchaser is to be issued in a name other than that in which the certificate surrendered in exchange therefor is registered, it will be a condition of the issuance thereof that the certificate so surrendered will be properly endorsed (or accompanied by an appropriate instrument of transfer) and otherwise in proper form for transfer and that the person requesting such exchange will have paid to Purchaser or any agent designated by it any transfer or other Taxes required by reason of the issuance of a certificate for securities of Purchaser in any name other than that of the registered holder of the certificate surrendered, or established to the satisfaction of Purchaser or any agent designated by it that such tax has been paid or is not payable.
(g) No Liability. Notwithstanding anything to the contrary in this Section 1.6, none of the Surviving Company, Pubco or any Party hereto shall be liable to any Person for any amount properly paid to a public official pursuant to any applicable abandoned property, escheat or similar law.
1.7 Effect of Merger on Merger Sub and Pubco Capital Shares. At the Effective Time, by virtue of the Merger and without any action on the part of any Party or the holders of any capital shares of Purchaser, Pubco or Merger Sub: (a) all of the Merger Sub Ordinary Shares issued and outstanding immediately prior to the Effective Time shall be converted into an equal number of ordinary shares of the Surviving Company, with the same rights, powers and privileges as the shares so converted and shall constitute the only outstanding share capital of the Surviving Company; and (b) all of the shares of Pubco issued and outstanding immediately prior to the Effective Time shall be canceled and extinguished without any conversion thereof or payment therefor.
1.8 Surrender of Purchaser Certificates. All securities issued upon the surrender of Purchaser Securities in accordance with the terms hereof shall be deemed to have been issued in full satisfaction of all rights pertaining to such securities, provided that any restrictions on the sale and transfer of Purchaser Securities shall also apply to the Pubco Securities so issued in exchange.
1.9 Lost, Stolen or Destroyed Purchaser Certificates. In the event any certificates shall have been lost, stolen or destroyed, Pubco shall issue in exchange for such lost, stolen or destroyed certificates or securities, as the case may be, upon the making of an affidavit of that fact by the holder thereof, such securities, as may be required pursuant to Section 1.6; provided, however, that the Surviving Company may, in its discretion and as a condition precedent to the
A-3
issuance thereof, require the owner of such lost, stolen or destroyed certificates to deliver a bond in such sum as it may reasonably direct as indemnity against any claim that may be made against the Surviving Company with respect to the certificates alleged to have been lost, stolen or destroyed.
1.10 Tax Consequences. The Parties hereby agree and acknowledge that for U.S. federal income tax purposes, the Merger and Share Exchange, taken together, are intended to qualify as exchanges described in Section 351 of the Code. The Parties hereby agree to file all Tax and other informational returns on a basis consistent with such characterization. Each of the Parties acknowledge and agree that each (i) has had the opportunity to obtain independent legal and tax advice with respect to the transactions contemplated by this Agreement, and (ii) is responsible for paying its own Taxes, including any adverse Tax consequences that may result if the Merger and the Share Exchange, taken together, does not qualify under Section 351 of the Code.
1.11 Taking of Necessary Action; Further Action. If, at any time after the Effective Time, any further action is necessary or desirable to carry out the purposes of this Agreement and to vest the Surviving Company with full right, title and possession to all assets, property, rights, privileges, powers and franchises of Purchaser and Merger Sub, the officers and directors of Purchaser and Merger Sub are fully authorized in the name of their respective entities to take, and will take, all such lawful and necessary action, so long as such action is not inconsistent with this Agreement.
Article II
SHARE EXCHANGE
2.1 Exchange of Company Ordinary Shares. At the Closing, and subject to and upon the terms and conditions of this Agreement, the Sellers shall sell, transfer, convey, assign and deliver to Pubco, and Pubco shall purchase, acquire and accept from the Sellers, all of the issued and outstanding Company Ordinary Shares (collectively, the “Purchased Shares”), free and clear of all Liens (other than potential restrictions on resale under applicable securities Laws). At or prior to the Closing, the Company will terminate any issued and outstanding Company Convertible Securities, without any consideration, payment or Liability therefor.
2.2 Exchange Consideration.
(a) Subject to and upon the terms and conditions of this Agreement, in full payment for the Purchased Shares, at the Closing, Pubco shall issue and deliver to the Sellers a number of Pubco Ordinary Shares (the “Exchange Shares”) equal to (i) 100,000,000 Pubco Ordinary Shares less, (ii) if the Cash Election is made in accordance with Section 2.2(b) below, a number of Pubco Ordinary Shares equal to the Cash Election Amount divided by the Redemption Price; provided, that 20,000,000 of the Exchange Shares otherwise issuable to the Sellers at the Closing (together with any equity securities paid as dividends or distributions with respect to such shares or into which such shares are exchanged or converted, the “Escrow Shares”) shall instead be issued and delivered to the Continental Stock Transfer & Trust Company (or such other escrow agent reasonably acceptable to Purchaser and the Company from time to time), as escrow agent (the “Escrow Agent”), at the Closing. The Exchange Shares issuable to the Sellers at the Closing after deducting the Escrow Shares may be referred to herein as the “Closing Exchange Shares”.
(b) Notwithstanding anything to the contrary herein, the Sellers shall have the right, at the sole election of the Company (the “Cash Election”), to receive a portion of the consideration for the Purchased Shares in the form of U.S. dollars. If the Cash Election is made, the Company may elect for the Sellers to have the right to receive at the Closing as cash consideration in lieu of shares of Pubco Ordinary Shares as Closing Exchange Shares (the “Cash Consideration”) an amount not to exceed forty percent (40%) of the Closing Net Cash (such cash amount as elected by the Company, the “Cash Election Amount”). In order to exercise its rights under this Section 2.2(b), the Company must provide written notice (the “Cash Election Notice”) of the Cash Election to Purchaser and the Sellers at least two (2) Business Days prior to the Closing, which Cash Election Notice must include the Cash Election Amount (provided, that if the Cash Election Amount in the Cash Election Notice exceeds forty percent (40%) of the Closing Net Cash, the Cash Election Amount shall automatically be reduced at the Closing to an amount equal to forty percent (40%) of the Closing Net Cash). Each Seller must then, at least one (1) Business Day prior to the Closing, provide written notice (a “Seller Cash Election Notice”) to the Company and the Purchaser of (i) the amount of such Seller’s Pro Rata Share of the Cash Election Amount that such Seller desires to receive as Cash Consideration (the “Seller Cash Amount”) (provided, that if the Seller Cash Amount as elected by such Seller exceeds the product of (A) such Seller’s Pro Rata Share, multiplied by (B) forty percent (40%) of the Closing Net Cash, the Seller Cash Amount for such Seller shall automatically be reduced at the Closing to an amount equal to the product of (A) such Seller’s Pro Rata Share, multiplied by (B) forty percent (40%) of the Closing Net Cash), and (ii) wire instructions for such Seller for the payment of the Cash Consideration. If a Seller fails to deliver a Seller Cash Election Notice to Purchaser and
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the Company at least one (1) Business Day prior to the Closing, such Seller shall be deemed to have elected to receive no Cash Consideration. For the avoidance of doubt, any Cash Election shall solely reduce the number of Closing Exchange Shares to be issued at the Closing, and shall not affect the number of Escrow Shares to be issued.
(c) Except as set forth in Section 2.2(b), each Seller shall receive its pro rata share of the Closing Exchange Shares, the Escrow Shares and any other Escrow Property (to the extent released from the Escrow Account to the Sellers in accordance with Section 2.5 and the Escrow Agreement), and any Cash Consideration based on the percentage of Purchased Shares owned by such Seller as compared to the total number of Purchased Shares owned by all Sellers (such Seller’s “Pro Rata Share”).
2.3 Surrender of Company Ordinary Shares and Disbursement of Exchange Consideration.
(a) At the Closing, Pubco shall cause (i) the Closing Exchange Shares to be issued to the Sellers in exchange for their Company Ordinary Shares, in each case in accordance with each Seller’s Pro Rata Share (less the Seller Cash Amount elected by such Seller), (ii) the Escrow Shares to be issued to the Escrow Agent in accordance with Section 2.5, and (iii) the Cash Consideration, if any, to be delivered to the Sellers by wire transfer of immediately available funds pursuant to the wire instructions included in the Seller Cash Election Notice.
(b) At the Closing, each Seller will deliver to Pubco their Company Ordinary Shares, including any certificates representing Company Ordinary Shares (“Company Certificates”), along with applicable share power or transfer forms reasonably acceptable to Pubco. In the event that any Company Certificate shall have been lost, stolen or destroyed, in lieu of delivery of a Company Certificate to Pubco, the Seller may instead deliver to Pubco an affidavit of lost certificate and indemnity of loss in form and substance reasonably acceptable to Pubco (a “Lost Certificate Affidavit”), which at the reasonable discretion of Pubco may include a requirement that the owner of such lost, stolen or destroyed Company Certificate deliver a bond in such sum as it may reasonably direct as indemnity against any claim that may be made against Pubco or the Company with respect to the Company Ordinary Shares represented by the Company Certificates alleged to have been lost, stolen or destroyed.
(c) Notwithstanding anything to the contrary contained herein, no fraction of a Pubco Ordinary Share will be issued by Pubco by virtue of this Agreement or the transactions contemplated hereby, and each Person who would otherwise be entitled to a fraction of a Pubco Ordinary Share (after aggregating all fractional Pubco Ordinary Shares that would otherwise be received by such Person) shall instead have the number of Pubco Ordinary Shares issued to such Person rounded up in the aggregate to the nearest whole Pubco Ordinary Share.
2.4 Company Shareholder Consent. Each Seller, as a shareholder of the Company, effective upon the execution and delivery of a Joinder to Purchaser, Pubco and the Company, hereby approves, authorizes and consents to the Company’s execution and delivery of this Agreement and the Ancillary Documents to which it is or is required to be a party or otherwise bound, the performance by the Company of its obligations hereunder and thereunder and the consummation by the Company of the transactions contemplated hereby and thereby. Each Seller acknowledges and agrees that the consents set forth herein are intended and shall constitute such consent of the Sellers as may be required (and shall, if applicable, operate as a written shareholder resolution of the Company) pursuant to the Company Organizational Documents, any other agreement in respect of the Company to which any Seller is a party or bound and all applicable Laws.
2.5 Share Escrow.
(a) Escrow. On or prior to April 30, 2019 (or such later date prior to the Closing as mutually agreed by Purchaser and the Company), Pubco, the Sellers and the Escrow Agent shall enter into an Escrow Agreement, effective as of the Closing, in form and substance reasonably satisfactory to Purchaser, the Sellers and the Company (the “Escrow Agreement”), pursuant to which Pubco shall deliver to the Escrow Agent the Escrow Shares to be held, along with any other dividends, distributions or other income on the Escrow Shares (together with the Escrow Shares, the “Escrow Property”), in a segregated escrow account (the “Escrow Account”) and disbursed therefrom in accordance with the terms hereof and the Escrow Agreement. The Escrow Property shall be allocated among and transferred to the Sellers pro rata based on their respective Pro Rata Shares. Amongst other things, the Escrow Agreement shall permit the Sellers after the Closing to (i) pledge their Pro Rata Share of the Escrow Property as collateral security for documented loans entered into by such Sellers, Pubco or its Subsidiaries, including the Company, after the Closing or (ii) transfer their rights to their Pro Rata Share of the Escrow Property to a third party, provided, that (A) in each case of clauses (i) and (ii), that the lender’s or transferee’s rights to any such pledged or transferred Escrow Property shall
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be subject to the provisions of this Section 2.5, including the forfeiture provisions herein, and the Escrow Agreement, and such lender or transferee must acknowledge such in writing to Pubco and the Escrow Agent prior to the granting of any such pledge or the making of any such transfer; and (B) in event of a pledge under clause (i), such Seller may transfer such Escrow Property, including physical possession of documentation evidencing a Seller’s Pro Rata Share of the Escrow Property (including a share certificate or book entry, if any), to another escrow agent (including one affiliated with such lender), as selected by such Seller and reasonably acceptable to a Disinterested Independent Director Majority, to hold the Escrow Property in a segregated escrow account on the same terms and conditions as the Escrow Agent under the Escrow Agreement is required to hold such Escrow Property (other than adjustments to the fees and expenses of such escrow agent as reasonably acceptable to a Disinterested Independent Director Majority).
(b) Other Escrow Terms. The Parties agree that:
(i) the Escrow Property shall be held in the Escrow Account and will only become vested and not subject to forfeiture, and released to the Sellers, in the event that Pubco meets certain minimum performance or milestone requirements as shall be mutually agreed to by Purchaser, the Sellers and the Company and set forth in the Escrow Agreement (the “Milestones”);
(ii) the period for Pubco to satisfy such Milestones will commence with the first full fiscal quarter beginning after the Closing Date and finish at the end of the twentieth (20th) fiscal quarter after such commencement date (such period, the “Escrow Period”); and
(iii) all other conditions not documented in this Agreement and relating to the Escrow Property and Escrow Account (including, for example, the applicable Milestones, the portion of the Escrow Property to be released at any one time for the satisfaction of a Milestone, the preparation of any statements regarding the calculation or satisfaction of a Milestone and the decision-making processes involved for the determination of the satisfaction of a Milestone and related release of such Escrow Property) will be further elaborated or documented in the Escrow Agreement.
(c) Forfeiture. At the end of the Escrow Period, if there is any Escrow Property which has not vested and the Sellers are not entitled to receive in accordance with this Section 2.5 and the Escrow Agreement, such Escrow Property will be forfeited by the Sellers and distributed to Pubco from the Escrow Account, and promptly (but in any event within ten (10) Business Days) after a final determination pursuant to the Escrow Agreement that at the end of the Escrow Period there is such Escrow Property which has not vested and to which the Sellers are not entitled to receive, Pubco and the Sellers will provide joint written instructions to the Escrow Agent to release and surrender any remaining Escrow Property to Pubco. Pubco will cancel any Escrow Shares distributed to Pubco from the Escrow Account promptly after its receipt thereof and cancel any accrued but unpaid dividends payable in respect of such Escrow Shares. Each Seller, effective upon the execution and delivery of a Joinder to Purchaser, Pubco and the Company, acknowledges that such Seller’s right to receive the Escrow Shares and the other Escrow Property is contingent on the performance of Pubco and its Subsidiaries during the Escrow Period as set forth in this Section 2.5 and the Escrow Agreement, and that if the requirements for the vesting and release of the Escrow Property to the Sellers as set forth in this Section 2.5 and the Escrow Agreement are not met in accordance with the terms hereof and the Escrow Agreement, the Escrow Shares and the other Escrow Property will not be paid or delivered to the Sellers, and the Sellers shall have no right to receive such Escrow Shares or other Escrow Property.
(d) Future Operations. Following the Closing (including during the Escrow Period), Pubco and its Subsidiaries, including the Company, will be entitled to operate their respective businesses based upon the business requirements of Pubco and its Subsidiaries. Each of Pubco and its Subsidiaries, including the Company, will be permitted following the Closing (including during the Escrow Period) to make changes at its sole discretion to its operations, organization, personnel, accounting practices and other aspects of its business, including actions that may have an impact on the achievement of the Milestones for the vesting and release of the Escrow Property to the Sellers, and the Sellers will have no right to claim the loss of all or any portion of the Escrow Property or other damages as a result of such decisions; provided that such actions are not taken or omitted to be taken by Pubco and its Subsidiaries in bad faith with the primary intent of causing the Sellers to not achieve the Milestones for the vesting and release of the Escrow Property to the Sellers as set forth in this Section 2.5 and the Escrow Agreement.
(e) Ownership Rights. Until and unless the Escrow Shares are forfeited in accordance with this Section 2.5 and the Escrow Agreement, each Seller shall have full voting rights to its pro rata entitlement of the Escrow Property.
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(f) Fractional Escrow Shares. Notwithstanding anything to the contrary contained herein or in the Escrow Agreement, no fraction of an Escrow Share will be forfeited or transferred to the Escrow Account by a Seller by virtue of this Section 2.5, the transactions contemplated hereby or the Escrow Agreement, and the number of Escrow Shares to be so forfeited or transferred shall instead be rounded down to the nearest whole Escrow Share.
(g) Founder Shares. The Parties agree that 30% of the Founder Shares owned by the Initial Purchaser Shareholders at the Closing (including any Pubco Ordinary Shares issued in exchange therefor in the Merger) will be escrowed in substantially identical terms to the Escrow Property under this Section 2.5 and the Escrow Agreement, the exact terms of which are provided for in the Founder Share Letter, a copy of which is attached as Exhibit A to this Agreement.
Article III
CLOSING
3.1 Closing. Subject to the satisfaction or waiver of the conditions set forth in Article VIII, the consummation of the transactions contemplated by this Agreement (the “Closing”) shall take place at the offices of Ellenoff Grossman & Schole, LLP (“EGS”), 1345 Avenue of the Americas, New York, NY 10105, on the second (2nd) Business Day after all the Closing conditions to this Agreement have been satisfied or waived at 10:00 a.m. local time, or at such other date, time or place as Purchaser and the Company may agree (the date and time at which the Closing is actually held being the “Closing Date”).
Article IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Except as set forth in (i) the disclosure schedules delivered by Purchaser to the Company on the date hereof (the “Purchaser Disclosure Schedules”), the Section numbers of which are numbered to correspond to the Section numbers of this Agreement to which they refer, or (ii) the SEC Reports that are available on the SEC’s website through EDGAR, Purchaser represents and warrants to the Company and the Sellers, as of the date hereof and as of the Closing, as follows:
4.1 Organization and Standing. Purchaser is an exempted company duly incorporated, validly existing and in good standing under the Laws of the Cayman Islands. Purchaser has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted. Purchaser is duly qualified or licensed and in good standing to do business in each jurisdiction in which the character of the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary. Purchaser has heretofore made available to the Company accurate and complete copies of its Organizational Documents as currently in effect. Purchaser is not in violation of any provision of its Organizational Documents in any material respect.
4.2 Authorization; Binding Agreement. Purchaser has all requisite corporate power and authority to execute and deliver this Agreement and each Ancillary Document to which it is a party, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby, subject to obtaining the Required Shareholder Approval. The execution and delivery of this Agreement and each Ancillary Document to which it is a party and the consummation of the transactions contemplated hereby and thereby (a) have been duly and validly authorized by the board of directors of Purchaser and (b) other than the Required Shareholder Approval, no other corporate proceedings, other than as set forth elsewhere in the Agreement, on the part of Purchaser are necessary to authorize the execution and delivery of this Agreement and each Ancillary Document to which it is a party or to consummate the transactions contemplated hereby and thereby. This Agreement has been, and each Ancillary Document to which Purchaser is a party has been or shall be when delivered, duly and validly executed and delivered by Purchaser and, assuming the due authorization, execution and delivery of this Agreement and such Ancillary Documents by the other parties hereto and thereto, constitutes, or when delivered shall constitute, the valid and binding obligation of Purchaser, enforceable against Purchaser in accordance with its terms, except to the extent that enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization and moratorium laws and other laws of general application affecting the enforcement of creditors’ rights generally or by any applicable statute of limitation or by any valid defense of set-off or counterclaim, and the fact that equitable remedies or relief (including the remedy of specific performance) are subject to the discretion of the court from which such relief may be sought (collectively, the “Enforceability Exceptions”).
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4.3 Governmental Approvals. Except as otherwise described in Schedule 4.3, no Consent of or with any Governmental Authority, on the part of Purchaser is required to be obtained or made in connection with the execution, delivery or performance by Purchaser of this Agreement and each Ancillary Document to which it is a party or the consummation by Purchaser of the transactions contemplated hereby and thereby, other than (a) pursuant to Antitrust Laws, (b) such filings as contemplated by this Agreement, (c) any filings required with Nasdaq or the SEC with respect to the Transactions, (d) applicable requirements, if any, of the Securities Act, the Exchange Act, and/ or any state “blue sky” securities Laws, and the rules and regulations thereunder, and (e) where the failure to obtain or make such Consents or to make such filings or notifications, would not reasonably be expected to have a Material Adverse Effect on Purchaser.
4.4 Non-Contravention. Except as otherwise described in Schedule 4.4, the execution and delivery by Purchaser of this Agreement and each Ancillary Document to which it is a party, the consummation by Purchaser of the transactions contemplated hereby and thereby, and compliance by Purchaser with any of the provisions hereof and thereof, will not (a) conflict with or violate any provision of Purchaser’s Organizational Documents, (b) subject to obtaining the Consents from Governmental Authorities referred to in Section 4.3 hereof, and the waiting periods referred to therein having expired, and any condition precedent to such Consent or waiver having been satisfied, conflict with or violate any Law, Order or Consent applicable to Purchaser or any of its properties or assets, or (c) (i) violate, conflict with or result in a breach of, (ii) constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, (iii) result in the termination, withdrawal, suspension, cancellation or modification of, (iv) accelerate the performance required by Purchaser under, (v) result in a right of termination or acceleration under, (vi) give rise to any obligation to make payments or provide compensation under, (vii) result in the creation of any Lien upon any of the properties or assets of Purchaser under, (viii) give rise to any obligation to obtain any third party Consent or provide any notice to any Person or (ix) give any Person the right to declare a default, exercise any remedy, claim a rebate, chargeback, penalty or change in delivery schedule, accelerate the maturity or performance, cancel, terminate or modify any right, benefit, obligation or other term under, any of the terms, conditions or provisions of, any Purchaser Material Contract, except for any deviations from any of the foregoing clauses (a), (b) or (c) that would not reasonably be expected to have a Material Adverse Effect on Purchaser.
4.5 Capitalization.
(a) Purchaser is authorized to issue 200,000,000 Purchaser Ordinary Shares and 2,000,000 Purchaser Preferred Shares. The issued and outstanding Purchaser Securities as of the date of this Agreement are set forth on Schedule 4.5(a). As of the date of this Agreement, there are no issued or outstanding Purchaser Preferred Shares. All outstanding Purchaser Ordinary Shares are duly authorized, validly issued, fully paid and non-assessable and not subject to or issued in violation of any purchase option, right of first refusal, preemptive right, subscription right or any similar right under any provision of the Cayman Act, the Purchaser’s Organizational Documents or any Contract to which Purchaser is a party. None of the outstanding Purchaser Securities has been issued in violation of any applicable securities Laws. Prior to giving effect to the transactions contemplated by this Agreement, Purchaser does not have any Subsidiaries or own any equity interests in any other Person.
(b) Except as set forth in Schedule 4.5(a) or Schedule 4.5(b) there are no (i) outstanding options, warrants, puts, calls, convertible securities, preemptive or similar rights, (ii) bonds, debentures, notes or other Indebtedness having general voting rights or that are convertible or exchangeable into securities having such rights or (iii) subscriptions or other rights, agreements, arrangements, Contracts or commitments of any character (other than this Agreement and the Ancillary Documents), (A) relating to the issued or unissued shares of Purchaser or (B) obligating Purchaser to issue, transfer, deliver or sell or cause to be issued, transferred, delivered, sold or repurchased any options or shares or securities convertible into or exchangeable for such shares, or (C) obligating Purchaser to grant, extend or enter into any such option, warrant, call, subscription or other right, agreement, arrangement or commitment for such capital shares. Other than the Redemption or as expressly set forth in this Agreement, there are no outstanding obligations of Purchaser to repurchase, redeem or otherwise acquire any shares of Purchaser or to provide funds to make any investment (in the form of a loan, capital contribution or otherwise) in any Person. Except as set forth in Schedule 4.5(b), there are no shareholders agreements, voting trusts or other agreements or understandings to which Purchaser is a party with respect to the voting of any shares of Purchaser.
(c) All Indebtedness of Purchaser as of the date of this Agreement is disclosed on Schedule 4.5(c). No Indebtedness of Purchaser contains any restriction upon: (i) the prepayment of any of such Indebtedness, (ii) the incurrence of Indebtedness by Purchaser or (iii) the ability of Purchaser to grant any Lien on its properties or assets.
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(d) Since the date of formation of Purchaser, and except as contemplated by this Agreement, Purchaser has not declared or paid any distribution or dividend in respect of its shares and has not repurchased, redeemed or otherwise acquired any of its shares, and Purchaser’s board of directors has not authorized any of the foregoing.
4.6 SEC Filings and Purchaser Financials.
(a) Purchaser, since the IPO, has filed all forms, pro formas, reports, schedules, statements, registration statements, prospectuses, proxies and other documents required to be filed or furnished by the Purchaser with the SEC under the Securities Act and/or the Exchange Act, together with any amendments, restatements or supplements thereto, and will file all such forms, reports, schedules, statements, proxies and other documents required to be filed subsequent to the date of this Agreement. Except to the extent available on the SEC’s web site through EDGAR, Purchaser has delivered to the Company copies in the form filed with the SEC of all of the following: (i) Purchaser’s annual reports on Form 10-K for each fiscal year of Purchaser beginning with the first year Purchaser was required to file such a form, (ii) Purchaser’s quarterly reports on Form 10-Q for each fiscal quarter that Purchaser filed such reports to disclose its quarterly financial results in each of the fiscal years of Purchaser referred to in clause (i) above, (iii) all other forms, pro formas, reports, registration statements, prospectuses, proxies and other documents (other than preliminary materials) filed by the Purchaser with the SEC since the beginning of the first fiscal year referred to in clause (i) above (the forms, pro formas, reports, registration statements, prospectuses, proxies and other documents referred to in clauses (i), (ii) and (iii) above, whether or not available through EDGAR, are, collectively, the “SEC Reports”) and (iv) all certifications and statements required by (A) Rules 13a-14 or 15d-14 under the Exchange Act, and (B) 18 U.S.C. §1350 (Section 906 of SOX) with respect to any report referred to in clause (i) above (collectively, the “Public Certifications”). The SEC Reports (x) were prepared in all material respects in accordance with the requirements of the Securities Act and the Exchange Act, as the case may be, and the rules and regulations thereunder and (y) did not, as of their respective effective dates (in the case of SEC Reports that are registration statements filed pursuant to the requirements of the Securities Act) and at the time they were filed with the SEC (in the case of all other SEC Reports) contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. The Public Certifications are each true as of their respective dates of filing. As used in this Section 4.6, the term “file” shall be broadly construed to include any manner permitted by SEC rules and regulations in which a document or information is furnished, supplied or otherwise made available to the SEC. As of the date of this Agreement, (A) the Purchaser Public Units, the Purchaser Ordinary Shares, the Purchaser Public Rights and the Purchaser Public Warrants are listed on Nasdaq, (B) Purchaser has not received any written deficiency notice from Nasdaq relating to the continued listing requirements of such Purchaser Securities, (C) there are no Actions pending or, to the Knowledge of Purchaser, threatened against Purchaser by the Financial Industry Regulatory Authority with respect to any intention by such entity to suspend, prohibit or terminate the quoting of such Purchaser Securities on Nasdaq and (D) such Purchaser Securities are in compliance with all of the applicable corporate governance rules of Nasdaq.
(b) The financial statements and notes of Purchaser contained or incorporated by reference in the SEC Reports (the “Purchaser Financials”), fairly present in all material respects the financial position and the results of operations, changes in shareholders’ equity, and cash flows of Purchaser at the respective dates of and for the periods referred to in such financial statements, all in accordance with (i) GAAP methodologies applied on a consistent basis throughout the periods involved and (ii) Regulation S-X or Regulation S-K, as applicable (except as may be indicated in the notes thereto and for the omission of notes and audit adjustments in the case of unaudited quarterly financial statements to the extent permitted by Regulation S-X or Regulation S-K, as applicable).
(c) Except as and to the extent reflected or reserved against in the Purchaser Financials, Purchaser has not incurred any Liabilities or obligations of the type required to be reflected on a balance sheet in accordance with GAAP that is not adequately reflected or reserved on or provided for in the Purchaser Financials, other than Liabilities of the type required to be reflected on a balance sheet in accordance with GAAP that have been incurred since Purchaser’s formation in the ordinary course of business.
4.7 Absence of Certain Changes. As of the date of this Agreement, except as set forth in Schedule 4.7, Purchaser has, (a) since its formation, conducted no business other than its formation, the public offering of its securities (and the related private offerings), public reporting and its search for an initial Business Combination as described in the IPO Prospectus (including the investigation of the Company and the negotiation and execution of this Agreement) and related activities and (b) since the date of the consummation of the IPO, not been subject to a Material Adverse Effect.
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4.8 Compliance with Laws. Purchaser is, and has since its formation been, in compliance with all Laws applicable to it and the conduct of its business except for such noncompliance which would not reasonably be expected to have a Material Adverse Effect on Purchaser, and Purchaser has not received written notice alleging any violation of applicable Law in any material respect by Purchaser.
4.9 Actions; Orders; Permits. There is no pending or, to the Knowledge of Purchaser, threatened material Action to which Purchaser is subject which would reasonably be expected to have a Material Adverse Effect on Purchaser, nor, to the Knowledge of Purchaser, is there any reasonable basis for any such Action to be made. There is no material Action that Purchaser has pending against any other Person. Neither Purchaser, nor, to the Knowledge of Purchaser, any of its directors or officers are subject to any material Orders of any Governmental Authority, nor are any such Orders pending. As of the date of this Agreement, none of the directors nor officers of have in the past five (5) years been charged with, indicted for, arrested for, or convicted of any felony or any crime involving fraud. Purchaser holds all material Permits necessary to lawfully conduct its business as presently conducted, and to own, lease and operate its assets and properties, all of which are in full force and effect, except where the failure to hold such Consent or for such Consent to be in full force and effect would not reasonably be expected to have a Material Adverse Effect on Purchaser.
4.10 Taxes and Returns.
(a) Purchaser has or will have timely filed, or caused to be timely filed, all material Tax Returns required to be filed by it, which Tax Returns are true, accurate, correct and complete in all material respects, and has paid, collected or withheld, or caused to be paid, collected or withheld, all material Taxes required to be paid, collected or withheld, other than such Taxes for which adequate reserves in the Purchaser Financials have been established in accordance with GAAP. Schedule 4.10(a) sets forth each jurisdiction where Purchaser files or is required to file a Tax Return. There are no audits, examinations, investigations or other proceedings pending against Purchaser in respect of any Tax, and Purchaser has not been notified in writing of any proposed Tax claims or assessments against Purchaser (other than, in each case, claims or assessments for which adequate reserves in the Purchaser Financials have been established in accordance with GAAP or are immaterial in amount). There are no Liens with respect to any Taxes upon any of Purchaser’s assets, other than Permitted Liens. Purchaser has no outstanding waivers or extensions of any applicable statute of limitations to assess any material amount of Taxes. There are no outstanding requests by Purchaser for any extension of time within which to file any Tax Return or within which to pay any Taxes shown to be due on any Tax Return.
(b) Since the date of its formation, Purchaser has not (i) changed any Tax accounting methods, policies or procedures except as required by a change in Law, (ii) made, revoked, or amended any material Tax election, (iii) filed any amended Tax Returns or claim for refund or (iv) entered into any closing agreement affecting or otherwise settled or compromised any material Tax Liability or refund.
4.11 Employees and Employee Benefit Plans. Purchaser does not (a) have any paid employees or (b) maintain, sponsor, contribute to or otherwise have any Liability under, any Benefit Plans.
4.12 Properties. Purchaser does not own, license or otherwise have any right, title or interest in any material Intellectual Property. Purchaser does not own or lease any material real property or Personal Property.
4.13 Material Contracts.
(a) Except as set forth on Schedule 4.13(a), other than this Agreement and the Ancillary Documents, there are no Contracts to which Purchaser is a party or by which any of its properties or assets may be bound, subject or affected, which (i) creates or imposes a Liability greater than $150,000, (ii) may not be cancelled by Purchaser on less than sixty (60) days’ prior notice without payment of a material penalty or termination fee or (iii) prohibits, prevents, restricts or impairs in any material respect any business practice of Purchaser as its business is currently conducted, any acquisition of material property by Purchaser, or restricts in any material respect the ability of Purchaser from engaging in business as currently conducted by it or from competing with any other Person (each, a “Purchaser Material Contract”). All Purchaser Material Contracts have been made available to the Company other than those that are exhibits to the SEC Reports.
(b) With respect to each Purchaser Material Contract: (i) the Purchaser Material Contract was entered into at arms’ length and in the ordinary course of business; (ii) the Purchaser Material Contract is legal, valid, binding and enforceable in all material respects against Purchaser and, to the Knowledge of Purchaser, the other parties thereto, and is in full force and effect (except, in each case, as such enforcement may be limited by the Enforceability Exceptions);
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(iii) Purchaser is not in breach or default in any material respect, and no event has occurred that with the passage of time or giving of notice or both would constitute such a breach or default in any material respect by Purchaser, or permit termination or acceleration by the other party, under such Purchaser Material Contract; and (iv) to the Knowledge of Purchaser, no other party to any Purchaser Material Contract is in breach or default in any material respect, and no event has occurred that with the passage of time or giving of notice or both would constitute such a breach or default by such other party, or permit termination or acceleration by Purchaser under any Purchaser Material Contract.
4.14 Transactions with Affiliates. Schedule 4.14 sets forth a true, correct and complete list of the Contracts and arrangements that are in existence as of the date of this Agreement under which there are any existing or future Liabilities or obligations between Purchaser and any (a) present or former director, officer or employee or Affiliate of Purchaser, or any immediate family member of any of the foregoing, or (b) record or beneficial owner of more than five percent (5%) of Purchaser’s outstanding share capital as of the date hereof.
4.15 Investment Company Act. Purchaser is not an “investment company” or a Person directly or indirectly “controlled” by or acting on behalf of an “investment company”, in each case within the meaning of the Investment Company Act of 1940, as amended.
4.16 Finders and Brokers. Except as set forth on Schedule 4.16, no broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission from Purchaser, Pubco, the Company or any of their respective Affiliates in connection with the transactions contemplated hereby based upon arrangements made by or on behalf of Purchaser.
4.17 Certain Business Practices.
(a) Neither Purchaser, nor any of its Representatives acting on its behalf, has (i) used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees, to foreign or domestic political parties or campaigns or violated any provision of the Foreign Corrupt Practices Act of 1977 or any other local or foreign ant-corruption or bribery Law, (iii) made any other unlawful payment or (iv) since the formation of Purchaser, directly or indirectly, given or agreed to give any unlawful gift or similar benefit in any material amount to any customer, supplier, governmental employee or other Person who is or may be in a position to help or hinder Purchaser or assist it in connection with any actual or proposed transaction.
(b) The operations of Purchaser are and have been conducted at all times in compliance with money laundering statutes in all applicable jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any Governmental Authority, and no Action involving Purchaser with respect to the any of the foregoing is pending or, to the Knowledge of Purchaser, threatened.
(c) None of Purchaser or any of its directors or officers, or, to the Knowledge of Purchaser, any other Representative acting on behalf of Purchaser is currently identified on the specially designated nationals or other blocked person list or otherwise currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”), and Purchaser has not, directly or indirectly, used any funds, or loaned, contributed or otherwise made available such funds to any Subsidiary, joint venture partner or other Person, in connection with any sales or operations in any other country sanctioned by OFAC or for the purpose of financing the activities of any Person currently subject to, or otherwise in violation of, any U.S. sanctions administered by OFAC in the last five (5) fiscal years.
4.18 Insurance. Schedule 4.18 lists all insurance policies (by policy number, insurer, coverage period, coverage amount, annual premium and type of policy) held by Purchaser relating to Purchaser or its business, properties, assets, directors, officers and employees, copies of which have been provided to the Company. All premiums due and payable under all such insurance policies have been timely paid and Purchaser is otherwise in material compliance with the terms of such insurance policies. All such insurance policies are in full force and effect, and to the Knowledge of Purchaser, there is no threatened termination of, or material premium increase with respect to, any of such insurance policies. There have been no insurance claims made by Purchaser. Purchaser has reported to its insurers all claims and pending circumstances that would reasonably be expected to result in a claim, except where such failure to report such a claim would not be reasonably likely to have a Material Adverse Effect on Purchaser.
4.19 Trust Account. As of the date hereof, there is at least $209,228,000 invested in the Trust Account, maintained by the Trustee pursuant to the Trust Agreement. Prior to the Closing, none of the funds held in the Trust Account may
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be released except in accordance with the Trust Agreement. Amounts in the Trust Account are invested in United States Government securities or in money market funds meeting certain conditions, under Rule 2a-7 promulgated under the Investment Company Act of 1940, as amended. Purchaser has performed all material obligations required to be performed by it to date under, and is not in material default, breach or delinquent in performance or any other respect (claimed or actual) in connection with, the Trust Agreement, and, to the Knowledge of Purchaser, no event has occurred which, with due notice in lapse of time or truth, would constitute a breach thereunder. As of the date hereof, there are no claims or proceedings pending with respect to the Trust Account. As of the date hereof, Purchaser has no reason to believe that any of the conditions to the use of the funds in the Trust Account on the Closing Date (net of obligations with respect to redemptions and the payment of Taxes and other permitted payments or distributions) will not be available to Purchaser on the Closing Date.
4.20 Independent Investigation. Purchaser has conducted its own independent investigation, review and analysis of the business, results of operations, condition (financial or otherwise) or assets of the Company, Pubco and Merger Sub and acknowledges that it has been provided adequate access to the personnel, properties, assets, premises, books and records, and other documents and data of the Company, Pubco and Merger Sub for such purpose. Purchaser acknowledges and agrees that: (a) in making its decision to enter into this Agreement and to consummate the transactions contemplated hereby, it has relied solely upon its own investigation and the express representations and warranties of the Company, the Sellers, Pubco and Merger Sub set forth in this Agreement (including the related portions of the Company Disclosure Schedules) and in any certificate delivered to Purchaser pursuant hereto, and the information provided by or on behalf of the Company, the Sellers, Pubco or Merger Sub for the Registration Statement; and (b) none of the Company, the Sellers, Pubco, Merger Sub or their respective Representatives have made any representation or warranty as to the Company, the Sellers, Pubco or Merger Sub or this Agreement, except as expressly set forth in this Agreement (including the related portions of the Company Disclosure Schedules) or in any certificate delivered to Purchaser pursuant hereto.
Article V
REPRESENTATIONS AND WARRANTIES OF PUBCO
Pubco represent and warrants to Purchaser, as of the date hereof and as of the Closing, as follows:
5.1 Organization and Standing. Pubco and Merger Sub are exempted companies duly incorporated, validly existing and in good standing under the Laws of the Cayman Islands. Each of Pubco and Merger Sub has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted. Each of Pubco and Merger Sub is duly qualified or licensed and in good standing to do business in each jurisdiction in which the character of the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary. Pubco has heretofore made available to Purchaser accurate and complete copies of the Organizational Documents of Pubco and Merger Sub, each as currently in effect. Neither Pubco nor Merger Sub is in violation of any provision of its Organizational Documents in any material respect.
5.2 Authorization; Binding Agreement. Each of Pubco and Merger Sub has all requisite corporate power and authority to execute and deliver this Agreement and each Ancillary Document to which it is a party, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and each Ancillary Document to which it is a party and the consummation of the transactions contemplated hereby and thereby have been duly and validly authorized by the board of directors and shareholders of Pubco and Merger Sub and no other corporate proceedings, other than as expressly set forth elsewhere in the Agreement, on the part of Pubco or Merger Sub are necessary to authorize the execution and delivery of this Agreement and each Ancillary Document to which it is a party or to consummate the transactions contemplated hereby and thereby. This Agreement has been, and each Ancillary Document to which Pubco or Merger Sub is a party has been or shall be when delivered, duly and validly executed and delivered by such Party and, assuming the due authorization, execution and delivery of this Agreement and such Ancillary Documents by the other parties hereto and thereto, constitutes, or when delivered shall constitute, the valid and binding obligation of such Party, enforceable against such Party in accordance with its terms, subject to the Enforceability Exceptions.
5.3 Governmental Approvals. No Consent of or with any Governmental Authority, on the part of Pubco or Merger Sub is required to be obtained or made in connection with the execution, delivery or performance by such Party of this Agreement and each Ancillary Document to which it is a party or the consummation by such Party of the transactions contemplated hereby and thereby, other than (a) pursuant to Antitrust Laws, (b) such filings as contemplated by this
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Agreement (including the Amended Pubco Charter), (c) any filings required with Nasdaq or the SEC with respect to the transactions contemplated by this Agreement, (d) applicable requirements, if any, of the Securities Act, the Exchange Act, and/ or any state “blue sky” securities Laws, and the rules and regulations thereunder, and (e) where the failure to obtain or make such Consents or to make such filings or notifications, would not reasonably be expected to have a Material Adverse Effect on Pubco.
5.4 Non-Contravention. The execution and delivery by each of Pubco and Merger Sub of this Agreement and each Ancillary Document to which it is a party, the consummation by such Party of the transactions contemplated hereby and thereby, and compliance by such Party with any of the provisions hereof and thereof, will not (a) conflict with or violate any provision of such Party’s Organizational Documents, (b) subject to obtaining the Consents from Governmental Authorities referred to in Section 5.3 hereof, and the waiting periods referred to therein having expired, and any condition precedent to such Consent or waiver having been satisfied, conflict with or violate any Law, Order or Consent applicable to such Party or any of its properties or assets, or (c) (i) violate, conflict with or result in a breach of, (ii) constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, (iii) result in the termination, withdrawal, suspension, cancellation or modification of, (iv) accelerate the performance required by such Party under, (v) result in a right of termination or acceleration under, (vi) give rise to any obligation to make payments or provide compensation under, (vii) result in the creation of any Lien upon any of the properties or assets of such Party under, (viii) give rise to any obligation to obtain any third party Consent or provide any notice to any Person or (ix) give any Person the right to declare a default, exercise any remedy, claim a rebate, chargeback, penalty or change in delivery schedule, accelerate the maturity or performance, cancel, terminate or modify any right, benefit, obligation or other term under, any of the terms, conditions or provisions of, any material Contract of such Party, except for any deviations from any of the foregoing clauses (a), (b) or (c) that would not reasonably be expected to have a Material Adverse Effect on Pubco.
5.5 Capitalization. As of the date hereof, (i) Pubco is authorized to issue 500,000,000 Pubco Ordinary Shares, of which 1 Pubco Ordinary Share is issued and outstanding and owned by Meclomen Maramot, and (ii) Merger Sub is authorized to issue 500,000,000 Merger Sub Ordinary Shares, of which 1 share is issued and outstanding and is owned by Pubco. Prior to giving effect to the transactions contemplated by this Agreement, other than Merger Sub, Pubco does not have any Subsidiaries or own any equity interests in any other Person. Pubco qualifies as a foreign private issuer pursuant to Rule 3b-4 of the Exchange Act.
5.6 Ownership of Exchange Shares. All Exchange Shares to be issued and delivered in accordance with Article II to the Sellers and the Escrow Agent shall be, upon issuance and delivery of such Exchange Shares, duly authorized and validly issued and fully paid and non-assessable, free and clear of all Liens, other than restrictions arising from applicable securities Laws, the Registration Rights Agreement, the Escrow Agreement, the provisions of this Agreement and any Liens incurred by the Sellers, and the issuance and sale of such Exchange Shares pursuant hereto will not be subject to or give rise to any preemptive rights or rights of first refusal.
5.7 Pubco and Merger Sub Activities. Since their formation, Pubco and Merger Sub have not engaged in any business activities other than as contemplated by this Agreement, do not own, directly or indirectly, any ownership equity, profits or voting interest in any Person (other than Pubco’s 100% ownership of Merger Sub) and have no assets or Liabilities except those incurred in connection with this Agreement and the Ancillary Documents to which they are a party and the Transactions contemplated by this Agreement, and, other than this Agreement and the Ancillary Documents to which they are a party, Pubco and Merger Sub are not party to or bound by any Contract.
5.8 Finders and Brokers. No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission from Purchaser, Pubco, the Company or any of their respective Affiliates in connection with the transactions contemplated hereby based upon arrangements made by or on behalf of Pubco or Merger Sub.
5.9 Information Supplied. None of the information supplied or to be supplied by Pubco or Merger Sub expressly for inclusion or incorporation by reference: (a) in any Current Report on Form 8-K or 6-K, and any exhibits thereto or any other report, form, registration or other filing made with any Governmental Authority (including the SEC) with respect to the transactions contemplated by this Agreement or any Ancillary Documents; (b) in the Registration Statement; or (c) in the mailings or other distributions to Purchaser’s or Pubco’s shareholders and/or prospective investors with respect to the consummation of the transactions contemplated by this Agreement or in any amendment to any of documents identified in (a) through (c), will, when filed, made available, mailed or distributed, as the case may be, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not
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misleading. None of the information supplied or to be supplied by Pubco or Merger Sub expressly for inclusion or incorporation by reference in any of the Signing Press Release, the Signing Filing, the Closing Filing and the Closing Press Release will, when filed or distributed, as applicable, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. Notwithstanding the foregoing, neither Pubco nor Merger Sub makes any representation, warranty or covenant with respect to any information supplied by or on behalf of Purchaser, the Company, the Sellers or any of their respective Affiliates.
5.10 Independent Investigation. Each of Pubco and Merger Sub has conducted its own independent investigation, review and analysis of the business, results of operations, condition (financial or otherwise) or assets of the Company and Purchaser and acknowledges that it has been provided adequate access to the personnel, properties, assets, premises, books and records, and other documents and data of the Company and Purchaser for such purpose. Each of Pubco and Merger Sub acknowledges and agrees that: (a) in making its decision to enter into this Agreement and to consummate the transactions contemplated hereby, it has relied solely upon its own investigation and the express representations and warranties of the Company, the Sellers and Purchaser set forth in this Agreement (including the related portions of the Company Disclosure Schedules and the Purchaser Disclosure Schedules) and in any certificate delivered to Pubco or Merger Sub pursuant hereto, and the information provided by or on behalf of the Company, the Sellers or Purchaser for the Registration Statement; and (b) none of the Company, the Sellers, Purchaser or their respective Representatives have made any representation or warranty as to the Company, the Sellers, Purchaser or this Agreement, except as expressly set forth in this Agreement (including the related portions of the Company Disclosure Schedules and the Purchaser Disclosure Schedules) or in any certificate delivered to Pubco or Merger Sub pursuant hereto.
Article VI
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the disclosure schedules delivered by the Company to Purchaser in accordance with the terms of Section 7.20 (the “Company Disclosure Schedules”), the Section numbers of which are numbered to correspond to the Section numbers of this Agreement to which they refer, the Company hereby represents and warrants to Purchaser, as of the date hereof and as of the Closing, as follows:
6.1 Organization and Standing. Except as set forth in Schedule 6.1, the Company is a company duly organized, validly existing and in good standing under the Laws of the Fujairah Free Zone, UAE, and has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted. The Company is duly qualified or licensed and in good standing in the jurisdiction in which it is incorporated or registered and in each other jurisdiction where it does business or operates to the extent that the character of the property owned, or leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary, except where the failure to be so qualified or licensed would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect with respect to the Company. The Company has provided to Purchaser accurate and complete copies of the Organizational Documents of the Company, each as amended to date and as currently in effect. The Company is not in violation of any provision of its Organizational Documents.
6.2 Authorization; Binding Agreement. Except as set forth in Schedule 6.2, the Company has all requisite corporate power and authority to execute and deliver this Agreement and each Ancillary Document to which it is or is required to be a party, to perform the Company’s obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby, subject to the receipt by Purchaser, Pubco and the Company of Joinders from the requisite shareholders of the Company. The execution and delivery of this Agreement and each Ancillary Document to which the Company is or is required to be a party and the consummation of the transactions contemplated hereby and thereby, (a) have been duly and validly authorized by the board of directors and, upon the receipt by Purchaser, Pubco and the Company of Joinders from the requisite shareholders of the Company, the shareholders of the Company in accordance with the Company’s Organizational Documents, UAE Law, any other applicable Law and any Contract to which the Company or any of its shareholders are party or bound and (b) no other corporate proceedings on the part of the Company are necessary to authorize the execution and delivery of this Agreement and each Ancillary Document to which it is a party or to consummate the transactions contemplated hereby and thereby. This Agreement has been, and each Ancillary Document to which the Company is or is required to be a party has been or shall be when delivered, duly and validly executed and delivered by the Company and assuming the due authorization, execution
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and delivery of this Agreement and any such Ancillary Document by the other parties hereto and thereto, constitutes, or when delivered shall constitute, the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to the Enforceability Exceptions.
6.3 Capitalization.
(a) The Company is authorized to issue 100 Company Ordinary Shares of AED 50,000 each for a total share capital of AED 5,000,000, of which 100 Company Ordinary Shares are issued and outstanding, and, except as set forth in Schedule 6.3(a), the Company is not authorized and does not have issued or outstanding any other capital shares or equity interests of the Company. The Sellers are the legal (registered) and beneficial owners of all of the issued and outstanding Company Ordinary Shares, with each Seller owning the Company Ordinary Shares set forth in Schedule 6.3(a), all of which Company Ordinary Shares are owned by the Sellers, to the Knowledge of the Company, free and clear of any Liens other than those imposed under the Company Organizational Documents and applicable securities Laws. The Purchased Shares to be delivered by the Sellers to Pubco at the Closing constitute all of the issued and outstanding shares and other equity interests of the Company. All of the outstanding capital shares of the Company have been duly authorized, are fully paid and non-assessable and not in violation of any purchase option, right of first refusal, preemptive right, subscription right or any similar right under any provision of UAE Law, any other applicable Law, the Company’s Organizational Documents or any Contract to which the Company is a party or by which the Company or its securities are bound. The Company does not directly or indirectly hold any of its shares or other equity interests in treasury.
(b) Except as set forth in Schedule 6.3(b), there are no Company Convertible Securities, or preemptive rights or rights of first refusal or first offer, nor are there any Contracts, commitments, arrangements or restrictions to which the Company or, to the Knowledge of the Company, any of its shareholders are a party or bound relating to any equity securities of the Company, whether or not outstanding. There are no outstanding or authorized equity appreciation, phantom equity or similar rights with respect to the Company. There are no voting trusts, proxies, shareholder agreements or any other agreements or understandings with respect to the voting of the Company’s equity interests. Except as set forth in the Company’s Organizational Documents, there are no outstanding contractual obligations of the Company to repurchase, redeem or otherwise acquire any of its equity interests or securities, nor has the Company granted any registration rights to any Person with respect to its equity securities. All of the Company’s securities have been granted, offered, sold and issued in compliance with all applicable securities Laws in all material respects. As a result of the consummation of the transactions contemplated by this Agreement, no equity interests of the Company are issuable and no rights in connection with any interests, warrants, rights, options or other securities of the Company accelerate or otherwise become triggered (whether as to vesting, exercisability, convertibility or otherwise).
(c) Except as set forth in Schedule 6.3(c), or as disclosed in the Company Financials, since January 1, 2018, the Company has not declared or paid any distribution or dividend in respect of its equity interests and has not repurchased, redeemed or otherwise acquired any equity interests of the Company, and the board of directors of the Company has not authorized any of the foregoing.
6.4 Subsidiaries. The Company does not have any Subsidiaries (provided, that in the event of the breach of the foregoing representation and warranty, without limiting any rights or remedies available to the Parties under this Agreement, any reference in this Agreement to the Company will include its Subsidiary to the extent reasonably applicable.). Except as set forth in Schedule 6.4, the Company does not own or have any rights to acquire, directly or indirectly, any equity interests of, or otherwise Control, any Person. The Company is not a participant in any joint venture, partnership or similar arrangement. There are no outstanding contractual obligations of the Company to provide funds to, or make any investment (in the form of a loan, capital contribution or otherwise) in, any other Person.
6.5 Governmental Approvals. Except as otherwise described in Schedule 6.5, no Consent of or with any Governmental Authority on the part of the Company is required to be obtained or made in connection with the execution, delivery or performance by the Company of this Agreement or any Ancillary Documents or the consummation by the Company of the transactions contemplated hereby or thereby other than (a) such filings as expressly contemplated by this Agreement, (b) pursuant to Antitrust Laws and (c) those Consents, the failure of which to obtain prior to the Closing, would not individually or in the aggregate reasonably be expected to be material to the Company or the ability of the Company to perform its obligations under this Agreement or the Ancillary Documents to which it is or required to be a party or otherwise bound.
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6.6 Non-Contravention. Except as otherwise described in Schedule 6.6, the execution and delivery by the Company of this Agreement and each Ancillary Document to which the Company is or is required to be a party or otherwise bound, and the consummation by the Company of the transactions contemplated hereby and thereby and compliance by the Company with any of the provisions hereof and thereof, will not (a) conflict with or violate any provision of the Company’s Organizational Documents, (b) subject to obtaining the Consents from Governmental Authorities referred to in Section 6.5 hereof, the waiting periods referred to therein having expired, and any condition precedent to such Consent or waiver having been satisfied, conflict with or violate any Law, Order or Consent applicable to the Company or any of its material properties or material assets, or (c) (i) violate, conflict with or result in a material breach of, (ii) constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, (iii) result in the termination, withdrawal, suspension, cancellation or modification of, (iv) accelerate the performance required by the Company under, (v) result in a right of termination or acceleration under, (vi) give rise to any material obligation to make payments or provide material compensation under, (vii) result in the creation of any Lien upon any of the properties or assets of the Company (other than Permitted Liens) under, (viii) give rise to any obligation to obtain any third party Consent or provide any notice to any Person or (ix) give any Person the right to declare a material default, exercise any remedy, claim a material rebate, material chargeback, material penalty or material change in delivery schedule, accelerate the maturity or performance, cancel, terminate or modify any right, benefit, obligation or other term under, any of the terms, conditions or provisions of any Company Material Contract.
6.7 Financial Statements.
(a) As used herein, the term “Company Financials” means (i) the consolidated 2017 financial statements of the Company (including any related notes thereto), consisting of the consolidated balance sheet of the Company as of December 31, 2017, and the related consolidated audited income statement, change in shareholder equity and statement of cash flows for the year then ended, audited in accordance with PCAOB auditing standards by a PCAOB qualified auditor, (ii) the consolidated six month 2018 financial statements of the Company (including any related notes thereto), consisting of the consolidated balance sheet of the Company as of June 30, 2018, and the related consolidated audited income statement, change in shareholder equity and statement of cash flows for the six month period then ended, audited in accordance with PCAOB auditing standards by a PCAOB qualified auditor, and (iii) the unaudited consolidated 2018 financial statements of the Company, consisting of the consolidated balance sheet of the Company as of December 31, 2018 (the “Interim Balance Sheet Date”) and the related consolidated income statement, changes in shareholder equity and statement of cash flows for the year then ended. True and correct copies of the Company Financials have been provided to Purchaser. Except as set forth in Schedule 6.7(a), the Company Financials (i) accurately reflect the books and records of the Company as of the times and for the periods referred to therein, (ii) were prepared in accordance with IFRS, consistently applied throughout and among the periods involved (except that the unaudited statements exclude the footnote disclosures and other presentation items required for IFRS and exclude year-end adjustments which will not be material in amount), (iii) comply with all applicable accounting requirements under the Securities Act and the rules and regulations of the SEC thereunder, and (iv) fairly present in all material respects the consolidated financial position of the Company as of the respective dates thereof and the consolidated results of the operations and cash flows of the Company for the periods indicated. The Company has not ever been subject to the reporting requirements of Sections 13(a) and 15(d) of the Exchange Act.
(b) Except as set forth in Schedule 6.7(b), the Company maintains accurate books and records reflecting its assets and Liabilities and maintains proper and adequate internal accounting controls that provide reasonable assurance that (i) the Company does not maintain any off-the-book accounts and that the Company’s assets are used only in accordance with the Company’s management directives, (ii) transactions are executed with management’s authorization, (iii) transactions are recorded as necessary to permit preparation of the financial statements of the Company and to maintain accountability for the Company’s assets, (iv) access to the Company’s assets is permitted only in accordance with management’s authorization, (v) the reporting of the Company’s assets is compared with existing assets at regular intervals and verified for actual amounts, and (vi) accounts, notes and other receivables and inventory are recorded accurately, and proper and adequate procedures are implemented to effect the collection of accounts, notes and other receivables on a current and timely basis. All of the financial books and records of the Company are complete and accurate in all material respects and have been maintained in the ordinary course consistent with past practice and in accordance with applicable Laws. The Company has not been subject to or involved in any material fraud that involves management or other employees who have a significant role in the internal controls over financial reporting of the Company. Since January 1, 2017, neither the Company nor any of its Representatives has received any written complaint, allegation, assertion or claim regarding the accounting or auditing practices,
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procedures, methodologies or methods of the Company or its internal accounting controls, including any material written complaint, allegation, assertion or claim that the Company has engaged in questionable accounting or auditing practices.
(c) The Company does not have any Indebtedness for more than $500,000 other than the Indebtedness set forth on Schedule 6.7(c), and in such amounts (including principal and any accrued but unpaid interest or other obligations with respect to such Indebtedness), as set forth on Schedule 6.7(c). Except as disclosed on Schedule 6.7(c), no outstanding Indebtedness of the Company contains any restriction upon (i) the prepayment of any of such Indebtedness, (ii) the incurrence of Indebtedness by the Company, or (iii) the ability of the Company to grant any Lien on its properties or assets.
(d) Except as set forth in Schedule 6.7(d), the Company is not subject to any Liabilities or obligations (whether or not required to be reflected on a balance sheet prepared in accordance with IFRS or GAAP), including any off-balance sheet obligations or any “variable interest entities” (within the meaning Accounting Standards Codification 810), except for those that are either (i) adequately reflected or reserved on or provided for in the consolidated balance sheet of the Company as of the Interim Balance Sheet Date contained in the Company Financials or (ii) not material and that were incurred after the Interim Balance Sheet Date in the ordinary course of business consistent with past practice (other than Liabilities for breach of any Contract or violation of any Law).
(e) Except as set forth in Schedule 6.7(e), all financial projections with respect to the Company that was delivered by or on behalf of the Company to Purchaser or Pubco or their respective Representatives were prepared in good faith using assumptions that the Company believes to be reasonable.
(f) Except as set forth in Schedule 6.7(f), all accounts, notes and other receivables, whether or not accrued, and whether or not billed, of the Company (the “Accounts Receivable”) arose from sales actually made or services actually performed in the ordinary course of business and represent valid obligations to the Company arising from its business. None of the Accounts Receivable are subject to any right of recourse, defense, deduction, return of goods, counterclaim, offset, or set off on the part of the obligor in excess of any amounts reserved therefore on the Company Financials. All of the Accounts Receivable are, to the Knowledge of the Company, fully collectible according to their terms in amounts not less than the aggregate amounts thereof carried on the books of the Company (net of reserves) within ninety (90) days.
6.8 Absence of Certain Changes. Except as set forth on Schedule 6.8 or for actions expressly contemplated by this Agreement, since December 31, 2018, the Company has (a) conducted its business only in the ordinary course of business consistent with past practice, (b) not been subject to a Material Adverse Effect and (c) has not taken any action or committed or agreed to take any action that would be prohibited by Section 7.2 (without giving effect to Schedule 7.2) if such action were taken on or after the date hereof without the consent of Purchaser.
6.9 Compliance with Laws. Except as set forth on Schedule 6.9, the Company is not and has not been in material conflict or material non-compliance with, or in material default or violation of, nor has the Company received in the past five (5) years any written or, to the Knowledge of the Company, oral notice of any material conflict or non-compliance with, or material default or violation of, any applicable Laws by which it or any of its properties, assets, employees, business or operations are or were bound or affected.
6.10 Company Permits. Except as set forth on Schedule 6.10, the Company (and its employees who are legally required to be licensed by a Governmental Authority in order to perform his or her duties with respect to his or her employment with the Company) holds all material Permits necessary to lawfully conduct in all material respects its business as presently conducted and as currently contemplated to be conducted, and to own, lease and operate its assets and properties (collectively, the “Company Permits”). The Company has made available to Purchaser and Pubco true, correct and complete copies of all material Company Permits, all of which material Company Permits are listed on Schedule 6.10. All of the material Company Permits are in full force and effect, and no suspension or cancellation of any of the material Company Permits is pending or, to the Company’s Knowledge, threatened. The Company is not in violation in any material respect of the terms of any material Company Permit, and the Company has not received any written or, to the Knowledge of the Company, oral notice of any material Actions relating to the revocation or modification of any material Company Permit.
6.11 Litigation. Except as set forth on Schedule 6.11, there is no (a) material Action of any nature currently pending or, to the Company’s Knowledge, threatened, nor, to the Knowledge of the Company, is there any reasonable
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basis for any Action to be made (and no such material Action has been brought or, to the Company’s Knowledge, threatened in the past five (5) years); or (b) material Order now pending or outstanding or that was rendered by a Governmental Authority in the past five (5) years, in either case of (a) or (b) by or against the Company, its current or former directors, officers or equity holders (provided, that any litigation involving the directors, officers or equity holders of the Company must be related to the Company’s business, equity securities or assets), its business, equity securities or assets. In the past five (5) years, none of the current or former officers, senior management or directors of the Company have been charged with, indicted for, arrested for, or convicted of any felony or any crime involving fraud.
6.12 Material Contracts.
(a) Schedule 6.12(a) sets forth a true, correct and complete list of, and the Company has made available to Purchaser (including written summaries of oral Contracts), true, correct and complete copies of, each Contract to which the Company is a party or by which the Company, or any of its properties or assets are bound or affected (each Contract required to be set forth on Schedule 6.12(a), a “Company Material Contract”) that:
(i) contains covenants that limit the ability of the Company in any material respect (A) to compete in any line of business or with any Person or in any geographic area or to sell, or provide any service or product or solicit any Person, including any non-competition covenants, employee and customer non-solicit covenants, exclusivity restrictions, rights of first refusal or most-favored pricing clauses or (B) to purchase or acquire an interest in any other Person;
(ii) involves any joint venture, profit-sharing, partnership, limited liability company or other similar agreement or arrangement relating to the formation, creation, operation, management or control of any partnership or joint venture;
(iii) involves any exchange traded, over the counter or other swap, cap, floor, collar, futures contract, forward contract, option or other derivative financial instrument or Contract, based on any commodity, security, instrument, asset, rate or index of any kind or nature whatsoever, whether tangible or intangible, including currencies, interest rates, foreign currency and indices;
(iv) evidences Indebtedness (whether incurred, assumed, guaranteed or secured by any asset) of the Company having an outstanding principal amount in excess of $500,000;
(v) involves the acquisition or disposition, directly or indirectly (by merger or otherwise), of assets with an aggregate value in excess of $1,000,000 (other than in the ordinary course of business consistent with past practice) or shares or other equity interests of the Company or another Person;
(vi) relates to any merger, consolidation or other business combination with any other Person or the acquisition or disposition of any other entity or its business or material assets or the sale of the Company, its business or material assets;
(vii) by its terms, individually or with all related Contracts, calls for aggregate payments or receipts by the Company under such Contract or Contracts of at least $500,000 per year or $1,000,000 in the aggregate;
(viii) is with any Top Customer or Top Supplier;
(ix) obligates the Company to provide continuing indemnification or a guarantee of obligations of a third party after the date hereof in excess of $1,000,000;
(x) is between the Company and any directors, officers or employees of the Company (other than at-will employment arrangements with employees entered into in the ordinary course of business consistent with past practice), including all non-competition, severance and indemnification agreements, or any Related Person;
(xi) obligates the Company to make any capital commitment or expenditure in excess of $1,000,000 (including pursuant to any joint venture);
(xii) relates to a material settlement entered into within three (3) years prior to the date of this Agreement or under which the Company has material outstanding obligations (other than customary confidentiality obligations);
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(xiii) that will be required to be filed with the Registration Statement under applicable SEC requirements or would otherwise be required to be filed by the Company as an exhibit for a Form S-1 pursuant to Items 601(b)(1), (2), (4), (9) or (10) of Regulation S-K under the Securities Act as if the Company was the registrant; or
(xiv) is otherwise material to the Company and outside of the ordinary course of business and not described in clauses (i) through (xiii) above.
(b) Except as set forth on Schedule 6.12(b), with respect to each Company Material Contract: (i) such Company Material Contract is valid and binding and enforceable in all material respects against the Company and, to the Knowledge of the Company, each other party thereto, and is in full force and effect (except, in each case, as such enforcement may be limited by the Enforceability Exceptions); (ii) the consummation of the transactions contemplated by this Agreement will not affect in any material respect the validity or enforceability of any Company Material Contract; (iii) the Company is not in breach or default in any material respect, and, to the Knowledge of the Company, no event has occurred that with the passage of time or giving of notice or both would constitute a material breach or default by the Company, or permit termination or acceleration by the other party thereto, under such Company Material Contract; (iv) to the Knowledge of the Company, no other party to such Company Material Contract is in breach or default in any material respect, and no event has occurred that with the passage of time or giving of notice or both would constitute such a material breach or default by such other party, or permit termination or acceleration by the Company, under such Company Material Contract; (v) the Company has not received written or, to the Knowledge of the Company, oral notice of an intention by any party to any such Company Material Contract that provides for material continuing obligations by any party thereto to terminate such Company Material Contract or amend the terms thereof, other than modifications in the ordinary course of business that do not adversely affect the Company in any material respect; and (vi) the Company has not waived any rights under any such Company Material Contract.
6.13 Intellectual Property.
(a) Except as set forth on Schedule 6.13(a), or as would not individually or in the aggregate reasonably be expected to be material to the Company or the ability of the Company to perform its obligations under this Agreement or the Ancillary Documents to which it is or required to be a party or otherwise bound: (i) the Company owns, free and clear of all Liens (other than Permitted Liens), has valid and enforceable rights in, and has the unrestricted right to use, sell, license, transfer or assign, all material Intellectual Property currently used, licensed or held for use by the Company, and previously used or licensed by the Company (“Company IP”), except for the Intellectual Property that is the subject of the Company IP Licenses; (ii) any Company Registered IP or other Company IP that is purported to be owned by the Company, the Company has obtained valid assignments of rights from all applicable third Persons such that the Company owns all Intellectual Property rights therein; (iii) all material Company Registered IP is owned exclusively by the Company without obligation to pay royalties, licensing fees or other fees, or otherwise account to any third party with respect to such Company Registered IP; and (iv) all registrations for Company Registered IP that are owned by or exclusively licensed to the Company are valid and in force, and all applications to register any material Company Registered IP are pending and in good standing, all without challenge of any kind, except for any applications that the Company may have intentionally abandoned or withdrawn.
(b) Except as set forth on Schedule 6.13(b), or as would not individually or in the aggregate reasonably be expected to be material to the Company or the ability of the Company to perform its obligations under this Agreement or the Ancillary Documents to which it is or required to be a party or otherwise bound: (i) the Company has a valid and enforceable license to use all Intellectual Property that is the subject of the Company IP Licenses applicable to the Company; (ii) the Company IP Licenses include all of the licenses, sublicenses and other agreements or permissions necessary to operate the Company as presently conducted; (iii) the Company has performed all obligations imposed on it in the Company IP Licenses, has made all payments required to date, and the Company is not, nor, to the Knowledge of the Company, is any other party thereto, in breach or default thereunder, nor has any event occurred that with notice or lapse of time or both would constitute a default thereunder; (iv) the continued use by the Company of the Intellectual Property that is the subject of the Company IP Licenses in the same manner that it is currently being used is not restricted by any applicable license of the Company; and (v) the Company is not party to any Contract that requires the Company to assign to any Person all of its rights in any Intellectual Property developed by the Company under such Contract.
(c) Except as set forth on Schedule 6.13(c), the Company has materially performed all obligations imposed on it in the Company Outbound IP Licenses, and the Company is not, nor, to the Knowledge of the Company, is any other party thereto, in breach or default thereunder, nor has any event occurred that with notice or lapse of time or both would constitute a default thereunder.
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(d) Except as set forth on Schedule 6.13(d), or as would not individually or in the aggregate reasonably be expected to be material to the Company or the ability of the Company to perform its obligations under this Agreement or the Ancillary Documents to which it is or required to be a party or otherwise bound: (i) no material Action is pending or, to the Company’s Knowledge, threatened that challenges the validity, enforceability, ownership, or right to use, sell, license or sublicense any Company IP; (ii) the Company has not received any written or, to the Knowledge of the Company, oral notice or claim asserting or suggesting that any material infringement, misappropriation, violation, dilution or unauthorized use of the Intellectual Property of any other Person is or may be occurring or has or may have occurred, as a consequence of the business activities of the Company, nor to the Knowledge of the Company is there a reasonable basis therefor; (iii) there are no Orders to which the Company is a party or its otherwise bound that (A) materially restrict the rights of the Company to use, transfer, license or enforce any Intellectual Property owned by the Company, (B) restrict the conduct of the business of the Company in order to accommodate a third Person’s Intellectual Property, or (C) other than the Company Outbound IP Licenses, grant any third Person any right with respect to any Intellectual Property owned by the Company; and (iv) the Company is not currently materially infringing, and has not, in the past, materially infringed, misappropriated or violated any Intellectual Property of any other Person in any material respect in connection with the ownership, use or license of any Intellectual Property owned or purported to be owned by the Company or, to the Knowledge of the Company, otherwise in connection with the conduct of the respective businesses of the Company. To the Company’s Knowledge, no third Person is infringing upon, has misappropriated or is otherwise violating any Company IP in any material respect.
(e) Except as set forth on Schedule 6.13(e), all employees and independent contractors of the Company have executed a confidentiality and assignment of inventions agreement with the Company and assigned to the Company all Intellectual Property arising from the services performed for the Company by such Persons. No current or former officers, employees or independent contractors of the Company have claimed any ownership interest in any material Intellectual Property owned by the Company. To the Knowledge of the Company, there has been no violation of the Company’s policies or practices related to protection of Company IP or any confidentiality or nondisclosure Contract relating to the Intellectual Property owned by the Company. To the Company’s Knowledge, none of the employees of the Company are obligated under any Contract, or subject to any Order, that would materially interfere with the use of such employee’s best efforts to promote the interests of the Company, or that would materially conflict with the business of the Company as presently conducted or contemplated to be conducted. The Company has taken reasonable security measures in order to protect the secrecy, confidentiality and value of the material Company IP.
(f) Except as set forth on Schedule 6.13(f), to the Knowledge of the Company, no Person has obtained unauthorized access to third-party information and data in the possession of the Company, nor has there been any other material compromise of the security, confidentiality or integrity of such information or data. The Company has complied in all material respects with all applicable Laws relating to privacy, personal data protection, and the collection, processing and use of personal information and its own privacy policies and guidelines. The operation of the business of the Company has not and does not violate in any material respect any right to privacy or publicity of any third person, or constitute unfair competition or trade practices under applicable Law.
6.14 Taxes and Returns. Except as set forth on Schedule 6.14.
(a) The Company has or will have timely filed, or caused to be timely filed, all material Tax Returns required to be filed by it (taking into account all available extensions), which Tax Returns are true, accurate, correct and complete in all material respects, and has paid, collected or withheld, or caused to be paid, collected or withheld, all material Taxes required to be paid, collected or withheld, other than such Taxes for which adequate reserves in the Company Financials have been established. The Company has complied in all material respects with all applicable Laws relating to Tax.
(b) There is no current pending or, to the Knowledge of the Company, threatened material Action against the Company by a Governmental Authority in a jurisdiction where the Company does not file Tax Returns that it is or may be subject to taxation by that jurisdiction.
(c) The Company is not being audited by any Tax authority and has not been notified in writing by any Tax authority that any such audit is contemplated or pending. There are no claims, assessments, audits, examinations, investigations or other Actions pending against the Company in respect of any Tax, and the Company has not been notified in writing of any proposed Tax claims or assessments against it (other than, in each case, claims or assessments for which adequate reserves in the Company Financials have been established).
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(d) There are no material Liens with respect to any Taxes upon the Company’s assets, other than Permitted Liens.
(e) The Company has collected or withheld all Taxes currently required to be collected or withheld by it, and all such Taxes have been paid to the appropriate Governmental Authorities or set aside in appropriate accounts for future payment when due.
(f) The Company does not have any outstanding waivers or extensions of any applicable statute of limitations to assess any material amount of Taxes. There are no outstanding requests by the Company for any extension of time within which to file any Tax Return or within which to pay any Taxes shown to be due on any Tax Return.
(g) The Company has not made any change in accounting method (except as required by a change in Law) or received a ruling from, or signed an agreement with, any taxing authority that would reasonably be expected to have a material impact on its Taxes following the Closing.
(h) The Company has not participated in, or sold, distributed or otherwise promoted, any “reportable transaction,” as defined in Treasury Regulation section 1.6011-4.
(i) The Company does not have any Liability for the Taxes of another Person (i) under any applicable Tax Law, (ii) as a transferee or successor, or (iii) by contract, indemnity or otherwise (excluding commercial agreements entered into in the ordinary course of business the primary purpose of which was not the sharing of Taxes). The Company is not a party to or bound by any Tax indemnity agreement, Tax sharing agreement or Tax allocation agreement or similar agreement, arrangement or practice (excluding commercial agreements entered into in the ordinary course of business the primary purpose of which was not the sharing of Taxes) with respect to Taxes (including advance pricing agreement, closing agreement or other agreement relating to Taxes with any Governmental Authority) that will be binding on the Company with respect to any period following the Closing Date.
(j) The Company has not requested, nor is it the subject of or bound by any private letter ruling, technical advice memorandum, closing agreement or similar ruling, memorandum or agreement with any Governmental Authority with respect to any Taxes, nor is any such request outstanding.
(k) The Company: (i) has not constituted either a “distributing corporation” or a “controlled corporation” (within the meaning of Section 355(a)(1)(A) of the Code) in a distribution of securities (to any Person or entity that is not a member of the consolidated group of which the Company is the common parent corporation) qualifying for, or intended to qualify for, Tax-free treatment under Section 355 of the Code (A) within the two-year period ending on the date hereof or (B) in a distribution which could otherwise constitute part of a “plan” or “series of related transactions” (within the meaning of Section 355(e) of the Code) in conjunction with the transactions contemplated by this Agreement; or (ii) is not and has never been (A) a U.S. real property holding corporation within the meaning of Section 897(c)(2) of the Code, or (B) a member of any consolidated, combined, unitary or affiliated group of corporations for any Tax purposes other than a group of which the Company is or was the common parent corporation.
(l) The Company is not treated as a domestic corporation (as such term is defined in Section 7701 of the Code) for U.S. federal income tax purposes.
6.15 Real Property.
(a) Schedule 6.15(a) sets forth a list of (i) all material real property and interests in real property owned in fee by the Company (collectively, the “Company Owned Properties”), and (ii) all material real property and interests in real property leased by the Company (collectively, the “Company Leased Properties” and, together with the Company Owned Properties, the “Company Real Properties”) as lessee or lessor. The Company has good and marketable fee title to all Company Owned Properties, free and clear of all Liens, except for Permitted Liens. The Company Real Properties constitute all material interests in real property currently used, occupied or currently held for use in connection with the business of the Company and which are necessary for the continued operation of the business of the Company as the business is currently conducted. All of the Company Real Properties and buildings, fixtures and improvements thereon (i) to the Knowledge of the Company, (A) are in reasonable operating condition without material structural defects, and all mechanical and other systems located thereon are in good operating condition, and (B) no condition exists requiring material repairs, alterations or corrections and (ii) are suitable, sufficient and appropriate in all material respects for their current and contemplated uses. None of the improvements located on the Company Real Properties constitute a legal non-conforming use or otherwise require any special dispensation,
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variance or special permit under any Laws. The Company has delivered to the Purchaser true, correct and complete copies of (i) all deeds, title reports and surveys for the Company Owned Properties and (ii) all leases, lease guarantees, agreements and documents related to any Company Leased Properties, including all amendments, terminations and modifications thereof (collectively, the “Company Real Property Leases”). The Company Real Properties are not subject to any leases, subleases, licenses, occupancy, rights of first refusal, options to purchase or rights of occupancy. The Company does not own or hold, and is not obligated under or a party to, any option, right of first refusal or other contractual right to purchase, acquire, sell, assign or dispose of any real estate or any portion thereof or interest therein.
(b) Except as set forth on Schedule 6.15(b), the Company has a valid, binding and enforceable leasehold interest under each of the Company Leased Properties under which it is a lessee, free and clear of all Liens other than Permitted Liens. Each of the Company Real Property Leases is in full force and effect. The Company is not in material default under any Company Real Property Lease, and no event has occurred and no circumstance exists which, if not remedied, and whether with or without notice or the passage of time or both, would result in such a default. The Company has not received or given any notice of any default or event that with notice or lapse of time, or both, would constitute a default by the Company under any of the Company Real Property Leases and, to the Knowledge of the Company, no other party is in default thereof. No party to any Company Real Property Lease has exercised any termination rights with respect thereto.
(c) Except as set forth on Schedule 6.15(c), the Company has all material certificates of occupancy and material Permits of any Governmental Authority necessary or useful for the current use and operation of each Company Real Property, and the Company has fully complied with all material conditions of the Permits applicable to it. No default or violation, or event that with the lapse of time or giving of notice or both would become a default or violation, has occurred in the due observance of any such Permit.
(d) Except as set forth on Schedule 6.15(d), with respect to the Company Real Properties: (i) there are no pending or, to the Knowledge of the Company, threatened material condemnation or eminent domain proceedings or Actions relating to any Company Real Property, and the Company has not received any notice of the intention of any Governmental Authority or other Person to take or use all or any part thereof; (ii) there are no pending or, to the Knowledge of the Company, threatened material Actions relating to boundary lines, ingress and egress, adverse possession or similar issues; (iii) the existing buildings and improvements located on the Company Real Properties are located entirely within the boundary lines of such Company Real Property or on permanent easements on adjoining land benefiting such Company Real Property and may lawfully be used under applicable zoning and land use laws for the purposes for which they are presently being used; and (iv) the Company Real Properties are in material compliance with the terms and provisions of any restrictive covenants, easements, or agreements affecting such Company Real Property.
6.16 Personal Property. Details of each item of Personal Property which is currently owned, used or leased by the Company with a book value or fair market value of greater than Five Million Dollars ($5,000,000) is set forth on Schedule 6.16, along with, to the extent applicable, a list of lease agreements, lease guarantees, security agreements and other agreements related thereto, including all amendments, terminations and modifications thereof or waivers thereto (“Company Personal Property Leases”). Except as set forth in Schedule 6.16, all such items of Personal Property are in good operating condition and repair (reasonable wear and tear excepted consistent with the age of such items), and are suitable for their intended use in the business of the Company. The operation of the Company’s business as it is now conducted or presently proposed to be conducted is not dependent upon the right to use the Personal Property of Persons, except for such Personal Property that is owned, leased or licensed by, or otherwise contracted to, the Company. The Company has provided to Purchaser and Pubco a true and complete copy of each of the Company Personal Property Leases. The Company Personal Property Leases are valid, binding and enforceable in accordance with their terms and are in full force and effect. To the Knowledge of the Company, no event has occurred which (whether with or without notice, lapse of time or both or the happening or occurrence of any other event) would constitute a default on the part of the Company or any other party under any of the Company Personal Property Leases, and the Company has not received notice of any such condition.
6.17 Title to and Sufficiency of Assets. Except as set forth on Schedule 6.17, the Company has good and marketable title to, or a valid leasehold interest in or right to use, all of its material assets, free and clear of all Liens other than (a) Permitted Liens, (b) the rights of lessors under leasehold interests, (c) Liens specifically identified on the most recent Company Financials and (d) Liens set forth on Schedule 6.17. The assets (including Intellectual Property rights and contractual rights) of the Company constitute all of the material assets, material rights and material
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properties that are used in the operation of the business of the Company as it is now conducted and presently proposed to be conducted or that are used or held by the Company for use in the operation of the businesses of the Company, and taken together, are adequate and sufficient in all material respects for the operation of the businesses of the Company as currently conducted.
6.18 Employee Matters.
(a) Except as set forth on Schedule 6.18(a), the Company is not a party to any collective bargaining agreement or other Contract covering any group of employees, labor organization or other representative of any of the employees of the Company and the Company has no Knowledge of any activities or proceedings of any labor union or other party to organize or represent such employees. There has not occurred or, to the Knowledge of the Company, been threatened any strike, slow-down, picketing, work-stoppage, or other similar labor activity with respect to any such employees. Schedule 6.18(a) sets forth all material unresolved labor controversies (including unresolved grievances and age or other discrimination claims), if any, that are pending or, to the Knowledge of the Company, threatened between the Company and Persons employed by or providing services as independent contractors to the Company. No current officer or senior employee of the Company has provided the Company written or, to the Knowledge of the Company, oral notice of his or her plan to terminate his or her employment with the Company within six (6) months after the date of this Agreement.
(b) Except as set forth on Schedule 6.18(b), the Company (i) is and has been in compliance in all material respects with all applicable Laws respecting employment and employment practices, terms and conditions of employment, health and safety and wages and hours, and other Laws relating to discrimination, disability, labor relations, hours of work, payment of wages and overtime wages, pay equity, immigration, workers compensation, working conditions, employee scheduling, occupational safety and health, family and medical leave, and employee terminations, and has not received written or, to the Knowledge of the Company, oral notice that there is any pending Action involving unfair labor practices against the Company, (ii) is not liable for any material past due arrears of wages or any material penalty for failure to comply with any of the foregoing, and (iii) is not liable for any material payment to any Governmental Authority with respect to unemployment compensation benefits, social security or other benefits or obligations for employees, independent contractors or consultants (other than routine payments to be made in the ordinary course of business and consistent with past practice). There are no material Actions pending or, to the Knowledge of the Company, threatened against the Company brought by or on behalf of any applicant for employment, any current or former employee, any Person alleging to be a current or former employee, or any Governmental Authority, relating to any such Law or regulation, or alleging breach of any express or implied contract of employment, wrongful termination of employment, or alleging any other discriminatory, wrongful or tortious conduct in connection with the employment relationship.
(c) Except as set forth on Schedule 6.18(c), the Company has paid in full to all of its employees all wages, salaries, commission, bonuses and other compensation due to its employees, including overtime compensation, and the Company has no material obligation or Liability (whether or not contingent) with respect to severance payments to any such employees under the terms of any written or, to the Company’s Knowledge, oral agreement, or commitment or any applicable Law, custom, trade or practice.
(d) Except as set forth on Schedule 6.18(d), or as would not individually or in the aggregate reasonably be expected to be material to the Company or the ability of the Company to perform its obligations under this Agreement or the Ancillary Documents to which it is or required to be a party or otherwise bound, (i) all independent contractors (including consultants) currently engaged by the Company are a party to a written Contract with the Company and (ii) for the purposes of applicable Law, including the Code, all independent contractors who are currently, or within the last six (6) years have been, engaged by the Company are bona fide independent contractors and not employees of the Company.
6.19 Benefit Plans.
(a) Set forth on Schedule 6.19(a) is a true and complete list of each Foreign Plan of the Company (each, a “Company Benefit Plan”). The Company has not ever maintained or contributed to (or had an obligation to contribute to) any Benefit Plan, whether or not subject to ERISA, which is not a Foreign Plan.
(b) Except as set forth on Schedule 6.19(b), with respect to each Company Benefit Plan which covers any current or former officer, director, consultant or employee (or beneficiary thereof) of the Company, the Company has
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made available to Purchaser accurate and complete copies, if applicable, of: (i) all plan documents and related trust agreements or annuity Contracts (including any amendments, modifications or supplements thereto), and written descriptions of any Company Benefit Plans which are not in writing; (ii) the most recent annual and periodic accounting of plan assets; (iii) the most recent actuarial valuation; and (iv) all communications with any Governmental Authority concerning any matter that is still pending or for which he Company has any outstanding Liability or obligation.
(c) Except as set forth on Schedule 6.19(c), with respect to each Company Benefit Plan: (i) such Company Benefit Plan has been administered and enforced in all material respects in accordance with its terms and the requirements of all applicable Laws, and has been maintained, where required, in good standing with applicable regulatory authorities and Governmental Authorities; (ii) no breach of fiduciary duty has occurred; (iii) no Action is pending, or to the Company’s Knowledge, threatened (other than routine claims for benefits arising in the ordinary course of administration); (iv) all contributions, premiums and other payments (including any special contribution, interest or penalty) required to be made with respect to a Company Benefit have been timely made; (v) all benefits accrued under any unfunded Company Benefit Plan has been paid, accrued, or otherwise adequately reserved in accordance with IFRS and are reflected on the Company Financials; and (vi) no Company Benefit Plan provides for retroactive increases in contributions, premiums or other payments in relation thereto. The Company has not incurred any obligation in connection with the termination of, or withdrawal from, any Company Benefit Plan.
(d) Except as set forth on Schedule 6.19(d), to the extent applicable, the present value of the accrued benefit liabilities (whether or not vested) under each Company Benefit Plan, determined as of the end of the Company’s most recently ended fiscal year on the basis of reasonable actuarial assumptions, each of which is reasonable, did not exceed the current value of the assets of such Company Benefit Plan allocable to such benefit liabilities.
(e) Except as set forth on Schedule 6.19(e) or to the extent required by applicable Law, the Company does not provide health or welfare benefits to any former or retired employee and is not obligated to provide such benefits to any active employee following such employee’s retirement or other termination of employment or service.
(f) Except as set forth on Schedule 6.19(f), all Company Benefit Plans can be terminated at any time as of or after the Closing Date without resulting in any Liability to the Company, Pubco, Purchaser or their respective Affiliates for any additional contributions, penalties, premiums, fees, fines, excise taxes or any other charges or liabilities.
6.20 Environmental Matters.
(a) Except as set forth on Schedule 6.20(a), the Company is and has been in compliance in all material respects with all applicable Environmental Laws, including obtaining, maintaining in good standing, and complying in all material respects with all Permits required for its business and operations by Environmental Laws (“Environmental Permits”), no material Action is pending or, to the Company’s Knowledge, threatened to revoke, modify, or terminate any such Environmental Permit, and, to the Company’s Knowledge, no facts, circumstances, or conditions currently exist that could adversely affect such continued compliance with Environmental Laws and Environmental Permits or require capital expenditures to achieve or maintain such continued compliance with Environmental Laws and Environmental Permits.
(b) Except as set forth on Schedule 6.20(b), the Company is not the subject of any material outstanding Order or Contract with any Governmental Authority or other Person in respect of any (i) Environmental Laws, (ii) Remedial Action, or (iii) Release or threatened Release of a Hazardous Material. The Company has not assumed, contractually or by operation of Law, any material Liabilities or obligations under any Environmental Laws.
(c) Except as set forth on Schedule 6.20(c), no Action has been made or is pending, or to the Company’s Knowledge, threatened against the Company or any assets of the Company alleging either or both that the Company may be in material violation of any Environmental Law or Environmental Permit or may have any material Liability under any Environmental Law.
(d) Except as set forth on Schedule 6.20(d), the Company has not manufactured, treated, stored, disposed of, arranged for or permitted the disposal of, generated, handled or Released any Hazardous Material, or owned or operated any property or facility, in a manner that has given or would reasonably be expected to give rise to any material Liability or obligation under applicable Environmental Laws. To the Knowledge of the Company, no fact, circumstance, or condition exists in respect of the Company or any property currently or formerly
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owned, operated, or leased by the Company or any property to which the Company arranged for the disposal or treatment of Hazardous Materials that could reasonably be expected to result in the Company incurring any material Environmental Liabilities.
(e) Except as set forth on Schedule 6.20(e), to the Knowledge of the Company, there is not located at any of the properties of the Company any (i) underground storage tanks, (ii) asbestos-containing material, or (iii) equipment containing polychlorinated biphenyls.
(f) Except as set forth on Schedule 6.20(f), the Company has provided to Purchaser all material environmentally related site assessments, audits, studies, reports, analysis and results of investigations that have been performed in respect of the currently or previously owned, leased, or operated properties of the Company.
6.21 Oil and Gas Matters.
(a) The Company owns and operates 14 oil storage tanks with an aggregate geometric oil storage capacity of approximately 0.399 million cubic meters (the “Storage Tanks”) and related short-haul transport pipelines and infrastructure, focused primarily on the storage, heating and blending of fuel oil and clean petroleum products, including aviation fuel, gas oil, gasoline, marine gas oil and naphtha, in a terminaling facility located in the Port of Fujairah (the “Facilities”) in the emirate of Fujairah in the UAE (as further described on Schedule 6.21(a)).
(b) Except as set forth on Schedule 6.21(b), the Company does not own any petroleum product inventory in the Storage Tanks, as all product in the Storage Tanks belongs to a third-party customer. All Storage Tanks and Facilities operated by the Company have been operated in accordance with reasonable, prudent field practices and in material compliance with the Company’s applicable Contracts and applicable Law. The Storage Tanks and Facilities are (i) in good operating condition and repair (normal wear and tear excepted), (ii) free from any material defects, and (iii) suitable for the purposes for which they are currently used. None of the Storage Tanks or any ancillary equipment located in the Facilities are in need of maintenance or repairs except for ordinary, routine maintenance and except for regularly scheduled overhauls from time to time.
6.22 Transactions with Related Persons. Except as set forth on Schedule 6.22, neither the Company nor any of its Affiliates, nor any officer, director, manager, employee, trustee or beneficiary of the Company or any of its Affiliates, nor any immediate family member of any of the foregoing (whether directly or indirectly through an Affiliate of such Person) (each of the foregoing, a “Related Person”) is presently, or in the past three (3) years, has been, a party to any transaction with the Company, including any Contract or other arrangement (a) providing for the furnishing of services by (other than as officers, directors or employees of the Company), (b) providing for the rental of real property or Personal Property from or (c) otherwise requiring payments to (other than for services or expenses as directors, officers or employees of the Company in the ordinary course of business consistent with past practice) any Related Person or any Person in which any Related Person has an interest as an owner, officer, manager, director, trustee or partner or in which any Related Person has any direct or indirect interest (other than the ownership of securities representing no more than three percent (3%) of the outstanding voting power or economic interest of a publicly traded company). Except as set forth on Schedule 6.22, the Company does not have outstanding any Contract or other arrangement or commitment with any Related Person, and no Related Person owns any real property or Personal Property, or right, tangible or intangible (including Intellectual Property) which is used in the business of the Company. The assets of the Company do not include any receivable or other obligation from a Related Person, and the liabilities of the Company do not include any payable or other obligation or commitment to any Related Person.
6.23 Insurance. Schedule 6.23 lists all material insurance policies (by policy number, insurer, coverage period, coverage amount, annual premium and type of policy) held by the Company relating to the Company or its business, properties, assets, directors, officers and employees, copies of which have been provided to the Purchaser. All premiums due and payable under all such insurance policies have been timely paid and the Company is otherwise in material compliance with the terms of such insurance policies. The Company does not have any self-insurance or co-insurance programs. Since January 1, 2018, the Company has not received any notice from, or on behalf of, any insurance carrier relating to or involving any adverse change or any change other than in the ordinary course of business, in the conditions of insurance, any refusal to issue an insurance policy or non-renewal of a policy. Since January 1, 2018, the Company has not been refused any insurance coverage sought or applied for, and the Company has no reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers at a cost that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect with respect to the Company.
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6.24 Top Customers and Suppliers. Schedule 6.24 lists, by dollar volume received or paid, as applicable, for the twelve (12) months ended on December 31, 2018, the ten (10) largest customers of the Company (the “Top Customers”) and the ten (10) largest suppliers of goods or services to the Company (the “Top Suppliers”), along with the amounts of such dollar volumes. The relationships of the Company with such suppliers and customers are good commercial working relationships and (i) no Top Supplier or Top Customer within the last twelve (12) months has cancelled or otherwise terminated, or, to the Company’s Knowledge, intends to cancel or otherwise terminate, any material relationships of such Person with the Company, (ii) no Top Supplier or Top Customer has during the last twelve (12) months decreased materially or, to the Company’s Knowledge, threatened to stop, decrease or limit materially, or, to the Company’s Knowledge, intends to modify materially its material relationships with the Company or intends to stop, decrease or limit materially its products or services to the Company or its usage or purchase of the products or services of the Company, (iii) to the Company’s Knowledge, no Top Supplier or Top Customer intends to refuse to pay any material amount due to the Company or seek to exercise any remedy against the Company, (iv) the Company has not within the past two (2) years been engaged in any material dispute with any Top Supplier or Top Customer, and (v) to the Company’s Knowledge, the consummation of the transactions contemplated in this Agreement and the Ancillary Documents will not materially and adversely affect the relationship of the Company with any Top Supplier or Top Customer.
6.25 Certain Business Practices.
(a) Except as set forth on Schedule 6.25(a), neither the Company, nor any of its Representatives acting on its behalf, have (i) used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees, to foreign or domestic political parties or campaigns or violated any provision of the Foreign Corrupt Practices Act of 1977 or any other local or foreign ant-corruption or bribery Law or (iii) made any other unlawful payment. Neither the Company, nor any of its Representatives acting on its behalf, have directly or indirectly, given or agreed to give any unlawful gift or similar benefit in any material amount to any customer, supplier, governmental employee or other Person who is or may be in a position to help or hinder the Company or assist the Company in connection with any actual or proposed transaction.
(b) Except as set forth on Schedule 6.25(b), the operations of the Company are and have been conducted at all times in compliance with money laundering statutes in all applicable jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any Governmental Authority, and no Action involving the Company with respect to the any of the foregoing is pending or, to the Knowledge of the Company, threatened.
(c) Except as set forth on Schedule 6.25(c), none of the Company or any of its directors or officers, nor, to the Knowledge of the Company, any other Representative acting on behalf of the Company, is currently identified on the specially designated nationals or other blocked person list or otherwise currently subject to any U.S. sanctions administered by OFAC, and the Company has not, directly or indirectly, used any funds, or loaned, contributed or otherwise made available such funds to any Subsidiary, joint venture partner or other Person, in connection with any sales or operations in Cuba, Iran, Syria, Sudan, Myanmar or any other country sanctioned by OFAC or for the purpose of financing the activities of any Person currently subject to, or otherwise in violation of, any U.S. sanctions administered by OFAC since its formation.
6.26 Investment Company Act. Except as set forth on Schedule 6.26, the Company is not an “investment company” or a Person directly or indirectly “controlled” by or acting on behalf of an “investment company”, in each case within the meaning of the Investment Company Act of 1940, as amended.
6.27 Finders and Brokers. Except as set forth on Schedule 6.27, no broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission from Purchaser, Pubco, the Company or any of their respective Affiliates in connection with the transactions contemplated hereby based upon arrangements made by or on behalf of the Company.
6.28 Information Supplied. None of the information supplied or to be supplied by the Company expressly for inclusion or incorporation by reference: (a) in any current report on Form 8-K, and any exhibits thereto or any other report, form, registration or other filing made with any Governmental Authority (including the SEC) with respect to the transactions contemplated by this Agreement or any Ancillary Documents; (b) in the Registration Statement; or (c) in the mailings or other distributions to Purchaser’s or Pubco’s shareholders and/or prospective investors with respect
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to the consummation of the transactions contemplated by this Agreement or in any amendment to any of documents identified in (a) through (c), will, when filed, made available, mailed or distributed, as the case may be, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. None of the information supplied or to be supplied by the Company expressly for inclusion or incorporation by reference in any of the Signing Press Release, the Signing Filing, the Closing Press Release and the Closing Filing will, when filed or distributed, as applicable, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. Notwithstanding the foregoing, the Company makes no representation, warranty or covenant with respect to any information supplied by or on behalf of Purchaser, or its Affiliates.
6.29 Disclosure. Except as set forth on Schedule 6.29, no representations or warranties by the Company in this Agreement (as modified by the Company Disclosure Schedules) or the Ancillary Documents, (a) contains or will contain any untrue statement of a material fact, or (b) omits or will omit to state, when read in conjunction with all of the information contained in this Agreement, the Company Disclosure Schedules and the Ancillary Documents, any fact necessary to make the statements or facts contained therein not materially misleading.
6.30 Independent Investigation. The Company has conducted its own independent investigation, review and analysis of the business, results of operations, condition (financial or otherwise) or assets of Purchaser, Pubco and Merger Sub and acknowledges that it has been provided adequate access to the personnel, properties, assets, premises, books and records, and other documents and data of Purchaser, Pubco and Merger Sub for such purpose. The Company acknowledges and agrees that: (a) in making its decision to enter into this Agreement and to consummate the transactions contemplated hereby, it has relied solely upon its own investigation and the express representations and warranties of Purchaser, Pubco and Merger Sub set forth in this Agreement (including the related portions of the Purchaser Disclosure Schedules) and in any certificate delivered to the Company pursuant hereto, and the information provided by or on behalf of Purchaser, Pubco or Merger Sub for the Registration Statement; and (b) none of Purchaser, Pubco, Merger Sub or their respective Representatives have made any representation or warranty as to Purchaser, Pubco or Merger Sub or this Agreement, except as expressly set forth in this Agreement (including the related portions of the Purchaser Disclosure Schedules) or in any certificate delivered to Company pursuant hereto.
Article VII
COVENANTS
7.1 Access and Information.
(a) During the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement in accordance with Section 9.1 or the Closing (the “Interim Period”), subject to Section 7.13, each of the Company, Pubco and Merger Sub shall give, and shall cause its Representatives to give, Purchaser and its Representatives, at reasonable times during normal business hours and upon reasonable intervals and notice, reasonable access to all offices and other facilities and to all employees, properties, Contracts, agreements, commitments, books and records, financial and operating data and other information (including Tax Returns, internal working papers, client files, client Contracts and director service agreements), of or pertaining to Pubco, Merger Sub or the Company, as Purchaser or its Representatives may reasonably request regarding Pubco, Merger Sub or the Company and their respective businesses, assets, Liabilities, financial condition, prospects, operations, management, employees and other aspects (including unaudited quarterly financial statements, including a consolidated quarterly balance sheet and income statement, a copy of each material report, schedule and other document filed with or received by a Governmental Authority pursuant to the requirements of applicable securities Laws, and independent public accountants’ work papers (subject to the consent or any other conditions required by such accountants, if any)) and cause each of the Representatives of the Company, Pubco and Merger Sub to reasonably cooperate with Purchaser and its Representatives in their investigation; provided, however, that Purchaser and its Representatives shall conduct any such activities in such a manner as not to unreasonably interfere with the business or operations of Pubco, Merger Sub or the Company.
(b) During the Interim Period, subject to Section 7.13, Purchaser shall give, and shall cause its Representatives to give, the Company, Pubco, Merger Sub and their respective Representatives, at reasonable times during normal business hours and upon reasonable intervals and notice, reasonable access to all offices and other facilities and to all employees, properties, Contracts, agreements, commitments, books and records, financial and
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operating data and other information (including Tax Returns, internal working papers, client files, client Contracts and director service agreements), of or pertaining to Purchaser or its Subsidiaries, as the Company, Pubco, Merger Sub or their respective Representatives may reasonably request regarding Purchaser, its Subsidiaries and their respective businesses, assets, Liabilities, financial condition, prospects, operations, management, employees and other aspects (including unaudited quarterly financial statements, including a consolidated quarterly balance sheet and income statement, a copy of each material report, schedule and other document filed with or received by a Governmental Authority pursuant to the requirements of applicable securities Laws, and independent public accountants’ work papers (subject to the consent or any other conditions required by such accountants, if any)) and cause each of their respective Representatives to reasonably cooperate with the Company, Pubco, Merger Sub and their respective Representatives in their investigation; provided, however, that the Company, Pubco, Merger Sub and their respective Representatives shall conduct any such activities in such a manner as not to unreasonably interfere with the business or operations of Purchaser or any of its Subsidiaries.
7.2 Conduct of Business of the Company, Pubco, Merger Sub and the Sellers.
(a) Unless Purchaser shall otherwise consent in writing (such consent not to be unreasonably withheld, conditioned or delayed), during the Interim Period, except as expressly contemplated by this Agreement, as set forth on Schedule 7.2 or as required by applicable Law, Pubco, Merger Sub and the Company shall, and shall cause their respective Subsidiaries to, (i) conduct their respective businesses, in all material respects, in the ordinary course of business consistent with past practice, (ii) comply with all Laws applicable to them and their respective Subsidiaries and their respective businesses, assets and employees, and (iii) take all commercially reasonable measures necessary or appropriate to preserve intact, in all material respects, their respective business organizations, to keep available the services of their respective managers, directors, officers, employees and consultants, and to preserve the possession, control and condition of their respective material assets, all as consistent with past practice.
(b) Without limiting Section 7.2(a), during the Interim Period, without the prior written consent of Purchaser, (i) the Company shall not issue any Company Ordinary Shares, and (ii) no Seller shall sell, transfer or dispose of any Company Ordinary Shares owned by such Seller, in either case of clauses (i) and (ii), unless the recipient or transferee of such Company Ordinary Shares (the “New Seller”) executes and delivers to Purchaser, Pubco and the Company both a Joinder and a joinder, in form and substance reasonably acceptable to Purchaser and the Company, to become bound by any Ancillary Documents previously executed by the transferring Seller.
7.3 Conduct of Business of Purchaser
(a) Unless the Company shall otherwise consent in writing (such consent not to be unreasonably withheld, conditioned or delayed), during the Interim Period, except as expressly contemplated by this Agreement, as set forth on Schedule 7.3 or as required by applicable Law, Purchaser shall, and shall cause its Subsidiaries to, (i) conduct their respective businesses, in all material respects, in the ordinary course of business consistent with past practice, (ii) comply with all Laws applicable to Purchaser and its Subsidiaries and their respective businesses, assets and employees, and (iii) take all commercially reasonable measures necessary or appropriate to preserve intact, in all material respects, their respective business organizations, to keep available the services of their respective managers, directors, officers, employees and consultants, and to preserve the possession, control and condition of their respective material assets, all as consistent with past practice. Notwithstanding anything to the contrary in this Section 7.3, nothing in this Agreement shall prohibit or restrict Purchaser from extending, in accordance with the Purchaser Charter and IPO Prospectus, the deadline by which it much complete its Business Combination (an “Extension”), and no consent of any other Party shall be required in connection therewith.
(b) Without limiting the generality of Section 7.3(a) and except as contemplated by the terms of this Agreement (including as contemplated by any PIPE Investment), as set forth on Schedule 7.3 or as required by applicable Law, during the Interim Period, without the prior written consent of the Company (such consent not to be unreasonably withheld, conditioned or delayed), Purchaser shall not, and shall cause its Subsidiaries to not:
(i) amend, waive or otherwise change, in any respect, its Organizational Documents;
(ii) authorize for issuance, issue, grant, sell, pledge, dispose of or propose to issue, grant, sell, pledge or dispose of any of its equity securities or any options, warrants, commitments, subscriptions or rights of any kind to acquire or sell any of its equity securities, or other securities, including any securities convertible into or exchangeable for any of its equity securities or other security interests of any class and any other equity-based awards, or engage in any hedging transaction with a third Person with respect to such securities;
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(iii) split, combine, recapitalize or reclassify any of its shares or other equity interests or issue any other securities in respect thereof or pay or set aside any dividend or other distribution (whether in cash, equity or property or any combination thereof) in respect of its shares or other equity interests, or directly or indirectly redeem, purchase or otherwise acquire or offer to acquire any of its securities;
(iv) incur, create, assume, prepay or otherwise become liable for any Indebtedness (directly, contingently or otherwise) in excess of $100,000 (individually or in the aggregate), make a loan or advance to or investment in any third party, or guarantee or endorse any Indebtedness, Liability or obligation of any Person (provided, that this Section 7.3(b)(iv) shall not prevent Purchaser from borrowing funds necessary to finance its ordinary course administrative costs and expenses and Expenses incurred in connection with the consummation of the Transactions, including any PIPE Investment, and costs and expenses necessary for an Extension (such expenses, “Extension Expenses”), up to aggregate additional Indebtedness during the Interim Period of $500,000);
(v) make or rescind any material election relating to Taxes, settle any claim, action, suit, litigation, proceeding, arbitration, investigation, audit or controversy relating to Taxes, file any amended Tax Return or claim for refund, or make any material change in its accounting or Tax policies or procedures, in each case except as required by applicable Law or in compliance with GAAP or IFRS, as applicable;
(vi) amend, waive or otherwise change the Trust Agreement in any manner adverse to Purchaser;
(vii) terminate, waive or assign any material right under any material agreement to which it is a party;
(viii) fail to maintain its books, accounts and records in all material respects in the ordinary course of business consistent with past practice;
(ix) establish any Subsidiary or enter into any new line of business;
(x) fail to use commercially reasonable efforts to keep in force insurance policies or replacement or revised policies providing insurance coverage with respect to its assets, operations and activities in such amount and scope of coverage as are currently in effect;
(xi) revalue any of its material assets or make any change in accounting methods, principles or practices, except to the extent required to comply with GAAP or IFRS, as applicable, and after consulting the Purchaser’s outside auditors;
(xii) waive, release, assign, settle or compromise any claim, action or proceeding (including any suit, action, claim, proceeding or investigation relating to this Agreement or the transactions contemplated hereby), other than waivers, releases, assignments, settlements or compromises that involve only the payment of monetary damages (and not the imposition of equitable relief on, or the admission of wrongdoing by, Purchaser or its Subsidiary) not in excess of $100,000 (individually or in the aggregate), or otherwise pay, discharge or satisfy any Actions, Liabilities or obligations, unless such amount has been reserved in the Purchaser Financials;
(xiii) acquire, including by merger, consolidation, acquisition of equity interests or assets, or any other form of business combination, any corporation, partnership, limited liability company, other business organization or any division thereof, or any material amount of assets outside the ordinary course of business;
(xiv) make capital expenditures in excess of $50,000 individually for any project (or set of related projects) or $100,000 in the aggregate (excluding for the avoidance of doubt, incurring any Expenses);
(xv) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization (other than with respect to the Merger);
(xvi) voluntarily incur any Liability or obligation (whether absolute, accrued, contingent or otherwise) in excess of $50,000 individually or $100,000 in the aggregate (excluding the incurrence of any Expenses or any Indebtedness permitted by Section 7.3(b)(iv)) other than pursuant to the terms of a Contract in existence as of the date of this Agreement or entered into in the ordinary course of business or in accordance with the terms of this Section 7.3 during the Interim Period;
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(xvii) sell, lease, license, transfer, exchange or swap, mortgage or otherwise pledge or encumber (including securitizations), or otherwise dispose of any material portion of its properties, assets or rights;
(xviii) enter into any agreement, understanding or arrangement with respect to the voting of its equity securities;
(xix) take any action that would reasonably be expected to significantly delay or impair the obtaining of any Consents of any Governmental Authority to be obtained in connection with this Agreement; or
(xx) authorize or agree to do any of the foregoing actions.
7.4 Annual and Interim Financial Statements. During the Interim Period, within thirty (30) calendar days following the end of each calendar month, each three-month quarterly period and each fiscal year, the Company shall deliver to Purchaser an unaudited consolidated income statement and an unaudited consolidated balance sheet of the Company for the period from the Interim Balance Sheet Date through the end of such calendar month, quarterly period or fiscal year and the applicable comparative period in the preceding fiscal year, in each case accompanied by a certificate of the Chief Financial Officer of the Company to the effect that all such financial statements fairly present the consolidated financial position and results of operations of the Company as of the date or for the periods indicated, in accordance with IFRS, subject to year-end audit adjustments and excluding footnotes. From the date hereof through the Closing Date, the Company will also promptly deliver to Purchaser copies of any audited consolidated financial statements of the Company that its certified public accountants may issue.
7.5 Purchaser Public Filings. During the Interim Period, Purchaser will keep current and timely file all of its public filings with the SEC and otherwise comply in all material respects with applicable securities Laws and shall use its commercially reasonable efforts prior to the Merger to maintain the listing of the Purchaser Public Units, the Purchaser Ordinary Share Purchaser, Public Rights and the Purchaser Public Warrants on Nasdaq; provided, that the Parties acknowledge and agree that from and after the Closing, the Parties intend to list on Nasdaq only the Pubco Ordinary Shares and the Pubco Public Warrants.
7.6 No Solicitation.
(a) For purposes of this Agreement, (i) an “Acquisition Proposal” means any inquiry, proposal or offer, or any indication of interest in making an offer or proposal, from any Person or group at any time relating to an Alternative Transaction, and (ii) an “Alternative Transaction” means (A) with respect to the Company, Pubco, Merger Sub, the Sellers and their respective Affiliates, a transaction (other than the transactions contemplated by this Agreement) concerning the sale of (x) all or any material part of the business or assets of the Company (other than in the ordinary course of business consistent with past practice) or (y) any of the shares or other equity interests or profits of the Company, in any case, whether such transaction takes the form of a sale of shares or other equity interests, assets, merger, consolidation, issuance of debt securities, management Contract, joint venture or partnership, or otherwise and (B) with respect to Purchaser and its Affiliates, a transaction (other than the transactions contemplated by this Agreement) concerning a Business Combination for Purchaser.
(b) During the Interim Period, in order to induce the other Parties to continue to commit to expend management time and financial resources in furtherance of the transactions contemplated hereby, each Party shall not, and shall cause its Representatives to not, without the prior written consent of the Company and Purchaser, directly or indirectly, (i) solicit, assist, initiate or facilitate the making, submission or announcement of, or intentionally encourage, any Acquisition Proposal, (ii) furnish any non-public information regarding such Party or its Affiliates (or with respect to any Seller, the Company) or their respective businesses, operations, assets, Liabilities, financial condition, prospects or employees to any Person or group (other than a Party to this Agreement or their respective Representatives) in connection with or in response to an Acquisition Proposal, (iii) engage or participate in discussions or negotiations with any Person or group with respect to, or that could be expected to lead to, an Acquisition Proposal, (iv) approve, endorse or recommend, or publicly propose to approve, endorse or recommend, any Acquisition Proposal, (v) negotiate or enter into any letter of intent, agreement in principle, acquisition agreement or other similar agreement related to any Acquisition Proposal, or (vi) release any third Person from, or waive any provision of, any confidentiality agreement to which such Party is a party.
(c) Each Party shall notify the others as promptly as practicable (and in any event within 48 hours) orally and in writing of the receipt by such Party or any of its Representatives of (i) any bona fide inquiries, proposals or offers, requests for information or requests for discussions or negotiations regarding or constituting any Acquisition Proposal
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or any bona fide inquiries, proposals or offers, requests for information or requests for discussions or negotiations that could be expected to result in an Acquisition Proposal, and (ii) any request for non-public information relating to such Party or its Affiliates (or with respect to any Seller, the Company), specifying in each case, the material terms and conditions thereof (including a copy thereof if in writing or a written summary thereof if oral) and the identity of the party making such inquiry, proposal, offer or request for information. Each Party shall keep the others promptly informed of the status of any such inquiries, proposals, offers or requests for information. During the Interim Period, each Party shall, and shall cause its Representatives to, immediately cease and cause to be terminated any solicitations, discussions or negotiations with any Person with respect to any Acquisition Proposal and shall, and shall direct its Representatives to, cease and terminate any such solicitations, discussions or negotiations.
7.7 No Trading. The Company, Pubco, Merger Sub and the Sellers each acknowledge and agree that it is aware, and that their respective Affiliates are aware (and each of their respective Representatives is aware or, upon receipt of any material nonpublic information of Purchaser, will be advised) of the restrictions imposed by U.S. federal securities laws and the rules and regulations of the SEC and Nasdaq promulgated thereunder or otherwise (the “Federal Securities Laws”) and other applicable foreign and domestic Laws on a Person possessing material nonpublic information about a publicly traded company. The Company, Pubco, Merger Sub and the Sellers each hereby agree that, while it is in possession of such material nonpublic information, it shall not purchase or sell any securities of Purchaser, communicate such information to any third party, take any other action with respect to Purchaser in violation of such Laws, or cause or encourage any third party to do any of the foregoing.
7.8 Notification of Certain Matters. During the Interim Period, each Party shall give prompt notice to the other Parties if such Party or its Affiliates (or, with respect to the Company, any Seller): (a) fails to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it or its Affiliates (or, with respect to the Company, any Seller) hereunder in any material respect; (b) receives any notice or other communication in writing from any third party (including any Governmental Authority) alleging (i) that the Consent of such third party is or may be required in connection with the transactions contemplated by this Agreement or (ii) any non-compliance with any Law by such Party or its Affiliates (or, with respect to the Company, any Seller); (c) receives any notice or other communication from any Governmental Authority in connection with the transactions contemplated by this Agreement; (d) discovers any fact or circumstance that, or becomes aware of the occurrence or non-occurrence of any event the occurrence or non-occurrence of which, would reasonably be expected to cause or result in any of the conditions to set forth in Article VIII not being satisfied or the satisfaction of those conditions being materially delayed; or (e) becomes aware of the commencement or threat, in writing, of any Action against such Party or any of its Affiliates (or, with respect to the Company, any Seller), or any of their respective properties or assets, or, to the Knowledge of such Party, any officer, director, partner, member or manager, in his, her or its capacity as such, of such Party or of its Affiliates (or, with respect to the Company, any Seller) with respect to the consummation of the transactions contemplated by this Agreement. No such notice shall constitute an acknowledgement or admission by the Party providing the notice regarding whether or not any of the conditions to the Closing have been satisfied or in determining whether or not any of the representations, warranties or covenants contained in this Agreement have been breached.
7.9 Efforts.
(a) Subject to the terms and conditions of this Agreement, each Party shall use its commercially reasonable efforts, and shall cooperate fully with the other Parties, to take, or cause to be taken, all actions and to do, or cause to be done, all things reasonably necessary, proper or advisable under applicable Laws and regulations to consummate the transactions contemplated by this Agreement (including the receipt of all applicable Consents of Governmental Authorities) and to comply as promptly as practicable with all requirements of Governmental Authorities applicable to the transactions contemplated by this Agreement.
(b) In furtherance and not in limitation of Section 7.9(a), to the extent required under any Laws that are designed to prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade (“Antitrust Laws”), each Party hereto agrees to make any required filing or application under Antitrust Laws, as applicable, at such Party’s sole cost and expense, with respect to the transactions contemplated hereby as promptly as practicable, to supply as promptly as reasonably practicable any additional information and documentary material that may be reasonably requested pursuant to Antitrust Laws and to take all other actions reasonably necessary, proper or advisable to cause the expiration or termination of the applicable waiting periods under Antitrust Laws as soon as practicable, including by requesting early termination of the waiting period provided for under the Antitrust Laws. Each Party shall, in connection with its efforts to obtain all requisite approvals and authorizations for the transactions
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contemplated by this Agreement under any Antitrust Law, use its commercially reasonable efforts to: (i) cooperate in all respects with each other Party or its Affiliates in connection with any filing or submission and in connection with any investigation or other inquiry, including any proceeding initiated by a private Person; (ii) keep the other Parties reasonably informed of any communication received by such Party or its Representatives from, or given by such Party or its Representatives to, any Governmental Authority and of any communication received or given in connection with any proceeding by a private Person, in each case regarding any of the transactions contemplated by this Agreement; (iii) permit a Representative of the other Parties and their respective outside counsel to review any communication given by it to, and consult with each other in advance of any meeting or conference with, any Governmental Authority or, in connection with any proceeding by a private Person, with any other Person, and to the extent permitted by such Governmental Authority or other Person, give a Representative or Representatives of the other Parties the opportunity to attend and participate in such meetings and conferences; (iv) in the event a Party’s Representative is prohibited from participating in or attending any meetings or conferences, the other Parties shall keep such Party promptly and reasonably apprised with respect thereto; and (v) use commercially reasonable efforts to cooperate in the filing of any memoranda, white papers, filings, correspondence or other written communications explaining or defending the transactions contemplated hereby, articulating any regulatory or competitive argument, and/or responding to requests or objections made by any Governmental Authority.
(c) As soon as reasonably practicable following the date of this Agreement, the Parties shall reasonably cooperate with each other and use (and shall cause their respective Affiliates to use) their respective commercially reasonable efforts to prepare and file with Governmental Authorities requests for approval of the transactions contemplated by this Agreement and shall use all commercially reasonable efforts to have such Governmental Authorities approve the transactions contemplated by this Agreement. Each Party shall give prompt written notice to the other Parties if such Party or any of its Representatives (or, with respect to the Company, any Seller) receives any notice from such Governmental Authorities in connection with the transactions contemplated by this Agreement, and shall promptly furnish the other Parties with a copy of such Governmental Authority notice. If any Governmental Authority requires that a hearing or meeting be held in connection with its approval of the transactions contemplated hereby, whether prior to the Closing or after the Closing, each Party shall arrange for Representatives of such Party to be present for such hearing or meeting. If any objections are asserted with respect to the transactions contemplated by this Agreement under any applicable Law or if any Action is instituted (or threatened to be instituted) by any applicable Governmental Authority or any private Person challenging any of the transactions contemplated by this Agreement or any Ancillary Document as violative of any applicable Law or which would otherwise prevent, materially impede or materially delay the consummation of the transactions contemplated hereby or thereby, the Parties shall use their commercially reasonable efforts to resolve any such objections or Actions so as to timely permit consummation of the transactions contemplated by this Agreement and the Ancillary Documents, including in order to resolve such objections or Actions which, in any case if not resolved, could reasonably be expected to prevent, materially impede or materially delay the consummation of the transactions contemplated hereby or thereby. In the event any Action is instituted (or threatened to be instituted) by a Governmental Authority or private Person challenging the transactions contemplated by this Agreement, or any Ancillary Document, the Parties shall, and shall cause their respective Representatives to, reasonably cooperate with each other and use their respective commercially reasonable efforts to contest and resist any such Action and to have vacated, lifted, reversed or overturned any Order, whether temporary, preliminary or permanent, that is in effect and that prohibits, prevents or restricts consummation of the transactions contemplated by this Agreement or the Ancillary Documents.
(d) Prior to the Closing, each Party shall use its commercially reasonable efforts to obtain any Consents of Governmental Authorities or other third Persons as may be necessary for the consummation by such Party or its Affiliates of the transactions contemplated by this Agreement or required as a result of the execution or performance of, or consummation of the transactions contemplated by, this Agreement by such Party or its Affiliates, and the other Parties shall provide reasonable cooperation in connection with such efforts. With respect to Pubco, during the Interim Period, the Company and Pubco shall take all commercially reasonable actions necessary to cause Pubco to qualify as “foreign private issuer” as such term is defined under Exchange Act Rule 3b-4 and to maintain such status through the Closing and immediately after the Closing.
7.10 Further Assurances. The Parties hereto shall further cooperate with each other and use their respective commercially reasonable efforts to take or cause to be taken all actions, and do or cause to be done all things, necessary, proper or advisable on their part under this Agreement and applicable Laws to consummate the transactions contemplated by this Agreement as soon as reasonably practicable, including preparing and filing as soon as practicable all documentation to effect all necessary notices, reports and other filings.
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7.11 The Registration Statement.
(a) As promptly as practicable after the date hereof, Purchaser and Pubco shall prepare with the reasonable assistance of the Company, and file with the SEC a registration statement on Form F-4 (as amended or supplemented from time to time, and including the Proxy Statement contained therein, the “Registration Statement”) in connection with the registration under the Securities Act of the Pubco Securities to be issued under this Agreement to the holders of Purchaser Securities prior to the Effective Time, which Registration Statement will also contain a proxy statement of Purchaser (as amended, the “Proxy Statement”) for the purpose of soliciting proxies from Purchaser shareholders for the matters to be acted upon at the Special Meeting and providing the Public Shareholders an opportunity in accordance with Purchaser’s Organizational Documents and the IPO Prospectus to have their Purchaser Ordinary Shares (or if after the Effective Time, their Pubco Ordinary Shares) redeemed (the “Redemption”) in conjunction with the shareholder vote on the Purchaser Shareholder Approval Matters. The Proxy Statement shall include proxy materials for the purpose of soliciting proxies from Purchaser shareholders to vote, at an extraordinary general meeting of Purchaser shareholders to be called and held for such purpose (the “Special Meeting”), in favor of resolutions approving (i) the adoption and approval of this Agreement and the Transactions (including to the extent required, the issuance of any PIPE Shares) by the holders of Purchaser Common Shares in accordance with the Purchaser’s Organizational Documents, the Cayman Act and the rules and regulations of the SEC and Nasdaq, (ii) if mutually agreed by Purchaser and the Company prior to the filing of the Registration Statement, the adoption and approval of a new Equity Incentive Plan for Pubco in form and substance reasonably acceptable to the Company, and Purchaser (the “Pubco Equity Plan”), (iii) the appointment of the members of the Post-Closing Pubco Board in accordance with Section 7.14 hereof, (iv) such other matters as the Company and Purchaser shall hereafter mutually determine to be necessary or appropriate in order to effect the Transactions (the approvals described in foregoing clauses (i) through (iv), collectively, the “Purchaser Shareholder Approval Matters”), and (v) the adjournment of the Special Meeting, if necessary or desirable in the reasonable determination of Purchaser. If on the date for which the Special Meeting is scheduled, Purchaser has not received proxies representing a sufficient number of shares to obtain the Required Shareholder Approval, whether or not a quorum is present, Purchaser may make one or more successive postponements or adjournments of the Special Meeting. In connection with the Registration Statement, Purchaser and Pubco will file with the SEC financial and other information about the transactions contemplated by this Agreement in accordance with applicable Law and applicable proxy solicitation and registration statement rules set forth in the Purchaser’s Organizational Documents, the Cayman Act and the rules and regulations of the SEC and Nasdaq. Purchaser and Pubco shall cooperate and provide the Company (and its counsel) with a reasonable opportunity to review and comment on the Registration Statement and any amendment or supplement thereto prior to filing the same with the SEC. The Company shall provide Purchaser and Pubco with such information concerning the Company and its shareholders, officers, directors, employees, assets, Liabilities, condition (financial or otherwise), business and operations that may be required or appropriate for inclusion in the Registration Statement, or in any amendments or supplements thereto, which information provided by the Company shall be true and correct and not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not materially misleading.
(b) Purchaser and Pubco shall take any and all reasonable and necessary actions required to satisfy the requirements of the Securities Act, the Exchange Act and other applicable Laws in connection with the Registration Statement, the Special Meeting and the Redemption. Each of Purchaser, Pubco and the Company shall, and shall cause each of its Subsidiaries to, make their respective directors, officers and employees, upon reasonable advance notice, available to the Company, Pubco, Purchaser and the Sellers and their respective Representatives in connection with the drafting of the public filings with respect to the transactions contemplated by this Agreement, including the Registration Statement, and responding in a timely manner to comments from the SEC. Each Party shall promptly correct any information provided by it for use in the Registration Statement (and other related materials) if and to the extent that such information is determined to have become false or misleading in any material respect or as otherwise required by applicable Laws. Purchaser and Pubco shall amend or supplement the Registration Statement and cause the Registration Statement, as so amended or supplemented, to be filed with the SEC and to be disseminated to Purchaser’s shareholders, in each case as and to the extent required by applicable Laws and subject to the terms and conditions of this Agreement and Purchaser’s Organizational Documents.
(c) Purchaser and Pubco, with the assistance of the other Parties, shall promptly respond to any SEC comments on the Registration Statement and shall otherwise use their commercially reasonable efforts to cause the Registration Statement to “clear” comments from the SEC and become effective. Purchaser and Pubco shall provide the Company with copies of any written comments, and shall inform the Company of any material oral comments, that
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Purchaser, Pubco or their respective Representatives receive from the SEC or its staff with respect to the Registration Statement, the Special Meeting and the Redemption promptly after the receipt of such comments and shall give the Company a reasonable opportunity under the circumstances to review and comment on any proposed written or material oral responses to such comments.
(d) As soon as practicable following the Registration Statement “clearing” comments from the SEC and becoming effective, Purchaser and Pubco shall distribute the Registration Statement to Purchaser’s shareholders and, pursuant thereto, shall call the Special Meeting in accordance with the Cayman Act for a date no later than thirty (30) days following the effectiveness of the Registration Statement.
(e) Purchaser and Pubco shall comply with all applicable Laws, any applicable rules and regulations of Nasdaq, Purchaser’s Organizational Documents and this Agreement in the preparation, filing and distribution of the Registration Statement, any solicitation of proxies thereunder, the calling and holding of the Special Meeting and the Redemption.
7.12 Public Announcements.
(a) The Parties agree that during the Interim Period, no public release, filing or announcement concerning this Agreement or the Ancillary Documents or the transactions contemplated hereby or thereby shall be issued by any Party or any of their Affiliates without the prior written consent (not be unreasonably withheld, conditioned or delayed) of Purchaser and the Company, except as such release or announcement may be required by applicable Law or the rules or regulations of any securities exchange, in which case the applicable Party shall use commercially reasonable efforts to allow the other Parties reasonable time to comment on, and arrange for any required filing with respect to, such release or announcement in advance of such issuance.
(b) The Parties shall mutually agree upon and, as promptly as practicable after the execution of this Agreement (but in any event within four (4) Business Days thereafter), issue a press release announcing the execution of this Agreement (the “Signing Press Release”); provided, that the Parties acknowledge that they intend to issue the Signing Press Release immediately after the execution of this Agreement. Promptly after the issuance of the Signing Press Release, Purchaser shall file a current report on Form 8-K (the “Signing Filing”) with the Signing Press Release and a description of this Agreement as required by Federal Securities Laws, which the Company shall review, comment upon and approve (which approval shall not be unreasonably withheld, conditioned or delayed) prior to filing (with the Company reviewing, commenting upon and approving such Signing Filing in any event no later than the third (3rd) Business Day after the execution of this Agreement). The Parties shall mutually agree upon and, as promptly as practicable after the Closing (but in any event within four (4) Business Days thereafter), issue a press release announcing the consummation of the transactions contemplated by this Agreement (the “Closing Press Release”). Promptly after the issuance of the Closing Press Release, Pubco shall file a current report on Form 8-K (the “Closing Filing”) with the Closing Press Release and a description of the Closing as required by Federal Securities Laws. In connection with the preparation of the Signing Press Release, the Signing Filing, the Closing Filing, the Closing Press Release, or any other report, statement, filing notice or application made by or on behalf of a Party to any Governmental Authority or other third party in connection with the transactions contemplated hereby, each Party shall, upon request by any other Party, furnish the Parties with all information concerning themselves, their respective directors, officers and equity holders, and such other matters as may be reasonably necessary or advisable in connection with the transactions contemplated hereby, or any other report, statement, filing, notice or application made by or on behalf of a Party to any third party and/ or any Governmental Authority in connection with the transactions contemplated hereby.
7.13 Confidential Information.
(a) The Company, Pubco, Merger Sub and the Sellers each hereby agree that during the Interim Period and, in the event that this Agreement is terminated in accordance with Article IX, for a period of two (2) years after such termination, they shall, and shall cause their respective Representatives to: (i) treat and hold in strict confidence any Purchaser Confidential Information, and will not use for any purpose (except in connection with the consummation of the transactions contemplated by this Agreement or the Ancillary Documents, performing their obligations hereunder or thereunder or enforcing their rights hereunder or thereunder), nor directly or indirectly disclose, distribute, publish, disseminate or otherwise make available to any third party any of the Purchaser Confidential Information without Purchaser’s prior written consent; and (ii) in the event that the Company, Pubco, Merger Sub, any Seller or any of their respective Representatives, during the Interim Period or, in the event that this Agreement is terminated in accordance with Article IX, for a period of two (2) years after such termination, becomes legally compelled to disclose
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any Purchaser Confidential Information, (A) provide Purchaser to the extent legally permitted with prompt written notice of such requirement so that Purchaser or an Affiliate thereof may seek, at Purchaser’s cost, a protective Order or other remedy or waive compliance with this Section 7.13(a), and (B) in the event that such protective Order or other remedy is not obtained, or Purchaser waives compliance with this Section 7.13(a), furnish only that portion of such Purchaser Confidential Information which is legally required to be provided as advised by outside counsel and to exercise its commercially reasonable efforts to obtain assurances that confidential treatment will be accorded such Purchaser Confidential Information. In the event that this Agreement is terminated and the transactions contemplated hereby are not consummated, the Company, Pubco, Merger Sub and the Sellers shall, and shall cause their respective Representatives to, promptly deliver to Purchaser or destroy (at the Company’s election) any and all copies (in whatever form or medium) of Purchaser Confidential Information and destroy all notes, memoranda, summaries, analyses, compilations and other writings related thereto or based thereon; provided, that the Company, Pubco, Merger Sub and the Sellers and their respective Representatives shall be entitled to keep any records required by applicable Law or bona fide record retention policies; provided, further that any Purchaser Confidential Information that is not returned or destroyed, including any oral Purchaser Confidential Information, shall remain subject to the confidentiality obligations set forth in this Agreement.
(b) Purchaser hereby agrees that during the Interim Period and, in the event that this Agreement is terminated in accordance with Article IX, for a period of two (2) years after such termination, it shall, and shall cause its Representatives to: (i) treat and hold in strict confidence any Company Confidential Information, and will not use for any purpose (except in connection with the consummation of the transactions contemplated by this Agreement or the Ancillary Documents, performing its obligations hereunder or thereunder or enforcing its rights hereunder or thereunder), nor directly or indirectly disclose, distribute, publish, disseminate or otherwise make available to any third party any of the Company Confidential Information without the Company’s prior written consent; and (ii) in the event that Purchaser or any of its Representatives, during the Interim Period or, in the event that this Agreement is terminated in accordance with Article IX, for a period of two (2) years after such termination, becomes legally compelled to disclose any Company Confidential Information, (A) provide the Company to the extent legally permitted with prompt written notice of such requirement so that the Company may seek, at the Company’s sole expense, a protective Order or other remedy or waive compliance with this Section 7.13(b) and (B) in the event that such protective Order or other remedy is not obtained, or the Company waives compliance with this Section 7.13(b), furnish only that portion of such Company Confidential Information which is legally required to be provided as advised by outside counsel and to exercise its commercially reasonable efforts to obtain assurances that confidential treatment will be accorded such Company Confidential Information. In the event that this Agreement is terminated and the transactions contemplated hereby are not consummated, Purchaser shall, and shall cause its Representatives to, promptly deliver to the Company or destroy (at Purchaser’s election) any and all copies (in whatever form or medium) of Company Confidential Information and destroy all notes, memoranda, summaries, analyses, compilations and other writings related thereto or based thereon; provided, that Purchaser and its Representatives shall be entitled to keep any records required by applicable Law or bona fide record retention policies; provided, further that any Company Confidential Information that is not returned or destroyed, including any oral Company Confidential Information, shall remain subject to the confidentiality obligations set forth in this Agreement. Notwithstanding the foregoing, Purchaser and its Representatives shall be permitted to disclose any and all Company Confidential Information to the extent required by the Federal Securities Laws.
7.14 Post-Closing Board of Directors and Executive Officers.
(a) The Parties shall take all necessary action, including causing the directors of the Pubco and Purchaser to resign, so that effective as of the Closing Pubco’s board of directors (the “Post-Closing Pubco Board”) will consist of such number of individuals as reasonably determined by the Company prior to the filing of the Registration Statement. Immediately after the Closing, the Parties shall take all necessary action to designate and appoint to the Post-Closing Pubco Board such qualified persons that are designated by the Company prior to the Closing (the “Company Directors”), and to the extent required by Nasdaq rules, at least a majority of such designees shall be required to qualify as independent directors under Nasdaq rules.
(b) The Parties shall take all action necessary, including causing the executive officers of Pubco to resign, so that the individuals serving as the chief executive officer and chief financial officer, respectively, of Pubco immediately after the Closing will be the same individuals (in the same office) as that of the Company immediately prior to the Closing (unless, at its sole discretion, the Company desires to appoint another qualified person to either such role, in which case, such other person identified by the Company shall serve in such role).
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7.15 Board Observers. Purchaser hereby agrees that during the Interim Period, the Company shall have the right to have up to two (2) individuals selected by the Company present at each meeting of the Purchaser’s board of directors, whether by physical presence or via conference call (at the election of the Company), as board observers (the “Company Board Observers”); provided, that prior to serving as a Company Board Observer, such individual must agree in writing to confidentiality restrictions in favor of Purchaser in form and substance reasonably acceptable to Purchaser. For the avoidance of doubt, the Company Board Observers will not have the right to vote at such meeting and shall not be counted for purposes of determining whether there is a quorum for such meeting. The Company Board Observers will be entitled to receive copies of any reports or other documents (including copies of any communications from existing or potential investors) distributed to Purchaser’s board of directors at the time such materials are given to Purchaser’s board of directors; and provided further, that Purchaser reserves the right to withhold any information and to exclude such Company Board Observer from any meeting or portion thereof if access to such information or attendance at such meeting could adversely affect the attorney-client privilege between Purchaser and its counsel or result in disclosure of a material trade secret or a conflict of interest, including without limitation, if the information provided is for, or the purpose of the meeting pertains to, a discussion regarding the Transactions.
7.16 Indemnification of Directors and Officers; Tail Insurance.
(a) The Parties agree that all rights to exculpation, indemnification and advancement of expenses existing in favor of the current or former directors and officers of Purchaser, the Company, Pubco or Merger Sub and each Person who served as a director, officer, member, trustee or fiduciary of another corporation, partnership, joint venture, trust, pension or other employee benefit plan or enterprise at the request of Purchaser, the Company, Pubco or Merger Sub (the “D&O Indemnified Persons”) as provided in their respective Organizational Documents or under any indemnification, employment or other similar agreements between any D&O Indemnified Person and Purchaser, the Company, Pubco or Merger Sub, in each case as in effect on the date of this Agreement, shall survive the Closing and continue in full force and effect in accordance with their respective terms to the extent permitted by applicable Law. For a period of six (6) years after the Effective Time, Pubco shall cause the Organizational Documents of Pubco, Purchaser and the Company to contain provisions no less favorable with respect to exculpation and indemnification of and advancement of expenses to D&O Indemnified Persons than are set forth as of the date of this Agreement in the Organizational Documents of Purchaser, the Company, Pubco and Merger Sub to the extent permitted by applicable Law. The provisions of this Section 7.16 shall survive the Closing and are intended to be for the benefit of, and shall be enforceable by, each of the D&O Indemnified Persons and their respective heirs and representatives.
(b) For the benefit of Purchaser’s directors and officers, Purchaser shall be permitted prior to the Effective Time to obtain and fully pay the premium for a “tail” insurance policy that provides coverage for up to a six-year period from and after the Effective Time for events occurring prior to the Effective Time (the “D&O Tail Insurance”) that is substantially equivalent to and in any event not less favorable in the aggregate than Purchaser’s existing policy or, if substantially equivalent insurance coverage is unavailable, the best available coverage. If obtained, Purchaser and Pubco shall maintain the D&O Tail Insurance in full force and effect, and continue to honor the obligations thereunder, and Purchaser and Pubco shall timely pay or cause to be paid all premiums with respect to the D&O Tail Insurance.
7.17 Use of Trust Account Proceeds. The Parties agree that after the Closing, the funds in the Trust Account, after taking into account payments for the Redemption, and any proceeds received by Pubco or Purchaser from any PIPE Investment and any other funds of Pubco or Purchaser shall first be used (i) to pay the Cash Consideration, if any, (ii) to pay Purchaser’s accrued Expenses, (iii) to pay Purchaser’s deferred Expenses (including cash amounts payable to EBC and any legal fees) of the IPO and (iv) to pay any loans owed by Purchaser to Sponsor for Expenses (including deferred Expenses), other administrative costs and expenses incurred by or on behalf of Purchaser, Extension Expenses and any premiums for the D&O Tail Insurance. Such amounts, as well as any Expenses that are required or permitted to be paid by delivery of Pubco Securities, will be paid at the Closing pursuant to written instructions delivered by Purchaser to the Trustee at the Closing (which amounts paid to or on behalf of the Company will be based on written instructions provided by the Company to Purchaser prior to the Closing). Any remaining cash will be paid to the Company (or as otherwise designated in writing by the Company to Purchaser prior to the Closing) pursuant to such written instructions and used for working capital and general corporate purposes.
7.18 Redemptions; PIPE Investment. During the Interim Period, each of Purchaser, Pubco and the Company will use their reasonable efforts to minimize the amount of funds in the Trust Account redeemed by Public Shareholders in the Redemption. Without limiting anything to the contrary contained herein, during the Interim Period, Purchaser may, but shall not be required to (and if requested by Purchaser, Pubco will), enter into and consummate subscription
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agreements with investors relating to a private equity investment in Purchaser or Pubco to purchase shares of Purchaser or Pubco (“PIPE Shares”) in connection with a private placement, and/or enter into backstop arrangements with potential investors, in either case on terms mutually agreeable to the Company, Purchaser and Pubco, acting reasonably (a “PIPE Investment”), and, if Purchaser elects to seek a PIPE Investment, Pubco, Purchaser and the Company shall, and shall cause their respective Representatives to, cooperate with each other and their respective Representatives in connection with such PIPE Investment and use their respective commercially reasonable efforts to cause such PIPE Investment to occur (including having the Company’s senior management participate in any investor meetings and roadshows as reasonably requested by Purchaser).
7.19 Nasdaq Ticker Symbol. Purchaser will use its reasonable efforts to promptly after the execution of this Agreement change the Nasdaq ticker symbol for the Purchaser Ordinary Shares to “BROG” (or such other Nasdaq ticker symbol as reasonably requested by the Company) (the “New Ticker Symbol”), subject to the approval by Nasdaq, and during the Interim Period shall use its reasonable efforts to maintain such New Ticker Symbol. The Parties will use their reasonable efforts to have the New Ticker Symbol assigned to Pubco at the Closing (or a promptly thereafter as possible), subject to Nasdaq approval.
7.20 Company Schedules. The Company shall deliver the fully completed Company Disclosure Schedules and Schedule 7.2 (together, the “Company Schedules”) to Purchaser on or prior to April 30, 2019 (or such later date prior to the Closing as mutually agreed by Purchaser and the Company). Purchaser shall have ten (10) Business Days to review the Company Schedules after its receipt thereof (the “Company Schedule Review Period”), and the Company shall, and shall cause its Representatives to, reasonably cooperate with Purchaser and its Representatives in their review of the Company Schedules, including providing any access and information as required by Section 7.1(a).
7.21 Joinder of Sellers. The Company shall deliver to Purchaser on or prior to April 30, 2019 (or such later date prior to the Closing as mutually agreed by Purchaser and the Company), a Joinder for each shareholder of the Company, duly executed by such shareholder, Pubco and the Company, as well as any Ancillary Documents required to be signed or delivered by a Seller at or prior to such time, including the Escrow Agreement (collectively, the “Joinder Documents”). Upon executing and delivering a Joinder to Purchaser and the Company, and the acceptance of such Joinder by the Company and Purchaser, the shareholder of the Company party thereto will be fully bound to the terms and conditions of this Agreement as a Seller hereunder and be deemed to be a Party to this Agreement, subject to the terms and conditions of this Agreement and the Joinder, and the Joinder will be deemed to be incorporated into and become a party of this Agreement, and any references to this Agreement herein, will include the Joinder. The Parties acknowledge and agree that the Joinder will, among other matters, contain customary representations and warranties (including its organization, authority, ownership of the Purchased Shares, non-contravention and investment representations) to be made by the Seller party thereto, as well as an agreement to promptly execute and deliver the Escrow Agreement and any other Ancillary Documents required to be executed and delivered by a Seller under this Agreement.
7.22 Amendment to Business Combination Marketing Agreement. Purchaser shall use all commercially reasonable efforts to cause EBC to enter into the Business Combination Marketing Agreement Fee Amendment.
Article VIII
CLOSING CONDITIONS
8.1 Conditions to Each Party’s Obligations. The obligations of each Party to consummate the Transactions shall be subject to the satisfaction or written waiver (where permissible) by the Company, the Purchaser and the Sellers (where applicable) of the following conditions:
(a) Required Shareholder Approval. The Purchaser Shareholder Approval Matters that are submitted to the vote of the shareholders of Purchaser at the Special Meeting in accordance with the Proxy Statement shall have been approved by the requisite vote of the shareholders of Purchaser at the Special Meeting in accordance with Purchaser’s Organizational Documents, applicable Law and the Proxy Statement (the “Required Shareholder Approval”).
(b) Company Approvals. The Company and its shareholders have obtained all necessary and requisite material Consents with respect to the consummation of the transactions contemplated by this Agreement, including obtaining such consents and approvals from the Company’s shareholders (which will occur upon the execution and delivery of the Joinder Documents), any Governmental Authorities and third parties, including ASMA Capital or its Affiliates or related parties and any other Consents that are set forth in Schedules 6.5 and 6.6.
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(c) Other Requisite Regulatory Approvals. All Consents required to be obtained from or made with any Governmental Authority with respect to Purchaser, Pubco or Merger Sub in order to consummate the transactions contemplated by this Agreement shall have been obtained or made.
(d) Antitrust Laws. Any waiting period (and any extension thereof) applicable to the consummation of this Agreement under any Antitrust Laws shall have expired or been terminated.
(e) No Law or Order. No Governmental Authority shall have enacted, issued, promulgated, enforced or entered any Law (whether temporary, preliminary or permanent) or Order that is then in effect and which has the effect of making the transactions or agreements contemplated by this Agreement illegal or which otherwise prevents or prohibits consummation of the transactions contemplated by this Agreement.
(f) No Litigation. There shall not be any pending Action brought by a third-party non-Affiliate to enjoin or otherwise restrict the consummation of the Closing.
(g) Net Tangible Assets Test. Upon the Closing, after giving effect to the Redemption and any PIPE Investment, Purchaser shall have net tangible assets of at least $5,000,001.
(h) Appointment to the Board. The members of the Post-Closing Pubco Board shall have been elected or appointed as of the Closing consistent with the requirements of Section 7.14.
(i) Registration Statement. The Registration Statement shall have been declared effective by the SEC and shall remain effective as of the Closing.
(j) Pubco Charter Amendment. At or prior to the Closing, the shareholders of Pubco shall have amended and restated the memorandum and articles of association of Pubco in form and substance reasonably acceptable to Pubco, the Company and Purchaser (the “Amended Pubco Charter”).
(k) Foreign Private Issuer Status. Each of the Company and Purchaser shall have received evidence reasonably satisfactory to such Party that Pubco qualifies as a foreign private issuer pursuant to Rule 3b-4 of the Exchange Act as of the Closing and Pubco has not received any written objection to such determination.
8.2 Conditions to Obligations of the Company, Pubco, Merger Sub and the Sellers. In addition to the conditions specified in Section 8.1, the obligations of the Company, Pubco, Merger Sub and the Sellers to consummate the Transactions are subject to the satisfaction or written waiver (by the Company) of the following conditions:
(a) Representations and Warranties. All of the representations and warranties of Purchaser set forth in this Agreement and in any certificate delivered by Purchaser pursuant hereto shall be true and correct on and as of the date of this Agreement and on and as of the Closing Date as if made on the Closing Date, except for (i) those representations and warranties that address matters only as of a particular date (which representations and warranties shall have been accurate as of such date), and (ii) any failures to be true and correct that (without giving effect to any qualifications or limitations as to materiality or Material Adverse Effect), individually or in the aggregate, have not had and would not reasonably be expected to have a Material Adverse Effect on, or with respect to, Purchaser.
(b) Agreements and Covenants. Purchaser shall have performed in all material respects all of its obligations and complied in all material respects with all of its agreements and covenants under this Agreement to be performed or complied with by it on or prior to the Closing Date.
(c) No Material Adverse Effect. No Material Adverse Effect shall have occurred with respect to Purchaser since the date of this Agreement which is continuing and uncured.
(d) Minimum Cash Condition. As of the Closing, the Closing Net Cash shall be at least One Hundred and Twenty-Five Million U.S. Dollars ($125,000,000).
(e) Closing Deliveries.
(i) Officer Certificate. Purchaser shall have delivered to the Company and Pubco a certificate, dated the Closing Date, signed by an executive officer of Purchaser in such capacity, certifying as to the satisfaction of the conditions specified in Sections 8.2(a), 8.2(b) and 8.2(c) with respect to Purchaser.
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(ii) Secretary Certificate. Purchaser shall have delivered to the Company and Pubco a certificate from its secretary or other executive officer certifying as to, and attaching, (A) copies of Purchaser’s Organizational Documents as in effect as of the Closing Date (immediately prior to the Effective Time), (B) the resolutions of Purchaser’s board of directors authorizing and approving the execution, delivery and performance of this Agreement and each of the Ancillary Documents to which it is a party or by which it is bound, and the consummation of the transactions contemplated hereby and thereby, (C) evidence that the Required Shareholder Approval has been obtained and (D) the incumbency of officers authorized to execute this Agreement or any Ancillary Document to which Purchaser is or is required to be a party or otherwise bound.
(iii) Good Standing. Purchaser shall have delivered to the Company and Pubco a good standing certificate (or similar documents applicable for such jurisdictions) for Purchaser certified as of a date no later than sixty (60) days prior to the Closing Date from the proper Governmental Authority of Purchaser’s jurisdiction of organization and from each other jurisdiction in which Purchaser is qualified to do business as a foreign entity as of the Closing, in each case to the extent that good standing certificates or similar documents are generally available in such jurisdictions.
(iv) Escrow Agreement. The Company and Pubco shall have received a copy of the Escrow Agreement, duly executed by the Escrow Agent.
(v) Registration Rights Agreement. The Company and Pubco shall have received a copy of a Registration Rights Agreement, providing customary registration rights to the Sellers with respect to the Closing Exchange Shares and any Escrow Shares that become vested and are released to the Sellers in accordance with Section 2.5 and the Escrow Agreement, in form and substance reasonably acceptable to Purchaser and the Company (the “Registration Rights Agreement”), duly executed by Pubco.
(vi) Founder Registration Rights Agreement Amendment. The Company and Pubco shall have received a copy of an Amendment to the Founder Registration Rights Agreement to, among other matters, have Pubco assume the registration obligations of Purchaser under the Founder Registration Rights Agreement and have such rights apply to the Pubco Securities, in form and substance reasonably acceptable to Purchaser and the Company (the “Founder Registration Rights Agreement Amendment”), duly executed by Purchaser, EBC and the holders of a majority of the “Registrable Securities” thereunder.
(vii) Founder Share Escrow Agreement Amendment. The Company and Pubco shall have received a copy of an Amendment to the Founder Share Escrow Agreement to, among other matters, have the Pubco Securities issued in exchange for the Founder Shares be subject to the Founder Share Escrow Agreement and to accommodate the provisions of the Founder Share Letter, in form and substance reasonably acceptable to Purchaser and the Company (the “Founder Share Escrow Agreement Amendment”), duly executed by Purchaser, Continental Stock Transfer & Trust Company and the Initial Purchaser Shareholders.
(viii) Business Combination Marketing Agreement Fee Amendment. The Company and Pubco shall have received a copy of an amendment to the Business Combination Marketing Agreement to reduce the fee payable to EBC thereunder by an amount as mutually reasonably determined by the Company and Purchaser (the “Business Combination Marketing Agreement Fee Amendment”), duly executed by EBC and Purchaser.
(ix) Director Resignations. The Company shall have received written resignations, effective as of the Closing, of each of the directors and officers of Purchaser (other than as requested by the Company prior to the Closing).
(x) Voting Agreement. The Company and Pubco shall have received a copy of a voting agreement in favor of Pubco by the Initial Purchaser Shareholders with respect to the Founder Shares, in form and substance reasonably acceptable to Purchaser and the Company (the “Voting Agreement”), duly executed by the Initial Purchaser Shareholders.
8.3 Conditions to Obligations of Purchaser. In addition to the conditions specified in Section 8.1, the obligations of Purchaser to consummate the Transactions are subject to the satisfaction or written waiver (by Purchaser) of the following conditions:
(a) Representations and Warranties. All of the representations and warranties of the Company, Pubco, Merger Sub and the Sellers set forth in this Agreement, the Joinders and in any certificate delivered by or behalf of
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the Company, Pubco, Merger Sub or any Seller pursuant hereto shall be true and correct on and as of the date of this Agreement (or with respect to a Seller, as of the date of the Joinder) and on and as of the Closing Date as if made on the Closing Date, except for (i) those representations and warranties that address matters only as of a particular date (which representations and warranties shall have been accurate as of such date), and (ii) any failures to be true and correct that (without giving effect to any qualifications or limitations as to materiality or Material Adverse Effect), individually or in the aggregate, have not had and would not reasonably be expected to have a Material Adverse Effect on, or with respect to, the Company, Pubco or any Seller.
(b) Agreements and Covenants. Each of the Company, Pubco, Merger Sub and each Seller shall have performed in all material respects all of its obligations and complied in all material respects with all of its agreements and covenants under this Agreement and, with respect to a Seller, the Joinder, to be performed or complied with by it on or prior to the Closing Date.
(c) No Material Adverse Effect. No Material Adverse Effect shall have occurred with respect to the Company or Pubco since the date of this Agreement which is continuing and uncured.
(d) Closing Deliveries.
(i) Officer Certificate. Purchaser shall have received a certificate from the Company, dated as the Closing Date, signed by an executive officer of the Company in such capacity, certifying as to the satisfaction of the conditions specified in Sections 8.3(a), 8.3(b) and 8.3(c). Pubco shall have delivered to Purchaser a certificate, dated the Closing Date, signed by an executive officer of Pubco in such capacity, certifying as to the satisfaction of the conditions specified in Sections 8.3(a), 8.3(b) and 8.3(c) with respect to Pubco and Merger Sub, as applicable.
(ii) Seller Certificate. Purchaser shall have received a certificate from each Seller, dated as the Closing Date, signed by such Seller, certifying as to the satisfaction of the conditions specified in Sections 8.3(a) and 8.3(b) with respect to such Seller.
(iii) Secretary Certificates. The Company shall have delivered to Purchaser a certificate from its secretary certifying as to the validity and effectiveness of, and attaching, (A) copies of its Organizational Documents as in effect as of the Closing Date, (B) the resolutions of its board of directors and shareholders authorizing and approving the execution, delivery and performance of this Agreement and each Ancillary Document to which it is a party or bound, and the consummation of the Merger, the Share Exchange and the other transactions contemplated hereby and thereby, and (C) the incumbency of its officers authorized to execute this Agreement or any Ancillary Document to which it is or is required to be a party or otherwise bound. Pubco shall have delivered to Purchaser a certificate from its secretary or other executive officer certifying as to, and attaching, (A) copies of Pubco’s Organizational Documents as in effect as of the Closing Date, (B) the resolutions of Pubco’s board of directors and shareholders authorizing and approving the execution, delivery and performance of this Agreement and each of the Ancillary Documents to which it is a party or by which it is bound, and the consummation of the transactions contemplated hereby and thereby, and (C) the incumbency of officers authorized to execute this Agreement or any Ancillary Document to which Pubco is or is required to be a party or otherwise bound.
(iv) Good Standing. The Company shall have delivered to Purchaser good standing certificates (or similar documents applicable for such jurisdictions) for the Company certified as of a date no later than sixty (60) days prior to the Closing Date from the proper Governmental Authority of the Company’s jurisdiction of organization and from each other jurisdiction in which the Company is qualified to do business as a foreign corporation or other entity as of the Closing, in each case to the extent that good standing certificates or similar documents are generally available in such jurisdictions. Pubco shall have delivered to Purchaser good standing certificates (or similar documents applicable for such jurisdictions) for each of Pubco and Merger Sub certified as of a date no later than sixty (60) days prior to the Closing Date from the proper Governmental Authority of Pubco’s and Merger Sub’s jurisdiction of organization and from each other jurisdiction in which Pubco or Merger Sub is qualified to do business as a foreign corporation or other entity as of the Closing, in each case to the extent that good standing certificates or similar documents are generally available in such jurisdictions.
(v) Employment Agreements. Purchaser shall have received employment agreements, in each case effective as of the Closing, in form and substance reasonably acceptable to the Company and Purchaser, between (A) such individuals as mutually agreed by the Company and Purchaser acting reasonably and (B) either Pubco or the
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Company, as mutually agreed by the Company and Purchaser acting reasonably, each such employment agreement duly executed by the parties thereto.
(vi) Escrow Agreement. Purchaser shall have received a copy of the Escrow Agreement, duly executed by Pubco, the Sellers and the Escrow Agent.
(vii) Registration Rights Agreement. Purchaser shall have received a copy of the Registration Rights Agreement, duly executed by Pubco and each Seller.
(viii) Founder Registration Rights Agreement Amendment. Purchaser shall have received a copy of the Founder Registration Rights Agreement Amendment, duly executed by Pubco.
(ix) Founder Share Escrow Agreement Amendment. Purchaser shall have received a copy of the Founder Share Escrow Agreement Amendment, duly executed by Pubco and Continental Stock Transfer & Trust Company.
(x) Share Certificates and Transfer Instruments. Purchaser shall have received copies of each Seller Company Certificates and other instruments or documents representing the Purchased Shares (or Lost Certificate Affidavits), if applicable, together with executed instruments of transfer in respect of the Purchased Shares in favor of Pubco (or its nominee) and in form reasonably acceptable for transfer on the books of the Company.
(xi) Termination of Company Convertible Securities. Purchaser shall have received evidence reasonably acceptable to Purchaser that any issued and outstanding Company Convertible Securities have been terminated, without any consideration, payment or Liability therefor.
(xii) Termination of Certain Contracts. Purchaser shall have received evidence reasonably acceptable to Purchaser that the Contracts that are mutually agreed by Purchaser and the Company (acting reasonably) involving the Company and/or any of Sellers or other Related Persons shall have been terminated with no further obligation or Liability of the Company thereunder;
(xiii) Joinder Documents. Purchaser shall have received all Joinder Documents.
(xiv) Company Schedules. Purchaser shall have received the Company Schedules and the Company Schedule Review Period shall have expired.
(xv) Voting Agreement. Purchaser shall have received a copy of the Voting Agreement, duly executed by Pubco.
8.4 Frustration of Conditions. Notwithstanding anything contained herein to the contrary, no Party may rely on the failure of any condition set forth in this Article VIII to be satisfied if such failure was caused by the failure of such Party or its Affiliates (or with respect to the Company, any Seller, Pubco or Merger Sub) to comply with or perform any of its covenants or obligations set forth in this Agreement.
Article IX
TERMINATION AND EXPENSES
9.1 Termination. This Agreement may be terminated and the transactions contemplated hereby may be abandoned at any time prior to the Closing as follows:
(a) by mutual written consent of Purchaser and the Company;
(b) by written notice by Purchaser or the Company if any of the conditions to the Closing set forth in Article VIII have not been satisfied or waived by August 31, 2019 (the “Outside Date”); provided, however, that the right to terminate this Agreement under this Section 9.1(b) shall not be available to a Party if the breach or violation by such Party or its Affiliates (or with respect to the Company, the Sellers, Pubco or Merger Sub) of any representation, warranty, covenant or obligation under this Agreement was the cause of, or resulted in, the failure of the Closing to occur on or before the Outside Date;
(c) by written notice by either Purchaser or the Company if a Governmental Authority of competent jurisdiction shall have issued an Order or taken any other action permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by this Agreement, and such Order or other action has become final and
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non-appealable; provided, however, that the right to terminate this Agreement pursuant to this Section 9.1(c) shall not be available to a Party if the failure by such Party or its Affiliates (or with respect to the Company, the Sellers, Pubco or Merger Sub) to comply with any provision of this Agreement has been a substantial cause of, or substantially resulted in, such action by such Governmental Authority;
(d) by written notice by the Company to Purchaser, if (i) there has been a material breach by Purchaser, of any of its representations, warranties, covenants or agreements contained in this Agreement, or if any representation or warranty of Purchaser shall have become materially untrue or materially inaccurate, in any case, which would result in a failure of a condition set forth in Section 8.2(a) or Section 8.2(b) to be satisfied (treating the Closing Date for such purposes as the date of this Agreement or, if later, the date of such breach), and (ii) the breach or inaccuracy is incapable of being cured or is not cured within twenty (20) days after written notice of such breach or inaccuracy is provided to Purchaser by the Company or Pubco; provided, that neither the Company nor Pubco shall have the right to terminate this Agreement pursuant to this Section 9.1(d) if at such time the Company, Pubco, Merger Sub or any Seller is in material uncured breach of this Agreement (or with respect to a Seller, a Joinder);
(e) by written notice by Purchaser to the Company, if (i) there has been a breach by the Company, Pubco, Merger Sub or any Seller of any of their respective representations, warranties, covenants or agreements contained in this Agreement or the Joinders, or if any representation or warranty of such Parties shall have become untrue or inaccurate, in any case, which would result in a failure of a condition set forth in Section 8.3(a) or Section 8.3(b) to be satisfied (treating the Closing Date for such purposes as the date of this Agreement or, if later, the date of such breach), and (ii) the breach or inaccuracy is incapable of being cured or is not cured within twenty (20) days after written notice of such breach or inaccuracy is provided to the Company and Pubco by Purchaser; provided, that Purchaser shall not have the right to terminate this Agreement pursuant to this Section 9.1(e) if at such time Purchaser is in material uncured breach of this Agreement;
(f) by written notice by Purchaser to the Company, if there shall have been a Material Adverse Effect with respect to the Company following the date of this Agreement which is uncured and continuing;
(g) by written notice by the Company to Purchaser, if there shall have been a Material Adverse Effect with respect to Purchaser following the date of this Agreement which is uncured and continuing;
(h) by written notice by either Purchaser or the Company to the other if the Special Meeting is held (including any adjournment or postponement thereof) and has concluded, Purchaser’s shareholders have duly voted, and the Required Shareholder Approval was not obtained;
(i) by written notice by Purchaser to the Company if the Company has failed to deliver all Joinder Documents to Purchaser on or prior to April 30, 2019 (or such later date prior to the Closing as mutually agreed by Purchaser and the Company), but only until all Joinder Documents have been delivered to Purchaser;
(j) by written notice by Purchaser to the Company (i) if the Company has failed to deliver the Company Schedules to Purchaser on or prior to April 30, 2019 (or such later date prior to the Closing as mutually agreed by Purchaser and the Company), but only until the Company Schedules have been delivered to Purchaser, or, (ii) for a period of ten (10) Business Days after the end of the Company Schedule Review Period, if the Company has delivered the Company Schedules to Purchaser, but such Company Schedules are not reasonably acceptable to Purchaser; or
(k) by written notice by Purchaser to the Company if the Company has failed to deliver to Purchaser on or prior to April 30, 2019 (or such later date prior to the Closing as mutually agreed by Purchaser and the Company) the Escrow Agreement, in form and substance reasonably acceptable to Purchaser and duly executed by the Company, Pubco and each Seller, but only until such Escrow Agreement, in form and substance reasonably acceptable to Purchaser and duly executed by the Company, Pubco and each Seller, has been delivered to Purchaser.
9.2 Effect of Termination. This Agreement may only be terminated in the circumstances described in Section 9.1 and pursuant to a written notice delivered by the applicable Party to the other applicable Parties, which sets forth the basis for such termination, including the provision of Section 9.1 under which such termination is made. In the event of the valid termination of this Agreement pursuant to Section 9.1, this Agreement shall forthwith become void, and there shall be no Liability on the part of any Party or any of their respective Representatives, and all rights and obligations of each Party shall cease, except: (i) Sections 7.12, 7.13, 9.3, 10.1, Article XI and this Section 9.2 shall survive the termination of this Agreement, and (ii) nothing herein shall relieve any Party from Liability for any willful breach of any representation, warranty, covenant or obligation under this Agreement or any fraud claim against such Party, in
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either case, prior to termination of this Agreement (in each case of clauses (i) and (ii) above, subject to Section 10.1). Without limiting the foregoing, and except as provided in Sections 9.3 and this Section 9.2 (but subject to Section 10.1, and subject to the right to seek injunctions, specific performance or other equitable relief in accordance with Section 11.8), the Parties’ sole right prior to the Closing with respect to any breach of any representation, warranty, covenant or other agreement contained in this Agreement by another Party or with respect to the transactions contemplated by this Agreement shall be the right, if applicable, to terminate this Agreement pursuant to Section 9.1.
9.3 Fees and Expenses. Subject to Sections 9.4 and 10.1, all Expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the Party incurring such expenses. As used in this Agreement, “Expenses” shall include all out-of-pocket expenses (including all fees and expenses of counsel, accountants, investment bankers, financial advisors, financing sources, experts and consultants to a Party hereto or any of its Affiliates) incurred by a Party or on its behalf in connection with or related to the authorization, preparation, negotiation, execution or performance of this Agreement or any Ancillary Document related hereto and all other matters related to the consummation of this Agreement. With respect to Purchaser, Expenses shall include any and all deferred expenses (including fees or commissions payable to the underwriters and any legal fees) of the IPO upon consummation of a Business Combination, any Extension Expenses, as well as any costs and expenses incurred in connection with any PIPE Investment.
9.4 Termination Fee.
(a) Notwithstanding Section 9.3 above, but subject to Section 10.1, in the event that (i) this Agreement is terminated by either Purchaser or the Company under Section 9.1(b) and the failure of the Closing to occur on or before the Outside Date was not caused by, or a result of, the breach or violation of the Company, the Sellers, Pubco or Merger Sub of any representation, warranty, covenant or obligation under this Agreement, or (ii) there is a valid and effective termination of this Agreement by the Company pursuant to Section 9.1(d), then Purchaser shall pay to the Company a termination fee in cash in an aggregate amount equal to the legal and advisory fee Expenses incurred by the Company prior to such termination, up to a maximum of Two Hundred Fifty Thousand Dollars ($250,000) (the “Termination Fee”). The Termination Fee shall be paid by Purchaser to the Company (but for the avoidance of doubt, subject to Section 10.1) by wire transfer of immediately available funds to an account designated in writing by the Company within twenty (20) Business Days after the date of the valid and effective termination of this Agreement by the Company where such payment is required pursuant to clauses (i) or (ii) of this Section 9.4(a) or, if later, three (3) Business Days after the Company shall have delivered to Purchaser the amount of such Expenses for the Termination Fee, along with reasonable documentation in connection therewith.
(b) Notwithstanding anything to the contrary in this Agreement, the Parties expressly acknowledge and agree that, with respect to any termination of this Agreement in circumstances where a Termination Fee is payable under this Section 9.4, the payment of the Termination Fee shall, in light of the difficulty of accurately determining actual damages, constitute liquidated damages with respect to any claim for damages or any other claim which the Company would otherwise be entitled to assert against Purchaser or its Affiliates or any of their respective assets, or against any of their respective directors, officers, employees or shareholders with respect to this Agreement and the transactions contemplated hereby and shall constitute the sole and exclusive remedy available to the Company, provided, that the foregoing shall not limit (x) any claim for fraud prior to termination of this Agreement or (y) the rights of the Company to seek specific performance or other injunctive relief in lieu of terminating this Agreement.
Article X
WAIVERS AND RELEASES
10.1 Waiver of Claims Against Trust. Reference is made to the IPO Prospectus. The Company, Pubco, Merger Sub and each Seller hereby acknowledges that it has read the IPO Prospectus and understands that Purchaser has established the Trust Account containing the proceeds of the IPO and the overallotment shares acquired by Purchaser’s underwriters and from certain private placements occurring simultaneously with the IPO (including interest accrued from time to time thereon) for the benefit of Purchaser’s public shareholders (including overallotment shares acquired by Purchaser’s underwriters) (including any successors after the Merger, the “Public Shareholders”) and that, except as otherwise described in the IPO Prospectus, Purchaser may disburse monies from the Trust Account only: (a) to the Public Shareholders in the event they elect to redeem their Purchaser Ordinary Shares (or Pubco Ordinary Shares upon the Merger) in connection with the consummation of its initial business combination (as such term is used in the IPO Prospectus) (“Business Combination”) or in connection with an amendment to Purchaser’s Organizational documents
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to extend Purchaser’s deadline to consummate a Business Combination, (b) to the Public Shareholders if Purchaser fails to consummate a Business Combination within eighteen (18) months after the closing of the IPO, (c) with respect to any interest earned on the amounts held in the Trust Account, as necessary to pay any taxes, and (d) to Purchaser after or concurrently with the consummation of a Business Combination. For and in consideration of Purchaser entering into this Agreement and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company, Pubco, Merger Sub and each Seller hereby agrees on behalf of itself and its Affiliates that, notwithstanding anything to the contrary in this Agreement, none of the Company, Pubco, Merger Sub, or any Seller nor any of their respective Affiliates do now or shall at any time hereafter have any right, title, interest or claim of any kind in or to any monies in the Trust Account or distributions therefrom, or make any claim against the Trust Account (including any distributions therefrom), regardless of whether such claim arises as a result of, in connection with or relating in any way to, this Agreement or any proposed or actual business relationship between Purchaser or any of its Representatives, on the one hand, and the Company, Pubco, Merger Sub, or any Seller or their respective Representatives, on the other hand, or any other matter, and regardless of whether such claim arises based on contract, tort, equity or any other theory of legal liability (collectively, the “Released Claims”). The Company, Pubco, Merger Sub and each Seller on behalf of itself and its Affiliates hereby irrevocably waives any Released Claims that any such Party or any of its Affiliates may have against the Trust Account (including any distributions therefrom) now or in the future as a result of, or arising out of, any negotiations, contracts or agreements with Purchaser or its Representatives and will not seek recourse against the Trust Account (including any distributions therefrom) for any reason whatsoever (including for an alleged breach of this Agreement or any other agreement with Purchaser or its Affiliates). The Company, Pubco, Merger Sub and each Seller each agrees and acknowledges that such irrevocable waiver is material to this Agreement and specifically relied upon by Purchaser and its Affiliates to induce Purchaser to enter in this Agreement, and the Company, Pubco, Merger Sub and each Seller each further intends and understands such waiver to be valid, binding and enforceable against such Party and each of its Affiliates under applicable Law. To the extent the Company, Pubco, Merger Sub or any Seller or any of their respective Affiliates commences any action or proceeding based upon, in connection with, relating to or arising out of any matter relating to Purchaser or its Representatives, which proceeding seeks, in whole or in part, monetary relief against Purchaser or its Representatives, the Company, Pubco, Merger Sub and the Sellers each hereby acknowledge and agree that such Party’s and its Affiliates’ sole remedy shall be against funds held outside of the Trust Account and that such claim shall not permit such Party or any of its Affiliates (or any Person claiming on any of their behalves or in lieu of them) to have any claim against the Trust Account (including any distributions therefrom) or any amounts contained therein. In the event that the Company, Pubco, Merger Sub or any Seller commences Action based upon, in connection with, relating to or arising out of any matter relating to Purchaser or its Representatives which proceeding seeks, in whole or in part, relief against the Trust Account (including any distributions therefrom) or the Public Shareholders, whether in the form of money damages or injunctive relief, Purchaser and its Representatives, as applicable, shall be entitled to recover from the Company, Pubco, Merger Sub and the Sellers and their respective Affiliates, as applicable, the associated legal fees and costs in connection with any such Action, in the event Purchaser or its Representatives, as applicable, prevails in such Action. This Section 10.1 shall survive termination of this Agreement for any reason.
10.2 Non-Recourse and Release.
(a) All claims or Actions (whether in contract or in tort, in law or in equity) that may be based upon, arise out of or relate to this Agreement or the other Ancillary Documents, or the negotiation, execution or performance of this Agreement or the other Ancillary Documents (including any representation or warranty made in or in connection with this Agreement or the other Ancillary Documents or as an inducement to enter into this Agreement or the other Ancillary Documents), may be made only against (i) the Company, (ii) Purchaser, (iii) Pubco, (iv) Merger Sub and (v) the Sellers, in their individual capacities (the “Liable Parties”). No Person, other than the Liable Parties, including any past, present or future Affiliate of any Seller or any of their Affiliates’ respective past, present or future directors, officers, employees, incorporators, members, managers, partners, equityholders (including stockholders and optionholders), Affiliates, agents, attorneys or representatives (“Non-Party Affiliates”), shall have any liability (whether in contract or in tort, in law or in equity, or based upon any theory that seeks to impose liability of an entity party against its owners or affiliates) for any obligations or liabilities arising under, in connection with or related to this Agreement or such other Ancillary Document (as the case may be) or for any claim based on, in respect of, or by reason of this Agreement or such other Ancillary Document (as the case may be) or the negotiation or execution hereof or thereof; and each Party hereto waives and releases all such liabilities, claims and obligations against any such Non-Party Affiliates.
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(b) Notwithstanding anything to the contrary herein, the Liable Parties acknowledge and agree that, from and after the Closing, any and all claims, Actions that they may have against the other Parties or any Non-Party Affiliates relating to the negotiation or subject matter of this Agreement or any disclosure schedule or the transactions contemplated hereby, whether in contract or in tort, in Law or in equity, or based upon any theory that seeks to impose liability of an entity party against its owners or Affiliates, are hereby irrevocably waived and released. Furthermore, without limiting the generality of the preceding sentence, no claim (whether in contract or in tort, in Law or in equity, or based upon any theory that seeks to impose liability of an entity party against its owners or Affiliates) or Action shall be brought or maintained by, or on behalf of, the Liable Parties against any Seller, other Party or any Non-Party Affiliate, and no recourse shall be sought or granted against any of them, by virtue of, or based upon, any alleged misrepresentation or inaccuracy in, or breach of, any of the representations, or warranties, or covenants or agreements (to the extent such covenants or agreements contemplate performance prior to the Closing) of the Sellers or any other Person set forth or contained in this Agreement, any certificate, instrument, opinion, agreement or other document delivered hereunder, the negotiation or subject matter of this Agreement or the disclosure schedules or the transactions contemplated hereby or thereby; and each Liable Party waives and releases all such liabilities, claims and obligations against any such Seller, Party or Non-Party Affiliate. Notwithstanding the foregoing, nothing herein will relinquish the rights of a Party after the Closing to enforce the terms of this Agreement that apply after the Closing in accordance with the terms hereof.
(c) Effective as of the Closing, to the fullest extent permitted by applicable Law, each Seller, on behalf of itself and its Affiliates that owns any share or other equity interest in or of such Seller (the “Releasing Persons”), hereby releases and discharges the Company from and against any and all Actions, obligations, agreements, debts and Liabilities whatsoever, whether known or unknown, both at law and in equity, which such Releasing Person now has, has ever had or may hereafter have against Company relating to such Seller’s capacity as a shareholder of the Company and arising on or prior to the Closing Date or on account of or arising out of any matter occurring on or prior to the Closing Date, including any rights to indemnification or reimbursement from the Company, whether pursuant to its Organizational Documents, Contract or otherwise, and whether or not relating to claims pending on, or asserted after, the Closing Date. From and after the Closing, each Releasing Person hereby irrevocably covenants to refrain from, directly or indirectly, asserting any Action, or commencing or causing to be commenced, any Action of any kind against the Company or its Affiliates, based upon any matter purported to be released hereby. Notwithstanding anything herein to the contrary, the releases and restrictions set forth herein shall not apply to any claims a Releasing Person may have against any party pursuant to the terms and conditions of this Agreement or any Ancillary Document, subject to the provisions of this Section 10.2.
(d) The Parties acknowledge and agree that the provisions contained in this Section 10.2 are an integral part of the transactions contemplated by this Agreement and that, without these provisions set forth in this Section 10.2, the Parties would not enter into this Agreement or otherwise agree to consummate the transactions contemplated hereby.
Article XI
MISCELLANEOUS
11.1 Survival. The representations and warranties of the Parties contained in this Agreement or in any certificate or instrument delivered by or on behalf of the Parties pursuant to this Agreement shall not survive the Closing, and from and after the Closing, the Parties and their respective Representatives shall not have any further obligations, nor shall any claim be asserted or action be brought against any of the Parties or their respective Representatives with respect thereto. The covenants and agreements made by the Parties in this Agreement or in any certificate or instrument delivered pursuant to this Agreement, including any rights arising out of any breach of such covenants or agreements, shall not survive the Closing, except for those covenants and agreements contained herein and therein that by their terms apply or are to be performed in whole or in part after the Closing (which such covenants shall survive the Closing and continue until fully performed in accordance with their terms).
11.2 Notices. All notices, consents, waivers and other communications hereunder shall be in writing and shall be deemed to have been duly given when delivered (i) in person, (ii) by facsimile or other electronic means, with affirmative confirmation of receipt, (iii) one Business Day after being sent, if sent by reputable, nationally recognized
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overnight courier service or (iv) three (3) Business Days after being mailed, if sent by registered or certified mail, pre-paid and return receipt requested, in each case to the applicable Party at the following addresses (or at such other address for a Party as shall be specified by like notice):
If to Purchaser, at or prior to the Closing, to: |
with a copy (which will not constitute notice) to: |
|
Twelve Seas Investment Company
|
Ellenoff Grossman & Schole LLP
|
|
If to the Company prior to the Closing, to: |
with a copy (which will not constitute notice) to: |
|
Brooge Petroleum And Gas Investment Company FZE
|
K&L Gates LLP
|
If to Pubco or Merger Sub prior to the Closing, to: |
with a copy (which will not constitute notice) to: |
|
Brooge Holdings Limited
|
K&L Gates LLP
|
If to any Seller, to: |
with a copy (which will not constitute notice) to: |
|
the address of such Seller as set forth in such Seller’s Joinder |
K&L Gates LLP
|
|
If to Pubco, Purchaser or the Company after the Closing, to: |
with a copy (which will not constitute notice) to: |
|
c/o Brooge Petroleum And Gas Investment Company FZE
|
K&L Gates LLP
|
11.3 Binding Effect; Assignment. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the Parties hereto and their respective successors and permitted assigns. This Agreement shall not be assigned by operation of Law or otherwise without the prior written consent of Purchaser, Pubco, the Company and the
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Sellers (and, after the Closing, a Disinterested Independent Director Majority), and any assignment without such consent shall be null and void; provided that no such assignment shall relieve the assigning Party of its obligations hereunder.
11.4 Third Parties. Except for the rights of the D&O Indemnified Persons set forth in Section 7.15, which the Parties acknowledge and agree are express third party beneficiaries of this Agreement, nothing contained in this Agreement or in any instrument or document executed by any party in connection with the transactions contemplated hereby shall create any rights in, or be deemed to have been executed for the benefit of, any Person that is not a Party hereto or thereto or a successor or permitted assign of such a Party.
11.5 Arbitration. Any and all disputes, controversies and claims (other than applications for a temporary restraining order, preliminary injunction, permanent injunction or other equitable relief or application for enforcement of a resolution under this Section 11.5) arising out of, related to, or in connection with this Agreement or the transactions contemplated hereby (a “Dispute”) shall be governed by this Section 11.5. A Party must, in the first instance, provide written notice of any Disputes to the other Parties subject to such Dispute, which notice must provide a reasonably detailed description of the matters subject to the Dispute. The Parties involved in such Dispute shall seek to resolve the Dispute on an amicable basis within ten (10) Business Days of the notice of such Dispute being received by such other Parties subject to such Dispute (the “Resolution Period”); provided, that if any Dispute would reasonably be expected to have become moot or otherwise irrelevant if not decided within sixty (60) days after the occurrence of such Dispute, then there shall be no Resolution Period with respect to such Dispute. Any Dispute that is not resolved during the Resolution Period may immediately be referred to and finally resolved by arbitration pursuant to the then-existing rules and procedures (including any expedited procedures) of the ICC (the “ICC Procedures”). Any Party involved in such Dispute may submit the Dispute to the ICC to commence the proceedings after the Resolution Period. To the extent that the ICC Procedures and this Agreement are in conflict, the terms of this Agreement shall control. The arbitration shall be conducted by one arbitrator nominated by the ICC promptly (but in any event within five (5) Business Days) after the submission of the Dispute to the ICC and reasonably acceptable to each Party subject to the Dispute, which arbitrator shall be a commercial lawyer with substantial experience arbitrating disputes under acquisition agreements. The arbitrator shall accept his or her appointment and begin the arbitration process promptly (but in any event within five (5) Business Days) after his or her nomination and acceptance by the Parties subject to the Dispute. The proceedings shall be streamlined and efficient. The arbitrator shall decide the Dispute in accordance with the substantive law of the state of New York. Time is of the essence. Each Party subject to the Dispute shall submit a proposal for resolution of the Dispute to the arbitrator within twenty (20) days after confirmation of the appointment of the arbitrator. The arbitrator shall have the power to order any Party subject to the Dispute to do, or to refrain from doing, anything consistent with this Agreement, the Ancillary Documents and applicable Law, including to perform its contractual obligation(s) and providing injunctive and other equitable relief; provided, that the arbitrator shall be limited to ordering pursuant to the foregoing power (and, for the avoidance of doubt, shall order) the relevant Party (or Parties, as applicable) to comply with only one or the other of the proposals. The arbitrator’s award shall be in writing and shall include a reasonable explanation of the arbitrator’s reason(s) for selecting one or the other proposal. The seat of arbitration shall be in London, United Kingdom. The language of the arbitration shall be English.
11.6 Governing Law. This Agreement shall be governed by, construed and enforced in accordance with the Laws of the State of New York without regard to the conflict of laws principles thereof.
11.7 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY ACTION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF ANY ACTION, SEEK TO ENFORCE THAT FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 11.7.
11.8 Specific Performance. Each Party acknowledges that the rights of each Party to consummate the transactions contemplated hereby are unique, recognizes and affirms that in the event of a breach of this Agreement by any Party, money damages may be inadequate and the non-breaching Parties may have not adequate remedy at law, and agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed by an applicable Party in accordance with their specific terms or were otherwise breached. Accordingly, each Party shall be entitled to seek an injunction or restraining order to prevent breaches of this Agreement and to seek to enforce
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specifically the terms and provisions hereof, without the requirement to post any bond or other security or to prove that money damages would be inadequate, this being in addition to any other right or remedy to which such Party may be entitled under this Agreement, at law or in equity.
11.9 Severability. In case any provision in this Agreement shall be held invalid, illegal or unenforceable in a jurisdiction, such provision shall be modified or deleted, as to the jurisdiction involved, only to the extent necessary to render the same valid, legal and enforceable, and the validity, legality and enforceability of the remaining provisions hereof shall not in any way be affected or impaired thereby nor shall the validity, legality or enforceability of such provision be affected thereby in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties will substitute for any invalid, illegal or unenforceable provision a suitable and equitable provision that carries out, so far as may be valid, legal and enforceable, the intent and purpose of such invalid, illegal or unenforceable provision.
11.10 Amendment. This Agreement may be amended, supplemented or modified only by execution of a written instrument signed by Purchaser, Pubco, the Company and the Sellers; provided that any amendment, supplement or modification of this Agreement after the Closing shall also require the prior written consent of a Disinterested Independent Director Majority.
11.11 Waiver. Each of Purchaser, Pubco and the Company on behalf of itself and its Affiliates, and the Sellers, may in its sole discretion (i) extend the time for the performance of any obligation or other act of any other non-Affiliated Party hereto, (ii) waive any inaccuracy in the representations and warranties by any other Party such other non-Affiliated Party contained herein or in any document delivered pursuant hereto and (iii) waive compliance by such other non-Affiliated Party with any covenant or condition contained herein. Any such extension or waiver shall be valid only if set forth in an instrument in writing signed by the Party or Parties to be bound thereby. Notwithstanding the foregoing, no failure or delay by a Party in exercising any right hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise of any other right hereunder. Notwithstanding the foregoing, any waiver of any provision of this Agreement after the Closing by Pubco or Purchaser shall also require the prior written consent of a Disinterested Independent Director Majority.
11.12 Entire Agreement. This Agreement and the documents or instruments referred to herein, including any exhibits and schedules attached hereto, which exhibits and schedules are incorporated herein by reference, together with the Ancillary Documents, embody the entire agreement and understanding of the Parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, representations, warranties, covenants or undertakings, other than those expressly set forth or referred to herein or the documents or instruments referred to herein, which collectively supersede all prior agreements and the understandings among the Parties with respect to the subject matter contained herein.
11.13 Interpretation. The table of contents and the Article and Section headings contained in this Agreement are solely for the purpose of reference, are not part of the agreement of the Parties and shall not in any way affect the meaning or interpretation of this Agreement. In this Agreement, unless the context otherwise requires: (a) any pronoun used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and words in the singular, including any defined terms, include the plural and vice versa; (b) reference to any Person includes such Person’s successors and assigns but, if applicable, only if such successors and assigns are permitted by this Agreement, and reference to a Person in a particular capacity excludes such Person in any other capacity; (c) any accounting term used and not otherwise defined in this Agreement or any Ancillary Document has the meaning assigned to such term in accordance with GAAP or IFRS, as applicable, based on the accounting principles used by the applicable Person; (d) “including” (and with correlative meaning “include”) means including without limiting the generality of any description preceding or succeeding such term and shall be deemed in each case to be followed by the words “without limitation”; (e) the words “herein,” “hereto,” and “hereby” and other words of similar import in this Agreement shall be deemed in each case to refer to this Agreement as a whole and not to any particular Section or other subdivision of this Agreement; (f) the word “if” and other words of similar import when used herein shall be deemed in each case to be followed by the phrase “and only if”; (g) the term “or” means “and/or”; (h) any reference to the term “ordinary course” or “ordinary course of business” shall be deemed in each case to be followed by the words “consistent with past practice”; (i) any agreement, instrument, insurance policy, Law or Order defined or referred to herein or in any agreement or instrument that is referred to herein means such agreement, instrument, insurance policy, Law or Order as from time to time amended, modified or supplemented, including (in the case of agreements or instruments) by waiver or consent and (in the case of statutes, regulations, rules or orders) by succession of comparable successor statutes,
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regulations, rules or orders and references to all attachments thereto and instruments incorporated therein; (j) except as otherwise indicated, all references in this Agreement to the words “Section,” “Article”, “Schedule”, and “Exhibit” are intended to refer to Sections, Articles, Schedules, and Exhibits to this Agreement; and (k) the term “Dollars” or “$” means United States dollars. Any reference in this Agreement to a Person’s directors shall include any member of such Person’s governing body and any reference in this Agreement to a Person’s officers shall include any Person filling a substantially similar position for such Person. Any reference in this Agreement or any Ancillary Document to a Person’s shareholders or stockholders shall include any applicable owners of the equity interests of such Person, in whatever form. The Parties have participated jointly in the negotiation and drafting of this Agreement. Consequently, in the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties hereto, and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any provision of this Agreement. To the extent that any Contract, document, certificate or instrument is represented and warranted to by the Company to be given, delivered, provided or made available by the Company, in order for such Contract, document, certificate or instrument to have been deemed to have been given, delivered, provided and made available to Purchaser or its Representatives, such Contract, document, certificate or instrument shall have been posted to the electronic data site maintained on behalf of the Company for the benefit of Purchaser and its Representatives and Purchaser and its Representatives have been given access to the electronic folders containing such information.
11.14 Counterparts. This Agreement may be executed and delivered (including by facsimile or other electronic transmission) in one or more counterparts, and by the different Parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.
11.15 Legal Representation. The Parties agree that, notwithstanding the fact that EGS may have, prior to Closing, jointly represented Purchaser and the Sponsor in connection with this Agreement, and has also represented Purchaser and its Affiliates in connection with matters other than the transaction that is the subject of this Agreement, EGS will be permitted in the future, after Closing, to represent the Sponsor or its Affiliates in connection with matters in which such Persons are adverse to Pubco, Purchaser or any of their respective Affiliates, including any disputes arising out of, or related to, this Agreement. The Company, Pubco, Merger Sub and the Sellers, who are or have the right to be represented by independent counsel in connection with the transactions contemplated by this Agreement, hereby agree, in advance, to waive (and to cause their Affiliates to waive) any actual or potential conflict of interest that may hereafter arise in connection with EGS’s future representation of one or more of the Sponsor or its Affiliates in which the interests of such Person are adverse to the interests of Pubco, Merger Sub, Purchaser, the Company, and/or the Sellers or any of their respective Affiliates, including any matters that arise out of this Agreement or that are substantially related to this Agreement or to any prior representation by EGS of the Sponsor, Purchaser or any of their respective Affiliates. The Parties acknowledge and agree that, for the purposes of the attorney-client privilege, the Sponsor shall be deemed the client of EGS with respect to the negotiation, execution and performance of this Agreement and the Ancillary Documents. All such communications shall remain privileged after the Closing and the privilege and the expectation of client confidence relating thereto shall belong solely to the Sponsor, shall be controlled by the Sponsor and shall not pass to or be claimed by Pubco or Purchaser; provided, further, that nothing contained herein shall be deemed to be a waiver by Pubco, Purchaser or any of their respective Affiliates of any applicable privileges or protections that can or may be asserted to prevent disclosure of any such communications to any third party.
Article XII
DEFINITIONS
12.1 Certain Definitions. For purpose of this Agreement, the following capitalized terms have the following meanings:
“Accounting Principles” means in accordance with IFRS as in effect at the date of the financial statement to which it refers or if there is no such financial statement, then as of the Closing Date, using and applying the same accounting principles, practices, procedures, policies and methods (with consistent classifications, judgments, elections, inclusions, exclusions and valuation and estimation methodologies) used and applied by the Company in the preparation of the latest audited Company Financials.
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“Action” means any notice of noncompliance or violation, or any claim, demand, charge, action, suit, litigation, audit, settlement, complaint, stipulation, assessment or arbitration, or any request (including any request for information), inquiry, hearing, proceeding or investigation, by or before any Governmental Authority.
“Affiliate” means, with respect to any Person, any other Person directly or indirectly Controlling, Controlled by, or under common Control with such Person. For the avoidance of doubt, Sponsor shall be deemed to be an Affiliate of Purchaser prior to the Closing.
“Ancillary Documents” means each agreement, instrument or document attached hereto as an Exhibit, including the Founder Share Letter, the Escrow Agreement, the Registration Rights Agreement, the Founder Registration Rights Agreement Amendment, the Founder Share Escrow Agreement Amendment, the Business Combination Marketing Agreement Fee Amendment and the other agreements, certificates and instruments to be executed or delivered by any of the Parties hereto in connection with or pursuant to this Agreement.
“Benefit Plans” of any Person means any and all deferred compensation, executive compensation, incentive compensation, equity purchase or other equity-based compensation plan, employment or consulting, severance or termination pay, holiday, vacation or other bonus plan or practice, hospitalization or other medical, life or other insurance, supplemental unemployment benefits, profit sharing, pension, or retirement plan, program, agreement, commitment or arrangement, and each other employee benefit plan, program, agreement or arrangement, including each “employee benefit plan” as such term is defined under Section 3(3) of ERISA, maintained or contributed to or required to be contributed to by a Person for the benefit of any employee or terminated employee of such Person, or with respect to which such Person has any Liability, whether direct or indirect, actual or contingent, whether formal or informal, and whether legally binding or not.
“Business Combination Marketing Agreement” means the Business Combination Marketing Agreement, dated as of June 19, 2018, by and between Purchaser and EBC.
“Business Day” means any day other than a Saturday, Sunday or a legal holiday on which commercial banking institutions in New York, New York are authorized to close for business.
“Cayman Act” means the Cayman Islands Companies Law (2018 Revision), as amended.
“Closing Net Cash” means an amount as of the Closing equal to (i) Closing Gross Cash, minus (ii) the amount of Purchaser’s and Pubco’s unpaid Expenses and Liabilities (including any Indebtedness owed to the Sponsor, Purchaser’s deferred Expenses, Extension Expenses and any premiums for the D&O Tail Insurance, and without giving effect to any Cash Consideration). For the avoidance of any doubt, unless such condition in Section 8.2(d) is waived by the Company, Closing Net Cash shall be equal to or more than One Hundred and Twenty Five Million U.S. Dollars (U.S.$125,000,000).
“Closing Gross Cash” means an amount as of the Closing equal to the total cash and cash equivalents of Pubco and Purchaser, including funds remaining in the Trust Account (after giving effect to the completion and payment of the Redemption), the proceeds of any PIPE Investment and any other funds of Pubco or Purchaser, but without giving effect to the payment of Purchaser’s or Pubco’s unpaid Expenses or Liabilities or any Cash Consideration.
“Code” means the Internal Revenue Code of 1986, as amended, and any successor statute thereto, as amended. Reference to a specific section of the Code shall include such section and any valid treasury regulation promulgated thereunder.
“Company Confidential Information” means all confidential or proprietary documents and information concerning Pubco, Merger Sub, the Company or the Sellers or any of their respective Representatives, furnished in connection with this Agreement or the transactions contemplated hereby; provided, however, that Company Confidential Information shall not include any information which, (i) at the time of disclosure by Purchaser or its Representatives, is generally available publicly and was not disclosed in breach of this Agreement or (ii) at the time of the disclosure by the Company, Pubco, Merger Sub, the Sellers or their respective Representatives to Purchaser or its Representatives was previously known by such receiving party without violation of Law or any confidentiality obligation by the Person receiving such Company Confidential Information.
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“Company Convertible Securities” means, collectively, any options, warrants or rights to subscribe for or purchase any capital shares of the Company or securities convertible into or exchangeable for, or that otherwise confer on the holder any right to acquire any capital shares of the Company.
“Company IP License” means any Intellectual Property license, sublicense or other agreement or permission under which the Company is a licensee or otherwise is authorized to use or practice any Intellectual Property.
“Company Ordinary Shares” means the ordinary shares of the Company.
“Company Outbound IP License” means any license, sublicense or other agreement or permission under which the Company is the licensor.
“Company Registered IP” means any U.S. or foreign Patent, Patent application, Trademark, service mark registration or application, copyright registration or application or registered Internet Asset or application owned or licensed by the Company or otherwise used or held for use by the Company in which the Company is the owner, applicant or assignee.
“Consent” means any consent, approval, waiver, authorization or Permit of, or notice to or declaration or filing with any Governmental Authority or any other Person.
“Contracts” means all contracts, agreements, binding arrangements, bonds, notes, indentures, mortgages, debt instruments, purchase order, licenses (and all other contracts, agreements or binding arrangements concerning Intellectual Property), franchises, leases and other instruments or obligations of any kind, written or oral (including any amendments and other modifications thereto).
“Control” of a Person means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract, or otherwise. “Controlled”, “Controlling” and “under common Control with” have correlative meanings. Without limiting the foregoing a Person (the “Controlled Person”) shall be deemed Controlled by (a) any other Person (i) owning beneficially, as meant in Rule 13d-3 under the Exchange Act, securities entitling such Person to cast ten percent (10%) or more of the votes for election of directors or equivalent governing authority of the Controlled Person or (ii) entitled to be allocated or receive ten percent (10%) or more of the profits, losses, or distributions of the Controlled Person; (b) an officer, director, general partner, partner (other than a limited partner), manager, or member (other than a member having no management authority that is not a Person described in clause (a) above) of the Controlled Person; or (c) a spouse, parent, lineal descendant, sibling, aunt, uncle, niece, nephew, mother-in-law, father-in-law, sister-in-law, or brother-in-law of an Affiliate of the Controlled Person or a trust for the benefit of an Affiliate of the Controlled Person or of which an Affiliate of the Controlled Person is a trustee.
“Copyrights” means any works of authorship, mask works and all copyrights therein, including all renewals and extensions, copyright registrations and applications for registration and renewal, and non-registered copyrights.
“Disinterested Independent Director” means an independent director serving on Pubco’s board of directors at the applicable time of determination that is disinterested in the Escrow Shares (i.e., such independent director is not a Seller, an Affiliate of a Seller, or an officer, director, manager, employee, trustee or beneficiary of a Seller, nor an immediate family member of any of the foregoing).
“Disinterested Independent Director Majority” means the vote or consent of a majority of the Disinterested Independent Directors.
“EBC” means EarlyBirdCapital, Inc., the lead underwriter in the IPO.
“Environmental Law” means any Law in any way relating to (a) the protection of human health and safety, (b) the protection, preservation or restoration of the environment and natural resources (including air, water vapor, surface water, groundwater, drinking water supply, surface land, subsurface land, plant and animal life or any other natural resource), or (c) the exposure to, or the use, storage, recycling, treatment, generation, transportation, processing, handling, labeling, production, release or disposal of Hazardous Materials.
“Environmental Liabilities” means, in respect of any Person, all Liabilities, obligations, responsibilities, Remedial Actions, Losses, damages, costs, and expenses (including all reasonable fees, disbursements, and expenses
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of counsel, experts, and consultants and costs of investigation and feasibility studies), fines, penalties, sanctions, and interest incurred as a result of any claim or demand by any other Person or in response to any violation of Environmental Law, whether known or unknown, accrued or contingent, whether based in contract, tort, implied or express warranty, strict liability, criminal or civil statute, to the extent based upon, related to, or arising under or pursuant to any Environmental Law, Environmental Permit, Order, or Contract with any Governmental Authority or other Person, that relates to any environmental, health or safety condition, violation of Environmental Law, or a Release or threatened Release of Hazardous Materials.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Foreign Plan” means any plan, fund (including any superannuation fund) or other similar program or arrangement established or maintained outside the United States by the Company or any one or more of its Subsidiaries primarily for the benefit of employees of the Company or such Subsidiaries residing outside the United States, which plan, fund or other similar program or arrangement provides, or results in, retirement income, a deferral of income in contemplation of retirement or payments to be made upon termination of employment, and which plan is not subject to ERISA or the Code.
“Founder Registration Rights Agreement” means the Registration Rights Agreement, dated as of June 19, 2018, by and among Purchaser, Sponsor and the other “Investors” named therein.
“Founder Share Escrow Agreement” means the Share Escrow Agreement, dated as of June 19, 2018, by and among Purchaser, Continental Stock Transfer & Trust Company and the Initial Purchaser Shareholders.
“Founder Shares” means an aggregate of 5,175,000 Purchaser Ordinary Shares which were originally issued to the Sponsor prior to the IPO in December 2017 and which are currently owned by the Initial Purchaser Shareholders.
“GAAP” means generally accepted accounting principles as in effect in the United States of America.
“Governmental Authority” means any federal, state, local, foreign or other governmental, quasi-governmental or administrative body, instrumentality, department or agency or any court, tribunal, administrative hearing body, arbitration panel, commission, or other similar dispute-resolving panel or body.
“Hazardous Material” means any waste, gas, liquid or other substance or material that is defined, listed or designated as a “hazardous substance”, “pollutant”, “contaminant”, “hazardous waste”, “regulated substance”, “hazardous chemical”, or “toxic chemical” (or by any similar term) under any Environmental Law, or any other material regulated, or that could result in the imposition of Liability or responsibility, under any Environmental Law, including petroleum and its by-products, asbestos, polychlorinated biphenyls, radon, mold, and urea formaldehyde insulation.
“ICC” means the International Chamber of Commerce Arbitration or any successor entity conducting arbitrations.
“IFRS” means international financial reporting standards, as adopted by the International Accounting Standards Board.
“Indebtedness” of any Person means, without duplication, (a) all indebtedness of such Person for borrowed money (including the outstanding principal and accrued but unpaid interest), (b) all obligations for the deferred purchase price of property or services (other than trade payables incurred in the ordinary course of business), (c) any other indebtedness of such Person that is evidenced by a note, bond, debenture, credit agreement or similar instrument, (d) all obligations of such Person under leases that should be classified as capital leases in accordance with GAAP or IFRS (as applicable to such Person), (e) all obligations of such Person for the reimbursement of any obligor on any line or letter of credit, banker’s acceptance, guarantee or similar credit transaction, in each case, that has been drawn or claimed against, (f) all obligations of such Person in respect of acceptances issued or created, (g) all interest rate and currency swaps, caps, collars and similar agreements or hedging devices under which payments are obligated to be made by such Person, whether periodically or upon the happening of a contingency, (h) all obligations secured by an Lien on any property of such Person, (i) any premiums, prepayment fees or other penalties, fees, costs or expenses associated with payment of any Indebtedness of such Person and (j) all obligation described in clauses (a) through
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(i) above of any other Person which is directly or indirectly guaranteed by such Person or which such Person has agreed (contingently or otherwise) to purchase or otherwise acquire or in respect of which it has otherwise assured a creditor against loss.
“Intellectual Property” means all of the following as they exist in any jurisdiction throughout the world: Patents, Trademarks, Copyrights, Trade Secrets, Internet Assets, Software and other intellectual property, and all licenses, sublicenses and other agreements or permissions related to the preceding property.
“Internet Assets” means any all domain name registrations, web sites and web addresses and related rights, items and documentation related thereto, and applications for registration therefor.
“IPO” means the initial public offering of Purchaser Public Units pursuant to the IPO Prospectus.
“IPO Prospectus” means the final prospectus of Purchaser, dated June 19, 2018, and filed with the SEC on June 20, 2018 (File Nos. 333-225352 and 333-225732).
“Knowledge” means, with respect to (i) the Company, the actual knowledge of the executive officers or directors of the Company, after reasonable inquiry of internal management employees and other employees specifically responsible for the matter and review of records in their possession or control, or (ii) any other Party, (A) if any entity, the actual knowledge of its directors and executive officers, after reasonable inquiry or (B) if a natural person, the actual knowledge of such Party after reasonable inquiry.
“Law” means any federal, state, local, municipal, foreign or other law, statute, legislation, principle of common law, ordinance, code, edict, decree, proclamation, treaty, convention, rule, regulation, directive, requirement, writ, injunction, settlement, Order or Consent that is or has been issued, enacted, adopted, passed, approved, promulgated, made, implemented or otherwise put into effect by or under the authority of any Governmental Authority.
“Liabilities” means any and all liabilities, Indebtedness, Actions or obligations of any nature (whether absolute, accrued, contingent or otherwise, whether known or unknown, whether direct or indirect, whether matured or unmatured, whether due or to become due and whether or not required to be recorded or reflected on a balance sheet under GAAP, IFRS or other applicable accounting standards), including Tax liabilities due or to become due.
“Lien” means any mortgage, pledge, security interest, attachment, right of first refusal, option, proxy, voting trust, encumbrance, lien or charge of any kind (including any conditional sale or other title retention agreement or lease in the nature thereof), restriction (whether on voting, sale, transfer, disposition or otherwise), any subordination arrangement in favor of another Person, or any filing or agreement to file a financing statement as debtor under the Uniform Commercial Code or any similar Law.
“Material Adverse Effect” means, with respect to any specified Person, any fact, event, occurrence, change or effect that has had, or would reasonably be expected to have, individually or in the aggregate, a material adverse effect upon (a) the business, assets, Liabilities, results of operations, prospects or condition (financial or otherwise) of such Person and its Subsidiaries, taken as a whole, or (b) the ability of such Person or any of its Subsidiaries on a timely basis to consummate the transactions contemplated by this Agreement or the Ancillary Documents to which it is a party or bound or to perform its obligations hereunder or thereunder; provided, however, that for purposes of clause (a) above, any changes or effects directly or indirectly attributable to, resulting from, relating to or arising out of the following (by themselves or when aggregated with any other, changes or effects) shall not be deemed to be, constitute, or be taken into account when determining whether there has or may, would or could have occurred a Material Adverse Effect: (i) general changes in the financial or securities markets or general economic or political conditions in the country or region in which such Person or any of its Subsidiaries do business; (ii) changes, conditions or effects that generally affect the industries in which such Person or any of its Subsidiaries principally operate; (iii) changes in IFRS, GAAP or other applicable accounting principles or mandatory changes in the regulatory accounting requirements applicable to any industry in which such Person and its Subsidiaries principally operate; (iv) conditions caused by acts of God, terrorism, war (whether or not declared) or natural disaster; (v) any failure in and of itself by such Person and its Subsidiaries to meet any internal or published budgets, projections, forecasts or predictions of financial performance for any period (provided that the underlying cause of any such failure may be considered in determining whether a Material Adverse Effect has occurred or would reasonably be expected to occur to the extent not excluded by another exception herein) and (vi), with respect to Purchaser or Pubco, the consummation and effects of the Redemption; provided further, however, that any event, occurrence, fact, condition, or change referred to in clauses (i) - (iv) immediately above shall be taken into account in determining whether a Material Adverse Effect has
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occurred or could reasonably be expected to occur to the extent that such event, occurrence, fact, condition, or change has a disproportionate effect on such Person or any of its Subsidiaries compared to other participants in the industries in which such Person or any of its Subsidiaries primarily conducts its businesses. Notwithstanding the foregoing, with respect to Purchaser and Pubco, the amount of the Redemption or the failure to obtain the Required Shareholder Approval shall not be deemed to be a Material Adverse Effect on or with respect to Purchaser or Pubco.
“Merger Sub Ordinary Shares” means the ordinary shares, par value $0.0001 per share, of Merger Sub.
“Nasdaq” means the Nasdaq Capital Market.
“Order” means any order, decree, ruling, judgment, injunction, writ, determination, binding decision, verdict, judicial award or other action that is or has been made, entered, rendered, or otherwise put into effect by or under the authority of any Governmental Authority.
“Organizational Documents” means, with respect to any Person, its certificate of incorporation and bylaws, memorandum and articles of association or similar organizational documents, in each case, as amended.
“Patents” means any patents, patent applications and the inventions, designs and improvements described and claimed therein, patentable inventions, and other patent rights (including any divisionals, provisionals, continuations, continuations-in-part, substitutions, or reissues thereof, whether or not patents are issued on any such applications and whether or not any such applications are amended, modified, withdrawn, or refiled).
“PCAOB” means the U.S. Public Company Accounting Oversight Board (or any successor thereto).
“Permits” means all federal, state, local or foreign or other third-party permits, grants, easements, consents, approvals, authorizations, exemptions, licenses, franchises, concessions, ratifications, permissions, clearances, confirmations, endorsements, waivers, certifications, designations, ratings, registrations, qualifications or orders of any Governmental Authority or any other Person.
“Permitted Liens” means (a) Liens for Taxes or assessments and similar governmental charges or levies, which either are (i) not delinquent or (ii) being contested in good faith and by appropriate proceedings, and adequate reserves have been established with respect thereto, (b) other Liens imposed by operation of Law arising in the ordinary course of business for amounts which are not due and payable and as would not in the aggregate materially adversely affect the value of, or materially adversely interfere with the use of, the property subject thereto, (c) Liens incurred or deposits made in the ordinary course of business in connection with social security, (d) Liens on goods in transit incurred pursuant to documentary letters of credit, in each case arising in the ordinary course of business, or (v) Liens arising under this Agreement or any Ancillary Document.
“Person” means an individual, corporation, partnership (including a general partnership, limited partnership or limited liability partnership), limited liability company, association, trust or other entity or organization, including a government, domestic or foreign, or political subdivision thereof, or an agency or instrumentality thereof.
“Personal Property” means any machinery, equipment, tools, vehicles, furniture, leasehold improvements, office equipment, plant, parts and other tangible personal property.
“Pubco Charter” means the memorandum and articles of association of Pubco, as amended and in effect under the Cayman Act.
“Pubco Ordinary Shares” means the ordinary shares, par value $0.0001 per share, of Pubco, along with any equity securities paid as dividends or distributions after the Closing with respect to such shares or into which such shares are exchanged or converted after the Closing.
“Pubco Private Warrant” means one whole warrant entitling the holder thereof to purchase one (1) Pubco Ordinary Share at a purchase price of $11.50 per share.
“Pubco Public Warrant” means one whole warrant entitling the holder thereof to purchase one (1) Pubco Ordinary Share at a purchase price of $11.50 per share.
“Pubco Securities” means the Pubco Ordinary Shares and the Pubco Warrants, collectively.
“Pubco Warrants” means Pubco Private Warrants and Pubco Public Warrants, collectively.
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“Purchaser Charter” means the amended and restated memorandum and articles of association of Purchaser, as amended and in effect under the Cayman Act; provided, that references herein to the Purchaser Charter for periods after the Merger includes the memorandum and articles of association of the Surviving Company.
“Purchaser Confidential Information” means all confidential or proprietary documents and information concerning Purchaser or any of its Representatives; provided, however, that Purchaser Confidential Information shall not include any information which, (i) at the time of disclosure by the Company, Pubco, Merger Sub, any Seller or their respective Representatives, is generally available publicly and was not disclosed in breach of this Agreement or (ii) at the time of the disclosure by Purchaser or its Representatives to the Company, any Seller or their respective Representatives, was previously known by such receiving party without violation of Law or any confidentiality obligation by the Person receiving such Purchaser Confidential Information. For the avoidance of doubt, from and after the Closing, Purchaser Confidential Information will include the confidential or proprietary information of the Company.
“Purchaser Ordinary Shares” means the ordinary shares par value $0.0001 per share, of Purchaser.
“Purchaser Preferred Shares” means preference shares, par value $0.0001 par value per share, of Purchaser.
“Purchaser Private Right” means one right that was included as part of each Purchaser Private Unit entitling the holder thereof to receive one-tenth (1/10th) of a Purchaser Ordinary Share upon the consummation by Purchaser of its Business Combination.
“Purchaser Private Unit” means the units issued in private placements to EBC and the Sponsor at the time of the consummation of the IPO consisting of one (1) Purchaser Ordinary Share, one (1) Purchaser Private Right, and one (1) Purchaser Private Warrant.
“Purchaser Private Warrant” means one whole warrant that was included in as part of each Purchaser Private Unit, entitling the holder thereof to purchase one (1) Purchaser Ordinary Share at a purchase price of $11.50 per share.
“Purchaser Public Right” means one right that was included as part of each Purchaser Public Unit entitling the holder thereof to receive one-tenth (1/10th) of a Purchaser Ordinary Share upon the consummation by Purchaser of its Business Combination.
“Purchaser Public Unit” means the units issued in the IPO (including overallotment units acquired by Purchaser’s underwriter) consisting of one (1) Purchaser Ordinary Share, one (1) Purchaser Public Right, and one (1) Purchaser Public Warrant.
“Purchaser Public Warrants” means one whole warrant that was included in as part of each Purchaser Public Unit, entitling the holder thereof to purchase one (1) Purchaser Ordinary Share at a purchase price of $11.50 per share.
“Purchaser Rights” means Purchaser Private Rights and Purchaser Public Rights, collectively.
“Purchaser Securities” means the Purchaser Units, the Purchaser Ordinary Shares, the Purchaser Preferred Shares, the Purchaser Rights and the Purchaser Warrants, collectively.
“Purchaser Units” means Purchaser Private Units and Purchaser Public Units, collectively.
“Purchaser Warrants” means Purchaser Private Warrants and Purchaser Public Warrants, collectively.
“Redemption Price” means an amount equal to price at which each Purchaser Ordinary Share (or after the Merger, Pubco Ordinary Share) is redeemed or converted pursuant to the Redemption (as equitably adjusted for share splits, share dividends, combinations, recapitalizations and the like after the Closing).
“Release” means any release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, or leaching into the indoor or outdoor environment, or into or out of any property.
“Remedial Action” means all actions to (i) clean up, remove, treat, or in any other way address any Hazardous Material, (ii) prevent the Release of any Hazardous Material so it does not endanger or threaten to endanger
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public health or welfare or the indoor or outdoor environment, (iii) perform pre-remedial studies and investigations or post-remedial monitoring and care, or (iv) correct a condition of noncompliance with Environmental Laws.
“Representatives” means, as to any Person, such Person’s Affiliates and the respective managers, directors, officers, employees, independent contractors, consultants, advisors (including financial advisors, counsel and accountants), agents and other legal representatives of such Person or its Affiliates.
“Rights Agreement” means the Rights Agreement, dated as of June 19, 2018, by and between Purchaser and Continental Stock Transfer & Trust Company, as rights agent thereunder, as amended.
“SEC” means the U.S. Securities and Exchange Commission (or any successor Governmental Authority).
“Securities Act” means the Securities Act of 1933, as amended.
“Software” means any computer software programs, including all source code, object code, and documentation related thereto and all software modules, tools and databases.
“SOX” means the Sarbanes-Oxley Act of 2002, as amended.
“Subsidiary” means, with respect to any Person, any corporation, partnership, association or other business entity of which (i) if a corporation, a majority of the total voting power of capital shares entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof, or (ii) if a partnership, association or other business entity, a majority of the partnership or other similar ownership interests thereof is at the time owned or controlled, directly or indirectly, by any Person or one or more Subsidiaries of that Person or a combination thereof. For purposes hereof, a Person or Persons will be deemed to have a majority ownership interest in a partnership, association or other business entity if such Person or Persons will be allocated a majority of partnership, association or other business entity gains or losses or will be or control the managing director, managing member, general partner or other managing Person of such partnership, association or other business entity. A Subsidiary of a Person will also include any variable interest entity which is consolidated with such Person under applicable accounting rules.
“Tax Return” means any return, declaration, report, claim for refund, information return or other documents (including any related or supporting schedules, statements or information) filed or required to be filed in connection with the determination, assessment or collection of any Taxes or the administration of any Laws or administrative requirements relating to any Taxes.
“Taxes” means (a) all direct or indirect federal, state, local, foreign and other net income, gross income, gross receipts, sales, use, value-added, ad valorem, transfer, franchise, profits, license, lease, service, service use, withholding, payroll, employment, social security and related contributions due in relation to the payment of compensation to employees, excise, severance, stamp, occupation, premium, property, windfall profits, alternative minimum, estimated, customs, duties or other taxes, fees, assessments or charges of any kind whatsoever, together with any interest and any penalties, additions to tax or additional amounts with respect thereto, (b) any Liability for payment of amounts described in clause (a) whether as a result of being a member of an affiliated, consolidated, combined or unitary group for any period or otherwise through operation of law and (c) any Liability for the payment of amounts described in clauses (a) or (b) as a result of any tax sharing, tax group, tax indemnity or tax allocation agreement with, or any other express or implied agreement to indemnify, any other Person.
“Trade Secrets” means any trade secrets, confidential business information, concepts, ideas, designs, research or development information, processes, procedures, techniques, technical information, specifications, operating and maintenance manuals, engineering drawings, methods, know-how, data, mask works, discoveries, inventions, modifications, extensions, improvements, and other proprietary rights (whether or not patentable or subject to copyright, trademark, or trade secret protection).
“Trademarks” means any trademarks, service marks, trade dress, trade names, brand names, internet domain names, designs, logos, or corporate names (including, in each case, the goodwill associated therewith), whether registered or unregistered, and all registrations and applications for registration and renewal thereof.
“Trust Account” means the trust account established by Purchaser with the proceeds from the IPO pursuant to the Trust Agreement in accordance with the IPO Prospectus.
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“Trust Agreement” means that certain Investment Management Trust Agreement, dated as of June 19, 2018, as it may be amended, by and between Purchaser and the Trustee, as it may be amended to add Pubco to accommodate the Merger, as well as any other agreements entered into related to or governing the Trust Account.
“Trustee” means Continental Stock Transfer & Trust Company, in its capacity as trustee under the Trust Agreement
“UAE Law” means applicable laws, regulations and instructions governing the Company in the United Arab Emirates.
12.2 Section References. The following capitalized terms, as used in this Agreement, have the respective meanings given to them in the Section as set forth below adjacent to such terms:
Term |
Section |
Term |
Section |
|||||
Accounts Receivable |
6.7(f) |
Effective Time |
1.2 |
|||||
Acquisition Proposal |
7.6(a) |
EGS |
3.1 |
|||||
Agreement |
Preamble |
Enforceability Exceptions |
4.2 |
|||||
Alternative Transaction |
7.6(a) |
Environmental Permit |
6.20(a) |
|||||
Amended Pubco Charter |
8.1(j) |
Escrow Account |
2.5(a) |
|||||
Antitrust Laws |
7.9(b) |
Escrow Agent |
2.2 |
|||||
Business Combination |
10.1 |
Escrow Agreement |
2.5(a) |
|||||
Business Combination Marketing Agreement Fee Amendment |
8.2(e)(viii) |
Escrow Period |
2.5(b)(ii) |
|||||
Cash Consideration |
2.2(b) |
Escrow Property |
2.5(a) |
|||||
Cash Election |
2.2(b) |
Escrow Shares |
2.2 |
|||||
Cash Election Amount |
2.2(b) |
Exchange Shares |
2.2 |
|||||
Cash Election Notice |
2.2(b) |
Expenses |
9.3 |
|||||
Closing |
3.1 |
Extension |
7.3(a) |
|||||
Closing Date |
3.1 |
Extension Expenses |
7.3(b)(iv) |
|||||
Closing Exchange Shares |
2.2 |
Facilities |
6.21(a) |
|||||
Closing Filing |
7.12(b) |
Federal Securities Laws |
7.7 |
|||||
Closing Press Release |
7.12(b) |
Founder Registration Rights Agreement Amendment |
8.2(e)(vi) |
|||||
Company |
Preamble |
Founder Share Escrow Agreement Amendment |
8.2(e)(vii) |
|||||
Company Benefit Plan |
6.19(a) |
Founder Share Letter |
Recitals |
|||||
Company Board Observers |
7.15 |
ICC Procedures |
11.5 |
|||||
Company Certificates |
2.3(b) |
Initial Purchaser Shareholders |
Recitals |
|||||
Company Directors |
7.14(a) |
Interim Balance Sheet Date |
6.7(a) |
|||||
Company Disclosure Schedules |
Article VI |
Interim Period |
7.1(a) |
|||||
Company Financials |
6.7(a) |
Joinder |
Recitals |
|||||
Company IP |
6.13(a) |
Joinder Documents |
7.21 |
|||||
Company Leased Properties |
6.15(a) |
Liable Parties |
10.2(a) |
|||||
Company Material Contract |
6.12(a) |
Lost Certificate Affidavit |
2.3(b) |
|||||
Company Owned Properties |
6.15(a) |
Merger |
Recitals |
|||||
Company Permits |
6.10 |
Merger Sub |
Preamble |
|||||
Company Personal Property Leases |
6.16 |
Milestones |
2.5(b)(i) |
|||||
Company Real Properties |
6.15(a) |
New Seller |
7.2(b) |
|||||
Company Real Property Leases |
6.15(a) |
New Ticker Symbol |
7.19 |
|||||
Company Schedule Review Period |
7.20 |
Non-Party Affiliates |
10.2(a) |
|||||
Company Schedules |
7.20 |
OFAC |
4.17(c) |
|||||
D&O Indemnified Person |
7.16(a) |
Outside Date |
9.1(b) |
|||||
D&O Tail Insurance |
7.16(b) |
Party(ies) |
Preamble |
|||||
Dispute |
11.5 |
PIPE Investment |
7.18 |
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Term |
Section |
Term |
Section |
|||||
PIPE Shares |
7.18 |
Releasing Persons |
10.2(c) |
|||||
Plan of Merger |
1.2 |
Required Shareholder Approval |
8.1(a) |
|||||
Post-Closing Pubco Board |
7.14(a) |
Resolution Period |
11.5 |
|||||
Pro Rata Share |
2.2(c) |
SEC Reports |
4.6(a) |
|||||
Proxy Statement |
7.11(a) |
Seller |
Preamble |
|||||
Pubco |
Preamble |
Seller Cash Amount |
2.2(b) |
|||||
Pubco Equity Plan |
7.11(a) |
Seller Cash Election Notice |
2.2(b) |
|||||
Public Certifications |
4.6(a) |
Special Meeting |
7.11(a) |
|||||
Public Shareholders |
10.1 |
Signing Filing |
7.12(b) |
|||||
Purchased Shares |
2.1 |
Signing Press Release |
7.12(b) |
|||||
Purchaser |
Preamble |
Sponsor |
Recitals |
|||||
Purchaser Disclosure Schedules |
Article IV |
Storage Tanks |
6.21(a) |
|||||
Purchaser Financials |
4.6(b) |
Surviving Company |
1.1 |
|||||
Purchaser Material Contract |
4.13(a) |
Surviving Company Charter |
1.4 |
|||||
Purchaser Shareholder Approval Matters |
7.11(a) |
Top Customer |
6.24 |
|||||
Redemption |
7.11(a) |
Top Supplier |
6.24 |
|||||
Registration Rights Agreement |
8.2(e)(v) |
Termination Fee |
9.4(a) |
|||||
Registration Statement |
7.11(a) |
Transactions |
Recitals |
|||||
Related Person |
6.22 |
Voting Agreement |
8.2(e)(x) |
|||||
Released Claims |
10.1 |
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, each Party hereto has caused this Agreement to be signed and delivered by its respective duly authorized officer as of the date first written above.
Purchaser: |
||||
TWELVE SEAS INVESTMENT COMPANY |
||||
By: |
/s/ Bryant Edwards |
|||
Name: Bryant Edwards |
||||
Title: Chief Operating Officer |
||||
Pubco: |
||||
BROOGE HOLDINGS LIMITED |
||||
By: |
/s/ Meclomen Maramot |
|||
Name: Meclomen Maramot |
||||
Title: Director |
||||
Merger Sub: |
||||
BROOGE MERGER SUB LIMITED |
||||
By: |
/s/ Meclomen Maramot |
|||
Name: Meclomen Maramot |
||||
Title: Director |
||||
The Company: |
||||
BROOGE PETROLEUM AND GAS INVESTMENT COMPANY FZE |
||||
By: |
/s/ Nicolaas L. Paardenkooper |
|||
Name: Nicolaas L. Paardenkooper |
||||
Title: Chief Executive Officer |
{Signature Page to Business Combination Agreement}
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Twelve Seas Investment Company
135 East 57th Street, 18th Floor,
New York, New York
April 30, 2019
Brooge Petroleum And Gas Investment Company FZE
4th Floor, Al Sayegh Building, Hamdan Street
Abu Dhabi, UAE
Attn: Mr. Nicolaas Paardenkooper
Re: Extension of Delivery Dates under the Business Combination Agreement
Dear Nicolaas,
Reference is made to that certain Business Combination Agreement, dated as of April 15, 2019 (as it may be amended, the “Business Combination Agreement”), by and among Twelve Seas Investment Company, a Cayman Islands exempted company (“Purchaser”), Brooge Holdings Limited, a Cayman Islands exempted company (“Pubco”), Brooge Merger Sub Limited, a Cayman Islands exempted company and a wholly-owned subsidiary of Pubco, Brooge Petroleum And Gas Investment Company FZE, a company formed under the laws of the Fujairah Free Zone, UAE (the “Company”), and each shareholder of the Company that executes and delivers a joinder agreement to become a Seller party thereunder. Unless otherwise defined herein, capitalized terms used herein shall have the meanings ascribed thereto in the Business Combination Agreement.
The Business Combination Agreement requires (i) in Section 2.5(a) thereof for Pubco, the Sellers and the Escrow Agent to enter into the Escrow Agreement, (ii) in Section 7.20 thereof for the Company to deliver to Purchaser the Company Schedules, and (iii) in Section 7.21 thereof for the Company to deliver to Purchaser the Joinder Documents for each shareholder of the Company, in each case of clauses (i) through (iii) on or prior to April 30, 2019 (or such later date prior to the Closing as mutually agreed by Purchaser and the Company), and Sections 9.1(i), 9.1(j) and 9.1(k) of the Business Combination Agreement permit Purchaser to terminate the Business Combination Agreement if any of such conditions are not satisfied on or prior to April 30, 2019 (or such later date prior to the Closing as mutually agreed by Purchaser and the Company).
In accordance with the provisions of the Business Combination Agreement, Purchaser and the Company hereby mutually agree that the April 30, 2019 date set forth in Sections 2.5(a), 7.20, 7.21, 9.1(i), 9.1(j) and 9.1(k) of the Business Combination Agreement is hereby extended to May 10, 2019 (or such later date prior to the Closing as mutually agreed by Purchaser and the Company).
The terms of this letter shall be governed, enforced, construed and interpreted in a manner consistent with the provisions of the Business Combination Agreement. Except as expressly provided in this letter, all of the terms and provisions in the Business Combination Agreement are and shall remain in full force and effect, on the terms and subject to the conditions set forth therein. This letter does not constitute, directly or by implication, an amendment, modification or waiver of any provision of the Business Combination Agreement, or any other right, remedy, power or privilege of any party to the Business Combination Agreement, except as expressly set forth herein.
{Remainder of Page Intentionally Left Blank; Signature page follows}
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Please indicate your agreement to the foregoing by signing in the space provided below.
Twelve Seas Investment Company |
||||
By: |
/s/ Stephen N. Cannon |
|||
Name: |
Stephen N. Cannon |
|||
Title: |
Chief Financial Officer |
Accepted and agreed, effective as of the date first set forth above:
BROOGE PETROLEUM AND GAS INVESTMENT COMPANY FZE |
||||
By: |
/s/ Nicolaas L. Paardenkooper |
|||
Name: |
Nicolaas L. Paardenkooper |
|||
Title: |
Chief Executive Officer |
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JOINDER TO BUSINESS COMBINATION AGREEMENT
THIS JOINDER TO BUSINESS COMBINATION AGREEMENT (this “Joinder”) is made and entered into as of May 10, 2019 by Brooge Petroleum and Gas Investment Company (BPGIC) PLC, a company formed under the laws of England and Wales (“Seller”) and the sole shareholder of the Company (as defined below), to and for the benefit of each of (i) Twelve Seas Investment Company, a Cayman Islands exempted company (together with its successors, “Purchaser”), (ii) Brooge Holdings Limited, a Cayman Islands exempted company (“Pubco”), (iii) Brooge Merger Sub Limited, a Cayman Islands exempted company and a wholly-owned subsidiary of Pubco (“Merger Sub”), and (iv) Brooge Petroleum And Gas Investment Company FZE, a company formed under the laws of the Fujairah Free Zone, UAE (the “Company”). Capitalized terms used but not otherwise defined herein shall have the meaning given to such terms in the Business Combination Agreement.
WHEREAS, Purchaser, Pubco, Merger Sub and the Company are parties to that certain Business Combination Agreement, dated as of April 15, 2019 (as amended, the “Business Combination Agreement”), pursuant to which, among other matters, Pubco will acquire from Seller all of the issued and outstanding ordinary shares of the Company in exchange for newly issued ordinary shares of Pubco, subject to the terms and conditions therein; and
WHEREAS, Seller desires to become a party to the Business Combination Agreement as the “Seller” party thereunder in accordance with the terms and conditions of this Joinder.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is acknowledged, Seller hereby agrees as follows:
1. Agreement to be Bound. Seller hereby: (a) acknowledges that Seller has received and reviewed a complete copy of the Business Combination Agreement, including the Exhibits and Schedules thereto; (b) agrees that upon execution and delivery of this Joinder to Purchaser, Pubco and the Company, Seller will become a party to the Business Combination Agreement, and will be fully bound by, and subject to, all of the terms and conditions of the Business Combination Agreement, as amended or modified by this Joinder, as the “Seller” party thereunder as though an original party thereto for all purposes of the Business Combination Agreement, and entitled to all the rights incidental thereto, with Seller selling all of its Company Ordinary Shares (as set forth underneath Seller’s name on the signature page hereto) to Pubco as Purchased Shares thereunder; (c) agrees to execute and deliver to Purchaser, Pubco and the Company all the Ancillary Documents required to be executed by Seller under the Business Combination Agreement; and (d) agrees that this Joinder, including the provisions of this Section 1 and the representations and warranties made by Seller in Section 2 below, will be deemed to be incorporated into, supplement and become a part of the Business Combination Agreement, and any references to the Business Combination Agreement therein and herein will include this Joinder.
2. Representations and Warranties: Except as set forth in the disclosure schedules delivered by Seller to Purchaser as an attachment to this Joinder, the Section numbers of which are numbered to correspond to the Section numbers of this Joinder to which they refer, Seller hereby represents and warrants to Purchaser as of the date hereof and as of the Closing as follows:
(a) Organization and Standing. Seller is an entity duly organized, validly existing and in good standing under the Laws of England and Wales and has all requisite power and authority to own, lease and operate its properties and to carry on its business as now being conducted.
(b) Authorization; Binding Agreement. Seller has all requisite power, authority and legal right and capacity to execute and deliver this Joinder (and become a party to the Business Combination Agreement in accordance with the terms and conditions of this Joinder) and each Ancillary Document to which it is or is required to be a party, to perform Seller’s obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. This Joinder and the Business Combination Agreement has been, and each Ancillary Document to which Seller is or is required to be a party has been, or shall be when delivered, duly and validly executed and delivered by Seller and assuming the due authorization, execution and delivery of this Joinder and the Business Combination Agreement and any such Ancillary Document by the other parties hereto and thereto, constitutes, or when delivered shall constitute, the legal, valid and binding obligation of Seller, enforceable against Seller in accordance with its terms, subject to the Enforceability Exceptions, as applied to Seller.
(c) Ownership. Seller owns good, valid and marketable title to the Company Ordinary Shares set forth underneath Seller’s name on the signature page hereto, free and clear of any and all Liens (other than those imposed
A-62
by applicable securities Laws or the Company’s Organizational Documents), which Company Ordinary Shares Seller acknowledges shall be deemed to be the Purchased Shares under the Business Combination Agreement. There are no proxies, voting rights, shareholders’ agreements or other agreements or understandings, to which Seller is a party or by which Seller is bound, with respect to the voting or transfer of any of Seller’s Purchased Shares other than this Joinder and the Business Combination Agreement. Upon delivery of its portion of the Purchased Shares to Pubco on the Closing Date in accordance with the Business Combination Agreement, the entire legal and beneficial interest in the Purchased Shares and good, valid and marketable title to the Purchased Shares, free and clear of all Liens (other than those imposed by applicable securities Laws or those incurred by Pubco), will pass to Pubco.
(d) Government Approvals. No Consent of or with any Governmental Authority on the part of Seller is required to be obtained or made in connection with the execution, delivery or performance by Seller of this Joinder or the Business Combination Agreement or any Ancillary Documents or the consummation by Seller of the transactions contemplated hereby or thereby other than (i) such consents or filings as expressly contemplated by this Joinder or the Business Combination Agreement (including the Consent of ASMA Capital or its Affiliates or related parties) or (ii) pursuant to Antitrust Laws.
(e) Non-Contravention. The execution and delivery by Seller of this Joinder (and becoming a party under the Business Combination Agreement) and each Ancillary Document to which it is a party or otherwise bound and the consummation by Seller of the transactions contemplated hereby or thereby, and compliance by Seller with any of the provisions hereof or thereof, will not, (i) conflict with or violate any provision of Seller’s Organizational Documents, (ii) conflict with or violate any Law, Order or Consent applicable to Seller or any of its properties or assets or (iii) (A) violate, conflict with or result in a breach of, (B) constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, (C) result in the termination, withdrawal, suspension, cancellation or modification of, (D) accelerate the performance required by Seller under, (E) result in a right of termination or acceleration under, (F) give rise to any obligation to make payments or provide compensation under, (G) result in the creation of any Lien upon any of the properties or assets of Seller under, (H) give rise to any obligation to obtain any third party consent or provide any notice to any Person or (I) give any Person the right to declare a default, exercise any remedy, claim a rebate, chargeback, penalty or change in delivery schedule, accelerate the maturity or performance, cancel, terminate or modify any right, benefit, obligation or other term under, any of the terms, conditions or provisions of, any Contract to which Seller is a party or Seller or its properties or assets are otherwise bound, except for any deviations from any of the foregoing clauses (i), (ii) or (iii) that have not had and would not reasonably be expected to have a Material Adverse Effect on Seller.
(f) No Litigation. There is no Action pending or, to the Knowledge of Seller, threatened, nor any Order is outstanding, against or involving such, whether at law or in equity, before or by any Governmental Authority, which would reasonably be expected to materially and adversely affect the ability of Seller to consummate the transactions contemplated by, and discharge its obligations under, this Joinder and the Business Combination Agreement and the Ancillary Documents to which Seller is or is required to be a party.
(g) Investment Representations. Seller: (i) is an “accredited investor” as such term is defined in Rule 501(a) of Regulation D under the Securities Act; (ii) is acquiring its portion of the Exchange Shares for itself for investment purposes only, and not with a view towards any resale or distribution of such Exchange Shares; (iii) has been advised and understands that the Exchange Shares (A) are being issued in reliance upon one or more exemptions from the registration requirements of the Securities Act and any applicable state securities Laws and (B) have not been and shall not be registered under the Securities Act or any applicable state securities Laws and, therefore, must be held indefinitely and cannot be resold unless such Exchange Shares are registered under the Securities Act and all applicable state securities Laws, unless exemptions from registration are available; (iv) is aware that an investment in Pubco is a speculative investment and is subject to the risk of complete loss; and (v) acknowledges that except as set forth in the Registration Rights Agreement, Pubco is under no obligation to register the Exchange Shares under the Securities Act. Seller does not have any Contract with any Person to sell, transfer, or grant participations to such Person, or to any third Person, with respect to the Exchange Shares. By reason of Seller’s business or financial experience, or by reason of the business or financial experience of Seller’s “purchaser representatives” (as that term is defined in Rule 501(h) under the Securities Act), Seller is capable of evaluating the risks and merits of an investment in Pubco and of protecting its interests in connection with this investment. Seller has carefully read and understands all materials provided by or on behalf of Pubco, Purchaser or their respective Representatives to Seller pertaining to an investment in Pubco and has consulted, as Seller has deemed advisable, with its own attorneys, accountants or investment advisors with respect to the investment contemplated hereby and its suitability for Seller. Seller acknowledges that the Exchange Shares are
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subject to dilution for events not under the control of Seller. Seller has completed its independent inquiry and has relied fully upon the advice of its own legal counsel, accountant, financial and other Representatives in determining the legal, tax, financial and other consequences of this Joinder and the transactions contemplated hereby and the suitability of this Joinder and the Business Combination Agreement and the transactions contemplated hereby and thereby for Seller and its particular circumstances, and, except as set forth herein or therein, has not relied upon any representations or advice by Pubco, Purchaser or their respective Representatives. Seller acknowledges and agrees that, except as set forth in Article IV and Article V, as applicable, of the Business Combination Agreement (including the related portions of the Purchaser Disclosure Schedules), no representations or warranties have been made to Seller by or on behalf of Pubco, Merger Sub, Purchaser or any of their respective Representatives, and that Seller has not been guaranteed or represented to by any Person, (i) any specific amount or the event of the distribution of any cash, property or other interest in Pubco or (ii) the profitability or value of the Exchange Shares in any manner whatsoever. Seller: (A) has been represented by independent counsel (or has had the opportunity to consult with independent counsel and has declined to do so); (B) has had the full right and opportunity to consult with Seller’s attorneys and other advisors and has availed itself of this right and opportunity; (C) has carefully read and fully understands this Joinder and the Business Combination Agreement in its entirety and has had it fully explained to it, him or her by such counsel; (D) is fully aware of the contents hereof and the meaning, intent and legal effect thereof; and (E) is competent to execute this Joinder (and become party to the Business Combination Agreement by execution hereof) and has executed this Joinder free from coercion, duress or undue influence.
(h) Finders and Brokers. No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission from Purchaser, Pubco, the Company or any of their respective Affiliates in connection with the transactions contemplated hereby based upon arrangements made by or on behalf of Seller.
(i) Information Supplied. None of the information supplied or to be supplied by Seller expressly for inclusion or incorporation by reference: (i) in any Current Report on Form 8-K or 6-K, and any exhibits thereto or any other report, form, registration or other filing made with any Governmental Authority (including the SEC) with respect to the transactions contemplated by this Joinder, the Business Combination Agreement or any Ancillary Documents; (ii) in the Registration Statement; or (iii) in the mailings or other distributions to Purchaser’s or Pubco’s shareholders and/or prospective investors with respect to the consummation of the transactions contemplated by this Joinder or the Business Combination Agreement or in any amendment to any of documents identified in clauses (i) through (iii), will, when filed, made available, mailed or distributed, as the case may be, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. Notwithstanding the foregoing, Seller does not make any representation, warranty or covenant with respect to any information supplied by or on behalf of Purchaser or its Affiliates.
(j) Independent Investigation. Seller has conducted its own independent investigation, review and analysis of the business, results of operations, condition (financial or otherwise) and assets of Purchaser, Pubco and Merger Sub and acknowledges that it has been provided adequate access to the personnel, properties, assets, premises, books and records, and other documents and data of Purchaser, Pubco and Merger Sub for such purpose. Seller acknowledges and agrees that: (i) in making its decision to enter into this Joinder and become a party to the Business Combination Agreement, and to consummate the transactions contemplated hereby and thereby, it has relied solely upon its own investigation and the express representations and warranties of Purchaser set forth in Article IV of the Business Combination Agreement (including the related portions of the Purchaser Disclosure Schedules) and in any certificate delivered to Seller pursuant the Business Combination Agreement; and (ii) none of Purchaser, the Company, Pubco, Merger Sub or their respective Representatives have made any representation or warranty as to Purchaser, the Company, Pubco or Merger Sub or this Joinder or the Business Combination Agreement, except as expressly set forth in the Business Combination Agreement (including the related portions of the Purchaser Disclosure Schedules) or in any certificate delivered to Seller pursuant thereto.
3. Liability. The parties agree that upon executing this Joinder, Seller, as an entity only (and not any of its Non-Party Affiliates), shall only be liable to the Parties pursuant to the express terms of the Business Combination Agreement and this Joinder. Further, the parties also acknowledge that, in accordance with, and in furtherance of, Sections 10.2(a) and 10.2(b) of the Business Combination Agreement, the following Persons shall have no liability whatsoever, and be subject to no Actions, Orders, damages, costs, expenses or claims, under the Business Combination Agreement or this Joinder: (a) officers, directors, managers, employees, representatives, or contractors of the Company, Seller, Purchaser, Pubco or Merger Sub; (b) officers, directors, managers, employees, representatives or contractors
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of any Affiliate or related party of the Company, Seller, Pubco, Purchaser or Merger Sub, including any of their direct or indirect investors; and (c) any Affiliate or related party of the Company, Seller, Pubco, Purchaser or Merger Sub, including any of their direct or indirect investors (but for the avoidance of any doubt, in each case of clauses (a) through (c), excluding any of the foregoing Persons that are direct parties to the Business Combination Agreement and/or this Joinder).
4. Miscellaneous. This Joinder shall be governed by, construed and enforced in accordance with the laws of the State of New York without regard to the conflict of laws principles thereof. This Joinder, the Business Combination Agreement and the Ancillary Documents, together with the other documents or instruments attached hereto or thereto or referenced herein or therein, constitutes the entire agreement by Seller with respect to the subject matter of hereof and thereof, and supersedes all prior agreements and understandings, both oral and written, by Seller with respect to its subject matter. The terms of this Joinder shall be governed by, enforced, construed and interpreted in a manner consistent with the provisions of the Business Combination Agreement.
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IN WITNESS WHEREOF, the undersigned Seller has executed and delivered this Joinder as of the date first set forth above.
Seller: |
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BROOGE PETROLEUM AND GAS INVESTMENT COMPANY (BPGIC) PLC |
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By: |
/s/ Nicolaas L. Paardenkooper |
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Name: |
Nicolaas L. Paardenkooper |
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Title: |
Director |
Number of Company Ordinary
|
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Address for Notice: |
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Address: |
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|
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|
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Facsimile No.: |
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Telephone No.: |
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Email: |
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Accepted and agreed by the undersigned, effective as of the date first set forth above:
TWELVE SEAS INVESTMENT COMPANY |
BROOGE PETROLEUM AND GAS INVESTMENT COMPANY FZE |
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By: |
/s/ Bryant Edwards |
By: |
/s/ Nicolaas L. Paardenkooper |
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Name: |
Bryant Edwards |
Name: |
Nicolaas L. Paardenkooper |
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Title: |
Chief Operating Officer |
Title: |
Chief Executive Officer |
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BROOGE HOLDINGS LIMITED |
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By: |
/s/ Meclomen Maramot |
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Name: |
Meclomen Maramot |
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Title: |
Director |
{Signature Page to Joinder}
A-66
FIRST AMENDMENT TO BUSINESS COMBINATION AGREEMENT
This First Amendment (this “First Amendment”) to Business Combination Agreement is made and entered into effective as of September 16, 2019, by and among (i) Twelve Seas Investment Company, a Cayman Islands exempted company (together with its successors, “Purchaser”), (ii) Brooge Holdings Limited, a Cayman Islands exempted company (“Pubco”), (iii) Brooge Petroleum And Gas Investment Company FZE, a company formed under the laws of the Fujairah Free Zone, UAE (the “Company”), and (iv) Brooge Petroleum and Gas Investment Company (BPGIC) PLC, a company formed under the laws of England and Wales (“Seller”). Capitalized terms used but not otherwise defined herein shall have the respective meanings assigned to such terms in the Business Combination Agreement (as defined below).
WHEREAS, Purchaser, Pubco, Brooge Merger Sub Limited, a Cayman Islands exempted company and a wholly-owned subsidiary of Pubco (“Merger Sub”), and the Company are parties to that certain Business Combination Agreement made and entered into as of April 15, 2019 (as amended by the Joinder (as defined below), the “Original Agreement”);
WHEREAS, Seller became a party to the Original Agreement by executing and delivering a Joinder to the Business Combination Agreement (the “Joinder”) to Purchaser, Pubco, Merger Sub and the Company on May 10, 2019; and
WHEREAS, the parties desire to amend the Original Agreement on the terms and conditions set forth herein (as amended, including by this First Amendment, the “Business Combination Agreement”).
NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth below and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in accordance with the terms of the Business Combination Agreement, the parties hereto, intending to be legally bound, do hereby agree as follows:
1. Correction of Description of Founder Share Letter. Clause (F) of the recitals to the Business Combination Agreement is hereby amended to remove the reference to Pubco being a party to the Founder Share Letter.
2. Correction of Escrow Period. Section 2.5(b)(ii) of the Business Combination Agreement is hereby amended to delete such section in its entirety and replace it with the following: “the period for Pubco to satisfy such Milestones will commence from the Closing and finish at the end of the twentieth (20th) fiscal quarter after the commencement date of the first full fiscal quarter beginning after the Closing (such period, the “Escrow Period”); and”.
3. Correction of Founder Share Letter. Section 2.5(g) of the Business Combination Agreement is hereby amended to remove the term “exact” on the fourth line thereof.
4. Inclusion of Conflicts Clause. A new Section 2.5(h) of the Business Combination Agreement is hereby included, stating the following:
“(h) Conflicts. The Parties agree that to the extent of any inconsistency or conflict between the terms of this Section 2.5 (or other provisions of this Agreement as they relate to the Escrow Property and Escrow Account) and the terms of the Escrow Agreement, the terms of the Escrow Agreement shall prevail to the extent of any such inconsistency or conflict, and the terms of Section 2.5 (or other provisions of this Agreement as they relate to the Escrow Property and Escrow Account) shall be disregarded to that extent.”
5. Correction of Delivery of Good Standing Certificates. Section 8.2(e)(iii) of the Business Combination Agreement is hereby amended to replace the term “later” on the third line thereof with the term “earlier”. Section 8.3(d)(iv) of the Business Combination Agreement is hereby amended to replace the term “later” on each of the third and eighth line thereof with the term “earlier”.
6. Correction of Voting Agreement. Section 8.2(e)(x) of the Business Combination Agreement is hereby amended to delete such section in its entirety and replaced with the following:
“(x) Voting Agreement. The Company, Seller and Pubco shall have received a copy of a voting agreement in favor of Seller (or Seller’s successors or assigns) from the Initial Purchaser Shareholders with respect to Pubco
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Ordinary Shares and other voting equity securities of Pubco that are issuable upon conversion or exchange (or are otherwise granted in Pubco) of: (i) the Founder Shares; (ii) the Purchaser Private Units; and (iii) securities of Purchaser or Pubco that the Initial Purchaser Shareholders (or their Affiliates) acquire or agree to acquire for any purpose, up to and including the time of the Closing; such voting agreement to be in form and substance reasonably acceptable to Purchaser, Seller (or Seller’s successors or assigns) and the Company (the “Voting Agreement”) and duly executed by the Initial Purchaser Shareholders.”
7. Extension of Outside Date. Section 9.1(b) of the Business Combination Agreement is hereby amended to replace the date “August 31, 2019” therein with the date “December 22, 2019”.
8. Correction of Termination Right. Section 9.1(d) of the Business Combination Agreement is hereby amended to delete clause (i) thereof in its entirety and replace it with the following: “(i) there has been a breach by Purchaser, of any of its representations, warranties, covenants or agreements contained in this Agreement, or if any representation or warranty of Purchaser shall have become untrue or inaccurate, in any case, which would result in a failure of a condition set forth in Section 8.2(a) or Section 8.2(b) to be satisfied (treating the Closing Date for such purposes as the date of this Agreement or, if later, the date of such breach), and”
9. Additional Termination Right. Section 9.1 of the Business Combination Agreement is hereby amended to add an additional termination right in a new Section 9.1(l) (with the word “or” being deleted at the end of Section 9.1(j) thereof, and with the end of Section 9.1(k) being amended to replace the period at the end thereof with “; or”):
“(l) by written notice by either Purchaser or the Company (to the other) if, by or on September 30, 2019, the first preliminary Registration Statement has not been submitted with the SEC; provided that, upon the submission of the first preliminary Registration Statement with the SEC after September 30, 2019, neither Purchaser nor the Company shall be permitted thereafter to terminate under this Section 9.1(l).”
10. Correction of Effect of Termination. Section 9.2 of the Business Combination Agreement is hereby amended to delete clause (i) in the second sentence thereof in its entirety and replace it with the following: “(i) Sections 7.12, 7.13, 9.3, 9.4, 10.1, 10.2(a), Article XI and this Section 9.2 shall survive the termination of this Agreement, and”.
11. Clarification of Non-Recourse. Section 10.2(b) of the Business Combination Agreement is hereby amended to add the following immediately after the phrase “Furthermore, without limiting the generality of the preceding sentence,” at the beginning of the second sentence thereof: “from and after the Closing,”.
12. Correction of Notices. Section 11.2 of the Business Combination Agreement is hereby amended to: (i) in the first half of the second table, as it pertains to the Company prior to the Closing, to delete and replace the numbers provided for the Facsimile No. and Telephone No. with “+971-9-201-6699” and “+971-56-284-2828”, respectively; (ii) in the first half of the third table, as it pertains to Pubco or Merger Sub prior to the Closing, to delete and replace “Brooge Holdings Limited” with “c/o Brooge Holdings Limited” and to delete and replace the numbers provided for the Facsimile No. and Telephone No. with “+971-2-633-3152” and “+971-2-633-3149”, respectively; and (iii) in the first half of the fifth table, as it pertains to Pubco, Purchaser or the Company after the Closing, to delete and replace the numbers provided for the Facsimile No. and Telephone No. with “+971-9-201-6699” and “+971-56-284-2828”, respectively.
13. Miscellaneous. Except as expressly provided in this First Amendment, all of the terms and provisions in the Original Agreement and the Ancillary Documents are and shall remain unchanged and in full force and effect, on the terms and subject to the conditions set forth therein. This First Amendment does not constitute, directly or by implication, an amendment or waiver of any provision of the Original Agreement or any Ancillary Document, or any other right, remedy, power or privilege of any party, except as expressly set forth herein. Any reference to the Business Combination Agreement in the Business Combination Agreement or any other agreement, document, instrument or certificate entered into or issued in connection therewith shall hereinafter mean the Original Agreement, as amended by this First Amendment (or as the Business Combination Agreement may be further amended or modified after the date hereof in accordance with the terms thereof). The Original Agreement, as amended by this First Amendment, and the documents or instruments attached hereto or thereto or referenced herein or therein, constitutes the entire agreement between the parties with respect to the subject matter of the Business Combination Agreement, and supersedes all prior agreements and understandings, both oral and written,
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between the parties with respect to its subject matter. If any provision of the Original Agreement is inconsistent with any provision of this First Amendment, the provision of this First Amendment shall control, and the provision of the Original Agreement shall, to the extent of such inconsistency, be disregarded. Sections 11.1 through 11.11, 11.13 and 11.14 of the Original Agreement are hereby incorporated herein by reference as if fully set forth herein, and such provisions apply to this First Amendment as if all references to the “Agreement” contained therein were instead references to this First Amendment.
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IN WITNESS WHEREOF, the parties hereto have executed this First Amendment to Business Combination Agreement as of the date first written above.
Purchaser: |
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TWELVE SEAS INVESTMENT COMPANY |
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By: |
/s/ Bryant Edwards |
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Name: Bryant Edwards |
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Title: Chief Operating Officer |
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Pubco: |
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BROOGE HOLDINGS LIMITED |
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By: |
/s/ Meclomen Maramot |
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Name: Meclomen Maramot |
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Title: Director |
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The Company: |
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BROOGE PETROLEUM AND GAS INVESTMENT COMPANY FZE |
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By: |
/s/ Nicolaas L. Paardenkooper |
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Name: Nicolaas L. Paardenkooper |
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Title: Chief Executive Officer |
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Seller: |
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BROOGE PETROLEUM AND GAS INVESTMENT COMPANY (BPGIC) PLC |
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By: |
/s/ Nicolaas L. Paardenkooper |
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Name: Nicolaas L. Paardenkooper |
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Title: Director |
A-70
THE COMPANIES LAW (2018 REVISION)
OF THE CAYMAN ISLANDS
COMPANY LIMITED BY SHARES
MEMORANDUM AND ARTICLES OF ASSOCIATION
OF
BROOGE HOLDINGS LIMITED
B-1
THE COMPANIES LAW (2018 REVISION)
OF THE CAYMAN ISLANDS
COMPANY LIMITED BY SHARES
MEMORANDUM OF ASSOCIATION
OF
BROOGE HOLDINGS LIMITED
1 The name of the Company is Brooge Holdings Limited.
2 The Registered Office of the Company shall be at the offices of Maples Corporate Services Limited, PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands, or at such other place within the Cayman Islands as the Directors may decide.
3 The objects for which the Company is established are unrestricted and the Company shall have full power and authority to carry out any object not prohibited by the laws of the Cayman Islands.
4 The liability of each Member is limited to the amount unpaid on such Member’s shares.
5 The share capital of the Company is US$50,000 divided into 500,000,000 shares of a par value of US$0.0001 each.
6 The Company has power to register by way of continuation as a body corporate limited by shares under the laws of any jurisdiction outside the Cayman Islands and to be deregistered in the Cayman Islands.
7 Capitalised terms that are not defined in this Memorandum of Association bear the respective meanings given to them in the Articles of Association of the Company.
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WE, the subscriber to this Memorandum of Association, wish to form a company pursuant to this Memorandum of Association, and we agree to take the number of shares shown opposite our name.
Dated this 12th day of April 2019.
Signature and Address of Subscriber |
Number of Shares Taken |
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Maples Corporate Services Limited
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One |
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acting by: |
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/s/ Marcia Borden |
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Marcia Borden |
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/s/ Ahmaree Piercy |
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Ahmaree Piercy |
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Witness to the above signature |
B-3
THE COMPANIES LAW (2018 REVISION)
OF THE CAYMAN ISLANDS
COMPANY LIMITED BY SHARES
ARTICLES OF ASSOCIATION
OF
BROOGE HOLDINGS LIMITED
1 Interpretation
1.1 In the Articles Table A in the First Schedule to the Statute does not apply and, unless there is something in the subject or context inconsistent therewith:
“Articles” |
means these articles of association of the Company. |
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“Auditor” |
means the person for the time being performing the duties of auditor of the Company (if any). |
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“Company” |
means the above named company. |
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“Directors” |
means the directors for the time being of the Company. |
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“Dividend” |
means any dividend (whether interim or final) resolved to be paid on Shares pursuant to the Articles. |
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“Electronic Record” |
has the same meaning as in the Electronic Transactions Law. |
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“Electronic Transactions Law” |
means the Electronic Transactions Law (2003 Revision) of the Cayman Islands. |
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“Member” |
has the same meaning as in the Statute. |
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“Memorandum” |
means the memorandum of association of the Company. |
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“Ordinary Resolution” |
means a resolution passed by a simple majority of the Members as, being entitled to do so, vote in person or, where proxies are allowed, by proxy at a general meeting, and includes a unanimous written resolution. In computing the majority when a poll is demanded regard shall be had to the number of votes to which each Member is entitled by the Articles. |
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“Register of Members” |
means the register of Members maintained in accordance with the Statute and includes (except where otherwise stated) any branch or duplicate register of Members. |
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“Registered Office” |
means the registered office for the time being of the Company. |
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“Seal” |
means the common seal of the Company and includes every duplicate seal. |
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“Share” |
means a share in the Company and includes a fraction of a share in the Company. |
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“Special Resolution” |
has the same meaning as in the Statute, and includes a unanimous written resolution. |
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“Statute” |
means the Companies Law (2018 Revision) of the Cayman Islands. |
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“Subscriber” |
means the subscriber to the Memorandum. |
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“Treasury Share” |
means a Share held in the name of the Company as a treasury share in accordance with the Statute. |
1.2 In the Articles:
(a) words importing the singular number include the plural number and vice versa;
(b) words importing the masculine gender include the feminine gender;
(c) words importing persons include corporations as well as any other legal or natural person;
(d) “written” and “in writing” include all modes of representing or reproducing words in visible form, including in the form of an Electronic Record;
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(e) “shall” shall be construed as imperative and “may” shall be construed as permissive;
(f) references to provisions of any law or regulation shall be construed as references to those provisions as amended, modified, re-enacted or replaced;
(g) any phrase introduced by the terms “including”, “include”, “in particular” or any similar expression shall be construed as illustrative and shall not limit the sense of the words preceding those terms;
(h) the term “and/or” is used herein to mean both “and” as well as “or.” The use of “and/or” in certain contexts in no respects qualifies or modifies the use of the terms “and” or “or” in others. The term “or” shall not be interpreted to be exclusive and the term “and” shall not be interpreted to require the conjunctive (in each case, unless the context otherwise requires);
(i) headings are inserted for reference only and shall be ignored in construing the Articles;
(j) any requirements as to delivery under the Articles include delivery in the form of an Electronic Record;
(k) any requirements as to execution or signature under the Articles including the execution of the Articles themselves can be satisfied in the form of an electronic signature as defined in the Electronic Transactions Law;
(l) sections 8 and 19(3) of the Electronic Transactions Law shall not apply;
(m) the term “clear days” in relation to the period of a notice means that period excluding the day when the notice is received or deemed to be received and the day for which it is given or on which it is to take effect; and
(n) the term “holder” in relation to a Share means a person whose name is entered in the Register of Members as the holder of such Share.
2 Commencement of Business
2.1 The business of the Company may be commenced as soon after incorporation of the Company as the Directors shall see fit.
2.2 The Directors may pay, out of the capital or any other monies of the Company, all expenses incurred in or about the formation and establishment of the Company, including the expenses of registration.
3 Issue of Shares
3.1 Subject to the provisions, if any, in the Memorandum (and to any direction that may be given by the Company in general meeting) and without prejudice to any rights attached to any existing Shares, the Directors may allot, issue, grant options over or otherwise dispose of Shares (including fractions of a Share) with or without preferred, deferred or other rights or restrictions, whether in regard to Dividend or other distribution, voting, return of capital or otherwise and to such persons, at such times and on such other terms as they think proper, and may also (subject to the Statute and the Articles) vary such rights. Notwithstanding the foregoing, the Subscriber shall have the power to:
(a) issue one Share to itself;
(b) transfer that Share by an instrument of transfer to any person; and
(c) update the Register of Members in respect of the issue and transfer of that Share.
3.2 The Company shall not issue Shares to bearer.
4 Register of Members
4.1 The Company shall maintain or cause to be maintained the Register of Members in accordance with the Statute.
4.2 The Directors may determine that the Company shall maintain one or more branch registers of Members in accordance with the Statute. The Directors may also determine which register of Members shall constitute the principal register and which shall constitute the branch register or registers, and to vary such determination from time to time.
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5 Closing Register of Members or Fixing Record Date
5.1 For the purpose of determining Members entitled to notice of, or to vote at any meeting of Members or any adjournment thereof, or Members entitled to receive payment of any Dividend or other distribution, or in order to make a determination of Members for any other purpose, the Directors may provide that the Register of Members shall be closed for transfers for a stated period which shall not in any case exceed forty days.
5.2 In lieu of, or apart from, closing the Register of Members, the Directors may fix in advance or arrears a date as the record date for any such determination of Members entitled to notice of, or to vote at any meeting of the Members or any adjournment thereof, or for the purpose of determining the Members entitled to receive payment of any Dividend or other distribution, or in order to make a determination of Members for any other purpose.
5.3 If the Register of Members is not so closed and no record date is fixed for the determination of Members entitled to notice of, or to vote at, a meeting of Members or Members entitled to receive payment of a Dividend or other distribution, the date on which notice of the meeting is sent or the date on which the resolution of the Directors resolving to pay such Dividend or other distribution is passed, as the case may be, shall be the record date for such determination of Members. When a determination of Members entitled to vote at any meeting of Members has been made as provided in this Article, such determination shall apply to any adjournment thereof.
6 Certificates for Shares
6.1 A Member shall only be entitled to a share certificate if the Directors resolve that share certificates shall be issued. Share certificates representing Shares, if any, shall be in such form as the Directors may determine. Share certificates shall be signed by one or more Directors or other person authorised by the Directors. The Directors may authorise certificates to be issued with the authorised signature(s) affixed by mechanical process. All certificates for Shares shall be consecutively numbered or otherwise identified and shall specify the Shares to which they relate. All certificates surrendered to the Company for transfer shall be cancelled and subject to the Articles no new certificate shall be issued until the former certificate representing a like number of relevant Shares shall have been surrendered and cancelled.
6.2 The Company shall not be bound to issue more than one certificate for Shares held jointly by more than one person and delivery of a certificate to one joint holder shall be a sufficient delivery to all of them.
6.3 If a share certificate is defaced, worn out, lost or destroyed, it may be renewed on such terms (if any) as to evidence and indemnity and on the payment of such expenses reasonably incurred by the Company in investigating evidence, as the Directors may prescribe, and (in the case of defacement or wearing out) upon delivery of the old certificate.
6.4 Every share certificate sent in accordance with the Articles will be sent at the risk of the Member or other person entitled to the certificate. The Company will not be responsible for any share certificate lost or delayed in the course of delivery.
7 Transfer of Shares
7.1 Subject to Article 3.1, Shares are transferable subject to the approval of the Directors by resolution who may, in their absolute discretion, decline to register any transfer of Shares without giving any reason. If the Directors refuse to register a transfer they shall notify the transferee within two months of such refusal.
7.2 The instrument of transfer of any Share shall be in writing and shall be executed by or on behalf of the transferor (and if the Directors so require, signed by or on behalf of the transferee). The transferor shall be deemed to remain the holder of a Share until the name of the transferee is entered in the Register of Members.
8 Redemption, Repurchase and Surrender of Shares
8.1 Subject to the provisions of the Statute the Company may issue Shares that are to be redeemed or are liable to be redeemed at the option of the Member or the Company. The redemption of such Shares shall be effected in such manner and upon such other terms as the Company may, by Special Resolution, determine before the issue of the Shares.
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8.2 Subject to the provisions of the Statute, the Company may purchase its own Shares (including any redeemable Shares) in such manner and on such other terms as the Directors may agree with the relevant Member.
8.3 The Company may make a payment in respect of the redemption or purchase of its own Shares in any manner permitted by the Statute, including out of capital.
8.4 The Directors may accept the surrender for no consideration of any fully paid Share.
9 Treasury Shares
9.1 The Directors may, prior to the purchase, redemption or surrender of any Share, determine that such Share shall be held as a Treasury Share.
9.2 The Directors may determine to cancel a Treasury Share or transfer a Treasury Share on such terms as they think proper (including, without limitation, for nil consideration).
10 Variation of Rights of Shares
10.1 If at any time the share capital of the Company is divided into different classes of Shares, all or any of the rights attached to any class (unless otherwise provided by the terms of issue of the Shares of that class) may, whether or not the Company is being wound up, be varied without the consent of the holders of the issued Shares of that class where such variation is considered by the Directors not to have a material adverse effect upon such rights; otherwise, any such variation shall be made only with the consent in writing of the holders of not less than two thirds of the issued Shares of that class, or with the approval of a resolution passed by a majority of not less than two thirds of the votes cast at a separate meeting of the holders of the Shares of that class. For the avoidance of doubt, the Directors reserve the right, notwithstanding that any such variation may not have a material adverse effect, to obtain consent from the holders of Shares of the relevant class. To any such meeting all the provisions of the Articles relating to general meetings shall apply mutatis mutandis, except that the necessary quorum shall be one person holding or representing by proxy at least one third of the issued Shares of the class and that any holder of Shares of the class present in person or by proxy may demand a poll.
10.2 For the purposes of a separate class meeting, the Directors may treat two or more or all the classes of Shares as forming one class of Shares if the Directors consider that such class of Shares would be affected in the same way by the proposals under consideration, but in any other case shall treat them as separate classes of Shares.
10.3 The rights conferred upon the holders of the Shares of any class issued with preferred or other rights shall not, unless otherwise expressly provided by the terms of issue of the Shares of that class, be deemed to be varied by the creation or issue of further Shares ranking pari passu therewith.
11 Commission on Sale of Shares
The Company may, in so far as the Statute permits, pay a commission to any person in consideration of his subscribing or agreeing to subscribe (whether absolutely or conditionally) or procuring or agreeing to procure subscriptions (whether absolutely or conditionally) for any Shares. Such commissions may be satisfied by the payment of cash and/or the issue of fully or partly paid-up Shares. The Company may also on any issue of Shares pay such brokerage as may be lawful.
12 Non Recognition of Trusts
The Company shall not be bound by or compelled to recognise in any way (even when notified) any equitable, contingent, future or partial interest in any Share, or (except only as is otherwise provided by the Articles or the Statute) any other rights in respect of any Share other than an absolute right to the entirety thereof in the holder.
13 Lien on Shares
13.1 The Company shall have a first and paramount lien on all Shares (whether fully paid-up or not) registered in the name of a Member (whether solely or jointly with others) for all debts, liabilities or engagements to or with the Company (whether presently payable or not) by such Member or his estate, either alone or jointly with any other person, whether a Member or not, but the Directors may at any time declare any Share to be wholly or in
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part exempt from the provisions of this Article. The registration of a transfer of any such Share shall operate as a waiver of the Company’s lien thereon. The Company’s lien on a Share shall also extend to any amount payable in respect of that Share.
13.2 The Company may sell, in such manner as the Directors think fit, any Shares on which the Company has a lien, if a sum in respect of which the lien exists is presently payable, and is not paid within fourteen clear days after notice has been received or deemed to have been received by the holder of the Shares, or to the person entitled to it in consequence of the death or bankruptcy of the holder, demanding payment and stating that if the notice is not complied with the Shares may be sold.
13.3 To give effect to any such sale the Directors may authorise any person to execute an instrument of transfer of the Shares sold to, or in accordance with the directions of, the purchaser. The purchaser or his nominee shall be registered as the holder of the Shares comprised in any such transfer, and he shall not be bound to see to the application of the purchase money, nor shall his title to the Shares be affected by any irregularity or invalidity in the sale or the exercise of the Company’s power of sale under the Articles.
13.4 The net proceeds of such sale after payment of costs, shall be applied in payment of such part of the amount in respect of which the lien exists as is presently payable and any balance shall (subject to a like lien for sums not presently payable as existed upon the Shares before the sale) be paid to the person entitled to the Shares at the date of the sale.
14 Call on Shares
14.1 Subject to the terms of the allotment and issue of any Shares, the Directors may make calls upon the Members in respect of any monies unpaid on their Shares (whether in respect of par value or premium), and each Member shall (subject to receiving at least fourteen clear days’ notice specifying the time or times of payment) pay to the Company at the time or times so specified the amount called on the Shares. A call may be revoked or postponed, in whole or in part, as the Directors may determine. A call may be required to be paid by instalments. A person upon whom a call is made shall remain liable for calls made upon him notwithstanding the subsequent transfer of the Shares in respect of which the call was made.
14.2 A call shall be deemed to have been made at the time when the resolution of the Directors authorising such call was passed.
14.3 The joint holders of a Share shall be jointly and severally liable to pay all calls in respect thereof.
14.4 If a call remains unpaid after it has become due and payable, the person from whom it is due shall pay interest on the amount unpaid from the day it became due and payable until it is paid at such rate as the Directors may determine (and in addition all expenses that have been incurred by the Company by reason of such non-payment), but the Directors may waive payment of the interest or expenses wholly or in part.
14.5 An amount payable in respect of a Share on issue or allotment or at any fixed date, whether on account of the par value of the Share or premium or otherwise, shall be deemed to be a call and if it is not paid all the provisions of the Articles shall apply as if that amount had become due and payable by virtue of a call.
14.6 The Directors may issue Shares with different terms as to the amount and times of payment of calls, or the interest to be paid.
14.7 The Directors may, if they think fit, receive an amount from any Member willing to advance all or any part of the monies uncalled and unpaid upon any Shares held by him, and may (until the amount would otherwise become payable) pay interest at such rate as may be agreed upon between the Directors and the Member paying such amount in advance.
14.8 No such amount paid in advance of calls shall entitle the Member paying such amount to any portion of a Dividend or other distribution payable in respect of any period prior to the date upon which such amount would, but for such payment, become payable.
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15 Forfeiture of Shares
15.1 If a call or instalment of a call remains unpaid after it has become due and payable the Directors may give to the person from whom it is due not less than fourteen clear days’ notice requiring payment of the amount unpaid together with any interest which may have accrued and any expenses incurred by the Company by reason of such non-payment. The notice shall specify where payment is to be made and shall state that if the notice is not complied with the Shares in respect of which the call was made will be liable to be forfeited.
15.2 If the notice is not complied with, any Share in respect of which it was given may, before the payment required by the notice has been made, be forfeited by a resolution of the Directors. Such forfeiture shall include all Dividends, other distributions or other monies payable in respect of the forfeited Share and not paid before the forfeiture.
15.3 A forfeited Share may be sold, re-allotted or otherwise disposed of on such terms and in such manner as the Directors think fit and at any time before a sale, re-allotment or disposition the forfeiture may be cancelled on such terms as the Directors think fit. Where for the purposes of its disposal a forfeited Share is to be transferred to any person the Directors may authorise some person to execute an instrument of transfer of the Share in favour of that person.
15.4 A person any of whose Shares have been forfeited shall cease to be a Member in respect of them and shall surrender to the Company for cancellation the certificate for the Shares forfeited and shall remain liable to pay to the Company all monies which at the date of forfeiture were payable by him to the Company in respect of those Shares together with interest at such rate as the Directors may determine, but his liability shall cease if and when the Company shall have received payment in full of all monies due and payable by him in respect of those Shares.
15.5 A certificate in writing under the hand of one Director or officer of the Company that a Share has been forfeited on a specified date shall be conclusive evidence of the facts stated in it as against all persons claiming to be entitled to the Share. The certificate shall (subject to the execution of an instrument of transfer) constitute a good title to the Share and the person to whom the Share is sold or otherwise disposed of shall not be bound to see to the application of the purchase money, if any, nor shall his title to the Share be affected by any irregularity or invalidity in the proceedings in reference to the forfeiture, sale or disposal of the Share.
15.6 The provisions of the Articles as to forfeiture shall apply in the case of non payment of any sum which, by the terms of issue of a Share, becomes payable at a fixed time, whether on account of the par value of the Share or by way of premium as if it had been payable by virtue of a call duly made and notified.
16 Transmission of Shares
16.1 If a Member dies the survivor or survivors (where he was a joint holder) or his legal personal representatives (where he was a sole holder), shall be the only persons recognised by the Company as having any title to his Shares. The estate of a deceased Member is not thereby released from any liability in respect of any Share, for which he was a joint or sole holder.
16.2 Any person becoming entitled to a Share in consequence of the death or bankruptcy or liquidation or dissolution of a Member (or in any other way than by transfer) may, upon such evidence being produced as may be required by the Directors, elect, by a notice in writing sent by him to the Company, either to become the holder of such Share or to have some person nominated by him registered as the holder of such Share. If he elects to have another person registered as the holder of such Share he shall sign an instrument of transfer of that Share to that person. The Directors shall, in either case, have the same right to decline or suspend registration as they would have had in the case of a transfer of the Share by the relevant Member before his death or bankruptcy or liquidation or dissolution, as the case may be.
16.3 A person becoming entitled to a Share by reason of the death or bankruptcy or liquidation or dissolution of a Member (or in any other case than by transfer) shall be entitled to the same Dividends, other distributions and other advantages to which he would be entitled if he were the holder of such Share. However, he shall not, before becoming a Member in respect of a Share, be entitled in respect of it to exercise any right conferred by membership in relation to general meetings of the Company and the Directors may at any time give notice requiring any such person to elect either to be registered himself or to have some person nominated by him be
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registered as the holder of the Share (but the Directors shall, in either case, have the same right to decline or suspend registration as they would have had in the case of a transfer of the Share by the relevant Member before his death or bankruptcy or liquidation or dissolution or any other case than by transfer, as the case may be). If the notice is not complied with within ninety days of being received or deemed to be received (as determined pursuant to the Articles) the Directors may thereafter withhold payment of all Dividends, other distributions, bonuses or other monies payable in respect of the Share until the requirements of the notice have been complied with.
17 Amendments of Memorandum and Articles of Association and Alteration of Capital
17.1 The Company may by Ordinary Resolution:
(a) increase its share capital by such sum as the Ordinary Resolution shall prescribe and with such rights, priorities and privileges annexed thereto, as the Company in general meeting may determine;
(b) consolidate and divide all or any of its share capital into Shares of larger amount than its existing Shares;
(c) convert all or any of its paid-up Shares into stock, and reconvert that stock into paid-up Shares of any denomination;
(d) by subdivision of its existing Shares or any of them divide the whole or any part of its share capital into Shares of smaller amount than is fixed by the Memorandum or into Shares without par value; and
(e) cancel any Shares that at the date of the passing of the Ordinary Resolution have not been taken or agreed to be taken by any person and diminish the amount of its share capital by the amount of the Shares so cancelled.
17.2 All new Shares created in accordance with the provisions of the preceding Article shall be subject to the same provisions of the Articles with reference to the payment of calls, liens, transfer, transmission, forfeiture and otherwise as the Shares in the original share capital.
17.3 Subject to the provisions of the Statute and the provisions of the Articles as regards the matters to be dealt with by Ordinary Resolution, the Company may by Special Resolution:
(a) change its name;
(b) alter or add to the Articles;
(c) alter or add to the Memorandum with respect to any objects, powers or other matters specified therein; and
(d) reduce its share capital or any capital redemption reserve fund.
18 Offices and Places of Business
Subject to the provisions of the Statute, the Company may by resolution of the Directors change the location of its Registered Office. The Company may, in addition to its Registered Office, maintain such other offices or places of business as the Directors determine.
19 General Meetings
19.1 All general meetings other than annual general meetings shall be called extraordinary general meetings.
19.2 The Company may, but shall not (unless required by the Statute) be obliged to, in each year hold a general meeting as its annual general meeting, and shall specify the meeting as such in the notices calling it. Any annual general meeting shall be held at such time and place as the Directors shall appoint and if no other time and place is prescribed by them, it shall be held at the Registered Office on the second Wednesday in December of each year at ten o’clock in the morning. At these meetings the report of the Directors (if any) shall be presented.
19.3 The Directors may call general meetings, and they shall on a Members’ requisition forthwith proceed to convene an extraordinary general meeting of the Company.
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19.4 A Members’ requisition is a requisition of Members holding at the date of deposit of the requisition not less than ten per cent. in par value of the issued Shares which as at that date carry the right to vote at general meetings of the Company.
19.5 The Members’ requisition must state the objects of the meeting and must be signed by the requisitionists and deposited at the Registered Office, and may consist of several documents in like form each signed by one or more requisitionists.
19.6 If there are no Directors as at the date of the deposit of the Members’ requisition or if the Directors do not within twenty-one days from the date of the deposit of the Members’ requisition duly proceed to convene a general meeting to be held within a further twenty-one days, the requisitionists, or any of them representing more than one-half of the total voting rights of all of the requisitionists, may themselves convene a general meeting, but any meeting so convened shall be held no later than the day which falls three months after the expiration of the said twenty-one day period.
19.7 A general meeting convened as aforesaid by requisitionists shall be convened in the same manner as nearly as possible as that in which general meetings are to be convened by Directors.
20 Notice of General Meetings
20.1 At least five clear days’ notice shall be given of any general meeting. Every notice shall specify the place, the day and the hour of the meeting and the general nature of the business to be conducted at the general meeting and shall be given in the manner hereinafter mentioned or in such other manner if any as may be prescribed by the Company, provided that a general meeting of the Company shall, whether or not the notice specified in this Article has been given and whether or not the provisions of the Articles regarding general meetings have been complied with, be deemed to have been duly convened if it is so agreed:
(a) in the case of an annual general meeting, by all of the Members entitled to attend and vote thereat; and
(b) in the case of an extraordinary general meeting, by a majority in number of the Members having a right to attend and vote at the meeting, together holding not less than ninety five per cent. in par value of the Shares giving that right.
20.2 The accidental omission to give notice of a general meeting to, or the non receipt of notice of a general meeting by, any person entitled to receive such notice shall not invalidate the proceedings of that general meeting.
21 Proceedings at General Meetings
21.1 No business shall be transacted at any general meeting unless a quorum is present. Two Members being individuals present in person or by proxy or if a corporation or other non-natural person by its duly authorised representative or proxy shall be a quorum unless the Company has only one Member entitled to vote at such general meeting in which case the quorum shall be that one Member present in person or by proxy or (in the case of a corporation or other non-natural person) by its duly authorised representative or proxy.
21.2 A person may participate at a general meeting by conference telephone or other communications equipment by means of which all the persons participating in the meeting can communicate with each other. Participation by a person in a general meeting in this manner is treated as presence in person at that meeting.
21.3 A resolution (including a Special Resolution) in writing (in one or more counterparts) signed by or on behalf of all of the Members for the time being entitled to receive notice of and to attend and vote at general meetings (or, being corporations or other non-natural persons, signed by their duly authorised representatives) shall be as valid and effective as if the resolution had been passed at a general meeting of the Company duly convened and held.
21.4 If a quorum is not present within half an hour from the time appointed for the meeting to commence or if during such a meeting a quorum ceases to be present, the meeting, if convened upon a Members’ requisition, shall be dissolved and in any other case it shall stand adjourned to the same day in the next week at the same time and/or place or to such other day, time and/or place as the Directors may determine, and if at the adjourned meeting a quorum is not present within half an hour from the time appointed for the meeting to commence, the Members present shall be a quorum.
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21.5 The Directors may, at any time prior to the time appointed for the meeting to commence, appoint any person to act as chairman of a general meeting of the Company or, if the Directors do not make any such appointment, the chairman, if any, of the board of Directors shall preside as chairman at such general meeting. If there is no such chairman, or if he shall not be present within fifteen minutes after the time appointed for the meeting to commence, or is unwilling to act, the Directors present shall elect one of their number to be chairman of the meeting.
21.6 If no Director is willing to act as chairman or if no Director is present within fifteen minutes after the time appointed for the meeting to commence, the Members present shall choose one of their number to be chairman of the meeting.
21.7 The chairman may, with the consent of a meeting at which a quorum is present (and shall if so directed by the meeting) adjourn the meeting from time to time and from place to place, but no business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place.
21.8 When a general meeting is adjourned for thirty days or more, notice of the adjourned meeting shall be given as in the case of an original meeting. Otherwise it shall not be necessary to give any such notice of an adjourned meeting.
21.9 A resolution put to the vote of the meeting shall be decided on a show of hands unless before, or on the declaration of the result of, the show of hands, the chairman demands a poll, or any other Member or Members collectively present in person or by proxy (or in the case of a corporation or other non-natural person, by its duly authorised representative or proxy) and holding at least ten per cent. in par value of the Shares giving a right to attend and vote at the meeting demand a poll.
21.10Unless a poll is duly demanded and the demand is not withdrawn a declaration by the chairman that a resolution has been carried or carried unanimously, or by a particular majority, or lost or not carried by a particular majority, an entry to that effect in the minutes of the proceedings of the meeting shall be conclusive evidence of that fact without proof of the number or proportion of the votes recorded in favour of or against such resolution.
21.11The demand for a poll may be withdrawn.
21.12Except on a poll demanded on the election of a chairman or on a question of adjournment, a poll shall be taken as the chairman directs, and the result of the poll shall be deemed to be the resolution of the general meeting at which the poll was demanded.
21.13A poll demanded on the election of a chairman or on a question of adjournment shall be taken forthwith. A poll demanded on any other question shall be taken at such date, time and place as the chairman of the general meeting directs, and any business other than that upon which a poll has been demanded or is contingent thereon may proceed pending the taking of the poll.
21.14In the case of an equality of votes, whether on a show of hands or on a poll, the chairman shall be entitled to a second or casting vote.
22 Votes of Members
22.1 Subject to any rights or restrictions attached to any Shares, on a show of hands every Member who (being an individual) is present in person or by proxy or, if a corporation or other non-natural person is present by its duly authorised representative or by proxy, shall have one vote and on a poll every Member present in any such manner shall have one vote for every Share of which he is the holder.
22.2 In the case of joint holders the vote of the senior holder who tenders a vote, whether in person or by proxy (or, in the case of a corporation or other non-natural person, by its duly authorised representative or proxy), shall be accepted to the exclusion of the votes of the other joint holders, and seniority shall be determined by the order in which the names of the holders stand in the Register of Members.
22.3 A Member of unsound mind, or in respect of whom an order has been made by any court, having jurisdiction in lunacy, may vote, whether on a show of hands or on a poll, by his committee, receiver, curator bonis, or other
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person on such Member’s behalf appointed by that court, and any such committee, receiver, curator bonis or other person may vote by proxy.
22.4 No person shall be entitled to vote at any general meeting unless he is registered as a Member on the record date for such meeting nor unless all calls or other monies then payable by him in respect of Shares have been paid.
22.5 No objection shall be raised as to the qualification of any voter except at the general meeting or adjourned general meeting at which the vote objected to is given or tendered and every vote not disallowed at the meeting shall be valid. Any objection made in due time in accordance with this Article shall be referred to the chairman whose decision shall be final and conclusive.
22.6 On a poll or on a show of hands votes may be cast either personally or by proxy (or in the case of a corporation or other non-natural person by its duly authorised representative or proxy). A Member may appoint more than one proxy or the same proxy under one or more instruments to attend and vote at a meeting. Where a Member appoints more than one proxy the instrument of proxy shall state which proxy is entitled to vote on a show of hands and shall specify the number of Shares in respect of which each proxy is entitled to exercise the related votes.
22.7 On a poll, a Member holding more than one Share need not cast the votes in respect of his Shares in the same way on any resolution and therefore may vote a Share or some or all such Shares either for or against a resolution and/or abstain from voting a Share or some or all of the Shares and, subject to the terms of the instrument appointing him, a proxy appointed under one or more instruments may vote a Share or some or all of the Shares in respect of which he is appointed either for or against a resolution and/or abstain from voting a Share or some or all of the Shares in respect of which he is appointed.
23 Proxies
23.1 The instrument appointing a proxy shall be in writing and shall be executed under the hand of the appointor or of his attorney duly authorised in writing, or, if the appointor is a corporation or other non natural person, under the hand of its duly authorised representative. A proxy need not be a Member.
23.2 The Directors may, in the notice convening any meeting or adjourned meeting, or in an instrument of proxy sent out by the Company, specify the manner by which the instrument appointing a proxy shall be deposited and the place and the time (being not later than the time appointed for the commencement of the meeting or adjourned meeting to which the proxy relates) at which the instrument appointing a proxy shall be deposited. In the absence of any such direction from the Directors in the notice convening any meeting or adjourned meeting or in an instrument of proxy sent out by the Company, the instrument appointing a proxy shall be deposited physically at the Registered Office not less than 48 hours before the time appointed for the meeting or adjourned meeting to commence at which the person named in the instrument proposes to vote.
23.3 The chairman may in any event at his discretion declare that an instrument of proxy shall be deemed to have been duly deposited. An instrument of proxy that is not deposited in the manner permitted, or which has not been declared to have been duly deposited by the chairman, shall be invalid.
23.4 The instrument appointing a proxy may be in any usual or common form (or such other form as the Directors may approve) and may be expressed to be for a particular meeting or any adjournment thereof or generally until revoked. An instrument appointing a proxy shall be deemed to include the power to demand or join or concur in demanding a poll.
23.5 Votes given in accordance with the terms of an instrument of proxy shall be valid notwithstanding the previous death or insanity of the principal or revocation of the proxy or of the authority under which the proxy was executed, or the transfer of the Share in respect of which the proxy is given unless notice in writing of such death, insanity, revocation or transfer was received by the Company at the Registered Office before the commencement of the general meeting, or adjourned meeting at which it is sought to use the proxy.
24 Corporate Members
Any corporation or other non-natural person which is a Member may in accordance with its constitutional documents, or in the absence of such provision by resolution of its directors or other governing body, authorise
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such person as it thinks fit to act as its representative at any meeting of the Company or of any class of Members, and the person so authorised shall be entitled to exercise the same powers on behalf of the corporation which he represents as the corporation could exercise if it were an individual Member.
25 Shares that May Not be Voted
Shares in the Company that are beneficially owned by the Company shall not be voted, directly or indirectly, at any meeting and shall not be counted in determining the total number of outstanding Shares at any given time.
26 Directors
There shall be a board of Directors consisting of not less than one person (exclusive of alternate Directors) provided however that the Company may by Ordinary Resolution increase or reduce the limits in the number of Directors. The first Directors of the Company shall be determined in writing by, or appointed by a resolution of, the Subscriber.
27 Powers of Directors
27.1 Subject to the provisions of the Statute, the Memorandum and the Articles and to any directions given by Special Resolution, the business of the Company shall be managed by the Directors who may exercise all the powers of the Company. No alteration of the Memorandum or Articles and no such direction shall invalidate any prior act of the Directors which would have been valid if that alteration had not been made or that direction had not been given. A duly convened meeting of Directors at which a quorum is present may exercise all powers exercisable by the Directors.
27.2 All cheques, promissory notes, drafts, bills of exchange and other negotiable or transferable instruments and all receipts for monies paid to the Company shall be signed, drawn, accepted, endorsed or otherwise executed as the case may be in such manner as the Directors shall determine by resolution.
27.3 The Directors on behalf of the Company may pay a gratuity or pension or allowance on retirement to any Director who has held any other salaried office or place of profit with the Company or to his widow or dependants and may make contributions to any fund and pay premiums for the purchase or provision of any such gratuity, pension or allowance.
27.4 The Directors may exercise all the powers of the Company to borrow money and to mortgage or charge its undertaking, property and assets (present and future) and uncalled capital or any part thereof and to issue debentures, debenture stock, mortgages, bonds and other such securities whether outright or as security for any debt, liability or obligation of the Company or of any third party.
28 Appointment and Removal of Directors
28.1 The Company may by Ordinary Resolution appoint any person to be a Director or may by Ordinary Resolution remove any Director.
28.2 The Directors may appoint any person to be a Director, either to fill a vacancy or as an additional Director provided that the appointment does not cause the number of Directors to exceed any number fixed by or in accordance with the Articles as the maximum number of Directors.
29 Vacation of Office of Director
The office of a Director shall be vacated if:
(a) the Director gives notice in writing to the Company that he resigns the office of Director; or
(b) the Director absents himself (for the avoidance of doubt, without being represented by proxy or an alternate Director appointed by him) from three consecutive meetings of the board of Directors without special leave of absence from the Directors, and the Directors pass a resolution that he has by reason of such absence vacated office; or
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(c) the Director dies, becomes bankrupt or makes any arrangement or composition with his creditors generally; or
(d) the Director is found to be or becomes of unsound mind; or
(e) all of the other Directors (being not less than two in number) determine that he should be removed as a Director, either by a resolution passed by all of the other Directors at a meeting of the Directors duly convened and held in accordance with the Articles or by a resolution in writing signed by all of the other Directors.
30 Proceedings of Directors
30.1 The quorum for the transaction of the business of the Directors may be fixed by the Directors, and unless so fixed shall be two if there are two or more Directors, and shall be one if there is only one Director. A person who holds office as an alternate Director shall, if his appointor is not present, be counted in the quorum. A Director who also acts as an alternate Director shall, if his appointor is not present, count twice towards the quorum.
30.2 Subject to the provisions of the Articles, the Directors may regulate their proceedings as they think fit. Questions arising at any meeting shall be decided by a majority of votes. In the case of an equality of votes, the chairman shall have a second or casting vote. A Director who is also an alternate Director shall be entitled in the absence of his appointor to a separate vote on behalf of his appointor in addition to his own vote.
30.3 A person may participate in a meeting of the Directors or any committee of Directors by conference telephone or other communications equipment by means of which all the persons participating in the meeting can communicate with each other at the same time. Participation by a person in a meeting in this manner is treated as presence in person at that meeting. Unless otherwise determined by the Directors the meeting shall be deemed to be held at the place where the chairman is located at the start of the meeting.
30.4 A resolution in writing (in one or more counterparts) signed by all the Directors or all the members of a committee of the Directors or, in the case of a resolution in writing relating to the removal of any Director or the vacation of office by any Director, all of the Directors other than the Director who is the subject of such resolution (an alternate Director being entitled to sign such a resolution on behalf of his appointor and if such alternate Director is also a Director, being entitled to sign such resolution both on behalf of his appointer and in his capacity as a Director) shall be as valid and effectual as if it had been passed at a meeting of the Directors, or committee of Directors as the case may be, duly convened and held.
30.5 A Director or alternate Director may, or other officer of the Company on the direction of a Director or alternate Director shall, call a meeting of the Directors by at least two days’ notice in writing to every Director and alternate Director which notice shall set forth the general nature of the business to be considered unless notice is waived by all the Directors (or their alternates) either at, before or after the meeting is held. To any such notice of a meeting of the Directors all the provisions of the Articles relating to the giving of notices by the Company to the Members shall apply mutatis mutandis.
30.6 The continuing Directors (or a sole continuing Director, as the case may be) may act notwithstanding any vacancy in their body, but if and so long as their number is reduced below the number fixed by or pursuant to the Articles as the necessary quorum of Directors the continuing Directors or Director may act for the purpose of increasing the number of Directors to be equal to such fixed number, or of summoning a general meeting of the Company, but for no other purpose.
30.7 The Directors may elect a chairman of their board and determine the period for which he is to hold office; but if no such chairman is elected, or if at any meeting the chairman is not present within five minutes after the time appointed for the meeting to commence, the Directors present may choose one of their number to be chairman of the meeting.
30.8 All acts done by any meeting of the Directors or of a committee of the Directors (including any person acting as an alternate Director) shall, notwithstanding that it is afterwards discovered that there was some defect in the appointment of any Director or alternate Director, and/or that they or any of them were disqualified, and/or had vacated their office and/or were not entitled to vote, be as valid as if every such person had been duly appointed
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and/or not disqualified to be a Director or alternate Director and/or had not vacated their office and/or had been entitled to vote, as the case may be.
30.9 A Director but not an alternate Director may be represented at any meetings of the board of Directors by a proxy appointed in writing by him. The proxy shall count towards the quorum and the vote of the proxy shall for all purposes be deemed to be that of the appointing Director.
31 Presumption of Assent
A Director or alternate Director who is present at a meeting of the board of Directors at which action on any Company matter is taken shall be presumed to have assented to the action taken unless his dissent shall be entered in the minutes of the meeting or unless he shall file his written dissent from such action with the person acting as the chairman or secretary of the meeting before the adjournment thereof or shall forward such dissent by registered post to such person immediately after the adjournment of the meeting. Such right to dissent shall not apply to a Director or alternate Director who voted in favour of such action.
32 Directors’ Interests
32.1 A Director or alternate Director may hold any other office or place of profit under the Company (other than the office of Auditor) in conjunction with his office of Director for such period and on such terms as to remuneration and otherwise as the Directors may determine.
32.2 A Director or alternate Director may act by himself or by, through or on behalf of his firm in a professional capacity for the Company and he or his firm shall be entitled to remuneration for professional services as if he were not a Director or alternate Director.
32.3 A Director or alternate Director may be or become a director or other officer of or otherwise interested in any company promoted by the Company or in which the Company may be interested as a shareholder, a contracting party or otherwise, and no such Director or alternate Director shall be accountable to the Company for any remuneration or other benefits received by him as a director or officer of, or from his interest in, such other company.
32.4 No person shall be disqualified from the office of Director or alternate Director or prevented by such office from contracting with the Company, either as vendor, purchaser or otherwise, nor shall any such contract or any contract or transaction entered into by or on behalf of the Company in which any Director or alternate Director shall be in any way interested be or be liable to be avoided, nor shall any Director or alternate Director so contracting or being so interested be liable to account to the Company for any profit realised by or arising in connection with any such contract or transaction by reason of such Director or alternate Director holding office or of the fiduciary relationship thereby established. A Director (or his alternate Director in his absence) shall be at liberty to vote in respect of any contract or transaction in which he is interested provided that the nature of the interest of any Director or alternate Director in any such contract or transaction shall be disclosed by him at or prior to its consideration and any vote thereon.
32.5 A general notice that a Director or alternate Director is a shareholder, director, officer or employee of any specified firm or company and is to be regarded as interested in any transaction with such firm or company shall be sufficient disclosure for the purposes of voting on a resolution in respect of a contract or transaction in which he has an interest, and after such general notice it shall not be necessary to give special notice relating to any particular transaction.
33 Minutes
The Directors shall cause minutes to be made in books kept for the purpose of recording all appointments of officers made by the Directors, all proceedings at meetings of the Company or the holders of any class of Shares and of the Directors, and of committees of the Directors, including the names of the Directors or alternate Directors present at each meeting.
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34 Delegation of Directors’ Powers
34.1 The Directors may delegate any of their powers, authorities and discretions, including the power to sub-delegate, to any committee consisting of one or more Directors. They may also delegate to any managing director or any Director holding any other executive office such of their powers, authorities and discretions as they consider desirable to be exercised by him provided that an alternate Director may not act as managing director and the appointment of a managing director shall be revoked forthwith if he ceases to be a Director. Any such delegation may be made subject to any conditions the Directors may impose and either collaterally with or to the exclusion of their own powers and any such delegation may be revoked or altered by the Directors. Subject to any such conditions, the proceedings of a committee of Directors shall be governed by the Articles regulating the proceedings of Directors, so far as they are capable of applying.
34.2 The Directors may establish any committees, local boards or agencies or appoint any person to be a manager or agent for managing the affairs of the Company and may appoint any person to be a member of such committees, local boards or agencies. Any such appointment may be made subject to any conditions the Directors may impose, and either collaterally with or to the exclusion of their own powers and any such appointment may be revoked or altered by the Directors. Subject to any such conditions, the proceedings of any such committee, local board or agency shall be governed by the Articles regulating the proceedings of Directors, so far as they are capable of applying.
34.3 The Directors may by power of attorney or otherwise appoint any person to be the agent of the Company on such conditions as the Directors may determine, provided that the delegation is not to the exclusion of their own powers and may be revoked by the Directors at any time.
34.4 The Directors may by power of attorney or otherwise appoint any company, firm, person or body of persons, whether nominated directly or indirectly by the Directors, to be the attorney or authorised signatory of the Company for such purpose and with such powers, authorities and discretions (not exceeding those vested in or exercisable by the Directors under the Articles) and for such period and subject to such conditions as they may think fit, and any such powers of attorney or other appointment may contain such provisions for the protection and convenience of persons dealing with any such attorneys or authorised signatories as the Directors may think fit and may also authorise any such attorney or authorised signatory to delegate all or any of the powers, authorities and discretions vested in him.
34.5 The Directors may appoint such officers of the Company (including, for the avoidance of doubt and without limitation, any secretary) as they consider necessary on such terms, at such remuneration and to perform such duties, and subject to such provisions as to disqualification and removal as the Directors may think fit. Unless otherwise specified in the terms of his appointment an officer of the Company may be removed by resolution of the Directors or Members. An officer of the Company may vacate his office at any time if he gives notice in writing to the Company that he resigns his office.
35 Alternate Directors
35.1 Any Director (but not an alternate Director) may by writing appoint any other Director, or any other person willing to act, to be an alternate Director and by writing may remove from office an alternate Director so appointed by him.
35.2 An alternate Director shall be entitled to receive notice of all meetings of Directors and of all meetings of committees of Directors of which his appointor is a member, to attend and vote at every such meeting at which the Director appointing him is not personally present, to sign any written resolution of the Directors, and generally to perform all the functions of his appointor as a Director in his absence.
35.3 An alternate Director shall cease to be an alternate Director if his appointor ceases to be a Director.
35.4 Any appointment or removal of an alternate Director shall be by notice to the Company signed by the Director making or revoking the appointment or in any other manner approved by the Directors.
35.5 Subject to the provisions of the Articles, an alternate Director shall be deemed for all purposes to be a Director and shall alone be responsible for his own acts and defaults and shall not be deemed to be the agent of the Director appointing him.
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36 No Minimum Shareholding
The Company in general meeting may fix a minimum shareholding required to be held by a Director, but unless and until such a shareholding qualification is fixed a Director is not required to hold Shares.
37 Remuneration of Directors
37.1 The remuneration to be paid to the Directors, if any, shall be such remuneration as the Directors shall determine. The Directors shall also be entitled to be paid all travelling, hotel and other expenses properly incurred by them in connection with their attendance at meetings of Directors or committees of Directors, or general meetings of the Company, or separate meetings of the holders of any class of Shares or debentures of the Company, or otherwise in connection with the business of the Company or the discharge of their duties as a Director, or to receive a fixed allowance in respect thereof as may be determined by the Directors, or a combination partly of one such method and partly the other.
37.2 The Directors may by resolution approve additional remuneration to any Director for any services which in the opinion of the Directors go beyond his ordinary routine work as a Director. Any fees paid to a Director who is also counsel, attorney or solicitor to the Company, or otherwise serves it in a professional capacity shall be in addition to his remuneration as a Director.
38 Seal
38.1 The Company may, if the Directors so determine, have a Seal. The Seal shall only be used by the authority of the Directors or of a committee of the Directors authorised by the Directors. Every instrument to which the Seal has been affixed shall be signed by at least one person who shall be either a Director or some officer of the Company or other person appointed by the Directors for the purpose.
38.2 The Company may have for use in any place or places outside the Cayman Islands a duplicate Seal or Seals each of which shall be a facsimile of the common Seal of the Company and, if the Directors so determine, with the addition on its face of the name of every place where it is to be used.
38.3 A Director or officer, representative or attorney of the Company may without further authority of the Directors affix the Seal over his signature alone to any document of the Company required to be authenticated by him under seal or to be filed with the Registrar of Companies in the Cayman Islands or elsewhere wheresoever.
39 Dividends, Distributions and Reserve
39.1 Subject to the Statute and this Article and except as otherwise provided by the rights attached to any Shares, the Directors may resolve to pay Dividends and other distributions on Shares in issue and authorise payment of the Dividends or other distributions out of the funds of the Company lawfully available therefor. A Dividend shall be deemed to be an interim Dividend unless the terms of the resolution pursuant to which the Directors resolve to pay such Dividend specifically state that such Dividend shall be a final Dividend. No Dividend or other distribution shall be paid except out of the realised or unrealised profits of the Company, out of the share premium account or as otherwise permitted by law.
39.2 Except as otherwise provided by the rights attached to any Shares, all Dividends and other distributions shall be paid according to the par value of the Shares that a Member holds. If any Share is issued on terms providing that it shall rank for Dividend as from a particular date, that Share shall rank for Dividend accordingly.
39.3 The Directors may deduct from any Dividend or other distribution payable to any Member all sums of money (if any) then payable by him to the Company on account of calls or otherwise.
39.4 The Directors may resolve that any Dividend or other distribution be paid wholly or partly by the distribution of specific assets and in particular (but without limitation) by the distribution of shares, debentures, or securities of any other company or in any one or more of such ways and where any difficulty arises in regard to such distribution, the Directors may settle the same as they think expedient and in particular may issue fractional Shares and may fix the value for distribution of such specific assets or any part thereof and may determine that cash payments shall be made to any Members upon the basis of the value so fixed in order to adjust the rights of all Members and may vest any such specific assets in trustees in such manner as may seem expedient to the Directors.
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39.5 Except as otherwise provided by the rights attached to any Shares, Dividends and other distributions may be paid in any currency. The Directors may determine the basis of conversion for any currency conversions that may be required and how any costs involved are to be met.
39.6 The Directors may, before resolving to pay any Dividend or other distribution, set aside such sums as they think proper as a reserve or reserves which shall, at the discretion of the Directors, be applicable for any purpose of the Company and pending such application may, at the discretion of the Directors, be employed in the business of the Company.
39.7 Any Dividend, other distribution, interest or other monies payable in cash in respect of Shares may be paid by wire transfer to the holder or by cheque or warrant sent through the post directed to the registered address of the holder or, in the case of joint holders, to the registered address of the holder who is first named on the Register of Members or to such person and to such address as such holder or joint holders may in writing direct. Every such cheque or warrant shall be made payable to the order of the person to whom it is sent. Any one of two or more joint holders may give effectual receipts for any Dividends, other distributions, bonuses, or other monies payable in respect of the Share held by them as joint holders.
39.8 No Dividend or other distribution shall bear interest against the Company.
39.9 Any Dividend or other distribution which cannot be paid to a Member and/or which remains unclaimed after six months from the date on which such Dividend or other distribution becomes payable may, in the discretion of the Directors, be paid into a separate account in the Company’s name, provided that the Company shall not be constituted as a trustee in respect of that account and the Dividend or other distribution shall remain as a debt due to the Member. Any Dividend or other distribution which remains unclaimed after a period of six years from the date on which such Dividend or other distribution becomes payable shall be forfeited and shall revert to the Company.
40 Capitalisation
The Directors may at any time capitalise any sum standing to the credit of any of the Company’s reserve accounts or funds (including the share premium account and capital redemption reserve fund) or any sum standing to the credit of the profit and loss account or otherwise available for distribution; appropriate such sum to Members in the proportions in which such sum would have been divisible amongst such Members had the same been a distribution of profits by way of Dividend or other distribution; and apply such sum on their behalf in paying up in full unissued Shares for allotment and distribution credited as fully paid-up to and amongst them in the proportion aforesaid. In such event the Directors shall do all acts and things required to give effect to such capitalisation, with full power given to the Directors to make such provisions as they think fit in the case of Shares becoming distributable in fractions (including provisions whereby the benefit of fractional entitlements accrue to the Company rather than to the Members concerned). The Directors may authorise any person to enter on behalf of all of the Members interested into an agreement with the Company providing for such capitalisation and matters incidental or relating thereto and any agreement made under such authority shall be effective and binding on all such Members and the Company.
41 Books of Account
41.1 The Directors shall cause proper books of account (including, where applicable, material underlying documentation including contracts and invoices) to be kept with respect to all sums of money received and expended by the Company and the matters in respect of which the receipt or expenditure takes place, all sales and purchases of goods by the Company and the assets and liabilities of the Company. Such books of account must be retained for a minimum period of five years from the date on which they are prepared. Proper books shall not be deemed to be kept if there are not kept such books of account as are necessary to give a true and fair view of the state of the Company’s affairs and to explain its transactions.
41.2 The Directors shall determine whether and to what extent and at what times and places and under what conditions or regulations the accounts and books of the Company or any of them shall be open to the inspection of Members not being Directors and no Member (not being a Director) shall have any right of inspecting any account or book or document of the Company except as conferred by Statute or authorised by the Directors or by the Company in general meeting.
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41.3 The Directors may cause to be prepared and to be laid before the Company in general meeting profit and loss accounts, balance sheets, group accounts (if any) and such other reports and accounts as may be required by law.
42 Audit
42.1 The Directors may appoint an Auditor of the Company who shall hold office on such terms as the Directors determine.
42.2 Every Auditor of the Company shall have a right of access at all times to the books and accounts and vouchers of the Company and shall be entitled to require from the Directors and officers of the Company such information and explanation as may be necessary for the performance of the duties of the Auditor.
42.3 Auditors shall, if so required by the Directors, make a report on the accounts of the Company during their tenure of office at the next annual general meeting following their appointment in the case of a company which is registered with the Registrar of Companies as an ordinary company, and at the next extraordinary general meeting following their appointment in the case of a company which is registered with the Registrar of Companies as an exempted company, and at any other time during their term of office, upon request of the Directors or any general meeting of the Members.
43 Notices
43.1 Notices shall be in writing and may be given by the Company to any Member either personally or by sending it by courier, post, cable, telex, fax or e-mail to him or to his address as shown in the Register of Members (or where the notice is given by e-mail by sending it to the e-mail address provided by such Member). Any notice, if posted from one country to another, is to be sent by airmail.
43.2 Where a notice is sent by courier, service of the notice shall be deemed to be effected by delivery of the notice to a courier company, and shall be deemed to have been received on the third day (not including Saturdays or Sundays or public holidays) following the day on which the notice was delivered to the courier. Where a notice is sent by post, service of the notice shall be deemed to be effected by properly addressing, pre paying and posting a letter containing the notice, and shall be deemed to have been received on the fifth day (not including Saturdays or Sundays or public holidays in the Cayman Islands) following the day on which the notice was posted. Where a notice is sent by cable, telex or fax, service of the notice shall be deemed to be effected by properly addressing and sending such notice and shall be deemed to have been received on the same day that it was transmitted. Where a notice is given by e-mail service shall be deemed to be effected by transmitting the e-mail to the e-mail address provided by the intended recipient and shall be deemed to have been received on the same day that it was sent, and it shall not be necessary for the receipt of the e-mail to be acknowledged by the recipient.
43.3 A notice may be given by the Company to the person or persons which the Company has been advised are entitled to a Share or Shares in consequence of the death or bankruptcy of a Member in the same manner as other notices which are required to be given under the Articles and shall be addressed to them by name, or by the title of representatives of the deceased, or trustee of the bankrupt, or by any like description at the address supplied for that purpose by the persons claiming to be so entitled, or at the option of the Company by giving the notice in any manner in which the same might have been given if the death or bankruptcy had not occurred.
43.4 Notice of every general meeting shall be given in any manner authorised by the Articles to every holder of Shares carrying an entitlement to receive such notice on the record date for such meeting except that in the case of joint holders the notice shall be sufficient if given to the joint holder first named in the Register of Members and every person upon whom the ownership of a Share devolves by reason of his being a legal personal representative or a trustee in bankruptcy of a Member where the Member but for his death or bankruptcy would be entitled to receive notice of the meeting, and no other person shall be entitled to receive notices of general meetings.
B-20
44 Winding Up
44.1 If the Company shall be wound up the liquidator shall apply the assets of the Company in satisfaction of creditors’ claims in such manner and order as such liquidator thinks fit. Subject to the rights attaching to any Shares, in a winding up:
(a) if the assets available for distribution amongst the Members shall be insufficient to repay the whole of the Company’s issued share capital, such assets shall be distributed so that, as nearly as may be, the losses shall be borne by the Members in proportion to the par value of the Shares held by them; or
(b) if the assets available for distribution amongst the Members shall be more than sufficient to repay the whole of the Company’s issued share capital at the commencement of the winding up, the surplus shall be distributed amongst the Members in proportion to the par value of the Shares held by them at the commencement of the winding up subject to a deduction from those Shares in respect of which there are monies due, of all monies payable to the Company for unpaid calls or otherwise.
44.2 If the Company shall be wound up the liquidator may, subject to the rights attaching to any Shares and with the approval of a Special Resolution of the Company and any other approval required by the Statute, divide amongst the Members in kind the whole or any part of the assets of the Company (whether such assets shall consist of property of the same kind or not) and may for that purpose value any assets and determine how the division shall be carried out as between the Members or different classes of Members. The liquidator may, with the like approval, vest the whole or any part of such assets in trustees upon such trusts for the benefit of the Members as the liquidator, with the like approval, shall think fit, but so that no Member shall be compelled to accept any asset upon which there is a liability.
45 Indemnity and Insurance
45.1 Every Director and officer of the Company (which for the avoidance of doubt, shall not include auditors of the Company), together with every former Director and former officer of the Company (each an “Indemnified Person”) shall be indemnified out of the assets of the Company against any liability, action, proceeding, claim, demand, costs, damages or expenses, including legal expenses, whatsoever which they or any of them may incur as a result of any act or failure to act in carrying out their functions other than such liability (if any) that they may incur by reason of their own actual fraud or wilful default. No Indemnified Person shall be liable to the Company for any loss or damage incurred by the Company as a result (whether direct or indirect) of the carrying out of their functions unless that liability arises through the actual fraud or wilful default of such Indemnified Person. No person shall be found to have committed actual fraud or wilful default under this Article unless or until a court of competent jurisdiction shall have made a finding to that effect.
45.2 The Company shall advance to each Indemnified Person reasonable attorneys’ fees and other costs and expenses incurred in connection with the defence of any action, suit, proceeding or investigation involving such Indemnified Person for which indemnity will or could be sought. In connection with any advance of any expenses hereunder, the Indemnified Person shall execute an undertaking to repay the advanced amount to the Company if it shall be determined by final judgment or other final adjudication that such Indemnified Person was not entitled to indemnification pursuant to this Article. If it shall be determined by a final judgment or other final adjudication that such Indemnified Person was not entitled to indemnification with respect to such judgment, costs or expenses, then such party shall not be indemnified with respect to such judgment, costs or expenses and any advancement shall be returned to the Company (without interest) by the Indemnified Person.
45.3 The Directors, on behalf of the Company, may purchase and maintain insurance for the benefit of any Director or other officer of the Company against any liability which, by virtue of any rule of law, would otherwise attach to such person in respect of any negligence, default, breach of duty or breach of trust of which such person may be guilty in relation to the Company.
46 Financial Year
Unless the Directors otherwise prescribe, the financial year of the Company shall end on 31st December in each year and, following the year of incorporation, shall begin on 1st January in each year.
B-21
47 Transfer by Way of Continuation
If the Company is exempted as defined in the Statute, it shall, subject to the provisions of the Statute and with the approval of a Special Resolution, have the power to register by way of continuation as a body corporate under the laws of any jurisdiction outside the Cayman Islands and to be deregistered in the Cayman Islands.
48 Mergers and Consolidations
The Company shall have the power to merge or consolidate with one or more other constituent companies (as defined in the Statute) upon such terms as the Directors may determine and (to the extent required by the Statute) with the approval of a Special Resolution.
B-22
Dated this 12th day of April 2019. |
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Maples Corporate Services Limited
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acting by: |
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/s/ Marcia Borden |
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Marcia Borden |
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/s/ Ahmaree Piercy |
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Ahmaree Piercy
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B-23
PROXY CARD
FOR THE EXTRAORDINARY GENERAL MEETING OF
TWELVE SEAS INVESTMENT COMPANY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints [Dimitri Elkin] and [Stephen N. Cannon] (each, a “Proxy”) as proxies, each with full power to act without the other and the power to appoint a substitute to vote the shares that the undersigned is entitled to vote (the “Shares”) at the Extraordinary General Meeting of Twelve Seas Investment Company to be held on [ ], 2019 at 10:00 a.m., Eastern time at the offices of Ellenoff Grossman & Schole LLP, 1345 Avenue of the Americas, New York, New York 10105, and at any adjournments thereof. Such Shares shall be voted as indicated with respect to the proposals listed on the reverse side hereof and in the Proxy’s discretion on such other matters as may properly come before the Meeting or any adjournment thereof.
The undersigned acknowledges receipt of the accompanying proxy statement and revokes all prior proxies for said meeting.
THE SHARES REPRESENTED BY THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO SPECIFIC DIRECTION IS GIVEN AS TO THE PROPOSALS ON THE REVERSE SIDE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2, 3 AND 4. PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY.
(Continued and to be marked, dated and signed on reverse side)
C-1
~ PLEASE DETACH ALONG PERFORATED LINE AND MAIL IN THE ENVELOPE PROVIDED. ~
TWELVE SEAS INVESTMENT COMPANY — THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” PROPOSALS 1, 2, 3 and 4. |
Please mark votes as £
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(1) The Business Combination Proposal — To consider and vote upon a proposal to approve and adopt the Business Combination Agreement, dated as of April 15, 2019 (as may be amended), by and among Twelve Seas Investment Company, Brooge Holdings Limited, Brooge Merger Sub, Brooge Petrolum And Gas Investment Company FZE and the other parties thereto, and the transactions contemplated thereby (the “Business Combination”); |
FOR
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AGAINST
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ABSTAIN
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£ Intention to Exercise Redemption Rights If you intend to exercise your redemption rights, please check this box. Checking this box, however, is not sufficient to exercise your redemption rights. You must also comply with the procedures set forth in the proxy statement/prospectus under the heading “Extraordinary General Meeting of Twelve Seas Shareholders — Redemption Rights.” |
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(2) The Merger Proposal — To consider and vote upon a proposal to approve the merger of Twelve Seas Investment Company with Brooge Merger Sub Limited |
FOR
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AGAINST
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ABSTAIN
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(3) The Share Issuance Proposal — To consider and vote upon a proposal to approve, for purposes of complying with applicable NASDAQ Stock Market LLC listing rules, the issuance of more than 20% of the issued and outstanding ordinary shares of Twelve Seas Investment Company in financing transactions in connection with the Business Combination; and |
FOR
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AGAINST
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ABSTAIN
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(4) The Adjournment Proposal — To consider and vote upon a proposal to adjourn the Extraordinary General Meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the meeting, there are not sufficient votes to approve the Business Combination Proposal and the Merger Proposal. |
FOR
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AGAINST
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ABSTAIN
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Date: , 2019 |
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Signature |
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Signature (if held jointly) |
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When shares are held by joint tenants, both should sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate name by president or other authorized officer. If a partnership, please sign in partnership name by an authorized person. |
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A vote to abstain will have the same effect as a vote AGAINST proposals 1, 2, 3 and 4. The shares represented by the proxy, when properly executed, will be voted in the manner directed herein by the undersigned shareholder(s). If no direction is made, this proxy will be voted FOR each of proposals 1, 2, 3 and 4. If any other matters properly come before the meeting, the Proxies will vote on such matters in their discretion. |
~ PLEASE DETACH ALONG PERFORATED LINE AND MAIL IN THE ENVELOPE PROVIDED. ~
Exhibit 3.1
THE COMPANIES LAW (2018 REVISION)
OF THE CAYMAN ISLANDS
COMPANY LIMITED BY SHARES
MEMORANDUM AND ARTICLES OF ASSOCIATION
OF
BROOGE HOLDINGS LIMITED
THE COMPANIES LAW (2018 REVISION)
OF THE CAYMAN ISLANDS
COMPANY LIMITED BY SHARES
MEMORANDUM OF ASSOCIATION
OF
BROOGE HOLDINGS LIMITED
1 | The name of the Company is Brooge Holdings Limited. |
2 | The Registered Office of the Company shall be at the offices of Maples Corporate Services Limited, PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands, or at such other place within the Cayman Islands as the Directors may decide. |
3 | The objects for which the Company is established are unrestricted and the Company shall have full power and authority to carry out any object not prohibited by the laws of the Cayman Islands. |
4 | The liability of each Member is limited to the amount unpaid on such Member’s shares. |
5 | The share capital of the Company is US$50,000 divided into 500,000,000 shares of a par value of US$0.0001 each. |
6 | The Company has power to register by way of continuation as a body corporate limited by shares under the laws of any jurisdiction outside the Cayman Islands and to be deregistered in the Cayman Islands. |
7 | Capitalised terms that are not defined in this Memorandum of Association bear the respective meanings given to them in the Articles of Association of the Company. |
WE, the subscriber to this Memorandum of Association, wish to form a company pursuant to this Memorandum of Association, and we agree to take the number of shares shown opposite our name.
Dated this 12th day of April 2019.
Signature and Address of Subscriber | Number of Shares Taken |
Maples Corporate Services Limited of PO Box 309, Ugland House Grand Cayman KY1-1104 Cayman Islands
acting by:
/s/ Marcia Borden Marcia Borden
/s/ Ahmaree Piercy
Ahmaree Piercy Witness to the above signature |
One |
2
THE COMPANIES LAW (2018 REVISION)
OF THE CAYMAN ISLANDS
COMPANY LIMITED BY SHARES
ARTICLES OF ASSOCIATION
OF
BROOGE HOLDINGS LIMITED
1 | Interpretation |
1.1 | In the Articles Table A in the First Schedule to the Statute does not apply and, unless there is something in the subject or context inconsistent therewith: |
3
“Register of Members” | means the register of Members maintained in accordance with the Statute and includes (except where otherwise stated) any branch or duplicate register of Members. | |
“Registered Office” | means the registered office for the time being of the Company. | |
“Seal” | means the common seal of the Company and includes every duplicate seal. | |
“Share” | means a share in the Company and includes a fraction of a share in the Company. | |
“Special Resolution” | has the same meaning as in the Statute, and includes a unanimous written resolution. | |
“Statute” | means the Companies Law (2018 Revision) of the Cayman Islands. | |
“Subscriber” | means the subscriber to the Memorandum. | |
“Treasury Share” | means a Share held in the name of the Company as a treasury share in accordance with the Statute. |
1.2 | In the Articles: |
(a) | words importing the singular number include the plural number and vice versa; |
(b) | words importing the masculine gender include the feminine gender; |
(c) | words importing persons include corporations as well as any other legal or natural person; |
(d) | “written” and “in writing” include all modes of representing or reproducing words in visible form, including in the form of an Electronic Record; |
(e) | “shall” shall be construed as imperative and “may” shall be construed as permissive; |
(f) | references to provisions of any law or regulation shall be construed as references to those provisions as amended, modified, re-enacted or replaced; |
(g) | any phrase introduced by the terms “including”, “include”, “in particular” or any similar expression shall be construed as illustrative and shall not limit the sense of the words preceding those terms; |
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(h) | the term “and/or” is used herein to mean both “and” as well as “or.” The use of “and/or” in certain contexts in no respects qualifies or modifies the use of the terms “and” or “or” in others. The term “or” shall not be interpreted to be exclusive and the term “and” shall not be interpreted to require the conjunctive (in each case, unless the context otherwise requires); |
(i) | headings are inserted for reference only and shall be ignored in construing the Articles; |
(j) | any requirements as to delivery under the Articles include delivery in the form of an Electronic Record; |
(k) | any requirements as to execution or signature under the Articles including the execution of the Articles themselves can be satisfied in the form of an electronic signature as defined in the Electronic Transactions Law; |
(l) | sections 8 and 19(3) of the Electronic Transactions Law shall not apply; |
(m) | the term “clear days” in relation to the period of a notice means that period excluding the day when the notice is received or deemed to be received and the day for which it is given or on which it is to take effect; and |
(n) | the term “holder” in relation to a Share means a person whose name is entered in the Register of Members as the holder of such Share. |
2 | Commencement of Business |
2.1 | The business of the Company may be commenced as soon after incorporation of the Company as the Directors shall see fit. |
2.2 | The Directors may pay, out of the capital or any other monies of the Company, all expenses incurred in or about the formation and establishment of the Company, including the expenses of registration. |
3 | Issue of Shares |
3.1 | Subject to the provisions, if any, in the Memorandum (and to any direction that may be given by the Company in general meeting) and without prejudice to any rights attached to any existing Shares, the Directors may allot, issue, grant options over or otherwise dispose of Shares (including fractions of a Share) with or without preferred, deferred or other rights or restrictions, whether in regard to Dividend or other distribution, voting, return of capital or otherwise and to such persons, at such times and on such other terms as they think proper, and may also (subject to the Statute and the Articles) vary such rights. Notwithstanding the foregoing, the Subscriber shall have the power to: |
(a) | issue one Share to itself; |
(b) | transfer that Share by an instrument of transfer to any person; and |
(c) | update the Register of Members in respect of the issue and transfer of that Share. |
3.2 | The Company shall not issue Shares to bearer. |
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4 | Register of Members |
4.1 | The Company shall maintain or cause to be maintained the Register of Members in accordance with the Statute. |
4.2 | The Directors may determine that the Company shall maintain one or more branch registers of Members in accordance with the Statute. The Directors may also determine which register of Members shall constitute the principal register and which shall constitute the branch register or registers, and to vary such determination from time to time. |
5 | Closing Register of Members or Fixing Record Date |
5.1 | For the purpose of determining Members entitled to notice of, or to vote at any meeting of Members or any adjournment thereof, or Members entitled to receive payment of any Dividend or other distribution, or in order to make a determination of Members for any other purpose, the Directors may provide that the Register of Members shall be closed for transfers for a stated period which shall not in any case exceed forty days. |
5.2 | In lieu of, or apart from, closing the Register of Members, the Directors may fix in advance or arrears a date as the record date for any such determination of Members entitled to notice of, or to vote at any meeting of the Members or any adjournment thereof, or for the purpose of determining the Members entitled to receive payment of any Dividend or other distribution, or in order to make a determination of Members for any other purpose. |
5.3 | If the Register of Members is not so closed and no record date is fixed for the determination of Members entitled to notice of, or to vote at, a meeting of Members or Members entitled to receive payment of a Dividend or other distribution, the date on which notice of the meeting is sent or the date on which the resolution of the Directors resolving to pay such Dividend or other distribution is passed, as the case may be, shall be the record date for such determination of Members. When a determination of Members entitled to vote at any meeting of Members has been made as provided in this Article, such determination shall apply to any adjournment thereof. |
6 | Certificates for Shares |
6.1 | A Member shall only be entitled to a share certificate if the Directors resolve that share certificates shall be issued. Share certificates representing Shares, if any, shall be in such form as the Directors may determine. Share certificates shall be signed by one or more Directors or other person authorised by the Directors. The Directors may authorise certificates to be issued with the authorised signature(s) affixed by mechanical process. All certificates for Shares shall be consecutively numbered or otherwise identified and shall specify the Shares to which they relate. All certificates surrendered to the Company for transfer shall be cancelled and subject to the Articles no new certificate shall be issued until the former certificate representing a like number of relevant Shares shall have been surrendered and cancelled. |
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6.2 | The Company shall not be bound to issue more than one certificate for Shares held jointly by more than one person and delivery of a certificate to one joint holder shall be a sufficient delivery to all of them. |
6.3 | If a share certificate is defaced, worn out, lost or destroyed, it may be renewed on such terms (if any) as to evidence and indemnity and on the payment of such expenses reasonably incurred by the Company in investigating evidence, as the Directors may prescribe, and (in the case of defacement or wearing out) upon delivery of the old certificate. |
6.4 | Every share certificate sent in accordance with the Articles will be sent at the risk of the Member or other person entitled to the certificate. The Company will not be responsible for any share certificate lost or delayed in the course of delivery. |
7 | Transfer of Shares |
7.1 | Subject to Article 3.1, Shares are transferable subject to the approval of the Directors by resolution who may, in their absolute discretion, decline to register any transfer of Shares without giving any reason. If the Directors refuse to register a transfer they shall notify the transferee within two months of such refusal. |
7.2 | The instrument of transfer of any Share shall be in writing and shall be executed by or on behalf of the transferor (and if the Directors so require, signed by or on behalf of the transferee). The transferor shall be deemed to remain the holder of a Share until the name of the transferee is entered in the Register of Members. |
8 | Redemption, Repurchase and Surrender of Shares |
8.1 | Subject to the provisions of the Statute the Company may issue Shares that are to be redeemed or are liable to be redeemed at the option of the Member or the Company. The redemption of such Shares shall be effected in such manner and upon such other terms as the Company may, by Special Resolution, determine before the issue of the Shares. |
8.2 | Subject to the provisions of the Statute, the Company may purchase its own Shares (including any redeemable Shares) in such manner and on such other terms as the Directors may agree with the relevant Member. |
8.3 | The Company may make a payment in respect of the redemption or purchase of its own Shares in any manner permitted by the Statute, including out of capital. |
8.4 | The Directors may accept the surrender for no consideration of any fully paid Share. |
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9 | Treasury Shares |
9.1 | The Directors may, prior to the purchase, redemption or surrender of any Share, determine that such Share shall be held as a Treasury Share. |
9.2 | The Directors may determine to cancel a Treasury Share or transfer a Treasury Share on such terms as they think proper (including, without limitation, for nil consideration). |
10 | Variation of Rights of Shares |
10.1 | If at any time the share capital of the Company is divided into different classes of Shares, all or any of the rights attached to any class (unless otherwise provided by the terms of issue of the Shares of that class) may, whether or not the Company is being wound up, be varied without the consent of the holders of the issued Shares of that class where such variation is considered by the Directors not to have a material adverse effect upon such rights; otherwise, any such variation shall be made only with the consent in writing of the holders of not less than two thirds of the issued Shares of that class, or with the approval of a resolution passed by a majority of not less than two thirds of the votes cast at a separate meeting of the holders of the Shares of that class. For the avoidance of doubt, the Directors reserve the right, notwithstanding that any such variation may not have a material adverse effect, to obtain consent from the holders of Shares of the relevant class. To any such meeting all the provisions of the Articles relating to general meetings shall apply mutatis mutandis, except that the necessary quorum shall be one person holding or representing by proxy at least one third of the issued Shares of the class and that any holder of Shares of the class present in person or by proxy may demand a poll. |
10.2 | For the purposes of a separate class meeting, the Directors may treat two or more or all the classes of Shares as forming one class of Shares if the Directors consider that such class of Shares would be affected in the same way by the proposals under consideration, but in any other case shall treat them as separate classes of Shares. |
10.3 | The rights conferred upon the holders of the Shares of any class issued with preferred or other rights shall not, unless otherwise expressly provided by the terms of issue of the Shares of that class, be deemed to be varied by the creation or issue of further Shares ranking pari passu therewith. |
11 | Commission on Sale of Shares |
The Company may, in so far as the Statute permits, pay a commission to any person in consideration of his subscribing or agreeing to subscribe (whether absolutely or conditionally) or procuring or agreeing to procure subscriptions (whether absolutely or conditionally) for any Shares. Such commissions may be satisfied by the payment of cash and/or the issue of fully or partly paid-up Shares. The Company may also on any issue of Shares pay such brokerage as may be lawful.
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12 | Non Recognition of Trusts |
The Company shall not be bound by or compelled to recognise in any way (even when notified) any equitable, contingent, future or partial interest in any Share, or (except only as is otherwise provided by the Articles or the Statute) any other rights in respect of any Share other than an absolute right to the entirety thereof in the holder.
13 | Lien on Shares |
13.1 | The Company shall have a first and paramount lien on all Shares (whether fully paid-up or not) registered in the name of a Member (whether solely or jointly with others) for all debts, liabilities or engagements to or with the Company (whether presently payable or not) by such Member or his estate, either alone or jointly with any other person, whether a Member or not, but the Directors may at any time declare any Share to be wholly or in part exempt from the provisions of this Article. The registration of a transfer of any such Share shall operate as a waiver of the Company’s lien thereon. The Company’s lien on a Share shall also extend to any amount payable in respect of that Share. |
13.2 | The Company may sell, in such manner as the Directors think fit, any Shares on which the Company has a lien, if a sum in respect of which the lien exists is presently payable, and is not paid within fourteen clear days after notice has been received or deemed to have been received by the holder of the Shares, or to the person entitled to it in consequence of the death or bankruptcy of the holder, demanding payment and stating that if the notice is not complied with the Shares may be sold. |
13.3 | To give effect to any such sale the Directors may authorise any person to execute an instrument of transfer of the Shares sold to, or in accordance with the directions of, the purchaser. The purchaser or his nominee shall be registered as the holder of the Shares comprised in any such transfer, and he shall not be bound to see to the application of the purchase money, nor shall his title to the Shares be affected by any irregularity or invalidity in the sale or the exercise of the Company’s power of sale under the Articles. |
13.4 | The net proceeds of such sale after payment of costs, shall be applied in payment of such part of the amount in respect of which the lien exists as is presently payable and any balance shall (subject to a like lien for sums not presently payable as existed upon the Shares before the sale) be paid to the person entitled to the Shares at the date of the sale. |
14 | Call on Shares |
14.1 | Subject to the terms of the allotment and issue of any Shares, the Directors may make calls upon the Members in respect of any monies unpaid on their Shares (whether in respect of par value or premium), and each Member shall (subject to receiving at least fourteen clear days’ notice specifying the time or times of payment) pay to the Company at the time or times so specified the amount called on the Shares. A call may be revoked or postponed, in whole or in part, as the Directors may determine. A call may be required to be paid by instalments. A person upon whom a call is made shall remain liable for calls made upon him notwithstanding the subsequent transfer of the Shares in respect of which the call was made. |
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14.2 | A call shall be deemed to have been made at the time when the resolution of the Directors authorising such call was passed. |
14.3 | The joint holders of a Share shall be jointly and severally liable to pay all calls in respect thereof. |
14.4 | If a call remains unpaid after it has become due and payable, the person from whom it is due shall pay interest on the amount unpaid from the day it became due and payable until it is paid at such rate as the Directors may determine (and in addition all expenses that have been incurred by the Company by reason of such non-payment), but the Directors may waive payment of the interest or expenses wholly or in part. |
14.5 | An amount payable in respect of a Share on issue or allotment or at any fixed date, whether on account of the par value of the Share or premium or otherwise, shall be deemed to be a call and if it is not paid all the provisions of the Articles shall apply as if that amount had become due and payable by virtue of a call. |
14.6 | The Directors may issue Shares with different terms as to the amount and times of payment of calls, or the interest to be paid. |
14.7 | The Directors may, if they think fit, receive an amount from any Member willing to advance all or any part of the monies uncalled and unpaid upon any Shares held by him, and may (until the amount would otherwise become payable) pay interest at such rate as may be agreed upon between the Directors and the Member paying such amount in advance. |
14.8 | No such amount paid in advance of calls shall entitle the Member paying such amount to any portion of a Dividend or other distribution payable in respect of any period prior to the date upon which such amount would, but for such payment, become payable. |
15 | Forfeiture of Shares |
15.1 | If a call or instalment of a call remains unpaid after it has become due and payable the Directors may give to the person from whom it is due not less than fourteen clear days’ notice requiring payment of the amount unpaid together with any interest which may have accrued and any expenses incurred by the Company by reason of such non-payment. The notice shall specify where payment is to be made and shall state that if the notice is not complied with the Shares in respect of which the call was made will be liable to be forfeited. |
15.2 | If the notice is not complied with, any Share in respect of which it was given may, before the payment required by the notice has been made, be forfeited by a resolution of the Directors. Such forfeiture shall include all Dividends, other distributions or other monies payable in respect of the forfeited Share and not paid before the forfeiture. |
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15.3 | A forfeited Share may be sold, re-allotted or otherwise disposed of on such terms and in such manner as the Directors think fit and at any time before a sale, re-allotment or disposition the forfeiture may be cancelled on such terms as the Directors think fit. Where for the purposes of its disposal a forfeited Share is to be transferred to any person the Directors may authorise some person to execute an instrument of transfer of the Share in favour of that person. |
15.4 | A person any of whose Shares have been forfeited shall cease to be a Member in respect of them and shall surrender to the Company for cancellation the certificate for the Shares forfeited and shall remain liable to pay to the Company all monies which at the date of forfeiture were payable by him to the Company in respect of those Shares together with interest at such rate as the Directors may determine, but his liability shall cease if and when the Company shall have received payment in full of all monies due and payable by him in respect of those Shares. |
15.5 | A certificate in writing under the hand of one Director or officer of the Company that a Share has been forfeited on a specified date shall be conclusive evidence of the facts stated in it as against all persons claiming to be entitled to the Share. The certificate shall (subject to the execution of an instrument of transfer) constitute a good title to the Share and the person to whom the Share is sold or otherwise disposed of shall not be bound to see to the application of the purchase money, if any, nor shall his title to the Share be affected by any irregularity or invalidity in the proceedings in reference to the forfeiture, sale or disposal of the Share. |
15.6 | The provisions of the Articles as to forfeiture shall apply in the case of non payment of any sum which, by the terms of issue of a Share, becomes payable at a fixed time, whether on account of the par value of the Share or by way of premium as if it had been payable by virtue of a call duly made and notified. |
16 | Transmission of Shares |
16.1 | If a Member dies the survivor or survivors (where he was a joint holder) or his legal personal representatives (where he was a sole holder), shall be the only persons recognised by the Company as having any title to his Shares. The estate of a deceased Member is not thereby released from any liability in respect of any Share, for which he was a joint or sole holder. |
16.2 | Any person becoming entitled to a Share in consequence of the death or bankruptcy or liquidation or dissolution of a Member (or in any other way than by transfer) may, upon such evidence being produced as may be required by the Directors, elect, by a notice in writing sent by him to the Company, either to become the holder of such Share or to have some person nominated by him registered as the holder of such Share. If he elects to have another person registered as the holder of such Share he shall sign an instrument of transfer of that Share to that person. The Directors shall, in either case, have the same right to decline or suspend registration as they would have had in the case of a transfer of the Share by the relevant Member before his death or bankruptcy or liquidation or dissolution, as the case may be. |
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16.3 | A person becoming entitled to a Share by reason of the death or bankruptcy or liquidation or dissolution of a Member (or in any other case than by transfer) shall be entitled to the same Dividends, other distributions and other advantages to which he would be entitled if he were the holder of such Share. However, he shall not, before becoming a Member in respect of a Share, be entitled in respect of it to exercise any right conferred by membership in relation to general meetings of the Company and the Directors may at any time give notice requiring any such person to elect either to be registered himself or to have some person nominated by him be registered as the holder of the Share (but the Directors shall, in either case, have the same right to decline or suspend registration as they would have had in the case of a transfer of the Share by the relevant Member before his death or bankruptcy or liquidation or dissolution or any other case than by transfer, as the case may be). If the notice is not complied with within ninety days of being received or deemed to be received (as determined pursuant to the Articles) the Directors may thereafter withhold payment of all Dividends, other distributions, bonuses or other monies payable in respect of the Share until the requirements of the notice have been complied with. |
17 | Amendments of Memorandum and Articles of Association and Alteration of Capital |
17.1 | The Company may by Ordinary Resolution: |
(a) | increase its share capital by such sum as the Ordinary Resolution shall prescribe and with such rights, priorities and privileges annexed thereto, as the Company in general meeting may determine; |
(b) | consolidate and divide all or any of its share capital into Shares of larger amount than its existing Shares; |
(c) | convert all or any of its paid-up Shares into stock, and reconvert that stock into paid-up Shares of any denomination; |
(d) | by subdivision of its existing Shares or any of them divide the whole or any part of its share capital into Shares of smaller amount than is fixed by the Memorandum or into Shares without par value; and |
(e) | cancel any Shares that at the date of the passing of the Ordinary Resolution have not been taken or agreed to be taken by any person and diminish the amount of its share capital by the amount of the Shares so cancelled. |
17.2 | All new Shares created in accordance with the provisions of the preceding Article shall be subject to the same provisions of the Articles with reference to the payment of calls, liens, transfer, transmission, forfeiture and otherwise as the Shares in the original share capital. |
17.3 | Subject to the provisions of the Statute and the provisions of the Articles as regards the matters to be dealt with by Ordinary Resolution, the Company may by Special Resolution: |
(a) | change its name; |
(b) | alter or add to the Articles; |
(c) | alter or add to the Memorandum with respect to any objects, powers or other matters specified therein; and |
(d) | reduce its share capital or any capital redemption reserve fund. |
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18 | Offices and Places of Business |
Subject to the provisions of the Statute, the Company may by resolution of the Directors change the location of its Registered Office. The Company may, in addition to its Registered Office, maintain such other offices or places of business as the Directors determine.
19 | General Meetings |
19.1 | All general meetings other than annual general meetings shall be called extraordinary general meetings. |
19.2 | The Company may, but shall not (unless required by the Statute) be obliged to, in each year hold a general meeting as its annual general meeting, and shall specify the meeting as such in the notices calling it. Any annual general meeting shall be held at such time and place as the Directors shall appoint and if no other time and place is prescribed by them, it shall be held at the Registered Office on the second Wednesday in December of each year at ten o’clock in the morning. At these meetings the report of the Directors (if any) shall be presented. |
19.3 | The Directors may call general meetings, and they shall on a Members’ requisition forthwith proceed to convene an extraordinary general meeting of the Company. |
19.4 | A Members’ requisition is a requisition of Members holding at the date of deposit of the requisition not less than ten per cent. in par value of the issued Shares which as at that date carry the right to vote at general meetings of the Company. |
19.5 | The Members’ requisition must state the objects of the meeting and must be signed by the requisitionists and deposited at the Registered Office, and may consist of several documents in like form each signed by one or more requisitionists. |
19.6 | If there are no Directors as at the date of the deposit of the Members’ requisition or if the Directors do not within twenty-one days from the date of the deposit of the Members’ requisition duly proceed to convene a general meeting to be held within a further twenty-one days, the requisitionists, or any of them representing more than one-half of the total voting rights of all of the requisitionists, may themselves convene a general meeting, but any meeting so convened shall be held no later than the day which falls three months after the expiration of the said twenty-one day period. |
19.7 | A general meeting convened as aforesaid by requisitionists shall be convened in the same manner as nearly as possible as that in which general meetings are to be convened by Directors. |
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20 | Notice of General Meetings |
20.1 | At least five clear days’ notice shall be given of any general meeting. Every notice shall specify the place, the day and the hour of the meeting and the general nature of the business to be conducted at the general meeting and shall be given in the manner hereinafter mentioned or in such other manner if any as may be prescribed by the Company, provided that a general meeting of the Company shall, whether or not the notice specified in this Article has been given and whether or not the provisions of the Articles regarding general meetings have been complied with, be deemed to have been duly convened if it is so agreed: |
(a) | in the case of an annual general meeting, by all of the Members entitled to attend and vote thereat; and |
(b) | in the case of an extraordinary general meeting, by a majority in number of the Members having a right to attend and vote at the meeting, together holding not less than ninety five per cent. in par value of the Shares giving that right. |
20.2 | The accidental omission to give notice of a general meeting to, or the non receipt of notice of a general meeting by, any person entitled to receive such notice shall not invalidate the proceedings of that general meeting. |
21 | Proceedings at General Meetings |
21.1 | No business shall be transacted at any general meeting unless a quorum is present. Two Members being individuals present in person or by proxy or if a corporation or other non-natural person by its duly authorised representative or proxy shall be a quorum unless the Company has only one Member entitled to vote at such general meeting in which case the quorum shall be that one Member present in person or by proxy or (in the case of a corporation or other non-natural person) by its duly authorised representative or proxy. |
21.2 | A person may participate at a general meeting by conference telephone or other communications equipment by means of which all the persons participating in the meeting can communicate with each other. Participation by a person in a general meeting in this manner is treated as presence in person at that meeting. |
21.3 | A resolution (including a Special Resolution) in writing (in one or more counterparts) signed by or on behalf of all of the Members for the time being entitled to receive notice of and to attend and vote at general meetings (or, being corporations or other non-natural persons, signed by their duly authorised representatives) shall be as valid and effective as if the resolution had been passed at a general meeting of the Company duly convened and held. |
21.4 | If a quorum is not present within half an hour from the time appointed for the meeting to commence or if during such a meeting a quorum ceases to be present, the meeting, if convened upon a Members’ requisition, shall be dissolved and in any other case it shall stand adjourned to the same day in the next week at the same time and/or place or to such other day, time and/or place as the Directors may determine, and if at the adjourned meeting a quorum is not present within half an hour from the time appointed for the meeting to commence, the Members present shall be a quorum. |
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21.5 | The Directors may, at any time prior to the time appointed for the meeting to commence, appoint any person to act as chairman of a general meeting of the Company or, if the Directors do not make any such appointment, the chairman, if any, of the board of Directors shall preside as chairman at such general meeting. If there is no such chairman, or if he shall not be present within fifteen minutes after the time appointed for the meeting to commence, or is unwilling to act, the Directors present shall elect one of their number to be chairman of the meeting. |
21.6 | If no Director is willing to act as chairman or if no Director is present within fifteen minutes after the time appointed for the meeting to commence, the Members present shall choose one of their number to be chairman of the meeting. |
21.7 | The chairman may, with the consent of a meeting at which a quorum is present (and shall if so directed by the meeting) adjourn the meeting from time to time and from place to place, but no business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place. |
21.8 | When a general meeting is adjourned for thirty days or more, notice of the adjourned meeting shall be given as in the case of an original meeting. Otherwise it shall not be necessary to give any such notice of an adjourned meeting. |
21.9 | A resolution put to the vote of the meeting shall be decided on a show of hands unless before, or on the declaration of the result of, the show of hands, the chairman demands a poll, or any other Member or Members collectively present in person or by proxy (or in the case of a corporation or other non-natural person, by its duly authorised representative or proxy) and holding at least ten per cent. in par value of the Shares giving a right to attend and vote at the meeting demand a poll. |
21.10 | Unless a poll is duly demanded and the demand is not withdrawn a declaration by the chairman that a resolution has been carried or carried unanimously, or by a particular majority, or lost or not carried by a particular majority, an entry to that effect in the minutes of the proceedings of the meeting shall be conclusive evidence of that fact without proof of the number or proportion of the votes recorded in favour of or against such resolution. |
21.11 | The demand for a poll may be withdrawn. |
21.12 | Except on a poll demanded on the election of a chairman or on a question of adjournment, a poll shall be taken as the chairman directs, and the result of the poll shall be deemed to be the resolution of the general meeting at which the poll was demanded. |
21.13 | A poll demanded on the election of a chairman or on a question of adjournment shall be taken forthwith. A poll demanded on any other question shall be taken at such date, time and place as the chairman of the general meeting directs, and any business other than that upon which a poll has been demanded or is contingent thereon may proceed pending the taking of the poll. |
21.14 | In the case of an equality of votes, whether on a show of hands or on a poll, the chairman shall be entitled to a second or casting vote. |
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22 | Votes of Members |
22.1 | Subject to any rights or restrictions attached to any Shares, on a show of hands every Member who (being an individual) is present in person or by proxy or, if a corporation or other non-natural person is present by its duly authorised representative or by proxy, shall have one vote and on a poll every Member present in any such manner shall have one vote for every Share of which he is the holder. |
22.2 | In the case of joint holders the vote of the senior holder who tenders a vote, whether in person or by proxy (or, in the case of a corporation or other non-natural person, by its duly authorised representative or proxy), shall be accepted to the exclusion of the votes of the other joint holders, and seniority shall be determined by the order in which the names of the holders stand in the Register of Members. |
22.3 | A Member of unsound mind, or in respect of whom an order has been made by any court, having jurisdiction in lunacy, may vote, whether on a show of hands or on a poll, by his committee, receiver, curator bonis, or other person on such Member’s behalf appointed by that court, and any such committee, receiver, curator bonis or other person may vote by proxy. |
22.4 | No person shall be entitled to vote at any general meeting unless he is registered as a Member on the record date for such meeting nor unless all calls or other monies then payable by him in respect of Shares have been paid. |
22.5 | No objection shall be raised as to the qualification of any voter except at the general meeting or adjourned general meeting at which the vote objected to is given or tendered and every vote not disallowed at the meeting shall be valid. Any objection made in due time in accordance with this Article shall be referred to the chairman whose decision shall be final and conclusive. |
22.6 | On a poll or on a show of hands votes may be cast either personally or by proxy (or in the case of a corporation or other non-natural person by its duly authorised representative or proxy). A Member may appoint more than one proxy or the same proxy under one or more instruments to attend and vote at a meeting. Where a Member appoints more than one proxy the instrument of proxy shall state which proxy is entitled to vote on a show of hands and shall specify the number of Shares in respect of which each proxy is entitled to exercise the related votes. |
22.7 | On a poll, a Member holding more than one Share need not cast the votes in respect of his Shares in the same way on any resolution and therefore may vote a Share or some or all such Shares either for or against a resolution and/or abstain from voting a Share or some or all of the Shares and, subject to the terms of the instrument appointing him, a proxy appointed under one or more instruments may vote a Share or some or all of the Shares in respect of which he is appointed either for or against a resolution and/or abstain from voting a Share or some or all of the Shares in respect of which he is appointed. |
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23 | Proxies |
23.1 | The instrument appointing a proxy shall be in writing and shall be executed under the hand of the appointor or of his attorney duly authorised in writing, or, if the appointor is a corporation or other non natural person, under the hand of its duly authorised representative. A proxy need not be a Member. |
23.2 | The Directors may, in the notice convening any meeting or adjourned meeting, or in an instrument of proxy sent out by the Company, specify the manner by which the instrument appointing a proxy shall be deposited and the place and the time (being not later than the time appointed for the commencement of the meeting or adjourned meeting to which the proxy relates) at which the instrument appointing a proxy shall be deposited. In the absence of any such direction from the Directors in the notice convening any meeting or adjourned meeting or in an instrument of proxy sent out by the Company, the instrument appointing a proxy shall be deposited physically at the Registered Office not less than 48 hours before the time appointed for the meeting or adjourned meeting to commence at which the person named in the instrument proposes to vote. |
23.3 | The chairman may in any event at his discretion declare that an instrument of proxy shall be deemed to have been duly deposited. An instrument of proxy that is not deposited in the manner permitted, or which has not been declared to have been duly deposited by the chairman, shall be invalid. |
23.4 | The instrument appointing a proxy may be in any usual or common form (or such other form as the Directors may approve) and may be expressed to be for a particular meeting or any adjournment thereof or generally until revoked. An instrument appointing a proxy shall be deemed to include the power to demand or join or concur in demanding a poll. |
23.5 | Votes given in accordance with the terms of an instrument of proxy shall be valid notwithstanding the previous death or insanity of the principal or revocation of the proxy or of the authority under which the proxy was executed, or the transfer of the Share in respect of which the proxy is given unless notice in writing of such death, insanity, revocation or transfer was received by the Company at the Registered Office before the commencement of the general meeting, or adjourned meeting at which it is sought to use the proxy. |
24 | Corporate Members |
Any corporation or other non-natural person which is a Member may in accordance with its constitutional documents, or in the absence of such provision by resolution of its directors or other governing body, authorise such person as it thinks fit to act as its representative at any meeting of the Company or of any class of Members, and the person so authorised shall be entitled to exercise the same powers on behalf of the corporation which he represents as the corporation could exercise if it were an individual Member.
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25 | Shares that May Not be Voted |
Shares in the Company that are beneficially owned by the Company shall not be voted, directly or indirectly, at any meeting and shall not be counted in determining the total number of outstanding Shares at any given time.
26 | Directors |
There shall be a board of Directors consisting of not less than one person (exclusive of alternate Directors) provided however that the Company may by Ordinary Resolution increase or reduce the limits in the number of Directors. The first Directors of the Company shall be determined in writing by, or appointed by a resolution of, the Subscriber.
27 | Powers of Directors |
27.1 | Subject to the provisions of the Statute, the Memorandum and the Articles and to any directions given by Special Resolution, the business of the Company shall be managed by the Directors who may exercise all the powers of the Company. No alteration of the Memorandum or Articles and no such direction shall invalidate any prior act of the Directors which would have been valid if that alteration had not been made or that direction had not been given. A duly convened meeting of Directors at which a quorum is present may exercise all powers exercisable by the Directors. |
27.2 | All cheques, promissory notes, drafts, bills of exchange and other negotiable or transferable instruments and all receipts for monies paid to the Company shall be signed, drawn, accepted, endorsed or otherwise executed as the case may be in such manner as the Directors shall determine by resolution. |
27.3 | The Directors on behalf of the Company may pay a gratuity or pension or allowance on retirement to any Director who has held any other salaried office or place of profit with the Company or to his widow or dependants and may make contributions to any fund and pay premiums for the purchase or provision of any such gratuity, pension or allowance. |
27.4 | The Directors may exercise all the powers of the Company to borrow money and to mortgage or charge its undertaking, property and assets (present and future) and uncalled capital or any part thereof and to issue debentures, debenture stock, mortgages, bonds and other such securities whether outright or as security for any debt, liability or obligation of the Company or of any third party. |
28 | Appointment and Removal of Directors |
28.1 | The Company may by Ordinary Resolution appoint any person to be a Director or may by Ordinary Resolution remove any Director. |
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28.2 | The Directors may appoint any person to be a Director, either to fill a vacancy or as an additional Director provided that the appointment does not cause the number of Directors to exceed any number fixed by or in accordance with the Articles as the maximum number of Directors. |
29 | Vacation of Office of Director |
The office of a Director shall be vacated if:
(a) | the Director gives notice in writing to the Company that he resigns the office of Director; or |
(b) | the Director absents himself (for the avoidance of doubt, without being represented by proxy or an alternate Director appointed by him) from three consecutive meetings of the board of Directors without special leave of absence from the Directors, and the Directors pass a resolution that he has by reason of such absence vacated office; or |
(c) | the Director dies, becomes bankrupt or makes any arrangement or composition with his creditors generally; or |
(d) | the Director is found to be or becomes of unsound mind; or |
(e) | all of the other Directors (being not less than two in number) determine that he should be removed as a Director, either by a resolution passed by all of the other Directors at a meeting of the Directors duly convened and held in accordance with the Articles or by a resolution in writing signed by all of the other Directors. |
30 | Proceedings of Directors |
30.1 | The quorum for the transaction of the business of the Directors may be fixed by the Directors, and unless so fixed shall be two if there are two or more Directors, and shall be one if there is only one Director. A person who holds office as an alternate Director shall, if his appointor is not present, be counted in the quorum. A Director who also acts as an alternate Director shall, if his appointor is not present, count twice towards the quorum. |
30.2 | Subject to the provisions of the Articles, the Directors may regulate their proceedings as they think fit. Questions arising at any meeting shall be decided by a majority of votes. In the case of an equality of votes, the chairman shall have a second or casting vote. A Director who is also an alternate Director shall be entitled in the absence of his appointor to a separate vote on behalf of his appointor in addition to his own vote. |
30.3 | A person may participate in a meeting of the Directors or any committee of Directors by conference telephone or other communications equipment by means of which all the persons participating in the meeting can communicate with each other at the same time. Participation by a person in a meeting in this manner is treated as presence in person at that meeting. Unless otherwise determined by the Directors the meeting shall be deemed to be held at the place where the chairman is located at the start of the meeting. |
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30.4 | A resolution in writing (in one or more counterparts) signed by all the Directors or all the members of a committee of the Directors or, in the case of a resolution in writing relating to the removal of any Director or the vacation of office by any Director, all of the Directors other than the Director who is the subject of such resolution (an alternate Director being entitled to sign such a resolution on behalf of his appointor and if such alternate Director is also a Director, being entitled to sign such resolution both on behalf of his appointer and in his capacity as a Director) shall be as valid and effectual as if it had been passed at a meeting of the Directors, or committee of Directors as the case may be, duly convened and held. |
30.5 | A Director or alternate Director may, or other officer of the Company on the direction of a Director or alternate Director shall, call a meeting of the Directors by at least two days’ notice in writing to every Director and alternate Director which notice shall set forth the general nature of the business to be considered unless notice is waived by all the Directors (or their alternates) either at, before or after the meeting is held. To any such notice of a meeting of the Directors all the provisions of the Articles relating to the giving of notices by the Company to the Members shall apply mutatis mutandis. |
30.6 | The continuing Directors (or a sole continuing Director, as the case may be) may act notwithstanding any vacancy in their body, but if and so long as their number is reduced below the number fixed by or pursuant to the Articles as the necessary quorum of Directors the continuing Directors or Director may act for the purpose of increasing the number of Directors to be equal to such fixed number, or of summoning a general meeting of the Company, but for no other purpose. |
30.7 | The Directors may elect a chairman of their board and determine the period for which he is to hold office; but if no such chairman is elected, or if at any meeting the chairman is not present within five minutes after the time appointed for the meeting to commence, the Directors present may choose one of their number to be chairman of the meeting. |
30.8 | All acts done by any meeting of the Directors or of a committee of the Directors (including any person acting as an alternate Director) shall, notwithstanding that it is afterwards discovered that there was some defect in the appointment of any Director or alternate Director, and/or that they or any of them were disqualified, and/or had vacated their office and/or were not entitled to vote, be as valid as if every such person had been duly appointed and/or not disqualified to be a Director or alternate Director and/or had not vacated their office and/or had been entitled to vote, as the case may be. |
30.9 | A Director but not an alternate Director may be represented at any meetings of the board of Directors by a proxy appointed in writing by him. The proxy shall count towards the quorum and the vote of the proxy shall for all purposes be deemed to be that of the appointing Director. |
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31 | Presumption of Assent |
A Director or alternate Director who is present at a meeting of the board of Directors at which action on any Company matter is taken shall be presumed to have assented to the action taken unless his dissent shall be entered in the minutes of the meeting or unless he shall file his written dissent from such action with the person acting as the chairman or secretary of the meeting before the adjournment thereof or shall forward such dissent by registered post to such person immediately after the adjournment of the meeting. Such right to dissent shall not apply to a Director or alternate Director who voted in favour of such action.
32 | Directors’ Interests |
32.1 | A Director or alternate Director may hold any other office or place of profit under the Company (other than the office of Auditor) in conjunction with his office of Director for such period and on such terms as to remuneration and otherwise as the Directors may determine. |
32.2 | A Director or alternate Director may act by himself or by, through or on behalf of his firm in a professional capacity for the Company and he or his firm shall be entitled to remuneration for professional services as if he were not a Director or alternate Director. |
32.3 | A Director or alternate Director may be or become a director or other officer of or otherwise interested in any company promoted by the Company or in which the Company may be interested as a shareholder, a contracting party or otherwise, and no such Director or alternate Director shall be accountable to the Company for any remuneration or other benefits received by him as a director or officer of, or from his interest in, such other company. |
32.4 | No person shall be disqualified from the office of Director or alternate Director or prevented by such office from contracting with the Company, either as vendor, purchaser or otherwise, nor shall any such contract or any contract or transaction entered into by or on behalf of the Company in which any Director or alternate Director shall be in any way interested be or be liable to be avoided, nor shall any Director or alternate Director so contracting or being so interested be liable to account to the Company for any profit realised by or arising in connection with any such contract or transaction by reason of such Director or alternate Director holding office or of the fiduciary relationship thereby established. A Director (or his alternate Director in his absence) shall be at liberty to vote in respect of any contract or transaction in which he is interested provided that the nature of the interest of any Director or alternate Director in any such contract or transaction shall be disclosed by him at or prior to its consideration and any vote thereon. |
32.5 | A general notice that a Director or alternate Director is a shareholder, director, officer or employee of any specified firm or company and is to be regarded as interested in any transaction with such firm or company shall be sufficient disclosure for the purposes of voting on a resolution in respect of a contract or transaction in which he has an interest, and after such general notice it shall not be necessary to give special notice relating to any particular transaction. |
33 | Minutes |
The Directors shall cause minutes to be made in books kept for the purpose of recording all appointments of officers made by the Directors, all proceedings at meetings of the Company or the holders of any class of Shares and of the Directors, and of committees of the Directors, including the names of the Directors or alternate Directors present at each meeting.
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34 | Delegation of Directors’ Powers |
34.1 | The Directors may delegate any of their powers, authorities and discretions, including the power to sub-delegate, to any committee consisting of one or more Directors. They may also delegate to any managing director or any Director holding any other executive office such of their powers, authorities and discretions as they consider desirable to be exercised by him provided that an alternate Director may not act as managing director and the appointment of a managing director shall be revoked forthwith if he ceases to be a Director. Any such delegation may be made subject to any conditions the Directors may impose and either collaterally with or to the exclusion of their own powers and any such delegation may be revoked or altered by the Directors. Subject to any such conditions, the proceedings of a committee of Directors shall be governed by the Articles regulating the proceedings of Directors, so far as they are capable of applying. |
34.2 | The Directors may establish any committees, local boards or agencies or appoint any person to be a manager or agent for managing the affairs of the Company and may appoint any person to be a member of such committees, local boards or agencies. Any such appointment may be made subject to any conditions the Directors may impose, and either collaterally with or to the exclusion of their own powers and any such appointment may be revoked or altered by the Directors. Subject to any such conditions, the proceedings of any such committee, local board or agency shall be governed by the Articles regulating the proceedings of Directors, so far as they are capable of applying. |
34.3 | The Directors may by power of attorney or otherwise appoint any person to be the agent of the Company on such conditions as the Directors may determine, provided that the delegation is not to the exclusion of their own powers and may be revoked by the Directors at any time. |
34.4 | The Directors may by power of attorney or otherwise appoint any company, firm, person or body of persons, whether nominated directly or indirectly by the Directors, to be the attorney or authorised signatory of the Company for such purpose and with such powers, authorities and discretions (not exceeding those vested in or exercisable by the Directors under the Articles) and for such period and subject to such conditions as they may think fit, and any such powers of attorney or other appointment may contain such provisions for the protection and convenience of persons dealing with any such attorneys or authorised signatories as the Directors may think fit and may also authorise any such attorney or authorised signatory to delegate all or any of the powers, authorities and discretions vested in him. |
34.5 | The Directors may appoint such officers of the Company (including, for the avoidance of doubt and without limitation, any secretary) as they consider necessary on such terms, at such remuneration and to perform such duties, and subject to such provisions as to disqualification and removal as the Directors may think fit. Unless otherwise specified in the terms of his appointment an officer of the Company may be removed by resolution of the Directors or Members. An officer of the Company may vacate his office at any time if he gives notice in writing to the Company that he resigns his office. |
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35 | Alternate Directors |
35.1 | Any Director (but not an alternate Director) may by writing appoint any other Director, or any other person willing to act, to be an alternate Director and by writing may remove from office an alternate Director so appointed by him. |
35.2 | An alternate Director shall be entitled to receive notice of all meetings of Directors and of all meetings of committees of Directors of which his appointor is a member, to attend and vote at every such meeting at which the Director appointing him is not personally present, to sign any written resolution of the Directors, and generally to perform all the functions of his appointor as a Director in his absence. |
35.3 | An alternate Director shall cease to be an alternate Director if his appointor ceases to be a Director. |
35.4 | Any appointment or removal of an alternate Director shall be by notice to the Company signed by the Director making or revoking the appointment or in any other manner approved by the Directors. |
35.5 | Subject to the provisions of the Articles, an alternate Director shall be deemed for all purposes to be a Director and shall alone be responsible for his own acts and defaults and shall not be deemed to be the agent of the Director appointing him. |
36 | No Minimum Shareholding |
The Company in general meeting may fix a minimum shareholding required to be held by a Director, but unless and until such a shareholding qualification is fixed a Director is not required to hold Shares.
37 | Remuneration of Directors |
37.1 | The remuneration to be paid to the Directors, if any, shall be such remuneration as the Directors shall determine. The Directors shall also be entitled to be paid all travelling, hotel and other expenses properly incurred by them in connection with their attendance at meetings of Directors or committees of Directors, or general meetings of the Company, or separate meetings of the holders of any class of Shares or debentures of the Company, or otherwise in connection with the business of the Company or the discharge of their duties as a Director, or to receive a fixed allowance in respect thereof as may be determined by the Directors, or a combination partly of one such method and partly the other. |
37.2 | The Directors may by resolution approve additional remuneration to any Director for any services which in the opinion of the Directors go beyond his ordinary routine work as a Director. Any fees paid to a Director who is also counsel, attorney or solicitor to the Company, or otherwise serves it in a professional capacity shall be in addition to his remuneration as a Director. |
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38 | Seal |
38.1 | The Company may, if the Directors so determine, have a Seal. The Seal shall only be used by the authority of the Directors or of a committee of the Directors authorised by the Directors. Every instrument to which the Seal has been affixed shall be signed by at least one person who shall be either a Director or some officer of the Company or other person appointed by the Directors for the purpose. |
38.2 | The Company may have for use in any place or places outside the Cayman Islands a duplicate Seal or Seals each of which shall be a facsimile of the common Seal of the Company and, if the Directors so determine, with the addition on its face of the name of every place where it is to be used. |
38.3 | A Director or officer, representative or attorney of the Company may without further authority of the Directors affix the Seal over his signature alone to any document of the Company required to be authenticated by him under seal or to be filed with the Registrar of Companies in the Cayman Islands or elsewhere wheresoever. |
39 | Dividends, Distributions and Reserve |
39.1 | Subject to the Statute and this Article and except as otherwise provided by the rights attached to any Shares, the Directors may resolve to pay Dividends and other distributions on Shares in issue and authorise payment of the Dividends or other distributions out of the funds of the Company lawfully available therefor. A Dividend shall be deemed to be an interim Dividend unless the terms of the resolution pursuant to which the Directors resolve to pay such Dividend specifically state that such Dividend shall be a final Dividend. No Dividend or other distribution shall be paid except out of the realised or unrealised profits of the Company, out of the share premium account or as otherwise permitted by law. |
39.2 | Except as otherwise provided by the rights attached to any Shares, all Dividends and other distributions shall be paid according to the par value of the Shares that a Member holds. If any Share is issued on terms providing that it shall rank for Dividend as from a particular date, that Share shall rank for Dividend accordingly. |
39.3 | The Directors may deduct from any Dividend or other distribution payable to any Member all sums of money (if any) then payable by him to the Company on account of calls or otherwise. |
39.4 | The Directors may resolve that any Dividend or other distribution be paid wholly or partly by the distribution of specific assets and in particular (but without limitation) by the distribution of shares, debentures, or securities of any other company or in any one or more of such ways and where any difficulty arises in regard to such distribution, the Directors may settle the same as they think expedient and in particular may issue fractional Shares and may fix the value for distribution of such specific assets or any part thereof and may determine that cash payments shall be made to any Members upon the basis of the value so fixed in order to adjust the rights of all Members and may vest any such specific assets in trustees in such manner as may seem expedient to the Directors. |
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39.5 | Except as otherwise provided by the rights attached to any Shares, Dividends and other distributions may be paid in any currency. The Directors may determine the basis of conversion for any currency conversions that may be required and how any costs involved are to be met. |
39.6 | The Directors may, before resolving to pay any Dividend or other distribution, set aside such sums as they think proper as a reserve or reserves which shall, at the discretion of the Directors, be applicable for any purpose of the Company and pending such application may, at the discretion of the Directors, be employed in the business of the Company. |
39.7 | Any Dividend, other distribution, interest or other monies payable in cash in respect of Shares may be paid by wire transfer to the holder or by cheque or warrant sent through the post directed to the registered address of the holder or, in the case of joint holders, to the registered address of the holder who is first named on the Register of Members or to such person and to such address as such holder or joint holders may in writing direct. Every such cheque or warrant shall be made payable to the order of the person to whom it is sent. Any one of two or more joint holders may give effectual receipts for any Dividends, other distributions, bonuses, or other monies payable in respect of the Share held by them as joint holders. |
39.8 | No Dividend or other distribution shall bear interest against the Company. |
39.9 | Any Dividend or other distribution which cannot be paid to a Member and/or which remains unclaimed after six months from the date on which such Dividend or other distribution becomes payable may, in the discretion of the Directors, be paid into a separate account in the Company’s name, provided that the Company shall not be constituted as a trustee in respect of that account and the Dividend or other distribution shall remain as a debt due to the Member. Any Dividend or other distribution which remains unclaimed after a period of six years from the date on which such Dividend or other distribution becomes payable shall be forfeited and shall revert to the Company. |
40 | Capitalisation |
The Directors may at any time capitalise any sum standing to the credit of any of the Company’s reserve accounts or funds (including the share premium account and capital redemption reserve fund) or any sum standing to the credit of the profit and loss account or otherwise available for distribution; appropriate such sum to Members in the proportions in which such sum would have been divisible amongst such Members had the same been a distribution of profits by way of Dividend or other distribution; and apply such sum on their behalf in paying up in full unissued Shares for allotment and distribution credited as fully paid-up to and amongst them in the proportion aforesaid. In such event the Directors shall do all acts and things required to give effect to such capitalisation, with full power given to the Directors to make such provisions as they think fit in the case of Shares becoming distributable in fractions (including provisions whereby the benefit of fractional entitlements accrue to the Company rather than to the Members concerned). The Directors may authorise any person to enter on behalf of all of the Members interested into an agreement with the Company providing for such capitalisation and matters incidental or relating thereto and any agreement made under such authority shall be effective and binding on all such Members and the Company.
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41 | Books of Account |
41.1 | The Directors shall cause proper books of account (including, where applicable, material underlying documentation including contracts and invoices) to be kept with respect to all sums of money received and expended by the Company and the matters in respect of which the receipt or expenditure takes place, all sales and purchases of goods by the Company and the assets and liabilities of the Company. Such books of account must be retained for a minimum period of five years from the date on which they are prepared. Proper books shall not be deemed to be kept if there are not kept such books of account as are necessary to give a true and fair view of the state of the Company’s affairs and to explain its transactions. |
41.2 | The Directors shall determine whether and to what extent and at what times and places and under what conditions or regulations the accounts and books of the Company or any of them shall be open to the inspection of Members not being Directors and no Member (not being a Director) shall have any right of inspecting any account or book or document of the Company except as conferred by Statute or authorised by the Directors or by the Company in general meeting. |
41.3 | The Directors may cause to be prepared and to be laid before the Company in general meeting profit and loss accounts, balance sheets, group accounts (if any) and such other reports and accounts as may be required by law. |
42 | Audit |
42.1 | The Directors may appoint an Auditor of the Company who shall hold office on such terms as the Directors determine. |
42.2 | Every Auditor of the Company shall have a right of access at all times to the books and accounts and vouchers of the Company and shall be entitled to require from the Directors and officers of the Company such information and explanation as may be necessary for the performance of the duties of the Auditor. |
42.3 | Auditors shall, if so required by the Directors, make a report on the accounts of the Company during their tenure of office at the next annual general meeting following their appointment in the case of a company which is registered with the Registrar of Companies as an ordinary company, and at the next extraordinary general meeting following their appointment in the case of a company which is registered with the Registrar of Companies as an exempted company, and at any other time during their term of office, upon request of the Directors or any general meeting of the Members. |
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43 | Notices |
43.1 | Notices shall be in writing and may be given by the Company to any Member either personally or by sending it by courier, post, cable, telex, fax or e-mail to him or to his address as shown in the Register of Members (or where the notice is given by e-mail by sending it to the e-mail address provided by such Member). Any notice, if posted from one country to another, is to be sent by airmail. |
43.2 | Where a notice is sent by courier, service of the notice shall be deemed to be effected by delivery of the notice to a courier company, and shall be deemed to have been received on the third day (not including Saturdays or Sundays or public holidays) following the day on which the notice was delivered to the courier. Where a notice is sent by post, service of the notice shall be deemed to be effected by properly addressing, pre paying and posting a letter containing the notice, and shall be deemed to have been received on the fifth day (not including Saturdays or Sundays or public holidays in the Cayman Islands) following the day on which the notice was posted. Where a notice is sent by cable, telex or fax, service of the notice shall be deemed to be effected by properly addressing and sending such notice and shall be deemed to have been received on the same day that it was transmitted. Where a notice is given by e-mail service shall be deemed to be effected by transmitting the e-mail to the e-mail address provided by the intended recipient and shall be deemed to have been received on the same day that it was sent, and it shall not be necessary for the receipt of the e-mail to be acknowledged by the recipient. |
43.3 | A notice may be given by the Company to the person or persons which the Company has been advised are entitled to a Share or Shares in consequence of the death or bankruptcy of a Member in the same manner as other notices which are required to be given under the Articles and shall be addressed to them by name, or by the title of representatives of the deceased, or trustee of the bankrupt, or by any like description at the address supplied for that purpose by the persons claiming to be so entitled, or at the option of the Company by giving the notice in any manner in which the same might have been given if the death or bankruptcy had not occurred. |
43.4 | Notice of every general meeting shall be given in any manner authorised by the Articles to every holder of Shares carrying an entitlement to receive such notice on the record date for such meeting except that in the case of joint holders the notice shall be sufficient if given to the joint holder first named in the Register of Members and every person upon whom the ownership of a Share devolves by reason of his being a legal personal representative or a trustee in bankruptcy of a Member where the Member but for his death or bankruptcy would be entitled to receive notice of the meeting, and no other person shall be entitled to receive notices of general meetings. |
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44 | Winding Up |
44.1 | If the Company shall be wound up the liquidator shall apply the assets of the Company in satisfaction of creditors’ claims in such manner and order as such liquidator thinks fit. Subject to the rights attaching to any Shares, in a winding up: |
(a) | if the assets available for distribution amongst the Members shall be insufficient to repay the whole of the Company’s issued share capital, such assets shall be distributed so that, as nearly as may be, the losses shall be borne by the Members in proportion to the par value of the Shares held by them; or |
(b) | if the assets available for distribution amongst the Members shall be more than sufficient to repay the whole of the Company’s issued share capital at the commencement of the winding up, the surplus shall be distributed amongst the Members in proportion to the par value of the Shares held by them at the commencement of the winding up subject to a deduction from those Shares in respect of which there are monies due, of all monies payable to the Company for unpaid calls or otherwise. |
44.2 | If the Company shall be wound up the liquidator may, subject to the rights attaching to any Shares and with the approval of a Special Resolution of the Company and any other approval required by the Statute, divide amongst the Members in kind the whole or any part of the assets of the Company (whether such assets shall consist of property of the same kind or not) and may for that purpose value any assets and determine how the division shall be carried out as between the Members or different classes of Members. The liquidator may, with the like approval, vest the whole or any part of such assets in trustees upon such trusts for the benefit of the Members as the liquidator, with the like approval, shall think fit, but so that no Member shall be compelled to accept any asset upon which there is a liability. |
45 | Indemnity and Insurance |
45.1 | Every Director and officer of the Company (which for the avoidance of doubt, shall not include auditors of the Company), together with every former Director and former officer of the Company (each an “Indemnified Person”) shall be indemnified out of the assets of the Company against any liability, action, proceeding, claim, demand, costs, damages or expenses, including legal expenses, whatsoever which they or any of them may incur as a result of any act or failure to act in carrying out their functions other than such liability (if any) that they may incur by reason of their own actual fraud or wilful default. No Indemnified Person shall be liable to the Company for any loss or damage incurred by the Company as a result (whether direct or indirect) of the carrying out of their functions unless that liability arises through the actual fraud or wilful default of such Indemnified Person. No person shall be found to have committed actual fraud or wilful default under this Article unless or until a court of competent jurisdiction shall have made a finding to that effect. |
45.2 | The Company shall advance to each Indemnified Person reasonable attorneys’ fees and other costs and expenses incurred in connection with the defence of any action, suit, proceeding or investigation involving such Indemnified Person for which indemnity will or could be sought. In connection with any advance of any expenses hereunder, the Indemnified Person shall execute an undertaking to repay the advanced amount to the Company if it shall be determined by final judgment or other final adjudication that such Indemnified Person was not entitled to indemnification pursuant to this Article. If it shall be determined by a final judgment or other final adjudication that such Indemnified Person was not entitled to indemnification with respect to such judgment, costs or expenses, then such party shall not be indemnified with respect to such judgment, costs or expenses and any advancement shall be returned to the Company (without interest) by the Indemnified Person. |
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45.3 | The Directors, on behalf of the Company, may purchase and maintain insurance for the benefit of any Director or other officer of the Company against any liability which, by virtue of any rule of law, would otherwise attach to such person in respect of any negligence, default, breach of duty or breach of trust of which such person may be guilty in relation to the Company. |
46 | Financial Year |
Unless the Directors otherwise prescribe, the financial year of the Company shall end on 31st December in each year and, following the year of incorporation, shall begin on 1st January in each year.
47 | Transfer by Way of Continuation |
If the Company is exempted as defined in the Statute, it shall, subject to the provisions of the Statute and with the approval of a Special Resolution, have the power to register by way of continuation as a body corporate under the laws of any jurisdiction outside the Cayman Islands and to be deregistered in the Cayman Islands.
48 | Mergers and Consolidations |
The Company shall have the power to merge or consolidate with one or more other constituent companies (as defined in the Statute) upon such terms as the Directors may determine and (to the extent required by the Statute) with the approval of a Special Resolution.
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Dated this 12th day of April 2019.
Maples Corporate Services Limited
of PO Box 309, Ugland House
Grand Cayman
KY1-1104
Cayman Islands
acting by:
/s/ Marcia Borden
Marcia Borden
/s/ Ahmaree Piercy
Ahmaree Piercy
Witness to the above signature
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Exhibit 5.1
Our ref | MUL/758168-000001/60278997v3 |
Brooge Holdings Limited
PO Box 309, Ugland House
Grand Cayman
KY1-1104
Cayman Islands
25 September 2019
Brooge Holdings Limited
We have acted as counsel as to Cayman Islands law to Brooge Holdings Limited (the “Company”) in connection with listing of securities of the Company (the “Listing”) pursuant to the Business Combination Agreement dated as of 15 April 2019 (as amended, restated and/or supplemented from time to time) by and among, among others, the Company and Twelve Seas Investment Company (the “Agreement”) and the Company’s registration statement on Form F-4, including all amendments or supplements thereto, filed with the United States Securities and Exchange Commission (the “Commission”) under the United States Securities Act of 1933, as amended (the “Act”) (including its exhibits, the “Registration Statement”) for the purposes of, registering with the Commission under the Act, the offering and sale of (“Securities”):
(a) | 26,779,000 ordinary shares of the Company of a par value of US$0.0001 each (“Ordinary Shares”) |
(b) | 21,229,000 redeemable warrants to purchase Ordinary Shares, each Warrant exercisable to purchase one Ordinary Share (“Warrants”); |
(c) | all Ordinary Shares that may be issued upon exercise of the Warrants; and |
(d) | all Ordinary Shares that may be issued upon exercise of the rights to receive one-tenth of an Ordinary Share upon the consummation of a business combination (“Rights”). |
This opinion letter is given in accordance with the terms of the Legal Matters section of the Registration Statement.
1 | Documents Reviewed |
We have reviewed originals, copies, drafts or conformed copies of the following documents:
1.1 | The certificate of incorporation dated 12 April 2019 and the memorandum and articles of association of the Company as registered or adopted on 12 April 2019 (the “Memorandum and Articles”) and the amended and restated memorandum and articles of association of the Company to be adopted by special resolution to be effective immediately before the Listing (the “IPO Memorandum and Articles”). |
1.2 | The written resolutions of the board of directors of the Company dated 25 September 2019 (the “Resolutions”) and the corporate records of the Company maintained at its registered office in the Cayman Islands. |
1.3 | A draft of the written resolutions of the sole shareholder of the Company (the “Shareholder Resolutions”) which includes a resolution to re-designate the authorised (and issued) share capital of the Company in the manner therein described effective on the Listing. |
1.4 | A certificate of good standing with respect to the Company issued by the Registrar of Companies (the “Certificate of Good Standing”). |
1.5 | A certificate from a director of the Company a copy of which is attached to this opinion letter (the “Director’s Certificate”). |
1.6 | The Registration Statement. |
1.7 | The Agreement. |
1.8 | The Warrant Agreement dated as of 19 June 2018 between Twelve Seas Investment Company and Continental Stock Transfer & Trust Company (“Continental”) and the form of the warrant certificate constituting the Warrants (the “Warrant Documents”). |
1.9 | The Rights Agreement dated as of 19 June 2018 between Twelve Seas Investment Company and Continental and the form of the rights certificate constituting the Rights (the “Rights Documents”). |
The documents listed in paragraphs 1.7 to 1.9 inclusive above shall be referred to collectively herein as the “Documents”.
2 | Assumptions |
The following opinions are given only as to, and based on, circumstances and matters of fact existing and known to us on the date of this opinion letter. These opinions only relate to the laws of the Cayman Islands which are in force on the date of this opinion letter. In giving the following opinions, we have relied (without further verification) upon the completeness and accuracy, as at the date of this opinion letter, of the Director’s Certificate and the Certificate of Good Standing. We have also relied upon the following assumptions, which we have not independently verified:
2.1 | The Documents have been or will be authorised and duly executed and unconditionally delivered by or on behalf of all relevant parties in accordance with all relevant laws (other than, with respect to the Company, the laws of the Cayman Islands). |
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2.2 | The Documents are, or will be, legal, valid, binding and enforceable against all relevant parties in accordance with their terms under the laws of the State of New York (the “Relevant Law”) and all other relevant laws (other than, with respect to the Company, the laws of the Cayman Islands). |
2.3 | The choice of the Relevant Law as the governing law of the Documents has been made in good faith and would be regarded as a valid and binding selection which will be upheld by the courts of the State of New York and any other relevant jurisdiction (other than the Cayman Islands) as a matter of the Relevant Law and all other relevant laws (other than the laws of the Cayman Islands). |
2.4 | Copies of documents, conformed copies or drafts of documents provided to us are true and complete copies of, or in the final forms of, the originals. |
2.5 | All signatures, initials and seals are genuine. |
2.6 | The capacity, power, authority and legal right of all parties under all relevant laws and regulations (other than, with respect to the Company, the laws and regulations of the Cayman Islands) to enter into, execute, unconditionally deliver and perform their respective obligations under the Documents. |
2.7 | No invitation has been or will be made by or on behalf of the Company to the public in the Cayman Islands to subscribe for any of the Rights, the Warrants or the Ordinary Shares. |
2.8 | There is no contractual or other prohibition or restriction (other than as arising under Cayman Islands law) binding on the Company prohibiting or restricting it from entering into and performing its obligations under the Documents. |
2.9 | No monies paid to or for the account of any party under the Documents or any property received or disposed of by any party to the Documents in each case in connection with the Documents or the consummation of the transactions contemplated thereby represent or will represent proceeds of criminal conduct or criminal property or terrorist property (as defined in the Proceeds of Crime Law (2019 Revision) and the Terrorism Law (2018 Revision), respectively). |
2.10 | There is nothing under any law (other than the laws of the Cayman Islands) which would or might affect the opinions set out below. Specifically, we have made no independent investigation of the Relevant Law. |
2.11 | The Company will receive money or money’s worth in consideration for the issue of the Ordinary Shares and none of the Ordinary Shares were or will be issued for less than par value. |
2.12 | The Shareholder Resolutions will be passed in the manner prescribed in the Memorandum and Articles and will not be amended, varied or revoked in any respect. |
2.13 | At the time of the Listing, the IPO Memorandum and Articles will be in full force and effect and will be unamended. |
Save as aforesaid we have not been instructed to undertake and have not undertaken any further enquiry or due diligence in relation to the transaction the subject of this opinion letter.
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3 | Opinions |
Based upon, and subject to, the foregoing assumptions and the qualifications set out below, and having regard to such legal considerations as we deem relevant, we are of the opinion that:
3.1 | The Company has been duly incorporated as an exempted company with limited liability and is validly existing and in good standing with the Registrar of Companies under the laws of the Cayman Islands. |
3.2 | Based solely on Director’s Certificate and our review of the IPO Memorandum and Articles, upon the IPO Memorandum and Articles and the Shareholder Resolution becoming effective, the authorised share capital of the Company will be US$50,000 divided into 450,000,000 ordinary shares of a par value of US$0.0001 each and 50,000,000 preferred shares of a par value of US$0.0001 each. |
3.3 | The Ordinary Shares to be offered and issued by the Company as contemplated by the Registration Statement (including the issuance of Ordinary Shares upon the exercise of the Warrants in accordance with the Agreement and the Warrant Documents and the issuance of Ordinary Shares upon the conversion of the Rights in accordance with the Agreement and the Rights Documents) have been duly authorised for issue, and when issued by the Company against payment in full of the consideration as set out in the Registration Statement and in accordance with the terms set out in the Registration Statement (including the issuance of Ordinary Shares upon the exercise of the Warrants in accordance with the Agreement and the Warrant Documents and the issuance of Ordinary Shares upon the conversion of the Rights in accordance with the Agreement and the Rights Documents), such Ordinary Shares will be validly issued, fully paid and non-assessable. As a matter of Cayman Islands law, a share is only issued when it has been entered in the register of members (shareholders). |
3.4 | The execution, delivery and performance of the Documents have been authorised by and on behalf of the Company and, once the Documents have been executed and delivered by any director or officer of the Company, the Documents will be duly executed and delivered on behalf of the Company and will constitute the legal, valid and binding obligations of the Company enforceable in accordance with their terms. |
4 | Qualifications |
The opinions expressed above are subject to the following qualifications:
4.1 | The term “enforceable” as used above means that the obligations assumed by the Company under the Documents are of a type which the courts of the Cayman Islands will enforce. It does not mean that those obligations will necessarily be enforced in all circumstances in accordance with their terms. In particular: |
(a) | enforcement may be limited by bankruptcy, insolvency, liquidation, reorganisation, readjustment of debts or moratorium or other laws of general application relating to or affecting the rights of creditors; |
(b) | enforcement may be limited by general principles of equity. For example, equitable remedies such as specific performance may not be available, inter alia, where damages are considered to be an adequate remedy; |
(c) | where obligations are to be performed in a jurisdiction outside the Cayman Islands, they may not be enforceable in the Cayman Islands to the extent that performance would be illegal under the laws of that jurisdiction; and |
(d) | some claims may become barred under relevant statutes of limitation or may be or become subject to defences of set off, counterclaim, estoppel and similar defences. |
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4.2 | To maintain the Company in good standing with the Registrar of Companies under the laws of the Cayman Islands, annual filing fees must be paid and returns made to the Registrar of Companies within the time frame prescribed by law. |
4.3 | Under Cayman Islands law, the register of members (shareholders) is prima facie evidence of title to shares and this register would not record a third party interest in such shares. However, there are certain limited circumstances where an application may be made to a Cayman Islands court for a determination on whether the register of members reflects the correct legal position. Further, the Cayman Islands court has the power to order that the register of members maintained by a company should be rectified where it considers that the register of members does not reflect the correct legal position. As far as we are aware, such applications are rarely made in the Cayman Islands and for the purposes of the opinion given in paragraph 3.3, there are no circumstances or matters of fact known to us on the date of this opinion letter which would properly form the basis for an application for an order for rectification of the register of members of the Company, but if such an application were made in respect of the Ordinary Shares, then the validity of such shares may be subject to re-examination by a Cayman Islands court. |
4.4 | Except as specifically stated herein, we make no comment with respect to any representations and warranties which may be made by or with respect to the Company in any of the documents or instruments cited in this opinion letter or otherwise with respect to the commercial terms of the transactions the subject of this opinion letter. |
4.5 | In this opinion letter, the phrase “non-assessable” means, with respect to the issuance of shares, that a shareholder shall not, in respect of the relevant shares and in the absence of a contractual arrangement, or an obligation pursuant to the memorandum and articles of association, to the contrary, have any obligation to make further contributions to the Company’s assets (except in exceptional circumstances, such as involving fraud, the establishment of an agency relationship or an illegal or improper purpose or other circumstances in which a court may be prepared to pierce or lift the corporate veil). |
We hereby consent to the filing of this opinion letter as an exhibit to the Registration Statement and to the reference to our firm under the heading “Legal Matters” in the prospectus included in the Registration Statement. In providing our consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Act or the Rules and Regulations of the Commission thereunder.
This opinion letter is addressed to you and may be relied upon by you, your counsel and purchasers of Securities pursuant to the Registration Statement. This opinion letter is limited to the matters detailed herein and is not to be read as an opinion with respect to any other matter.
Yours faithfully
/s/ Maples and Calder
Maples and Calder
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Brooge Holdings Limited
PO Box 309, Ugland House
Grand Cayman
KY1-1104
Cayman Islands
25 September 2019
To: | Maples and Calder |
PO Box 309, Ugland House
Grand Cayman
KY1-1104
Cayman Islands
Brooge Holdings Limited (the “Company”)
I, the undersigned, being a director of the Company, am aware that you are being asked to provide an opinion letter (the “Opinion”) in relation to certain aspects of Cayman Islands law. Unless otherwise defined herein, capitalised terms used in this certificate have the respective meanings given to them in the Opinion. I hereby certify that:
1 | The Memorandum and Articles remain in full force and effect and are unamended. |
2 | The Company has not entered into any mortgages or charges over its property or assets other than those entered in the register of mortgages and charges of the Company. |
3 | The Resolutions were duly passed in the manner prescribed in the Memorandum and Articles (including, without limitation, with respect to the disclosure of interests (if any) by directors of the Company) and have not been amended, varied or revoked in any respect. |
4 | Upon adoption of the IPO Memorandum and Articles, the authorised share capital of the Company will be US$50,000 divided into 450,000,000 ordinary shares of a par value of US$0.0001 each and 50,000,000 preferred shares of a par value of US$0.0001 each. |
5 | The shareholders of the Company (the “Shareholders”) have not restricted the powers of the directors of the Company in any way. |
6 | The sole director of the Company at the date of the Resolutions and at the date of this certificate was and is as follows: Meclomen Maramot. |
7 | The minute book and corporate records of the Company as maintained at its registered office in the Cayman Islands and made available to you are complete and accurate in all material respects, and all minutes and resolutions filed therein represent a complete and accurate record of all meetings of the Shareholders and directors (or any committee thereof) of the Company (duly convened in accordance with the Memorandum and Articles) and all resolutions passed at the meetings or passed by written resolution or consent, as the case may be. |
8 | Prior to, at the time of, and immediately following the approval of the transactions the subject of the Registration Statement the Company was, or will be, able to pay its debts as they fell, or fall, due and has entered, or will enter, into the transactions the subject of the Registration Statement for proper value and not with an intention to defraud or wilfully defeat an obligation owed to any creditor or with a view to giving a creditor a preference. |
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9 | Each director of the Company considers the transactions contemplated by the Registration Statement to be of commercial benefit to the Company and has acted in good faith in the best interests of the Company, and for a proper purpose of the Company, in relation to the transactions which are the subject of the Opinion. |
10 | To the best of my knowledge and belief, having made due inquiry, the Company is not the subject of legal, arbitral, administrative or other proceedings in any jurisdiction. Nor have the directors or Shareholders taken any steps to have the Company struck off or placed in liquidation, nor have any steps been taken to wind up the Company. Nor has any receiver been appointed over any of the Company’s property or assets. |
11 | To the best of my knowledge and belief, having made due inquiry, there are no circumstances or matters of fact existing which may properly form the basis for an application for an order for rectification of the register of members of the Company. |
12 | The Registration Statement has been, or will be, authorised and duly executed and delivered by or on behalf of all relevant parties in accordance with all relevant laws. |
13 | No invitation has been made or will be made by or on behalf of the Company to the public in the Cayman Islands to subscribe for any of the Ordinary Shares. |
14 | The Ordinary Shares to be issued pursuant to the Registration Statement have been, or will be, duly registered, and will continue to be registered, in the Company’s register of members (shareholders). |
15 | The Company is not a central bank, monetary authority or other sovereign entity of any state and is not a subsidiary, direct or indirect, of any sovereign entity or state. |
16 | There is no contractual or other prohibition or restriction (other than as arising under Cayman Islands law) binding on the Company prohibiting or restricting it from entering into and performing its obligations under the Documents. |
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I confirm that you may continue to rely on this certificate as being true and correct on the day that you issue the Opinion unless I shall have previously notified you in writing personally to the contrary.
Signature: | /s/ Meclomen Maramot | |
Name: | Meclomen Maramot | |
Title: | Director |
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Exhibit 10.20
Certain identified information has been excluded from the exhibit because it is both not material and would likely cause competitive harm to the registrant if publicly disclosed.
Exhibit 10.21
Novation Agreement
Dated 01st September 2014
FUJAIRAH MUNICIPALITY (FM)
FUJAIRAH OIL INDUSTRY ZONE (FOIZ)
BROOGE PETROLEUM & GAS INVESTMENT COMPANY FZC (Lessee)
Relating
to a
Oil Storage Terminal Project
in
The Emirate of Fujairah
United Arab Emirates
Page 1 of 4
THIS NOVATION AGREEMENT (“Novation Agreement”) is dated the 01st day of September 2014 and made
BETWEEN:
1. | FUJAIRAH MUNICIPALITY, (the “Original Contracting Party”): |
2. | FUJAIRAH OIL INDUSTRY ZONE , (FOIZ), (the “Transferee”) |
3. | BROOGE PETROLEUM & GAS INVESTMENT COMPANY FZC with Company Registration No. 13-FZC-1117, a company incorporated in UAE and having its registered office at Fujairah Free Zone in the Emirate Of Fujairah, United Arab Emirates, with postal address P.O. Box 50170, Fujairah, UAE, all in accordance with the local and federal laws of the UAE on the date of this agreement, and/ or its nominee(s), (hereinafter referred to as the “Lessee”), |
collectively referred to as the “Parties” and individually as a “Party”.
BACKGROUND:
A. | The Original Contracting Party and the Lessee entered into a lease agreement on March 10, 2013 (“Land Lease”) for the plant site located at Sudah, Fujairah as more particularly described in the Land Lease (“Plant Site”) |
B. | The Original Contracting Party now wishes to be released from the Land Lease, and the Lessee has agreed to release it. |
C. | The Lessee has agreed with the Original Contracting Party and the Transferee to replace the Original Contracting Party as a party to the Land Lease and accordingly the Parties wish to transfer the rights and obligations of the Original Contracting Party under the Land Lease to the Transferee. |
D. | All three Parties have also agreed to amend the area of the Plant Site. |
E. | The parties hereto have agreed to transfer the rights and obligations of the Original Contracting Party under the Land Lease Agreement to the Transferee all in accordance with the terms of this Novation Agreement. |
F. | The Parties wish to record the terms of their agreement as provided in this Novation Agreement. |
NOW IT IS HEREBY AGREED as follows:
1. | NOVATION |
1.1. | The Parties agree that on and from the date of execution of this Novation Agreement: |
a. | Transferee and the Lessee hereby agree that the provisions of the original Land Lease Agreement shall not be amended in any respect as provided herein. |
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b. | the Transferee is substituted for the Original Contracting Party under the Land Lease as if the Transferee had originally been the party to the Land Lease Agreement instead of the Original Contracting Party and all references in the Land Lease to the Original Contracting Party are to be read and construed as if they were references to the Transferee; |
c. | the Transferee is bound by and must fulfill, comply with and observe all the provisions of the Land Lease and shall enjoy all the rights and benefits of the Original Contracting Party under the Land Lease regardless of whether they are owed before or after the execution of this Novation Agreement; |
d. | the Lessee is released and discharged from all and any of its liabilities and obligations to the Original Contracting Party under the Land Lease but without prejudice to the rights of the Lessee against the Transferee in respect of such obligations and liabilities; |
e. | the Lessee releases and discharges the Original Contracting Party from any obligations to the Lessee under the Land Lease any and all claims, actions, proceedings, obligations and liabilities (whether arising under the Land Lease, based in negligence or any other form of legal liability) which the Lessee has or may have in the future against the Original Contracting Party for events arising prior to, on or after the date of execution of this Novation Agreement. |
2. | ADDENDUM TO LAND LEASE |
2.1. | The Transferee and the Lessee agree that the Clause 5 of the Land Lease shall be amended to reflect the revised area as set out in this Clause 2 from the date of execution of this Novation Agreement. |
2.2. | The area of the Plant Site referred to in Clause 5.1 of the Land Lease shall be amended to “153,916.93 square metres”. |
2.3. | The Plant Site plan (attached at Schedule 1 to this Novation Agreement) shall be inserted as a new Annexure 2 to the Land Lease. |
2.4. | The definition of “Plant Site” in Clause 1.1 of the Land Lease shall be deleted and replaced with the following wording: |
“Plant Site” means the area of the Leased Premises on which the Plant shall he constructed as more particularly described in Annexure 2.
3. | GOVERNING LAW |
This Agreement shall be governed by and construed in accordance with the Federal Laws of the United Arab Emirates and Fujairah Law.
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IN WITNESS whereof the parties hereto have caused this Novation Agreement to be duly executed on the day and year first written.
SIGNED BY:
On behalf of FOIZ (Transferee)
By: | /s/ H.H.Sheikh Rashid Bin Hamad Al Sharqi | |
Name: | H.H.Sheikh Rashid Bin Hamad Al Sharqi | |
Title: | Vice Chairman | |
Date: | September 01, 2014 |
On behalf of Fuiairah Municipality:
By: | /s/ Mohamed Saif Al Afkham | |
Name: | Mohamed Saif Al Afkham | |
Title: | Director | |
Date: | September 01, 2014 |
On behalf of Lessee
By: | /s/ Housam El Emri | |
Name: | Housam El Emri | |
Title: | C.E.O | |
Date: | September 01, 2014 |
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Exhibit 10.22
ACCESS TO AND USE OF
PORT FACILITIES AGREEMENT
between
PORT OF FUJAIRAH
and
BROOGE PETROLEUM AND GAS INVESTMENT COMPANY FZC
TABLE OF CONTENTS
1. | DEFINITIONS AND INTERPRETATION | 1 |
2. | GRANT OF RIGHTS | 10 |
3. | CONSTRUCTION | 11 |
4. | OPERATION AND MAINTENANCE | 11 |
5. | TERM, TERMINATION, CONSEQUENCES OF TERMINATION | 12 |
6. | PORT USE AND CHARGES | 13 |
7. | ENVIRONMENTAL, HEALTH, SAFETY AND SECURITY MATTERS | 14 |
8. | LAWS, RULES AND REGULATIONS | 14 |
9. | CHANGE IN LAW | |
10. | VESSEL COMPLIANCE WITH LAWS AND REGULATIONS | 15 |
11. | REPRESENTATIONS AND WARRANTIES | 16 |
12. | RECORDS | 17 |
13. | TERMINATION, EVENTS OF DEFAULT AND REMEDIES | 17 |
14. | GOVERNING LAW AND DISPUTE RESOLUTION | 18 |
15. | LIABILITIES OF THE PARTIES; INDEMNITIES | 21 |
16. | ASSIGNMENT | 22 |
17. | CONFIDENTIAL INFORMATION | 23 |
18. | FORCE MAJEURE | 24 |
19. | NOTICES | 25 |
20. | MISCELLANEOUS | 26 |
SCHEDULE:
SCHEDULE 1 | FORM OF DEED OF SUBSTITUTION | |
APPENDICES: | ||
APPENDIX A | PORT MASTER PLANS | |
APPENDIX B | COMPANY BUILDING PROGRAM1 AND TIMETABLE | |
APPENDIX C | CARGO HANDLING RATES2 |
1 | “Company Building Program” is the defined term. |
2 | “Cargo Handling Rates” is the defined term. |
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THIS ACCESS TO AND USE OF PORT FACILITIES AGREEMENT (the “Agreement”) is made this …....... day of …………… 2014 (the “Effective Date”).
BETWEEN:
(1) | PORT OF FUJAIRAH, an authority established by Emiri Decree Number 1 of 15 February 1984, with its registered address at PO Box 787, Fujairah, United Arab Emirates (“POF”), and |
(2) | THE COMPANY, …………… (the “Company”). |
WHEREAS:
(A) | POF is the owner and operator of the port (“Port”), including the existing Oil Tanker Terminals (as defined below); |
(B) | The Company, will finance, has built, operate and own a new multi-product oil storage terminal through a building program and initial plan capacity specified in Appendix B on land leased from the Fujairah Municipality adjacent to the Port (as defined below) which it intends to utilise in accordance with the Municipality Land Lease Agreement and this Agreement; |
(C) | POF agrees (i) to grant the company certain rights in connection with the requirements of the Company Terminal and in relation to their building program to utilise OT-2 (as defined below) with all associated Port usage rights as may be required in connection with such rights, along with rights of access to the pipelines in the Port, pipe racks, interface connection points, each on the terms and conditions set out below; and |
(D) | POF and the Company now wish to enter into this Agreement to define amongst themselves their respective roles, duties, rights, obligations and interests in relation to the Port and OT-2. |
IT IS AGREED as follows:
1. | DEFINITIONS AND INTERPRETATION |
1.1 | Capitalised terms not otherwise defined in this Agreement have the meanings assigned thereto in this Clause 1.1 as follows: |
“AED” means the lawful currency of the UAE.
“Affiliate” means, as to any person, any other person that (a) controls directly or indirectly such person, or (b) that is controlled directly or indirectly by such person, or (c) is directly or indirectly controlled by a person that directly or indirectly controls such person. For the purposes of this definition, the term “control” (including the term “controlled by”) means the right to exercise more than fifty percent (50%) of the voting rights in the appointment of the directors of such person. With respect to a person which is an agency or instrumentality of a government or any subdivision thereof, or is controlled by or under common control with such an agency or instrumentality. “Affiliate” of such person shall include other agencies or instrumentalities of such government or subdivision thereof and persons controlled by or under common control with such other agencies or instrumentalities.
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“Agreement” means this Agreement together with its annexures and the documents referred to herein.
“Applicable Laws” means, with respect to the Parties or any person, all laws, statutes, codes, acts, treaties, ordinances, orders, judgments, writs, decrees, injunctions, rules, regulations, government approvals, directives, requirements, policies, procedures and standards enacted or adopted by the Emirate of Fujairah or the UAE, or any other competent Governmental Instrumentality in the UAE and shall include the International Ship and Port Facility Security Code, all relevant applicable international conventions implemented in the UAE and the Consents.
“Applicable Rate” means a rate per annum equal to the lower of (a) LIBOR plus two percent (2%) or (b) the maximum rate permitted under the laws of the Emirate of Fujairah and the UAE.
“Approved Uses” has the meaning set forth in Clause 16.3(b).
“Assignment” has the meaning set forth in Clause 15.
“Business Day” means any day when banks in the UAE are open for business.
“Cargo Handling Rates” has the meaning set forth in Clause 6.
“Company Building Program” means the building program for construction, completion and commissioning of the Company Terminal advised to and approved by POF containing specific target dates and crucial design aspects of product receipt into and transfer from the Company Terminal via the port Pipeline, as outlined in Appendix B.
“Company’s Completion Date” means the target date on which the Company shall complete the construction of the initial phase of the Company Terminal and make it operational.
“Company’s Operations” means the operation by the Company of the Company Terminal as allowed by its license.
“Company Pipeline” means any pipeline and associated systems that are owned by the Company, whether now existing or that may be constituted in the future, that start at the Company Terminal facility and terminate at the Matrix Manifold.
“Company Segment” has the meaning set forth in Clause 4.2.
“Company Terminal” means the tanks and associated facilities within the Leased Premises designed, constructed, commissioned, operated, maintained and utilised by the Company as described in the Company Building Program and subject to the terms set out in the Municipality Land Lease Agreement.
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“Completion Date OT-2” means the date on which the POF has completed the construction of OT-2 (as defined in the Plans) and the same is ready for use by any vessel (including the Vessels) utilising the Port for the loading or discharging of Products.
“Confidential Information” means all confidential information of the Disclosing Party provided to the Recipient pursuant to this Agreement or any prior confidentiality agreement between the Parties that is designated by the Disclosing Party as “Confidential”, including business plans, data, designs documents, unpublished patent application claims and office actions, names and concepts, reports, analyses, tests, specifications, charts, plans, drawings, models, ideas, schemes, correspondence, communications, lists, manuals, computer programs, software, technology, techniques, methods, processes, services, routines, systems, procedures, practices, operations, modes of operation, apparatus, equipment, business opportunities, trade secrets, know-how, customer and supplier lists, and methods of combining information. Notwithstanding the foregoing, Confidential Information shall not include information that:
(a) | Is in or becomes available in the public domain through no fault of the Recipient; |
(b) | Was already known to the Recipient prior to disclosure by the Disclosing Party as proven by the dated written records of the Recipient; |
(c) | Is disclosed to the Recipient by a third party who did not obtain such information, directly or indirectly, from the Disclosing Party and was not subject to any confidentiality obligation to the Disclosing Party regarding such information; |
(d) | Is independently developed by a person (as established by dated documentation) without access to the Confidential Information provided by the Disclosing Party; or |
(e) | Is approved for release by written authorisation of the Disclosing Party; |
(f) | Provided that the existence of this Agreement is not deemed to be Confidential Information. |
“Consents” means all authorisations, consents, decrees, licenses, permits, waivers, privileges and approvals from all filings with the Governmental Instrumentalities necessary for the performance of the obligations of the Parties to this Agreement or the Land Lease Agreement under such Agreements, including any approval, consent, license, or other authorisation that is required from any Governmental Instrumentality under the laws of the Emirate of Fujairah or the UAE.
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“Contractor” means, as the context requires, (a) any contractor appointed by POF, or any subcontractor of any tier appointed by any such contractor, in each case in connection with the design, construction, commissioning, operation and maintenance by POF of the Port, in each case in connection with its performance of its obligations under this Agreement or the Port and the successors and assigns of such contractor or subcontractor of any tier appointed by any such contractor, in each case in connection with its obligations under this Agreement or its use of the Port and the successors and assigns of such contractor or subcontractor.
“Customers” mean customers of the Company that use the facilities of the Port for the discharge and loading of their Products or goods.
“Deed of Substitution” means a deed executed pursuant to Clause 15, in the form attached as Schedule 1.
“DIAC” shall have the meaning set forth in Clause 13.5.
“Disclosing Party” has the meaning set forth in Clause 16.1.
“Dispute” means any dispute or difference of any kind between the Parties in connection with, arising out of or related to this Agreement or the breach, termination or invalidity of this Agreement.
“Dispute Committee” has the meaning set forth in Clause 13.2.
“Effective Date” means the date of this Agreement.
“Event of Default” has the meaning set forth in Clause 12.2.
“Force Majeure” means any event, act or circumstance beyond the control of a Party, acting reasonably and prudently, including the following:
(a) | Act of God, fire, flood, lightning storm, typhoon, earthquake, perils of the sea, soil erosion, or epidemics; |
(b) | War, battle, revolution, riot, civil disturbances, looting, insurrection, sabotage, acts of public enemies, blockade, boycott, or embargo; |
(c) | Strikes, lockouts, or other industrial disturbances; provided, however, that the resolution of any strike, lockout, or other industrial disturbance shall be deemed to be within the control of either Party affected thereby if the same may be resolved by acceding to the lawful and reasonable demands of other parties to any labour dispute giving rise to such circumstance; |
(d) | Rupture or explosion of or damage to equipment, mechanical breakdown of equipment, failure of equipment (excluding mal operation or rupture breakdowns or failures of equipment that are attributed to maintenance, or lack thereof, that has not been performed in accordance with the manufacturers’ recommendations), water used to extinguish fires, burst pipe, breached bund, damage by aircraft or vessel, obstructions to shipping or roads that prevent access to or egress from the Port, Port Installations or Company Terminal; |
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(e) | Compliance with laws, regulations, directions, orders, and acts of any Governmental Instrumentality; provided, however that acts of a Governmental Instrumentality of the UAE shall not constitute an event, act or circumstance of Force Majeure with respect to any obligation of POF hereunder unless the same are of general application to all industries at the Port, in all regions of the U.A.E., and are not discriminatory against the Company; |
(f) | Specifically excluded from Force Majeure conditions are delays by Government of Fujairah and/or POF in placing contracts for, construction of, and financing of contracts for the design, build, and placing into service of the OT-2 and OT-3 unless caused by Force Majeure conditions (a) to (e) above; |
(g) | Further, specifically excluded from Force Majeure conditions are unilateral acts of the Government of Fujairah specifically targeted at the Company whose primary objective is to relieve POF of its responsibilities or penalties under Events of Default by claiming Force Majeure. |
“Fujairah Government” means the Government of the Emirate of Fujairah.
“Good Industry Practice” means the exercise of the degree of skill, diligence, prudence and practice which could reasonably and ordinarily be expected from a skilled and experienced operator engaged (a) in respect of POF, in the operation of a port facility comparable in capacity and type to the Port or (b) in respect of the Company, operations comparable in nature to the Company’s Operations, taking into account, in either case, the location of the Port and the prevailing circumstances.
“Governmental Instrumentality” means the federal government of the UAE, the Fujairah Government or any ministry, department or political subdivision thereof, and any person exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government or any other governmental entity, instrumentality, agency, authority, corporation, committee or commission under the direct or indirect control of the Fujairah Government or the federal government of the UAE, including successors and assigns of the same, and any privatised agency or body established by the Fujairah Government or the federal government of the UAE as successors to the functions of the same.
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“Leased Premises” means the parcels of land as described in the municipality site plan to be leased to the Company under the terms of the Municipality Land Lease Agreement.
“LIBOR” means (a) the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on Telerate Page 3750 (or any successor page) as the London interbank offered rate for deposits in U.S. Dollars at or about 11:00 a.m. (London time) two (2) Banking Days before the date of determination thereof for a period of six (6) months, and reset for each six (6) month period thereafter if necessary, or (b) if for any reason such rate is not available, the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) posted on the Reuters Screen LIBO Page at or about 11:00 a.m. (London time) two (2) Business Days before the date of determination thereof for a period of six (6) months, and reset for each six (6) month period thereafter if necessary; provided, however, that if neither such rate is so posted, “LIBOR” shall be the interest rate per annum announced by Citibank, N.A. in London from time to time as its base rate. For purposes of this definition only, a “Banking Day” means any day on which banks in London are generally open for business.
“Manifest” means the ship’s inward or outward manifest or any other appropriate record of the amount of the Products loaded or discharged in units commonly used in the industry.
“Marine Loading Arms or MLAs” means oil loading arms placed at the Oil Tanker Terminals that connect to the loading connections on the Vessels.
“Matrix Manifold” means the oil manifolds owned and maintained by POF and located at OT-2 where Company Pipeline(s) will tie-in into for availing loading and discharge activities to and from Vessels berthed at OT-2.
“Municipality Land Lease Agreement” means the land lease agreement dated 25 November 2009 between the Company and the Fujairah Municipality pursuant to which the Fujairah Municipality has demised, leased and let the Leased Premises.
“Oil Tanker Terminals” means, individually or collectively, OT-1 and OT-2.
“Oil Tanker Terminal 1” or “OT-1” means all permanent oil tanker berths on the oil tanker terminal within the Port along with the installations related thereto as more particularly described in the Plans.
“Oil Tanker Terminal (North)” or “OT-2” means new permanent oil tanker berths to be designed, constructed, commissioned, operated, and maintained on a common-user basis in accordance with the Port Regulations at the Port to the north of the current northern breakwater along with installations related thereto as more particularly described in the Plans.
“Party” means POF or the Company, as the case may be, and “Parties” means POF and the Company.
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“Plans” means the drawings and descriptions contained in Appendix A.
“POF Segment” has the meaning set forth in Clause 4.1.
“Port” means the Port of Fujairah as more particularly described in the Plans.
“Port Guidelines” means the Port Guidelines dated April 2007 produced by the POF, as replaced or amended from time to time.
“Port Ordinance” means the Port Ordinance Rules and Regulations of 1982 as replaced or amended from time to time.
“Port Pipeline” means any pipeline and associated systems located on the oil Tanker Terminals that are owned and/or operated by the POF whether now existing or that may be installed or constructed after the Effective Date.
“Port Regulations” means any rules, regulations, ordinances, procedures, directives, requirements, policies, standards or information of any kind, whether currently in force or introduced from time to time, produced by the POF in connection with the Port and with which users of the Port (including the Company and its Customers) are required to comply with including the Master’s Obligations as described in Clause 8.2(b)), the Port Ordinance, the Port Guidelines, Port Rules for Top Side Facility Operations and the Tariffs.
“Port Rules for Top Side Facility Operations” means the “Port Rules for Top Side Facility Operations” issued by the Port of Fujairah, as replaced or amended from time to time.
“Port Specifications” means the specifications for the Port (including the Oil Tanker Terminals set out in the Port Regulations and which apply to all users of the Port including the Company and its Customers.
“Products” means all petroleum and petroleum products and goods loaded, discharged, stored, transported, traded, consumed, sold or otherwise located or used in the Company’s Operations.
“Recipient” has the meaning set forth in Clause 16.1.
“Representatives” has the meaning set forth in Clause 16.3.
“Rules” has the meaning set forth in Clause 13.5.
“Shipping Schedule” means each preliminary schedule sent by the Company to POF, detailing the name and expected date of arrival of the Vessels that will discharge or load Products and the expected Time Alongside, over a consecutive four (4) week period.
“Statement of Dispute” has the meaning set forth in Clause 13.2.
“Tariffs” means the Port Tariff Marine Services and Charges dated 1 May 2008 and produced by the POF, as replaced or amended from time to time and any other Port Regulations setting out tariffs or charges payable by users of the Port.
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“Term” means the period described in Clause 5, as the same be extended pursuant to Clause 5.
“Time Alongside” means the amount of time that a ship is alongside the allocated Oil Tanker Terminal calculated by reference to the securing of the ship’s first line and the releasing of the ship’s last line.
“Ton” means a metric ton (MT) of one thousand (1,000) kilograms.
“Tribunal” has the meaning set forth in Clause 13.5.
“UAE” means the United Arab Emirates.
“Vessel” means a self propelled tanker vessel that is owned, managed, operated or chartered (including chartered by demise) by the Company, by a Contractor of the Company or Customers of the Company, or by a purchaser or supplier of Products to or from the Company and any such other vessel as is necessary for the conduct of the Company’s Operations or those of its Customers or for the delivery to or from the Port and/or the Oil Tanker Terminals of any Products.
“Vessel Owner” shall mean the owner, operator, manager or charterer, as the case may be, of a Vessel.
“Vessel Specifications” means the specifications for any vessels (including the Vessels) utilising the Port as set out in the Port Regulations.
1.2 | In the interpretation of this Agreement, unless the context otherwise requires: |
(a) | References to “person” include individuals, corporations, limited liability companies, bodies corporate, associations, partnerships, unincorporated entities, and any organisation having legal capacity and any Governmental Instrumentality (whether of not having a separate legal personality); |
(b) | Where the context admits, the singular includes the plural and vice versa, and words importing any gender include the other gender; |
(c) | References to any Party or person mean and include a reference to that Party or person, its successors in title, permitted assignees, estates and legal personal representatives; |
(d) | References to this Agreement or any other document include (i) this Agreement or such other document (as the case may be) as amended, supplemented or novated from time to time, and (ii) any document that amends, supplements or novates this Agreement or, as the case may be, such other document notwithstanding any change in the identity of the Parties, and (iii) any and all schedules, appendices, exhibits, annexes and tables to this Agreement or to any such other document; provided, however that no Party shall assume any additional obligation or liability under this Agreement by reason of any such amendment, supplement or novation unless such Party has consented to the same in writing; |
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(e) | The contents table and the headings to Clauses, Appendices and paragraphs of this Agreement are inserted for convenience and are to be ignored in construing and interpreting the provisions of this Agreement; |
(f) | References to “day” mean a calendar day, references to “month” mean a Gregorian calendar month, and references to “year” mean 365 days or 366 days in a leap year, unless otherwise specified in the text; |
(g) | Save as otherwise provided herein, references to any law shall include any and all regulations, rules, statutes, rulings, decrees, judgments or orders made under that law and any amendment, re-enactment, variation or extension thereof or provision substituting any of them; |
(h) | Where general words are followed or preceded by specific examples, the nature of the specific examples shall not restrict or qualify the natural meaning of the general words. Accordingly, references to the word “including” shall mean “including, but not limited to” and other forms of the words “include” or “including” are used and shall be interpreted accordingly; |
(i) | Where a Party is required to act “reasonably” or a Party’s conduct is required to be “reasonable,” the standard to be achieved shall be judged on an objective basis without regard to the particular circumstances of the Party whose conduct is being judged; |
(j) | Wherever provision is made for the giving of notice or consent or approval by any person, unless otherwise specified or required such notice or consent or approval shall be in writing and in the English language and the word “notify” shall be construed accordingly; and |
(k) | A reference to “writing” includes printing, typing, lithography and other means of reproducing words in a visible form bearing the signatures of the party/parties concerned; |
1.3 | The Appendices attached hereto are incorporated herein by reference and form a part of this Agreement. In the event of any conflict, discrepancy or inconsistency between this Agreement and any provision of any Appendix, the provisions of this Agreement (not including the Appendices) shall prevail. |
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2. | GRANT OF RIGHTS |
2.1 | Port Facilities, Matrix Manifold(s), Port Pipeline’s segments |
POF hereby grants to the Company for the Term and subject to all Applicable Laws and this Agreement, and without prejudice to its generality, subject to sub clause (2.1(i)) and Clause 3 below, the right to:
(a) | From and after the Completion Date of OT-2, utilise OT-2, on a non-exclusive, common-user, “first come, first served” basis (that is each Vessel will be allocated a berth based on when it lodges its Notice of Readiness) and with access rights and other terms no less favourable than those generally applicable to all other users of OT-2, in connection with the Company’s Terminal and Operations; |
(b) | From and after the Completion Date OT-2, have Vessels access the OT-2, in order for Customers to load and discharge the Products; |
(c) | Have its personnel and contractors access the Port on a timely basis in order to utilise OT-2 and fulfil the Company’s Operations associated with loading and discharging products; |
(d) | Design, construct commission, expand, use, operate, repair and maintain the Company Pipelines in connection with the transportation of the Products to and from the OT-2; |
(e) | Whilst at all times co-operating with the POF and co-ordinating the exercise of any such rights with the POF without any nuisance to port operations (including taking into account the scheduled operations at the Port), exercise and enjoy all necessary rights in connection with the existence, use, operation, extension, expansion, repair and maintenance of the Company Pipelines; |
(f) | Whilst at all times co-operating with the POF and co-ordinating the excise of any such rights with the POF without any nuisance to port operations (including taking into account the scheduled operations at the Port), access the Port for the purposes of maintaining, repairing, extending and expanding the Company’s Pipelines and surveying the route of any extension to the same (which such right shall extend to the Company’s Contractors); |
(g) | Right includes: (i) the right to exercise and enjoy all necessary rights of easement or other property rights, (ii) rights of access to any such land or water which does not fall within the Port but over or under which the Company’s Pipelines and associated systems may be located in the event such land or water is in the control of the POF, (iii) the right to design and construct any reasonable extension or alteration of the Company’s Pipelines in accordance with Good Industry Practice and after POF approval where such approval is necessary (POF agrees not to withhold such approval without due cause), and (iv) the right to access, operate and maintain the Company’s Pipelines; |
(h) | Exercise and enjoy all incidental rights, including any rights reasonably necessary for the Company to enjoy the rights granted by this Agreement and to conduct the Company’s Operations as set out herein; |
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(i) | For avoidance of doubts, and without prejudice to Clause 5.4 if the Company’s construction falls totally or significantly behind the Company Building Program, other than by reason of force majeure the Port does not commit to the Company to keep berths space in OT-2 available for the un-built portion and reserves the right to allocate OT-2 berths space to other users who are ready to use it. |
3. | CONSTRUCTION |
3.1 | The Parties shall work together to facilitate the efficient, safe and economical construction of, in case of POF, the works required to complete OT-2, and in the case of the Company, the works required to complete the Company Terminal, and will use their reasonable endeavours to assist one another insofar as is practical in order to perform this Agreement. The Parties will liaise to ensure that design and construction of the Company Pipeline align with the design and construction of the Matrix Manifold. To this extent, the design of the infrastructure and systems of the Company for the receipt from and transference of Products at POF’s Matrix Manifold shall be aligned to the synopsis of hydraulic analysis of the communal pipeline systems of OT-2 as provided for in the Port Rules for Top Side Facility Operation. |
3.2 | The Company shall complete the construction of Company Terminal no later than the Company Completion Date other than by reason of Force Majeure. The Company shall ensue that the Company will update the POF on request with pertinent information in connection with the same. |
4. | OPERATION AND MAINTENANCE |
4.1 | Operation of the Port, Oil Tanker Terminals and Port Pipelines: |
POF shall be responsible for the day-to-day operation and maintenance, including programmed maintenance of: the Port, the Oil Tanker Terminals and the Port Pipelines (the “POF Segment”) in accordance with Good Industry Practice and the Port Regulations.
4.2 | Operation of the Company Pipelines: |
The Company shall be responsible for the day-to-day operation and maintenance of the Company Pipelines (the “Company Segment”) in accordance with Good Industry Practice and the Port Regulations.
4.3 | Efficiency of Product Transfer Operations |
Each Party warrants to the other that it shall adopt Good Industry Practice in carrying out their relevant activities so as to enable the common facilities of POF to be efficiently occupied. This includes the design and ratings of Main Load Out pumps, nominations of Vessels with good performance records, employment of a skilled workforce, optimal operational plans, on the part of the Company, and design and ratings of pigging and stripping systems, employment of a skilled workforce, exercising of rights to cast-off non-performing Vessels, optimal operational plans, on the part of POF.
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4.4 | Title to Company Pipelines and Products |
At no time will POF have ownership of the Company Pipelines or any Products, save for slops generated within and/or unrecoverable products from the communal pipeline system of POF as provided for in the Port Rules for Top Side Facility Operations and the Company shall not have any claim over or any claim for compensation in respect of such slops or unrecoverable products.
4.5 | Risk of Loss |
(a) | The Company will bear the risk of loss or damage including contamination to any Products in the Company Pipelines. |
(b) | POF will bear the risk of loss or damage including contamination to any Products in the Port Pipelines. |
5. | TERM, TERMINATION, CONSEQUENCES OF TERMINATION |
5.1 | This Agreement comes into force on its Effective Date. |
The initial operating term of this Agreement shall be twenty five (25) years from the Completion Date OT-2 or such other date as the Parties hereto shall mutually agree in writing (the “Initial Operations Period”).
This Agreement shall automatically extend for a further twenty five (25) years, or such other period as the Parties shall agree in writing from the end of the Initial Operations Period.
5.2 | The Term will be extended by each day during which a Force Majeure Event continues, subject to Clause 18. |
5.3 | This Agreement may be terminated upon the first to occur of any of the following events: |
(a) | An agreement in writing is entered into between the Parties to terminate this Agreement; |
(b) | The termination of the Municipality Land Lease Agreement; |
(c) | The failure of the Company after six months from the commencement of the building program outline in Appendix B to meet any or a significant proportion of the advised target dates set; and |
(d) | The occurrence of an Event of Default which has not been remedied in accordance with Clause 12.2. |
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5.4 | If after six months from the date of commencement of the Company Building Program, the Company, by reason of its own default and not by reason of force majeure or, fails to meet any or a significant proportion of the milestones set out in the Company Building Program, the following provisions shall apply: |
(a) | POF may give notice to the Company setting out in reasonable detail, particulars of the Company’s failure to achieve specified milestones and requiring the Company to show cause as to the reasons for such failures, within [30 days] from the date of such notice (“Show Cause Notice”); |
(b) | The Company shall respond to the Show Cause Notice within [30] days from the date of receipt setting out the reasons for its failure to meet any or a significant proportion of the milestones and setting out particulars of the steps which it intends to take to remedy such failure; |
(c) | If within a period of [90] days from the date of the Company’s response, such failure has not been remedied, POF shall have a right to issue a notice to the Company terminating this Agreement whereupon this Agreement shall terminate with immediate effect; |
(d) | The provisions of Clause 13.5 shall apply to termination under this Clause 5.4. |
6. | PORT USE AND CHARGES |
6.1 | Cargo Handling Rates |
(a) | The Company shall pay the cargo handling fees calculated by reference to the rates set out in Appendix C (“Cargo Handling Rates”) in accordance with the then published handling rates as contained in the POF Tariff as may from time to time be amended. The Cargo Handling Rates shall be the same for OT-1 and OT-2. |
(b) | The cargo handling rates described in Appendix C show the rates which will apply upon Completed Date “OT-2”. Thereafter the Port undertakes that the prices will remain competitive with prices charged by other ports in the Gulf regions for the same scope of services. Moreover, all Port users in any throughput range will pay the same rate, on a non-discriminatory basis. |
(c) | The payment of the Cargo Handling Fees (specified in 1, 2, 3, & 4 of the Appendix C) on the terms set out herein shall constitute the only fee or expense payable by the Company to the POF in respect of cargo handling. |
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6.2 | Payment of Charges by Vessel Owner |
The Company acknowledges that in respect of each visit to the Port by a Vessel, dues and charges shall be paid for the use of the Port by such Vessel in accordance with the prevailing Tariffs.
7. | ENVIRONMENTAL, HEALTH, SAFETY AND SECURITY MATTERS |
7.1 | POF has published, within the port Guidelines, Port Rules for Top Side Facility Operations and otherwise in the Port Regulations, procedures in connection with environmental health, safety and security and the Company shall comply with the same and all other relevant environmental laws applicable in the UAE and use reasonable endeavours to cause Vessels utilising OT-2 to comply with the same. |
7.2 | The latest published Port Regulations shall apply. If the Port introduces changes that have retroactive effect, the Company has no retroactive liabilities in respect of any such changes. |
8. | LAWS, RULES AND REGULATIONS |
8.1 | The Company shall not at any time use or cause to be used any facilities, or carry on or cause to be carried on any activities, within the Port or upon OT-2, or the Company Terminal in violation of the Port Regulations and shall at all times carry on its activities in accordance with the terms and conditions set out in Clause 8.2 below, the Applicable Laws and this Agreement. |
8.2 | The rules and regulations governing Port use in addition to the Port Ordinance shall be: |
(a) | Port Guidelines: Port Guidelines Revision 4, April 2007 (or as amended from time to time). |
(b) | Master’s Obligations: Master Declaration, Revision 4, 2007 (or as amended from time to time). |
(c) | Port Rules for Top Side Facility Operations as may be amended from time to time. |
(d) | Port Tariff as amended from time to time. |
(e) | Environmental Law of the UAE and all other relevant UAE Laws and Regulations. |
8.3 | The Parties acknowledge that the Port Regulations may change during the Term of this Agreement. If any change in such rules or regulations imposes a material negative impact on the Company (except for price revisions which are controlled by Clause 6.1, then the Parties will make the necessary revisions to the Agreement to minimize such negative impact as may be possible. |
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8.4 | The latest published Port Regulations shall apply. Furthermore, if the Port introduces changes that have retroactive effect, the Company has no retroactive liabilities under such changes. |
9. | VESSEL COMPLIANCE WITH LAWS AND REGULATIONS |
9.1 | Vessel Particulars |
The Company shall ensure that all Vessels utilising the Company Terminal via the Oil Tanker Terminals comply with the Port Regulations.
9.2 | Vessel Rules and Regulations |
POF shall have the right to conduct any inspections of any Vessels in accordance with the port Regulations.
9.3 | Scheduling Procedures; Loading and Discharging; Pilotage |
The Company shall use reasonable endeavours to cause all Vessels utilising the oil Tanker Terminals to comply with such procedures relating to scheduling, loading and discharge and pilotage as apply generally within the Port and are part of the Port Regulations. Such procedures shall from time to time be notified by POF to the Company and shall be consistent with the Company’s rights of access to OT-2 under Clause 2.1.
9.4 | Insurance |
Including Customers who self insure, the Company shall require that any Vessel engaged for the purposes of shipping the Products shall effect and keep effected comprehensive protection and indemnity insurance, including comprehensive coverage for collision liability, crew, cargo, pollution, spillage, and wreck removal in accordance with Good Industry Practice in addition to any requirements imposed by the Port Regulations and relevant International Conventions.
9.5 | Company Insurance |
The Company shall effect and keep effected throughout the Term third party liability insurance relating to their operations at the Port in accordance with Good Industry Practice including coverage for liability or damage caused to the Port or any users of the Port by the Company.
9.6 | POF Insurance |
POF shall effect and keep effected throughout the Term, in connection with the Port, third party liability insurance as is required in accordance with Good Industry Practice including coverage for liability or damage caused to the Company or the products by the Port.
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10. | REPRESENTATIONS AND WARRANTIES |
Each Party hereby represents and warrants to the other Party as follows:
10.1 | Organisation; Good Standing; Power |
(a) | The Party is a company (in the case of the Company) or an authority (in the case of POF) duly organised, validly existing and in good standing under the respective laws of the jurisdiction of its incorporation. |
(b) | The Party has all requisite power to own, lease and operate its respective assets and to conduct its business and operations as currently conducted and as contemplated to be conducted. |
10.2 | Authorisation; Enforceability |
(a) | The Party has all requisite power and authority to execute and deliver this Agreement and any and all instruments necessary or appropriate in order to effectuate fully the terms and conditions of this Agreement and to perform fully its obligations under this Agreement. The execution and delivery of this Agreement and the other transactions contemplated by this Agreement have been duly and validly authorised by all necessary action on its part. This Agreement has been duly and validly executed and delivered by the Party and constitutes its legal, valid and binding obligations enforceable against it in accordance with its terms. |
(b) | No consent, approval or authorisation of, or declaration to or filing with, any person is required by the Party for the due and valid authorisation, execution and delivery by it of this Agreement or for the consummation by it of the transactions contemplated hereby other than those consents, approvals, authorisations, declarations or filings which have been obtained or made. |
10.3 | Non-Contravention |
(a) | The execution, delivery and performance of this Agreement by the Party do not (i) violate or conflict with its organisational documents or (ii) conflict with or violate any Applicable Law. |
(b) | The Party’s entering into this Agreement is not a breach of any contract, loan or other agreement or commitment previously entered into by it. |
10.4 | Litigation |
(a) | As of the Effective Date, there is no litigation, suit, claim, action, proceeding or investigation by or before any Governmental Instrumentality or any court, tribunal or judicial or arbitral body pending or to the best of the Party’s knowledge, threatened against or involving it which questions or challenges the validity of this Agreement or any action to be taken by it pursuant to this Agreement, or impairs its ability to perform its obligations under this Agreement. |
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(b) | As of the Effective Date, there are no writs, judgments, injunctions, decrees or similar orders of any Governmental Instrumentality or any court tribunal or judicial or arbitral body outstanding against the Party which materially affects its occupancy, use, operation or maintenance of the Company Terminal (in the case of the company) or the Port (in the case of POF). |
11. | RECORDS |
Each Party shall keep and maintain records for the minimum statutory period required under UAE law, to allow the other Party to verify throughput at the Oil Tanker Terminals and shall grant access to such records to the other Party on the giving of reasonable notice. The terms of this Clause 11 shall not affect the timely production of information and documentation by the Company for the purposes of the administration of the cargo handling fees.
12. | TERMINATION, EVENTS OF DEFAULT AND REMEDIES |
12.1 | Termination |
Without prejudice to the provisions of Clause 5.2 hereof, other than for Events of Default not remedied in accordance with this Clause 12, neither Party shall have any right to terminate this Agreement as a consequence of any breach of any part of this Agreement by the other Party and the rights granted hereby shall not be revoked or terminated other than by written agreement of the Parties.
12.2 | Events of Default |
Subject to Clause 12.3, an event of default (“Event of Default”) under this Agreement shall be deemed to exist upon the occurrence of any one or more of the following events:
(a) | failure by either Party to make payment of any amounts due to the other Party under this Agreement, which failure continues for a period of forty-five (45) days after notice of such failure is given by the non-defaulting Party; or |
(b) | failure by either Party to perform or meet in any material respect any other material term, condition, covenant, agreement or obligation on the part of such Party to be performed or met under this Agreement, and such failure continues for a period of ninety (90) days after notice thereof is given by the other Party; provided, however that an Event of Default shall not be deemed to have occurred hereunder if such failure cannot reasonably be cured within such ninety (90) day period and the non-performing Party has commenced and is diligently pursuing such cure within such ninety (90) day period, in which case the non-performing Party shall have an additional period of time (not to exceed thirty (30) days after receipt of written notice of such default) to cure such failure. |
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12.3 | The Company will not be deemed to be in default of any of its obligations under this Agreement relating to compliance with Applicable Law if (i) the Company is contesting the Applicable Law in good faith by appropriate proceedings conducted with due diligence or (ii) the Company is seeking with due diligence to comply with such Applicable Law or to obtain or maintain any applicable waiver, exemption, variance, franchise, certification, approval, permit, authorisation, licence, consent or similar order or decision required of or from any Governmental Instrumentality or person in respect of the operation or maintenance of the Company’s Operations and Applicable Law permits continued performance of its obligations under this Agreement, provided that the default under this Clause shall not continue to exist for more than 120 days. |
12.4 | Remedies |
(a) | Subject to Clauses 12.2 and 12.3, upon the occurrence and during the continuance of any Event of Default hereunder, the non-defaulting Party shall have the right to pursue any remedy given under this Agreement, or now or hereafter existing under any Applicable Law or in equity. |
(b) | The exercise by the non-defaulting Party of any right or remedy against the defaulting Party shall not preclude the simultaneous or successive exercise against the Defaulting Party of any other right or remedy provided for herein or permitted under any Applicable Law or in equity, whether or not such rights or remedies are consistent or inconsistent with any other right or remedy. |
12.5 | Effect of Termination |
If this Agreement is terminated, the Parties shall be released and discharged from any obligations and liabilities arising or accruing under this Agreement from and after the date of such termination. Termination of this Agreement shall not discharge or relieve either Party from any obligations or liabilities which may have accrued under this Agreement prior to such termination, or which may accrue out of or in respect of such termination.
13. | GOVERNING LAW AND DISPUTE RESOLUTION |
13.1 | This Agreement, and any Dispute arising hereunder, shall be governed by the laws of the UAE, without reference to any choice of law principles. Notwithstanding the choice principle of UAE law, all communications, disputes, and other transactions under this Agreement shall be in the English language. |
13.2 | All Disputes shall first be presented to a a committee consisting of a senior management designee of each Party (the “Dispute Committee”). |
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13.3 | A Party seeking such resolution shall as soon as reasonably practical after a Dispute arises, prepare and deliver to the other Party a statement setting forth (a) a succinct statement of the issue in Dispute, (b) why such Party believes it is a proper subject for resolution by the Dispute Committee, and (c) a proposed remedy for such Dispute (the “Statement of Dispute”). Within ten (10) days thereafter, the Dispute Committee shall meet in person or by telephone to discuss and resolve the issue. If the Dispute Committee has failed to agree upon a unanimous resolution of the disputed issue(s) within forty (40) days following the delivery of the Statement of Dispute to the Dispute Committee, then either Party shall be free to commence arbitration. |
13.4 | All Disputes not resolved by the Dispute Committee shall be finally decided by binding arbitration. |
13.5 | The following principles shall apply in any arbitration under this Agreement, unless the Parties to the arbitration unanimously agree otherwise in writing: |
(a) | The arbitration will be conducted under the Conciliation and Arbitration Rules (“Rules”) of the Dubai International Arbitration Centre (“DIAC”), which Rules are deemed incorporated into this Agreement, by three (3) arbitrators appointed in accordance with the said Rules and the following provisions. Each Party shall nominate one (1) arbitrator within the time specified in the Rules. The two (2) arbitrators nominated by the Parties shall together nominate the third arbitrator, who shall be the chairman of the arbitral tribunal (the “Tribunal”), by mutual agreement within twenty (20) days of their appointment by the DIAC. If any nominated arbitrator is not appointed; declines, resigns, become incapacitated; or otherwise refuses or fails to serve or to continue to serve as an arbitrator, the Party or arbitrators entitled to nominate that arbitrator shall promptly nominate a successor. In the event that an arbitrator is objected to, the two (2) remaining arbitrators shall decide whether the objection is valid and whether the challenged arbitrator shall be removed. Should a Party fail to nominate an arbitrator, or should the two party appointed arbitrators fail to nominate a chairman, the DIAC shall make the appointment. Should one Party challenge an arbitrator prior to the appointment of a chairman, the DIAC shall resolve the challenge. |
(b) | The arbitration proceedings shall be conducted and the award rendered in the English language, and the arbitrators shall be fluent in the English language and have appropriate commercial, technical and/or legal expertise as appropriate to the Dispute. |
(c) | The seat and legal place of arbitration shall be Dubai, United Arab Emirates. |
(d) | The Tribunal shall take into account principles of legal privilege, such as those involving the confidentiality of communications between a lawyer and a client. Subject to any such relevant legal privilege, the Tribunal shall have the power to make all appropriate orders necessary for disclosure; such orders the Parties consent in advance to obey. |
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(e) | The validity, construction, and interpretation of this agreement to arbitrate, and all procedural aspects of the arbitration conducted pursuant to this agreement to arbitrate, including but not limited to the scope of this agreement to arbitrate and the determination of the issues that are subject to arbitration, and the rules governing the conduct of the arbitration, shall be decided by the Tribunal. |
(f) | The Tribunal shall have the power to enter such interim orders as it deems necessary, including orders to preserve the subject matter of the Dispute or to preserve or adjust the status of the Parties pending resolution of the Dispute in arbitration. |
(g) | The Tribunal in making its award shall be guided by this by this Agreement, the terms of any other written agreements between the Parties, and such other documents and evidence in written form between the Parties that post-date this Agreement as the Tribunal shall find relevant, and it shall make every effort to give effect to the Parties’ intention as expressed therein. The Parties specifically agreeing to waive the application of any Applicable Law or doctrine that would permit the Tribunal to reach a result that is contrary to the expressed intent of the Parties. |
(h) | Consequential, punitive or other similar damages shall not be allowed except those payable to third parties for which liability is allocated among the Parties by the arbitral award. |
(i) | All costs of the arbitration proceedings, including attorneys’ fees and costs, shall be borne in the manner determined by the Tribunal. |
(j) | Any Party to the arbitration, either prior to the appointment of the chairman of the Tribunal or thereafter with the approval of the Tribunal, may request injunctive relief, or other provisional or protective measures from any court having jurisdiction over the Party to which such measures would be applied and such request shall not waive the right to arbitrate. |
(k) | Judgment upon the award may be entered in any court having jurisdiction over the Party against whom the award is issued or its property, or application may be made to such court for a judicial acceptance of the award and an order of enforcement, as the case may be. |
(l) | Any monetary award shall be rendered and promptly paid in United States Dollars free of any deduction or offset, and any costs or fees incident to enforcing the award shall be charged against the Party resisting such enforcement. |
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(m) | The award shall include interest at the Applicable Rate from the date of any breach or violation of this Agreement as determined in the arbitral award until paid in full. |
(n) | Except to the extent necessary for proceedings relating to enforcement of the arbitration agreement, any order of the Tribunal, any award or other, related rights of the Parties, the fact of the arbitration, the arbitration proceeding itself, all evidence, memorials or other documents exchanged or used in the arbitration and the arbitrators’ award shall be maintained in confidence by the Parties to the fullest extent permitted by any Applicable Law. However, a violation of this covenant shall not affect the enforceability of this agreement to arbitrate or of the Tribunal’s award. |
14. | LIABILITIES OF THE PARTIES; INDEMNITIES |
14.1 | Subject always to the Applicable Laws, and Port Rules and Regulations, except as provided for elsewhere in this Agreement, the Company shall indemnify, defend and hold harmless POF, its officials, employees, and representatives and its affiliates, agents, contractors or licensees and their respective officers, directors, and employees, acting bonafide and in good faith from and against any direct liability, loss, damage, cost, claim or expense suffered by POF resulting from death or injury to persons and damage to property which arises from: |
(a) | An act of negligence, omissions, or default of the Company or any person representing the Company however and wherever arising; or |
(b) | Any material breach of warranty, material misrepresentation by the Company or material non-performance of any term, condition, covenant or obligation to be performed by the Company under this Agreement. |
14.2 | Subject always to the Applicable Laws, and Port Rules and Regulations, except as provided for elsewhere in this Agreement, the POF shall indemnify, defend, and hold harmless the Company, its officials, employees, and representatives and its affiliates, agents, contractors or licensees and their respective officers, directors, and employees, acting bonafide and in good faith from and against any liability, loss, damage, cost, claim or expense suffered by Company resulting from death or injury to persons and damage to property, including the Company Pipeline within the Port, which arises from: |
(a) | An act of negligence, omissions, or default of POF or any person representing POF however and wherever arising; or |
(b) | Any material breach of warranty, material misrepresentation by POF or material non-performance of any term, condition, covenant or obligation to be performed by POF under this Agreement. |
14.3 | The Company shall be liable to and shall compensate POF for any loss or damage caused to POF’s facilities or any other property belonging to or under the care, control or custody of POF, whether arising directly or indirectly out of the use of POF’s facilities by the Company, caused by any act or omission or negligence of the Company and or contacts customers and their respective agents, servants or sub-contractors. |
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14.4 | POF shall be liable to and shall compensate the Company for any loss or damage caused to the Company’s facilities or any other property belonging to or under the care, control or custody of the Company, whether arising directly or indirectly out of the use of the Company’s facilities by POF, caused by any act or omission or negligence of POF and or contacts customers and their respective agents, servants or sub-contractors. |
14.5 | Limitations of Damages and Liability |
Subject always to Applicable Laws in no event will either Party or any of their respective officials, officers, directors, agents, representatives, contractors, subcontractors, vendors or employees have any liability to the other Party for consequential loss, including loss of profits or business interruptions, claims for labour, or incidental, special, consequential, indirect or punitive damages of any type arising under this Agreement.
14.6 | Gross Negligence |
Subject always to Applicable Laws and the Port Rules and Regulations, if a Party engages in gross negligence and/or wilful misconduct then, such Party shall be solely liable for any resulting liability to the other Party and Customers or to third-parties for direct, indirect, and consequential damages.
15. | ASSIGNMENT |
15.1 | Neither Party may assign or transfer any of its rights or obligations, in part or in whole, under this Agreement without the prior written consent of the other Party; provided, however that (i) such consent shall not be unreasonably withheld or delayed if the Party wishing to assign has demonstrated to the reasonable satisfaction of the other Party that the proposed assignee has adequate legal, financial and technical status and ability to observe and perform the obligations of the assignor under this Agreement, (ii) the Company may transfer its rights under this Agreement by way of security to its finance parties; and (iii) the Company may nominate an Affiliate to assume all of its rights and obligations and upon execution of a Deed of Substitution, the Company shall be released from all of its obligations and liabilities under this Agreement and such Affiliate shall assume such obligations and liabilities. POF agrees to execute the Deed of Substitution promptly on the request of the Company. |
15.2 | No transfer pursuant to Clause 15.1(iii) shall be effective unless and until the assignor has procured the proposed assignee to covenant directly with the other Party to observe and perform all the terms and conditions of this Agreement, and has provided to the other Party a certified copy of the deed of adherence. |
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16. | CONFIDENTIAL INFORMATION |
16.1 | The following describes the procedures by which one Party (the “Disclosing Party”) may disclose Confidential Information to the other Party (the “Recipient”) under this Agreement. |
16.2 | The Disclosing Party reserves its ownership rights and, if applicable, its customers’ and third party contractors’ ownership rights, in and to Confidential Information disclosed hereunder. |
16.3 | In consideration of the disclosure by the Disclosing Party to the Recipient of the Confidential Information, the Recipient agrees that it and its officers, directors, partners, employees, Affiliates, agents, advisers, technology providers, suppliers, representatives, finance providers (including prospective finance providers) and outside auditors who have access to the Confidential Information (collectively, “Representatives”); |
(a) | Will keep the Confidential Information confidential and will not, without the prior written consent of the Disclosing Party or as allowed by this Agreement, disclose Confidential Information to third parties; and |
(b) | Will not use Confidential Information other than for the purposes of (i) exercising its rights and fulfilling its obligations under this Agreement, (ii) evaluating the potential exercise of its rights under this Agreement, or (iii) the present or contemplated activities or operations of the Company (collectively, the “Approved Uses”); provided, however, that Confidential Information may be used by a Party (including any Affiliate of a Party) in connection with the development, construction or operation of any plants, facility, machinery or equipment owned or operated by that Party to the extent that such Confidential Information is free from restrictions on use imposed by any person not a Party hereto holding intellectual property rights in such Confidential Information. Moreover, the Recipient agrees to transmit the Confidential Information only to such of its Representatives who need to know the Confidential Information for the sole purpose of assisting the Recipient in the Approved Uses, who are informed of this Agreement, and who, when necessary to safeguard the Confidential Information, have agreed in writing to obligations of confidentiality substantially equivalent to those contained in this Clause 16 or are otherwise subject to professional obligations of confidentiality. In any event, the Recipient shall take all reasonable measures to restrain its Representatives from prohibited or unauthorised disclosure or use of the Confidential Information. |
16.4 | If any portion of the Confidential Information is, pursuant to the advice of legal counsel, required to be disclosed by subpoena, under any Applicable Law, litigation, or similar legal process, or to a governmental regulatory agency or commission or securities exchange, the Recipient will promptly inform the Disclosing Party of the existence, terms and circumstances surrounding such request. The Recipient will consult with the Disclosing Party on the advisability of taking legally-available steps to resist or narrow such request. The Disclosing Party may thereafter seek to obtain a protective order, and the Recipient shall reasonably cooperate with the Disclosing party in its efforts to obtain a protective order. |
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16.5 | The existence and provisions of this Agreement and all other information, data, technology, trade secrets and know-how relating to the business of POF, or the Company or any Affiliate thereof are Confidential Information. |
16.6 | The Parties acknowledge that the Confidential Information is valuable and the other Party would suffer irreparable harm if the Confidential Information (or any part of it) were to be disclosed to a third party or used otherwise than in accordance with the terms of this Agreement by any person to whom it has been disclosed. |
16.7 | For the purpose of this Clause 15.1, the term “third party” means any person, firm or corporation, any private or public commercial entity, or any state-owned or controlled agency or enterprise of any kind but not including an Affiliate of a Party. |
16.8 | Without prejudice to use and disclosure restrictions contained in any other agreement, the restrictions on use and disclosure agreed between the Parties in this Clause 16.1 shall cease as to all Confidential Information on the date that there is three (3) years after the termination of this Agreement. |
18. | FORCE MAJEURE |
18.1 | General |
Subject always to the Applicable Laws, and Port Rules and Regulations, except with respect to any obligations for the payment of money hereunder, neither the Company nor POF shall be considered in default in the performance of their respective obligations under this Agreement or be responsible for any delay in the carrying out such obligations if and to the extent that such failure or delay is due to Force Majeure; provided, however that the Force Majeure circumstances or cause complained of directly and unavoidably affects the ability of the Party invoking this Clause 18.1, and such Party shall take all action which is reasonable to overcome any such delay or failure and to proceed with the performance of its obligations hereunder.
18.2 | Notice |
A Party affected by a Force Majeure event or circumstance shall, promptly upon becoming aware of the existence thereof, notify the other Party of the same and give reasonably full particulars thereof. Similarly, upon becoming aware of the cessation of such event or circumstance, the affected party shall promptly notify the other Party of such cessation. Where feasible, the Force Majeure event and cessation of same should be confirmed in writing by the local chamber of commerce or equivalent neutral body.
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18.3 | Discussion |
If the Force Majeure event or circumstances is anticipated to continue or does continue for more than six (6) consecutive months or eight (8) months during any twelve (12) month period, the Parties shall meet to discuss what actions, if any, should be taken. If a Force Majeure event or circumstances is not resolved within a further three months after the parties have met pursuant to this Clause 18.3, then the Party suffering economic harm as a result of the Force Majeure, may terminate this Agreement by written notice to the other Party.
19. | NOTICES |
All notices, approvals, consents, agreements, invoices and other communications (collectively, “notices”) between the Parties shall be in writing and delivered by hand or recognised courier service or sent by telefax. Notices delivered by hand or courier shall be deemed received on the date of delivery. Notices delivered by telefax shall be deemed received on the date of transmission; provided, however that such transmission is confirmed by electronic answer back transmission. All communications by telefax shall promptly be followed by delivery of the original by hand or registered mail. All notices from one Party to the other shall be sent to the following addresses (unless changed by the appropriate notice):
Port of Fujairah
Address:
PO Box 787
Fujairah
United Arab Emirates
Fax: +971 9 222 8811
Brooge Petroleum and Gas Investment Co.
Address:
PO Box 50170
Fujairah
United Arab Emirates
Email: [*****]
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20. | MISCELLANEOUS |
20.1 | Entire Agreement |
This Agreement and the Appendices hereto constitute and contain the entire agreement of the Parties at the date of execution (and supersede any and all prior negotiations, correspondence, understandings and agreements between the Parties) respecting the subject matter hereof.
20.2 | Waiver |
A waiver of any term, provision or condition of, or consent granted under, this Agreement shall be effective only if given in writing and signed by the waiving or consenting Party and then only in the instance and for the purpose for which it is given. No failure or delay on the part of a Party in exercising any right, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or privilege preclude any other or further exercise thereof or the exercise of any other right, power or privilege. No breach of any provision of this Agreement shall be waived or discharged except with the express written consent of the Parties. The rights and remedies herein provided are cumulative with and not exclusive of any rights or remedies provided by any Applicable Law.
20.3 | Amendments |
This Agreement may be amended only by a written instrument signed by both Parties. Any such amendment shall be included in the documents considered in the event of a Dispute and Arbitration under Clause 13.
20.4 | Third party Beneficiaries |
Except as otherwise expressly stated herein, nothing in this Agreement confers any right on any person other than the Parties and no person other than a Party to this Agreement shall be entitled to enforce the provisions of this Agreement.
20.5 | Severability |
If any provision of this Agreement or part of it is rendered invalid, illegal or unenforceable in any respect under any Applicable Law, the validity, legality and enforceability of the remaining provisions of this Agreement shall not in any way be affected or impaired thereby; and the Parties shall promptly negotiate in good faith new provisions to eliminate the the invalidity, illegality or unenforceability and to restore this Agreement as near as possible to its original intent and effect.
20.6 | Counterparts |
This Agreement may be executed in any number of counterparts. All such counterparts shall constitute but one and the same Agreement.
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20.7 | Sovereign Immunity |
(a) | Subject to the Applicable Laws each of the Parties hereby unconditionally and irrevocably agrees for now and hereafter to the binding submission of any Dispute to the Dispute Committee and/or arbitration as set out in Clause 13 and not to claim, invoke or permit to be invoked on its behalf or for its benefit by its representatives any immunity right it may have under the laws of the UAE or the Emirate of Fujairah, or of any other state or jurisdiction, to prevent, delay, hinder, nullify or in any other way obstruct the submission of any Dispute to the Dispute Committee and/or arbitration as set out in Clause 13. Each of the Parties hereby unconditionally and irrevocably agrees for now and hereafter to accept any award rendered by the Dispute Committee and/or the Tribunal as set out in Clause 13 and any judgment entered thereon by a court of competent jurisdiction as final and binding, and not to claim, invoke or permit to be invoked on its behalf or for its benefit any immunity right it may have under the laws of the UAE or the Emirate of Fujairah, or of any other state or jurisdiction, to prevent, delay, hinder, nullify or in any other way obstruct the enforcement or execution of any award rendered by the Dispute Committee and/or an Tribunal as set out in Clause 13 and any judgment entered thereon by a court of competent jurisdiction. |
(b) | Subject to the Applicable Laws to the extent that the Parties, or any of their properties may in any sate or jurisdiction claim or benefit from any immunity (whether characterised as state immunity, sovereign immunity, act of state or otherwise) from jurisdiction, suit, action, service, execution, attachment, set off, provisional measures or orders, or other legal process (whether in aid of execution, before award or judgment or otherwise), or the extent that there may be attributed to the Parties or any of their properties any such immunity (whether or not claimed), the Parties hereby expressly, unconditionally and irrevocably agree not to claim, invoke or permit to be invoked on their or their properties’ behalf or for their or their properties’ benefit, any such immunity. |
(c) | The Parties acknowledge that all of the transactions and actions contemplated and effected by this Agreement are commercial transactions. |
20.8 | No Partnership |
This Agreement shall not be construed as creating an association or partnership between the Parties or as imposing any partnership obligation or liability upon either Party. No Party shall have the right, power or authority to enter into agreements or undertakings for, or act on behalf of, or as an agent or representative of, or to otherwise bind, the other party.
20.9 | Binding Effect |
This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.
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IN WITNESS WHEREOF, the Parties have duly executed this Agreement on the date first above written.
PORT OF FUJAIRAH | ||
/s/ Capt. Mousa Murad | ||
By: | Capt. Mousa Murad | |
Title: | G.M. |
The Company | |
|
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Exhibit 10.23
Certain identified information has been excluded from the exhibit because it is both not material and would likely cause competitive harm to the registrant if publicly disclosed.
PRIVATE & CONFIDENTIAL
Date: | 06/04/2014 |
Ref: | CAD/039/14 |
M/s. Brooge Petroleum and Gas Investment Company FZC
P.O. Box. No. 50170, Fujairah,
United Arab Emirates.
Dear Sirs,
Sub: FACILITY OFFER LETTER
We, National Bank of Abu Dhabi, RISC-Islamic Banking Division (“ISD-NBAD”), refer to your request and our recent discussions and are pleased to offer you the Islamic banking facilities detailed in Schedule (A) attached hereto (the “Facility”) subject to the terms hereinafter and the terms of the documentation to be concluded between you and ISD-NBAD in relation to the Facility.
Yours faithfully,
Fahad Al Shaer MD – ADNIF | /s/ Omar Katri | ||
National Bank of Abu Dhabi, PJSC-Islamic Banking Division | Head of Business Banking |
Date: | Date: |
We agree and accept the terms of this Facility Offer Letter (the “Offer”) including the attached schedules and agree to be bound by its terms and conditions.
Signature: |
|
M/s. Brooge Petroleum and Gas Investment Company FZC | ||
Date: | 15/4/2014 |
Certain identified information has been excluded from the exhibit because it is both not material and would likely cause competitive harm to the registrant if publicly disclosed.
Page 1 of 6
Date: | 06/04/2014 |
Ref: | CAD/039/14 |
SCHEDULE “A”
Facility |
Limit
(AED) |
Pricing | Purpose / Tenor / Payment Source | |||
Contract for Works & Forward Lease | 310,718,000 |
6M EBOR+3.5%
p.a. Minimum 5.5% p.a. |
Purpose: To part finance for construction of properties (14 Oil Tanks) located at plot no. 130, Fujairah, United Arab Emirates through forward lease contract. Repayment: In maximum 48 quarterly installments after 21 months construction period and 6 months grace period, final maturity maximum by 31/03/2028. Profit to be serviced on quarterly basis during construction period. Payment Source: Operating cash flow / business income of the shareholders / other sources. |
|||
Total | 310,718,000 | [UAE Dirham Three Hundred Ten Million Seven Eighteen Thousand only] |
Securities:
1. | Assignment of lease contract with off-takers in favor of ISD-NBAD |
2. | Step in right over leased land in favor of NBAD to be provided. |
3. | Mortgage over the financed assets in favor of NBAD to be provided, if the same is not owned by the lender in the Islamic structure. |
4. |
Corporate guarantee of including facility amount in addition to 10% of project cost as contingency, to be provided. |
5. | Assignment of Contractor’s “All Risk Insurance policy” to ISD-NBAD as first beneficiary during construction and maintenance periods. |
6. | Assignment of Fire Insurance Policy of the Property (upon completion of construction) in favor of ISD-NBAD as first beneficiary. |
Page 2 of 6
Date: | 06/04/2014 |
Ref: | CAD/039/14 |
7. | Performance guarantee in favor of ISD-NBAD to be issued in a text and by a bank that are acceptable to ISD-NBAD equivalent to 10% of the Istisna contract amount. The performance guarantee should be lodged with ISD-NBAD prior to any disbursement. |
8. | Advance payment guarantee (APG) in favor of ISD-NBAD to be issued in text and by a bank that are acceptable to ISD-NBAD and to be lodged with ISD-NBAD prior to any disbursement. |
9. | Retention guarantee (RG) in favor of ISD-NBAD to be issued in text and by a bank that are acceptable to ISD-NBAD and to be lodged with ISD-NBAD prior to any disbursement. |
10. | Assignment over the shares and accounts held with NBAD, to be provided. |
11. | Assignment over EPC, O&M contracts and port facilities agreement, variations, if any, in specifications are subject to the Bank’s consents and contractors are to be notified and to adhere to this. |
12. | All the contractor bonds to be assigned to the bank |
Support: |
1. | Direct Debit Authority. |
2. | Undertaking to cover the default or shortfall, if any, in finance payment arrangement from your other sources of income. |
3. | Project cash flow statement |
Conditions:
1. | Amount of AED 3,107,180.00 as non-refundable study and documentation fee to be paid (AED 1,553,590.00 at the time of signing this Offer and AED 1,553,590.00 on first drawdown). |
2. | Approval of the facility is subject to 50% sell down within 6 months period and positive market sounding. |
3. | Due diligence must include satisfying evidence of sufficient demand and update regarding the complete status of the refinery on which the project is highly dependent |
4. | Ownership covenants to be provided |
5. | Minimum DSCR of 150% is required at all the times, if DSCR reaches to 120% or less, it must be trigger as an event of default. |
Page 3 of 6
Date: | 06/04/2014 |
Ref: | CAD/039/14 |
6. | Amount equivalent to 1 quarterly instalment including profit to be kept in DSR accounts at all the times, 50% of the excess fund will be retained to reduce the facility tenor and remaining will be released to you. |
7. | Technical advisor to be appointed from the beginning of the project and prior to construction. |
8. | Technical advisor to provide the project management services and supervision of the construction, disbursement of the facility will be based progress report from Technical advisor. |
9. | Construction cost will be turnkey / fixed cost and independent engineering consultant (Technical Advisor) to review the project design and construction agreement and ensure completion risk is mitigated with no escalation clause and minimum risk of cost overrun. |
10. | Technical advisor to review the technical capabilities of the project and ensure that the project will suit a sufficient wide range of requirements from different potential off takers in terms of ancillary business. |
11. | Duty of care of the technical advisor to be under the lender |
12. | MOUs of 80% capacity to be provided maximum prior to first drawdown and satisfactory firm off take agreements covering at least 60% of the capacity and acceptable to the lender to be produced at completion. The MOUs to reflect the specifications / designs of the required tanks which must be in line with the tanks subject of finance. |
13. | Debt equity ratio is (65:35) with 25% upfront and 10% pro-rata basis. |
14. | Early settlement charge @ 1.0% of the total outstanding to be paid, in case of early settlement of the facility. |
15. | The release of surplus funds from rental collection account will be subject to servicing the installment amount and within Bank’s discretion. |
16. | To accept the terms of this Offer, please sign and return a copy hereof within 14 days from the date first written above otherwise this Offer will lapse. |
17. | Without prejudice to the above paragraph and where the terms of this Offer are accepted by you in the manner stated above, this Offer shall not be binding on ISD-NBAD unless documentation and formalities are completed and executed to the entire satisfaction of ISD-NBAD on / or before 06/07/2014. |
18. | This Offer is part of the documentation to be executed in respect of the Facility. |
Page 4 of 6
Date: | 06/04/2014 |
Ref: | CAD/039/14 |
19. | ISD-NBAD may revoke this offer letter at its sole discretion if, an event occurs or series of events occur which might have in the opinion of ISD-NBAD adverse effect on your financial condition or where market conditions change, thus creating in Our sole opinion an adverse effect on our ability to offer the Facility to you on the terms of this Offer. |
20. | You hereby commit yourself and undertake, in the event of any delay by way of procrastination in the payment of any Rental Payment (advance or normal) or any other amount due to ISD-NBAD on its due date, to donate to charity an amount to be added by ISD-NBAD to any next Rental Payment and calculated for the delay period on the basis of 2.0% p.a. of the overdue amount. Any delay in payment from your side shall be deemed as procrastination unless proven otherwise. The said amount shall be dispensed of for charitable purposes under the supervision of the Fatwa and Sharia’ Supervisory Board of National Bank of Abu Dhabi-Islamic Banking Division. ISD-NBAD shall not retain such amount nor account for it in its profits. |
21. | Without prejudice to and in addition to any term or condition in any finance document which you may sign with the ISD-NBAD in respect of the Facility, ISD-NBAD shall have the right to cancel the Facility at any time without liability on its part if: |
a. | You fail to provide any document or information required by ISD-NBAD in form and substance to the satisfaction of ISD-NBAD and within the period of time specified by it. |
b. | You fail to comply with any term or condition, condition precedent, security or any other matter required from your pursuant to this Offer or pursuant to any document, contract or correspondence between you and ISD-NBAD. |
c. | You do not utilize the Facility within a period of 90 days from the date of this Offer regardless of any other document or contract signed between you and ISD-NBAD in relation to the Facility, OR if the first draw down / utilization under the Facility did not occur for any reason attributed to you within the dates / timelines as specified or required in the Facility approval or as notified to you by ISD-NBAD from time to time. |
d. | Any other event occurs which, in the reasonable opinion of ISD-NBAD would jeopardize the interests of ISD-NBAD or which may possibly result in a default by you under the Facility. |
Page 5 of 6
Date: | 06/04/2014 |
Ref: | CAD/039/14 |
National Bank of Abu Dhabi, PJSC-Islamic Banking Division
/s/ Omar Katri | ||
/s/ Fahad Al Shaer MD – ADNIF | Head of Business Banking | |
Signature: | Signature: | |
Date: | Date: |
M/s. Brooge Petroleum and Gas Investment Company FZC
Signature: |
|
Date: | 15/4/2014 |
Page 6 of 6
Exhibit 10.24
M/s. Brooge Petroleum and Gas Investment Company FZC
P.O. Box. No. 50170, Fujairah,
United Arab Emirates,
Date | : 24/07/2014 |
Subject | : | Facility Offer Letter (Addendum) |
Reference | : | CAD/100/14 |
Dear Sirs,
Reference to our Facility Offer Letter (Ref. No CAD/039/14 dated 06/04/2014) which has been already signed and accepted by you.
Please be informed that your request for extension of documentation and security perfection date from 06/07/2014 to 31/10/2014 has been approved.
This letter is an addendum to the above mentioned FOL. All other terms and conditions in the Facility Offer Letter remain unchanged.
National Bank of Abu Dhabi, PJSC-Islamic Banking Division
Signature: |
|
Signature: |
|
|
Date: | 24/07/2014 | Date: | 24/07/2014 |
M/s. Brooge Petroleum and Gas Investment Company FZC
Signature: |
|
|
Date: | 24-07-2014 |
|
National Bank of Abu Dhabi PJSC | P.O. Box 40057 | Abu Dhabi | United Arab Emirates | Toll Free 800 23643 |
Exhibit 10.25
M/s. Brooge Petroleum and Gas Investment Company FZC
P.O. Box. No. 50170, Fujairah,
United Arab Emirates,
Date: 13/11/2014
Subject : Facility Offer Letter (Addendum)
Reference : CAD/185/14
Dear Sirs,
Reference to our Facility Offer Letter (Ref. No CAD/100/14 dated 24/07/2014) which has been already signed and accepted by you.
Please be informed that your request for extension of documentation and security perfection date from 31/10/2014 to 31/01/2015 has been approved.
Please also be informed that this will be the last extension for the documents perfection without any further consideration in this regard
This letter is an addendum to the above mentioned Facility Offer Letter. All other terms and conditions in the Facility Offer Letter remain unchanged.
National Bank of Abu Dhabi, PJSC-Islamic Banking Division
Signature: |
|
Signature: |
|
|
Date: | 16-11-2014 | Date: | 16-11-2014 |
M/s. Brooge Petroleum and Gas Investment Company FZC
Signature: |
|
||
|
|||
Date: | 16.11.2014 |
Exhibit 10.26
M/s. Brooge Petroleum and Gas Investment Company FZC
P.O. Box. No. 50170, Fujairah,
United Arab Emirates,
Date | : 31/12/2014 |
Subject | : Facility Offer Letter (Addendum) |
Reference | : CAD/228/14 |
Dear Sirs,
Reference to our Facility Offer Letter (Ref. No CAD/185/14 dated 13/11/2014) which has been already signed and accepted by you.
Please be informed that your request for extension of documentation and security perfection date from 31/01/2015 to 31/03/2015 has been approved.
Please also be informed that this will be the last extension for the documents perfection without any further consideration in this regard.
This letter is an addendum to the above mentioned Facility Offer Letter. All other terms and conditions in the Facility Offer Letter remain unchanged.
National Bank of Abu Dhabi, PJSC-Islamic Banking Division
Signature: |
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Signature: |
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Date: | 31-12-2014 | Date: | 31-12-2014 |
M/s. Brooge Petroleum and Gas Investment Company FZC
Signature: |
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Date: | 31-12-2014 |
Exhibit 10.27
Certain identified information has been excluded from the exhibit because it is both not material and would likely cause competitive harm to the registrant if publicly disclosed.
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Date: 13th April 2015
Ref: A-008/B15
To: | Fujairah Oil Industry Zone (FOIZ) |
P.O. Box No.9900
Fujairah, UAE.
Kind Attention:
Copy to: | National Bank of Abu Dhabi- Islamic Banking Division (ADNIF), |
P.O.Box No. 40057
Abu Dhabi, United Arab Emirates
FUJAIRAH OIL INDUSTRY ZONE (FOIZ) NO-OBJECTION IN RESPECT OF THE OIL STORAGE TERMINAL PROJECT BY M/s. BROOGE PETROLEUM AND GAS INVESTMENT CO. FZC IN THE EMIRATE OF FUJAIRAH
Dear Sirs,
We refer to the proposed development by Brooge Petroleum & Gas Investment Co. FZC (BPGIC) of an Oil Storage Terminal in Fujairah (the “Project”) on Property No. 130, Block A, Al Suda Region, Fujairah (the “Property”).
BPGIC in its capacity, as the Lessee , has entered into a forward lease agreement (Ijara Mawsufa Fi”l-Dhimma) with National Bank of Abu Dhabi PJSC - Islamic Banking Division (ADNIF) in respect of the project, as part of the financing made available to BPGIC by ADNIF (the Islamic Financing).
1. | PROJECT |
Please note (and by acknowledging this letter confirm your no-objection) that in the context of the project and Islamic Financing:
1.1 | BPGIC, a Fujairah Free Zone Company, pursuant to the Land Lease Agreement is leasing land, bearing Plot number 130, Block A, located at Al Sudah in Fujairah; |
1.2 | BPGIC, a Fujairah Free Zone Company shall operate from Al Sudah in Fujairah |
1.3 | BPGIC is the Lessee under the land lease agreement (the “Land Lease Agreement”) dated 10 Mar 2013 between Fujairah Municipality, novated to Fujairah Oil Industries Zone (FOIZ) on 01.September 2014 and Brooge Petroleum and Gas Investment Co. FZC, a company incorporated in the Fujairah Free Zone, with registration number 13-FZC-1117. |
1.4 | The Property is free of any administrative impediments, legal disputes, rights in rem or others’ rights, whatsoever. |
Abu Dhabi, UAE | |
P.O.Box 29939 | |
Tel +971 2 633 3116 | |
Fax +971 2 633 3955 | |
www.bpgic.com | E-mail:info@bpgic.com |
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1.5 | BPGIC is granting mortgage over the constructed facilities required to be built on the Property in favor of ADNIF as one of the finance guarantees, and such mortgage remains valid till the date of full repayment. For clarification, the Land shall not be subject to any lien, whatsoever. |
1.6 | In case of the mortgage of the constructed facilities; the termination of such mortgage during the finance period may be claimed only as per a written letter by ADNIF ; |
1.7 | BPGIC and ADNIF are entitled to construct buildings on the Property according to the plans, drawings and schedules to be agreed upon in the finance terms. |
1.8 | BPGIC may not dispose of the financed constructed facilities or the leased Property or any part thereof, grant third party any rights therein, or take any other disposal that may dilute the whole or any part of the mortgage before obtaining the written consent of ADNIF and FOIZ; |
1.9 | The lease contract of the Property between FOIZ in its capacity as the Lessor and Brooge Petroleum and Gas Investment Company in its capacity as the Lessee must not be terminated whatsoever throughout the finance period, provided however, BPGIC is not in material breach of the terms and conditions as enunciated in the Land Lease Agreement between FOIZ & BPGIC dated September 01, 2014. If such material breach was raised; then FOIZ shall notify ADNIF in order to either rectify the breach or replace BPGIC in all the rights under the lease contract; |
1.10 | ADNIF is entitled to request to replace BPGIC in all the rights under the lease contract at any time during the finance period, meanwhile, BPGIC shall continue fulfilling the obligations thereof under the lease contract. Such request shall be conditional by providing proof that BPGIC is in continuous breach of fulfilling the repayment of its due finance installments. |
Yours faithfully,
For and on behalf of:
Brooge Petroleum and Gas Investment Co. FZC
Name: Housam Salman Al Amri
Title: CEO / Vice Chairman
Date: 13th April 2015
We acknowledge receipt of this letter and confirm that we have no objection to any of its terms.
For and on behalf of:
FUJAIRAH OIL INDUSTRY ZONE
Name: St. Rashid Bin Hamad Al Sharqi
Title: Deputy Chairman
Date: 19.04.2015
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Abu Dhabi, UAE | |
P.O.Box 29939 | ||
Tel +971 2 633 3116 | ||
Fax +971 2 633 3955 | ||
www.bpgic.com | E-mail:info@bpgic.com |
Exhibit 10.28
M/s. Brooge Petroleum and Gas Investment
Company FZC
P.O. Box. No. 50170, Fujairah,
United Arab Emirates,
Date | : 24/06/2015 |
Subject | : Facility Offer Letter (Addendum) |
Reference | : CAD/162/15 |
Dear Sirs,
Reference to our Facility Offer Letter addendum (Ref. No CAD/228/14 dated 31/12/2014) which has been already signed and accepted by you.
Please be informed that your request for increase of tenor, extension of documentation and security perfection date from 31/01/2015 to 31/03/2015 and disbursement of AED 48 million against advance payment guarantee (APG) has been approved subject to following conditions:
1. | Confirmation that 18% of the total contribution has been utilized in the project, same to be confirmed by technical project advisor (MUC) |
2. | Undertaking that remaining 7% of the contribution will be utilized prior to any further drawdown other than advance payment disbursement to the contractor |
3. | A mechanism to established whereby all your remaining contribution to be deposited in NBAD account to ensure proper tracking. |
4. | Non-refundable study and documentation fees to fully paid prior to disbursement of advance payment. |
5. | Over all tenor has been increased by 2 months (i.e. total tenor 13 years and 11 months) due to delay in commencement of the work, any further delay in project to be notified to ISD-NBAD in due course in order to extend the validity of the guarantees. |
6. | Documents perfection validity has been extended till 1st of July 2015 |
7. | Pricing has been change from 6MEBOR to 3MEBOR noting that repayment frequency of the facility is quarterly |
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National Bank of Abu Dhabi PJSC | P.O. Box 40057 | Abu Dhabi | United Arab Emirates | Toll Free 800 23643 |
This letter is an addendum to the above mentioned Facility Offer Letter. All other terms and conditions in the Facility Offer Letter remain unchanged.
National Bank of Abu Dhabi, PJSC-Islamic Banking Division
Signature: |
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Signature: |
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Date: | 29-06-2015 | Date: | 29-06-2015 |
M/s. Brooge Petroleum and Gas Investment Company FZC.
Signature: |
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Date: | 29-06-2015 |
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National Bank of Abu Dhabi PJSC | P.O. Box 40057 | Abu Dhabi | United Arab Emirates | Toll Free 800 23643 |
Exhibit 10.29
EXECUTION VERSION [4]
Master Istisna’ Agreement
Dated 29-06-2015
Brooge Petroleum and Gas Investment Company FZC
(The Seller)
National Bank of Abu Dhabi PJSC - Islamic Banking Division
(The Investment Agent)
Dentons & Co Suite 1204 Al Ghaith Tower Hamdan Street PO Box 47656 Abu Dhabi United Arab Emirates |
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Contents
1 | Definitions and interpretation | 1 |
2 | Istisna’ Facility | 4 |
3 | Investment Agent’s rights and obligations | 4 |
4 | Conditions precedent | 5 |
5 | Istisna’ Agreement | 6 |
6 | Conditions precedent to the making of Istisna’ Payments | 7 |
7 | Specific sale and purchase provisions | 8 |
8 | Payment obligations | 9 |
9 | Representations and warranties | 10 |
10 | Information undertakings | 11 |
11 | Positive undertakings | 12 |
12 | Negative undertakings | 13 |
13 | Istisna’ Events of Default | 13 |
14 | Events of Default and Events of Mandatory Prepayment | 14 |
15 | Early termination by the Seller before the Istisna’ Agreement exists | 14 |
16 | Indemnity | 15 |
17 | Governing law | 16 |
18 | Enforcement | 16 |
Schedule 1 – Form of Offer Letter and Acceptance | 18 | |
Schedule A – Specifications and other matters | 20 | |
Schedule 2 – Istisna’ Instalment Notice | 21 |
Contents (i)
Master Istisna’ Agreement
Dated
Between
(1) | Broege Petroleum and Gas Investment Company FZC incorporated under the laws of Fujairah Free Zone, Fujairah, United Arab Emirates of P. O. Box 50170, Fujairah, United Arab Emirates (the Seller); and |
(2) | National Bank of Abu Dhabi PJSC - Islamic Banking Division, of P. O. Box 40057, Abu Dhabi, United Arab Emirates, acting in its capacity as Investment Agent for an on behalf of the Participants (the Investment Agent). |
Recitals
A | In accordance with the Investment Agency Agreement, the Participants have, amongst other things, appointed the Investment Agent as their agent under and in connection with the Transaction Documents, including this Master Istisna’ Agreement (the Agreement). |
B | Under the Istisna’ Facility, the Investment Agent will buy the Istisna’ Development from the Seller in accordance with the terms of this Agreement. |
C | The Seller has independently reviewed the Transaction Documents for the purpose of ensuring its compliance with the Shari’ah, and is satisfied that they do so comply. |
It is agreed:
1 | Definitions and interpretation |
1.1 | Definitions |
1.1.1 | Unless the context otherwise requires or unless otherwise defined in this Agreement, words and expressions defined in the Common Terms Agreement (whether directly or indirectly) shall have the same meaning when used in this Agreement. |
1.1.2 | In addition, in this Agreement: |
Acceptance means a document substantially in the form set out in Part 2 of Schedule 1 (Form of Offer Letter and Acceptance) or such other form as may be mutually agreed between the Seller and the Investment Agent.
Availability Period means the period from and including the date of this Agreement and ending on the Termination Date.
Available Commitment means at any time, in relation to a Participant, the Participant’s Commitment minus:
(a) | the amount of its Participant Contribution in relation to any Istisna’ Instalments that have been paid; and |
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(b) | in relation to any proposed Istisna’ Instalment, the amount of its Participant Contribution in relation to any Istisna’ Instalments that are due to be made on or before the proposed Istisna’ Payment Date. |
Available Facility means the aggregate for the time being of each Participant’s Available Commitment.
Common Terms Agreement means, in relation to the Istisna’ Development, that agreement made on or about the date of this Agreement between the Seller (acting in the capacity as the Company) and the Investment Agent.
Completion Certificate means, in relation to the Istisna’ Development, the certificate, howsoever described in the Main Construction Agreement and which is issued under the Main Construction Agreement, confirming that the Istisna’ Development has been completed and is ready for handover.
Construction Event of Default means, in relation to the Istisna’ Development, those events howsoever described in the Main Construction Agreement.
Development Completion Date means, in relation to the Istisna’ Development, the date when the Completion Certificate is issued which must be on or before the Projected Completion Date.
Final Istisna’ Instalment means, in relation to the Istisna’ Agreement, the last scheduled Istisna’ Instalment which is due to be paid on the Development Completion Date.
Istisna’ Agreement means an istisna’ agreement in which the Seller sells and the Investment Agent buys the Istisna’ Development in accordance with the provisions of this Agreement.
Istisna’ Development means the assets to be constructed under the Istisna’ Agreement in accordance with the Specifications, as described in the Istisna’ Agreement.
Istisna’ Event of Default means any of the events listed in Clause 13 (Istisna’ Events of Default).
Istisna’ Facility means a facility in a maximum amount equal to the Total Commitments.
Istisna’ Instalment Notice means a notice substantially in the form contained in Schedule 2 (Istisna’ Instalment Notice).
Istisna’ Instalments means, in relation to the Istisna’ Agreement, the instalments of the Purchase Price payable in accordance with this Agreement, the Istisna’ Agreement and the other Transaction Documents.
Istisna’ Payment means the payment of an Istisna’ Instalment.
Istisna’ Payment Date means a date when an Istisna’ Payment is made or has been paid or, as the context requires, is to be made.
Istisna’ Repeating Representations means each of the representations and warranties set out in Clause 9.2 (Main Construction Agreement).
Main Construction Agreement means, in relation to the Istisna’ Development, the construction agreement entered into between the Seller and Main Contractor for the construction of the Istisna’ Development as described in Schedule A (Specifications and other matters) to the Istisna’ Agreement created by the Offer Letter and Acceptance.
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Main Contractor means, in relation to the Istisna’ Development, the contractor under the Main Construction Agreement described in Schedule A (Specifications and other matters) to the Istisna’ Agreement created by the Offer Letter and Acceptance.
Main Contractor Insurances means, in relation to the Istisna’ Development, all policies and other contracts of insurance to be maintained by the Main Contractor under the Main Construction Contract.
Offer Letter means a document substantially in the form set out in Part 1 of Schedule 1 (Form of Offer Letter and Acceptance) or such other form as may be mutually agreed between the Seller and the Investment Agent.
Party means a party to this Agreement.
Payment Support Documents means, in relation to the Istisna’ Development, those documents that are to accompany an Istisna’ Instalment Notice as advised from time-to-time by the Technical Advisor.
Progress Reports means all progress reports received by the Seller under or in connection with the Istisna’ Development.
Projected Completion Date means, in relation to the Istisna’ Development, the date specified in the Offer Letter or such later date as the Parties may agree.
Purchase Price means, in relation to the Istisna’ Agreement, AED 310,718,000.
Specifications means the specifications of the Istisna’ Development that are contained in Schedule A to the Istisna’ Agreement created by the Offer Letter and Acceptance.
Technical Advisor means the party nominated by, or otherwise acceptable to, the Investment Agent,
Termination Date means the sooner to occur of:
(a) | the Projected Completion Date; and |
(b) | the date falling 23 months after the first Istisna’ Payment Date. |
1.2 | Construction |
The principles of construction used in the Common Terms Agreement shall apply to this Agreement to the extent they are relevant to it and, subject to any necessary changes, as they apply to the Common Terms Agreement.
1.3 | Third party rights |
1.3.1 | Subject to Clause 1.3.2, unless expressly provided to the contrary in this Agreement a person who is not a Party has no right under the Third Parties Act to enforce to enjoy the benefit of any term of this Agreement. |
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1.3.2 | Each Participant may, except as otherwise stated in the Transaction Documents, enforce or enjoy the benefit of any term of this Agreement which it would be able to enforce or enjoy if it were a party to this Agreement. |
1.3.3 | Notwithstanding any term of any Transaction Document, the Parties may rescind, vary, waive, release, assign, novate or otherwise dispose of all or any of their respective rights or obligations under this Agreement without the consent of any person who is not a Party. |
1.4 | Common Terms Agreement |
This Agreement and the rights and obligations of the Parties hereunder are subject to the provisions of the Common Terms Agreement. The provisions of the Common Terms Agreement that are expressed to apply to all Transaction Documents apply equally to this Agreement.
2 | Istisna’ Facility |
2.1 | Istisna’ Facility |
Subject to the terms and conditions of this Agreement and the Common Terms Agreement, the Investment Agent makes available to the Seller the Istisna’ Facility.
2.2 | Purpose |
2.2.1 | The Istisna’ Facility shall be used by the Seller to construct the Istisna’ Development to be sold to the Investment Agent under the terms of this Agreement. |
2.2.2 | No Finance Party is bound to monitor or verify the application of any Istisna’ Instalment paid to the Seller under this Agreement. |
2.3 | Cancellation of Commitments |
The Commitments which, at that time, are unutilised shall be immediately cancelled at the end of the Availability Period.
3 | Investment Agent’s rights and obligations |
The Seller acknowledges and agrees that:
(a) | the Investment Agent is only obliged to fund any Istisna’ Instalment if the Investment Agent receives cleared funds from the Participants for that purpose; |
(b) | the obligations of each Participant under the Investment Agency Agreement are several; |
(c) | if a Participant: |
(i) | fails to perform any of its obligations under the Investment Agency Agreement; or |
(ii) | is not required to perform its obligations as a result of Clause 14 (Illegality) of the Common Terms Agreements (a Relevant Event), the Investment Agent is not responsible either for the obligations of the defaulting Participant or for the payment of the relevant Istisna’ Instalment. The Seller waives and releases any right, recourse or claim it might otherwise have against the Investment Agent or its assets (including any right of set-off or counterclaim) as a result of such Relevant Event; and |
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(d) | to the extent that the full amount of an Istisna’ Instalment is not paid this will not affect the relevant Istisna’ Agreement which will continue with the Purchase Price unaffected but, subject to their being no Event of Default which has occurred and is continuing, with the Commitment (along with the other rights and obligations of the relevant defaulting Participant) transferred to National Bank of Abu Dhabi PJSC - Islamic Banking Division (in its capacity as Participant) pursuant to clause 15.2 (National Bank of Abu Dhabi PJSC - Islamic Banking Division payment undertaking) of the Common Terms Agreement. |
4 | Conditions precedent |
4.1 | Initial conditions precedent |
Without limiting the provisions of Clause 4.2 (Further conditions precedent), the Seller may not deliver the Offer Letter unless the Investment Agent has issued a notice that the provisions of clause 2 (Initial conditions precedent) of the Common Terms Agreement have been satisfied.
4.2 | Further conditions precedent |
The Investment Agent shall only be obliged to enter into the Istisna’ Agreement if:
(a) | each of the following have been entered into: |
(i) | the Forward Lease; |
(ii) | the Service Agency Agreement; |
(iii) | the Sale Undertaking; |
(iv) | the Purchase Undertaking; and |
(v) | the Seller Option Deed. |
(b) | on the date of the Offer Letter and the Acceptance: |
(i) | no Default is continuing or would result from the entry into of the proposed Istisna’ Agreement; |
(ii) | the Repeating Representations to be made by each Obligor are true in all material respects; and |
(iii) | the Istisna’ Repeating Representations to be made by each Obligor are true in all material respects; |
(c) | the Purchase Price: |
(i) | is denominated in Dirham; and |
(ii) | equals or is less than the Total Commitments; |
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(d) | the Offer Letter is issued in the Availability Period; |
(e) | the Final Istisna’ Instalment does not fall after the Termination Date; and |
(f) | it is not illegal or unlawful for the Investment Agent to enter into the Istisna’ Agreement. |
5 | Istisna’ Agreement |
5.1 | Offer Letter |
5.1.1 | Subject to the terms and conditions of this Agreement, if the Seller wants to enter into the Istisna’ Agreement it must deliver a completed and signed Offer letter to the Investment Agent. |
5.1.2 | The Offer Letter must be issued on a Business Day falling within the Availability Period. |
5.1.3 | Once given, the Offer Letter shall be irrevocable. |
5.1.4 | As soon as practicable after the Investment Agent receives the Offer letter, it shall send a copy to each Participant. |
5.2 | Acceptance |
If the Investment Agent receives affirmative confirmations from all of the Participants that they wish to proceed and that they will provide their Participant Contributions in relation to the proposed Istisna’ Agreement, it shall deliver the Acceptance to the Seller.
5.3 | Failure to respond affirmatively to the Seller |
If the Investment Agent does not issue the Acceptance within three Business Days of the date of receipt of the Offer Letter, the Investment Agent (for the Participants) will be deemed to have refused to enter into the proposed Istisna’ Agreement. (For the avoidance of doubt, the Investment Agent acknowledges that, on the date of this Agreement, it has received confirmation from the sole Participant, National Bank of Abu Dhabi PJSC - Islamic Banking Division, that it will provide its Participant Contributions in relation to the proposed Istisna’ Agreement detailed in the Offer Letter of the same date and that the Investment Agent shall, accordingly, also issue the related Acceptance on the date of this Agreement).
5.4 | No liability for failing to issue the Acceptance |
Neither the Investment Agent nor any Participant shall be:
(a) | obliged to give reasons for any refusal to issue the Acceptance; or | |
(b) | liable in any way to the Seller for not issuing the Acceptance. |
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6 | Conditions precedent to the making of Istisna’ payments |
In relation to the Istisna’ Agreement:
6.1 | Conditions precedent |
The Investment Agent shall only be obliged make an Istisna’ Payment if:
(a) | the Istisna’ Instalment Notice is received no later than 11 a.m. on the day falling two Business Days prior to the proposed Istisna’ Payment Date; |
(b) | the proposed Istisna’ Payment Date is within the Availability Period; |
(c) | in relation to the first Istisna’ Payment, the Investment Agent receives a status report from the Technical Advisor in form and substance satisfactory to the Investment Agent which includes the following information: |
(i) | confirmation that the expected Projected Completion Date will be achieved by the completion date specified in the Main Construction Agreement; |
(ii) | the current completion status; |
(iii) | the outstanding work to be completed; |
(iv) | the amounts paid by the Main Contractor under the Main Construction Agreement; and |
(v) | details of any variations made or to be made to the Main Construction Agreement. |
(d) | in relation to each Istisna’ Payment (other than the Final Istisna’ Instalment), the Investment Agent receives a certificate from the Technical Advisor confirming that the Technical Advisor is satisfied that the Payment Support Documents attached to the Istisna’ Instalment Notice evidences that the construction of the Istisna’ Development has reached the relevant construction milestones; |
(e) | in relation to the Final Istisna’ Instalment, the Investment Agent receives a certificate from the Technical Advisor confirming that the Technical Advisor is satisfied that the Payment Support Documents attached to the Istisna’ Instalment Notice support the request for the Istisna’ Payment; |
(f) | the Istisna’ Payment: |
(i) | is denominated in Dirhams; |
(ii) | equals or is less than the Available Facility; |
(iii) | is not more than 90 per cent of the amount of the instalment due to the Main Contractor by the Seller pursuant to the Main Construction Agreement and referred to in the Payment Support Documents; and |
(iv) | is an integral multiple of AED1,000,000 (except in relation to the Final Istisna’ Instalment, which may be AED1,718,000); |
(g) | the Investment Agent has received from the Seller an amount equal to 10 percent of the payment due to the Main Contractor by the Seller pursuant to the Main Construction Agreement and referred to in the Payment Support Documents together with irrevocable instructions to pay that amount to the Main Contractor and/or |
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(h) | on the Istisna’ Payment Date: |
(i) | no Default is continuing; and |
(ii) | the Repeating Representations and the Istisna’ Repeating Representations to be made by each Obligor are true in all material respects. |
6.2 | Completion of an Istisna’ Instalment Notice |
An Istisna’ Instalment Notice is irrevocable and will not be regarded as having been duly completed unless it complies with the provisions of this Agreement.
6.3 | Istisna’ Payments |
If the Investment Agent determines that the conditions precedent contained in Clause 6.1 (Conditions precedent) have been satisfied, the Investment Agent shall make the relevant Istisna’ Payment on the relevant Istisna’ Payment Date.
7 | Specific sale and purchase provisions |
Unless specifically provided to the contrary the provisions of this Clause 7 (Specific sale and purchase provisions) shall apply to the Istisna’ Agreement.
7.1 | General |
7.1.1 | The Seller sells the Istisna’ Development to the Investment Agent: |
(a) | for the Purchase Price which shall be paid by the making of the Istisna’ Instalments; |
(b) | in accordance with the Specifications; and |
(c) | with completion of the Istisna’ Development being on or before the Projected Completion Date, all in accordance with the provisions of this Agreement, the Istisna’ Agreement and the other Transaction Documents. |
7.1.2 | The Investment Agent purchases the Istisna’ Development in accordance with the terms of this Agreement, the Istisna’ Agreement and the other Transaction Documents. |
7.2 | Transfer of title and ownership |
7.2.1 | Provided that the Development Completion Date occurs on or before the Projected Completion Date, the Final Istisna’ Instalment shall be paid on the Development Completion Date. |
7.2.2 | On payment of the Final Istisna’ Instalment: |
(a) | title, possession and risk to the Istisna’ Development shall automatically pass and transfer from the Seller to the Investment Agent free of any Security other than for any Permitted Security; and |
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(b) | the Seller shall provide the same warranties to the Investment Agent in relation to the Istisna’ Development as it receives under the Main Construction Agreement, in form and substance satisfactory to the Investment Agent. |
7.3 | Right to be on the property |
On the same date as the matters described in Clause 7.2.2 occur, the Seller shall grant to the Investment Agent (at no additional cost) such legal rights that the Investment Agent requires in order to be legally on the real estate on which the Istisna’ Development is situated.
7.4 | Further assurances |
Without limiting Clause 11.2 (Further documents), the Seller shall, at the request of the Investment Agent and at the Seller’s expense, take whatever action is required by the Investment Agent to give effect to Clause 7.2 (Transfer of title and ownership) and Clause 7.3 (Right to be on the property).
7.5 | Position if title not registered in the name of the Investment Agent |
If for whatever reason title to the Istisna’ Development is not registered in the name of the Investment Agent but remains registered in the name of the Seller, the Seller shall hold the registered title on the following terms:
(a) | the registration of title in the name of the Seller shall be held and maintained by the Seller as agent for and on behalf of the Investment Agent; |
(b) | the Seller acknowledges that the Seller’s right, title and interest in and to the Istisna’ Development has been transferred to the Investment Agent in accordance with this Agreement and the Seller also acknowledges that the Seller is no longer the owner of the Istisna’ Development; |
(c) | the Investment Agent has an absolute right of disposal in respect of the Istisna’ Development in any manner whatsoever; and |
(d) | the Seller shall not, without the prior written permission of the Investment Agent, take any action that may result in any change in registration or ownership of the Istisna’ Development. |
8 | Payment obligations |
8.1 | Istisna’ Instalment Notices |
8.1.1 | In relation to the Istisna’ Agreement, at least two Business Days before a Istisna’ Payment Date, the Seller must give an Istisna’ Instalment Notice to the Investment Agent. |
8.1.2 | The first Istisna’ Instalment Notice in relation to the Istisna’ Agreement cannot be issued until the Investment Agent is satisfied that it has received all of the documents and other evidence listed in Schedule 1 (Specific conditions precedent in relation to the Forward Lease) to the Master Forward Lease Agreement and which relate to the Forward Lease whose Leased Assets correspond to the Istisna’ Development of that Istisna’ Agreement, in form and substance satisfactory to the Investment Agent. |
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8.2 | Payment procedure for the Istisna’ Instalments (other than the Final Istisna’ Instalment) |
8.2.1 | In relation to the Istisna’ Agreement, with regard to an Istisna’ Instalment other than the Final Istisna’ Instalment, within seven days of receiving an Istisna’ Instalment Notice, the Investment Agent shall inform the Seller that either: |
(a) | it is satisfied that the Payment Support Documents attached to the Istisna’ Instalment Notice evidence that the construction of the Istisna’ Development has reached the required construction phase as determined by the Technical Advisor; or |
(b) | it is not satisfied. |
8.2.2 | In the case of Clause 8.2.1(a), the Investment Agent shall make the Istisna’ Payment on the Istisna’ Payment Date. |
8.2.3 | In the case of Clause 8.2.1(b), the Seller may submit revised Payment Support Documents (and may do so on more than one occasion) until such time as the Investment Agent confirms that it is satisfied as described in Clause 8.2.1(a) at which time (and subject to the terms of this Agreement and the other Transaction Documents) the Investment Agent shall make the Istisna’ Payment to the Seller. |
8.3 | Payment procedure for the Final Istisna’ Instalment |
In relation to the Istisna’ Agreement, with regard to the Final Istisna’ Instalment, and provided that the Investment Agent receives an Istisna’ Instalment Notice that has been accompanied by the Completion Certificate on or before the Projected Completion Date, the Investment Agent shall make the Istisna’ Payment relating to the Final Istisna’ Instalment on the Istisna’ Payment Date.
8.4 | Account details for payments |
The Investment Agent shall pay each Istisna’ Instalment to the main contractor under the Main Construction Agreement on the irrevocable instructions of the Seller to the account notified by the Seller for such purpose.
9 | Representations and warranties |
The
Investment Agent and each other Finance Party has entered into the Transaction Documents in reliance on the representations of
each Obligor set out in this Clause 9, and each Obligor warrants to the Investment Agent and each other Finance Party on the date
of this Agreement as set out in this Clause 9.
9.1 | General application |
The representations described below shall apply by reference to the Istisna’ Agreement.
9.2 | Main Construction Agreement |
9.2.1 | The obligations expressed to be assumed by it and the Main Contractor in the Main Construction Agreement are legal, valid, binding and enforceable obligations. |
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9.2.2 | The entry into and performance by it and the Main Contractor of, and the transactions contemplated by, the Main Construction Agreement do not and will not conflict with any law or regulation applicable to it or the Main Contractor. |
9.2.3 | It has the power to enter into, perform and deliver, and has taken all necessary action to authorise its entry into, performance and delivery of, the Main Construction Agreement and the transactions contemplated by the Main Construction Agreement. |
9.2.4 | All Authorisations required or desirable: |
(a) | to enable it lawfully to enter into, exercise its rights and comply with its obligations in the Main Construction Agreement; and |
(b) | to make the Main Construction Agreement admissible in evidence in each Relevant Jurisdiction, have been obtained or effected and are in full force and effect. |
9.2.5 | The Main Contractor has not taken any action nor (to the best of its knowledge and belief) have any steps been taken or legal proceedings been started or threatened against it for its winding-up, dissolution or reorganisation, for the enforcement of any Security over its assets or for the appointment of a liquidator, supervisor, receiver, administrator, administrative receiver, compulsory manager, trustee or other similar officer of it or in respect of any of its assets. |
9.2.6 | No event of default (howsoever described under the Main Construction Agreement) or other event or circumstance is outstanding which constitutes (or would do so with the expiry of a grace period, the giving of notice, the making of any determination, the satisfaction of any other condition or any combination of any of the foregoing) a default or termination event (howsoever described) under the Main Construction Agreement. |
9.3 | Repetition |
The representations and warranties set out in this Clause 9 shall survive the execution of this Agreement and are deemed to be repeated by each Obliger by reference to the facts in relation to the Istisna’ Agreement then existing on:
(a) | the date of the Offer Letter; |
(b) | the date of the Acceptance; |
(c) | the date of each Istisna’ Instalment Notice; and |
(d) | each Istisna’ Payment Date. |
10 | Information undertakings |
The undertakings in this Clause 10 remain in force from the date of this Agreement until the expiry of the Security Period.
10.1 | Progress Reports |
The Seller shall supply to the Investment Agent in sufficient copies for all the Participants copies of Progress Reports promptly upon receiving them.
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10.2 | Environmental Claims |
The Seller shall promptly upon becoming aware of the same, inform the Investment Agent in writing of:
(a) | any Environmental Claim that relates to the Istisna’ Development which is current, pending or threatened; and |
(b) | any facts or circumstances which are reasonably likely to result in any Environmental Claim being commenced or threatened in relation to the Istisna’ Development. |
11 | Positive undertakings |
The undertakings in this Clause 11 remain in force from the date of this Agreement until the expiry of the Security Period.
11.1 | Access |
The Seller shall permit the Investment Agent, the Security Agent and any person (being an accountant, auditor, solicitor, valuer or other professional adviser of the Investment Agent or the Security Agent) authorised by the Investment Agent or the Security Agent to have, at all reasonable times during normal business hours, and on reasonable notice, access to the Istisna’ Development.
11.2 | Development |
The Seller must ensure that the Istisna’ Development is promptly commenced and is diligently carried out and is completed:
(a) | in accordance with the Specifications and the Transaction Documents; and |
(b) | in a good and workmanlike manner, using materials of good quality which are fit for their respective purposes. |
11.3 | Further documents |
Without limiting the terms of clause 8.5 (Further documents) of the Common Terms Agreement, the Seller shall, at the request of the Investment Agent, do or arrange for the doing of all such things and execute or arrange for the execution of all such documents as are, in the opinion of the Investment Agent, necessary or desirable to ensure that the Finance Parties obtain all the rights and benefits intended to be conferred on them in relation to the Istisna’ Development.
11.4 | Main Construction Agreement compliance |
In relation to the Istisna’ Agreement, the Seller shall:
(a) | comply with all the provisions of the Main Construction Agreement; |
(b) | obtain, maintain, file (where applicable) and ensure compliance with all requisite Environmental Permits required for the Istisna’ Development; and |
(c) | implement procedures to monitor compliance with and to prevent liability under any Environmental Law in relation to the Istisna’ Development. |
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11.5 | Dangerous Materials |
The Seller shall ensure that all Dangerous Materials treated, kept and stored, produced, manufactured, generated, refined or used from, in, upon or under the Istisna’ Development are held and kept upon such real property in such a manner and up to such standards as they would be kept by a prudent company carrying on such development activities.
11.6 | Insurance |
11.6.1 | In relation to the Istisna’ Agreement, the Seller shall ensure that the Main Contractor: |
(a) | complies with all of its obligations under the Main Construction Agreement to provide and maintain in full force and effect the Main Contractor Insurances; |
(b) | complies with the requirements of all covenants, undertakings and conditions as to insurance which are imposed by the terms of the Main Construction Agreement; |
(c) | duly and punctually pays all premiums and other moneys due and payable in respect of the Main Contractor Insurances and promptly at the request of the Seller (including if so requested by the Investment Agent) produce receipts for the payment of the premiums; |
(d) | at the request of the Seller (including if so requested by the Investment Agent), deposit with or produce for inspection (to the Investment Agent or, at the Investment Agent’s request, to the Security Agent) the Main Contractor Insurances; and |
(e) | uses all reasonable endeavours to prevent the happening of any act, omission, breach or default which would be reasonably likely to render void or voidable any insurances effected by it. |
12 | Negative undertakings |
The undertakings in this Clause 12 remain in force from the date of this Agreement until the expiry of the Security Period.
12.1 | Negative pledge |
The Seller shall not (and the Seller shall ensure that no other Group Company will not) create or permit to subsist any Security over the Istisna’ Development.
12.2 | Main Construction Agreement |
No Obliger shall amend, vary or terminate the Main Construction Agreement in relation to the Istisna’ Agreement without the consent of the Investment Agent.
13 | Istisna’ Events of Default |
Each of the events or circumstances set out in this Clause 13 is an Istisna’ Event of Default.
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13.1 | Construction Event of Default |
A Construction Event of Default occurs or the Investment Agent reasonably believes that a Construction Event of Default is likely to occur.
13.2 | Completion Certificate |
The Completion Certificate is not issued on or before the Projected Completion Date for the Istisna’ Development.
14 | Events of Default and Events of Mandatory Prepayment |
If:
(a) | any Event of Default; or |
(b) | any Event of Mandatory Prepayment, |
occurs, the Investment Agent may exercise the rights and remedies set out in clause 12 (Acceleration) of the Common Terms Agreement including those rights and remedies relating to this Agreement, the Istisna’ Agreement and any other Transaction Document.
15 | Early termination by the Seller before the Istisna’ Agreement exists |
15.1 | Notice |
Provided that the Seller has not issued an Offer Letter, the Seller may give the Investment Agent not less than 30 days’ notice (or such shorter period as the Majority Participants may agree) that it no longer wishes to issue an Offer Letter.
15.2 | Effect of the notice |
Once the notice has been issued:
(a) | all Available Commitments shall be reduced to zero; and |
(b) | the Seller may not utilise any part of the Available Facility. |
15.3 | Copies |
The Investment Agent shall immediately send copies of the notice to the other Finance Parties.
15.4 | Cancellation |
Any cancellation under this Clause 15 shall reduce the Commitments of the Participants rateably under the Istisna’ Facility.
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16 | Indemnity |
16.1 | Indemnity claims |
16.1.1 | Without prejudice to the indemnities contained in clause 16 (Other indemnities) of the Common Terms Agreement, the Seller acknowledges that the Istisna’ Development is being leased by the Investment Agent under the Forward Lease and that the Investment Agent is relying on the Seller to perform its obligations under this Agreement and the Istisna’ Agreement in order for it to fulfil its own obligations under the Forward Lease and accordingly the Seller shall, within three Business Days of demand, indemnify each Secured Party and each Secured Party’s officers and employees against any Losses incurred by that Secured Party or any of its officers and employees as a result of: |
(a) | the Development Completion Date not occurring on or before the relevant Projected Completion Date; |
(b) | the Istisna’ Development not being constructed in accordance with the relevant Specifications; |
(c) | there being any defects (including latent defects) relating to all or any part of the Istisna’ Development including any claims based on decennial liability claims; |
(d) | any claim under any Environmental Laws, legislation, judgments, awards and decisions, including notices and orders which are breached in relation to the Istisna’ Development or the construction of the Istisna’ Development; and |
(e) | whether directly or indirectly, in or through the design or construction of the Istisna’ Development. |
16.1.2 | Losses shall include any claim that the Lessee may have against the Investment Agent (acting as the Lessor) under the Forward Lease (including the return of any Advance Rental Payments) on the grounds that the Commencement Date has not occurred or will not occur on or before the relevant Projected Completion Date and whether caused by the Seller or the Investment Agent terminating this Agreement, the Istisna’ Agreement or the Forward Lease or for any other reason. |
16.2 | General |
Any certificate of any Finance Party as to the amount of any Losses sustained or incurred by it and which are being claimed under Clause 16.1 (Indemnity claims) shall be conclusive and binding on any Obligor except for any manifest error.
16.3 | Exclusions |
The indemnities contained in this Clause 16 shall not extend to any liability, loss or damage that is caused by the gross negligence or wilful misconduct of a Secured Party or that Secured Party’s officers and employees.
16.4 | Survival |
The obligations of the Seller in respect of the indemnities described in this Clause 16 shall survive the expiration or termination of this Agreement, the Istisna’ Agreement for any reason whatsoever (including any fundamental or repudiatory breach by the Seller).
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17 | Governing law |
17.1 | English law |
17.1.1 | Subject to Clause 17.1.2, this Agreement and the Istisna’ Agreement and all non-contractual obligations arising out of or connected with it shall be governed by, and construed in accordance with, English law. |
17.1.2 | The Parties agree that the creation and transfer of any proprietary rights of the Parties in relation to the Istisna’ Development shall be governed by, and construed in accordance with, the laws of Fujairah and the federal laws of the United Arab Emirates as applied by the civil courts of Fujairah, in each case, to the extent those laws do not conflict with Shari’a. In the event of any contradiction between the laws of Fujairah and the federal laws of the United Arab Emirates and the principles of Shari’a, the principles of Shari’a shall prevail. |
17.2 | Interest |
The Parties recognise and agree that the principle of the payment of interest is repugnant to the Shari’ah and accordingly, to the extent that any legal system would (but for the provisions of this Clause) impose (whether by contract or by statute) any obligation to pay interest, the Parties hereby irrevocably and unconditionally expressly waive and reject any entitlement to recover interest from each other.
18 | Enforcement |
18.1 | Jurisdiction |
18.1.1 | Subject to Clause 18.1.2, the Parties submit, and waive any objection, to the exclusive jurisdiction of the courts of the Dubai International Financial Centre, Emirate of Dubai, United Arab Emirates to settle any dispute arising out of or in connection with this Agreement and the Istisna’ Agreement (including a dispute relating to the existence, validity or termination of this Agreement and the Istisna’ Agreement or any non-contractual obligation arising out of or in connection with this Agreement and the Istisna’ Agreement) (a Dispute). The Parties agree that the courts of the Dubai International Financial Centre, Emirate of Dubai, United Arab Emirates are the most appropriate and convenient courts to settle Disputes and accordingly no Party will argue to the contrary. |
18.1.2 | The Parties agree that the civil courts of Fujairah shall have the exclusive jurisdiction to settle any dispute arising out of or in connection with the creation and transfer of any proprietary rights of the Parties in relation to the Istisna’ Development. |
18.1.3 | Notwithstanding Clauses 18.1.1 and 18.1.2, the Parties agree that the Investment Agent may take proceedings relating to a Dispute in any other court with jurisdiction. To the extent allowed by law, the Investment Agent may take concurrent proceedings in any number of jurisdictions. This Clause 18.1.3 is for the benefit of the Investment Agent only. |
18.2 | State Immunity |
18.2.1 | Each Party acknowledges and agrees, to the extent relevant, that its execution, performance and delivery of this Agreement and the Istisna’ Agreement shall constitute a private commercial transaction entered into entirely in its commercial capacity. |
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18.2.2 | To the extent that any Party may in any jurisdiction claim for itself or its assets immunity from legal proceedings, and to the extent that in any jurisdiction there may be attributed to any Party or its assets such immunity (whether claimed or not), that Party irrevocably and unconditionally and to the full extent permitted by the laws of the Relevant Jurisdiction: |
(a) | agrees not to claim such immunity; |
(b) | waives any such immunity which it or its assets now has or may in future acquire; and |
(c) | consents, in any legal proceedings arising out of or in connection with this Agreement, the Istisna’ Agreement to the giving of relief by enforcement, execution (including the arrest, detention or sale of any state property) or attachment (whether before judgment, in aid of execution or otherwise) against any of its assets. |
18.2.3 | In relation to any legal proceedings that may be taken in England, the foregoing waiver of immunity shall have effect under, and be construed in accordance with, the State Immunity Act 1978. |
18.2.4 | For the purposes of this Clause 18.2: |
legal proceedings includes any service of process, suit, judgment, execution, attachment (whether before judgment, in aid of execution, or otherwise), arbitral proceedings or other dispute resolution mechanisms; and
asset includes any asset not used solely for commercial purposes.
This Agreement is entered into by the Parties on the date stated at the beginning of this Agreement.
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Execution Page of Master Istisna’ Agreement
The Seller
Signed by | ) |
|
) | ||
duly authorised in accordance with the | ) | |
laws of Fujairah Free Zone, United Arab | ) | |
Emirates for and on behalf of Brooge | ) | |
Petroleum and Gas Investment Company | ) | |
FZC in the presence of: | ) | |
Signature of witness | ) |
Name of witness: | ||
Address of witness: | ||
The Investment Agent
Signed by | ) | /s/ Aqeel Bughio /s/ Omar Katri |
) | ||
authorised in accordance with the | ) | |
laws of Abu Dhabi, United Arab Emirates for | ) | |
and on behalf of National Bank of Abu | ) | |
Dhabi PJSC - Islamic Banking Division in | ) | |
the presence of: | ) | |
Signature of witness | ) |
Name of witness: | ||
Address of witness: | ||
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Exhibit 10.30
Certain identified information has been excluded from the exhibit because it is both not material and would likely cause competitive harm to the registrant if publicly disclosed.
Offer Letter
From: | Brooge Petroleum and Gas Investment Company FZC of P. O. Box 50170, Fujairah, United Arab Emirates (the Seller) |
To: | National Bank of Abu Dhabi PJSC - Islamic Banking Division of P. O. Box 40057, Abu Dhabi, United Arab Emirates (the Investment Agent) |
Attn: | - Relationship Manager |
Date: | 29-06-2015 |
Master Istisna’ Agreement between dated 29-06-2015 between the Seller and the Investment Agent (the Master Istisna’ Agreement)
Terms defined in the Master Istisna’ Agreement have the same meaning when used in this document.
This is the Offer Letter.
1 | We offer to enter into an Istisna’ Agreement based on the provisions of the Master Istisna’ Agreement and in relation to the following specific terms: |
(a) | Details of the Istisna’ Development: | ** Construction of 14 Oil Storage Tanks | |
(b) | Projected Completion Date: | [2 March 2017] | |
(c) | Purchase Price: | ** AED 310,718,000/– | |
(d) | Specifications: | See attached Schedule A | |
(e) | Istisna’ Instalments: | ** Quarterly. |
2 | The above is subject to the terms of the Master Istisna’ Agreement, including clause 17 (Governing law) and clause 18 (Enforcement) of the Master Istisna’ Agreement which shall (mutatis mutandis) be deemed to be incorporated into the Istisna’ Agreement created by the issue of the Acceptance of this Offer Letter. |
3 | The terms and conditions set out in the Master Istisna’ Agreement shall be deemed incorporated in this Offer Letter and shall be considered an integral part of this Offer Letter and Acceptance. |
|
|
For and on behalf of | |
Brooge Petroleum and Gas Investment Company FZC | |
as Seller |
** | To be completed by the Seller, |
25 June 2015 | Page 1 |
Acceptance
We confirm acceptance of the terms and conditions and the offer contained in the above Offer Letter and we agree that our signature of this Acceptance concludes the Istisna’ Agreement between us as of the date of this Acceptance on the terms specified in the Offer Letter and the Master Istisna’ Agreement.
Date: 29-06-2015
|
|
For and on behalf of | |
National Bank of Abu Dhabi PJSC - Islamic Banking Division | |
as Investment Agent |
25 June 2015 | Page 2 |
Exhibit 10.31
Master Forward Lease Agreement
Dated 29-06-2015
National Bank of Abu Dhabi PJSC – Islamic Banking Division
(The Lessor, acting as Investment Agent for and on behalf of the Participants)
Brooge Petroleum and Gas Investment Company FZC
(The Lessee)
Dentons & Co Suite 1204 Al Ghaith Tower Hamden Street PO Box 47656 Abu Dhabi United Arab Emirates |
|
Contents
Page i
Master Forward Lease Agreement
Dated
Between
National Bank of Abu Dhabi PJSC – Islamic Banking Division, of P.O. Box 40057, Abu Dhabi, United, Arab Emirates (the Lessor) acting in its capacity as Investment Agent for an on behalf of the Participants; and
(1) | Brooge Petroleum and Gas Investment Company FZC incorporated under the laws of Fujairah Free Zone, Fujairah, United Arab Emirates of P.O. Box 50170, Fujairah, United Arab Emirates (the Lessee). |
Recitals
The Lessor and the Lessee wish to enter into this master forward lease agreement (the Agreement) to set out the framework for the leasing (by way of a forward lease) to the Lessee of the Leased Asset as described in the Forward Lease.
1 | Definitions and interpretation |
1.1 | Definitions |
1.1.1 | Unless the context otherwise requires or unless expressly defined in this Agreement, words and expressions defined in the Common Terms Agreement (whether directly or indirectly) shall have the same meanings in this Agreement. |
1.1.2 | In addition, in this Agreement: |
Additional Rental Payment means, in relation to the Forward Lease, an amount equal to the aggregate of all Advance Rental Payments that the Lessor has received.
Advance Fixed Rental Payment means, in relation to the Forward Lease, the rental as described in Clause 6.1 (Advance Fixed Rental Payments) and as specified in Schedule 1 to the Forward Lease.
Advance Fixed Rental Payment Date means, in relation to the Forward Lease, each date for the payment of an Advance Fixed Rental Payment as specified in Schedule 1 to the Forward Lease.
Advance Rental Payment means, in relation to the Forward Lease, a rental payment paid or payable before the Commencement Date consisting of, as applicable, an Advance Fixed Rental Payment, Advance Variable Rental Payment and any Increased Costs Amount.
Advance Variable Rental Payment means, in relation to the Forward Lease, the rental as specified in Schedule 1 to the Forward Lease and mentioned in an Advance Variable Rental Payment Notice.
Advance Variable Rental Payment Date means, in relation to the Forward Lease, each date for the payment of an Advance Variable Rental Payment as specified in Schedule 1 to the Forward Lease, other than as provided in Clause 6.7 (Increased Costs Amount).
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Advance Variable Rental Payment Notice means, in relation to the Forward Lease, the notice substantially in the form contained in Schedule 3 (Advance Variable Rental Payment Notice).
Advance Variable Rental Period means, in relation to the Forward Lease:
(a) | with the first Advance Variable Rental Period, the period beginning on the date of the Forward Lease and ending on the first Advance Variable Rental Payment Date; and |
(b) | subsequently, each period beginning on the expiry of the previous Advance Variable Rental Period and ending on the next Advance Variable Rental Payment Date or the Commencement Date. |
Base Amount means at any time, in relation to the Forward Lease:
(a) | the aggregate of the Istisna’ Instalments that have been paid under the Istisna’ Agreement; less |
(b) | an amount equal to the aggregate of the Advance Fixed Rental Payments that have been paid, |
subject to adjustment in accordance with the provisions of the Transaction Documents.
Commencement Date means, in relation to the Forward Lease, the same date of the Development Completion Date (provided that date occurs before the Projected Completion Date) under the Istisna’ Agreement which corresponds to the Leased Asset specified in the Forward Lease.
Common Terms Agreement means the common terms agreement dated on or about the date of this Agreement between the Investment Agent, the Arranger, the Security Agent and the Original Participants (each as defined therein).
Compensation means, in respect of the Forward Lease, any sum payable to the Lessee or any other Obligor or any shareholder of the Lessee in respect of an Expropriation Event.
Cut Off Date means 31 March 2028.
Expropriation Event means:
(a) | the nationalisation, confiscation, requisition, expropriation or compulsory purchase of all or a substantial part of the Leased Asset; or |
(b) | the revocation, refusal or suspension of any Authorisation in relation to the Leased Asset. |
First Lease Period means, in relation to the Forward Lease, the period commencing on (and including) the Commencement Date and ending on the first Rental Payment Date.
First Rental Payment Notice means, in relation to the Forward Lease, the notice substantially in the form appearing in Schedule 4 (First Rental Payment Notice).
Fixed Rental Payment means, in relation to the Forward Lease, the Rental Payments described as such in Schedule 2 to the Forward Lease.
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Forward Lease means a lease substantially in the form contained in Schedule 2 (Form of Forward Lease) in relation to the Istisna’ Development.
General Rental Payment Notice means, in relation to the Forward Lease, the notice substantially in the form appearing in Schedule 5 (General Rental Payment Notice).
Increased Costs has the meaning given to it in Clause 21.1 (Increased Costs).
Increased Costs Amount means, in relation to the Forward Lease, the amount claimed in respect of Increased Costs pursuant to Clause 21.2 (Increased Costs claims) by a Participant.
Insurance Policies means, in relation to the Forward Lease, the Operating Insurance Policy, the Property Insurance Policy and the Third Party Insurance Policy and Insurance Policy means any one of them.
Investment Agency Agreement means the investment agency and security agency agreement dated on or around the date of this Agreement between, amongst others, the Lessor (as Investment Agent) and the Participants in relation to, amongst other matters, the Istisna’ Facility.
Lease Period means, in relation to the Forward Lease:
(a) | the First Lease Period; and |
(b) | subsequently, each period beginning on the expiry of the previous Lease Period and ending on the next Rental Payment Date. |
Lease Term means, in relation to the Forward Lease, the term of the Forward Lease as specified in the Forward Lease.
Leased Asset means, in relation to the Forward Lease, the Istisna’ Development corresponding to the Leased Asset under that Forward Lease.
Lessee Event of Default means any of those events described in Clause 17.1 (Lessee Events of Default).
Major Maintenance means, in relation to the Forward Lease, all structural repair and major maintenance (excluding Ordinary Maintenance and Repair) without which the Leased Asset could not be reasonably and properly used by the Lessee.
Margin means 3.5 per cent per annum.
Operating Insurance Policy means, in relation to the Forward Lease, the insurance policy referred to in Clause 13.3.1.
Ordinary Maintenance and Repair means, in relation to the Forward Lease, all repairs, replacements, acts, maintenance and upkeep works (excluding Major Maintenance) required for the general use and operation of the Leased Asset or to keep, repair, maintain and preserve the Leased Asset in good order, state and condition.
Outstanding Fixed Rental means, in relation to the Forward Lease, the Base Amount as at the Commencement Date less the aggregate of Fixed Rental Payments paid from time to time.
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Outstanding Istisna’ Amount means, in relation to the Istisna’ Agreement, the aggregate of all Istisna’ Payments that have been paid to and received by the Seller under the Istisna’ Agreement less the aggregate of any Advance Fixed Rental Payments paid from time to time.
Ownership Taxes means, in relation to the Forward Lease, Tax imposed on the Leased Asset by reason of the ownership of the Leased Asset (whether direct or indirect).
Partial Loss means a loss which is not a Total Loss.
Party means a party to this Agreement.
Plant Site means plot number 130, Fujairah, United Arab Emirates.
Property Insurance Policy means, in relation to the Forward Lease, the insurance policy referred to in Clause 13.1.1.
Purchase Undertaking means, in relation to the Forward Lease, the purchase undertaking relating to the Leased Asset provided by the Lessee in favour of the Lessor.
Rental Payment means, in relation to the Forward Lease, a rental payment payable after the Commencement Date consisting of, as applicable, a Fixed Rental Payment, a Variable Rental Payment, any Supplementary Rental Payment and any Increased Costs Amount.
Rental Payment Date means in relation to the Forward Lease, a rental payment date described in Schedule 2 to the Forward Lease and mentioned in the First Rental Payment Notice or General Rental Payment Notice, as the case may be, other than as provided in Clause 6.7 (Increased Costs Amount).
Sale Documentation means, in relation to the Leased Asset specified in the bill of sale and delivery to be executed pursuant to either a Sale Undertaking or a Purchase Undertaking and in substantially the form appearing in schedule 2 to the Sale Undertaking or Purchase Undertaking.
Sale Undertaking means, in relation to the Forward Lease, the sale undertaking relating to the Forward Lease provided by the Lessor in favour of the Lessee.
Service Agency Agreement means, in relation to the Forward Lease, the service agency agreement relating to the Leased Asset specified in the associated Forward Lease and entered into by the Lessor as principal and the Service Agent.
Service Agent means the Lessee in the context of a service agent under a Service Agency Agreement.
Supplementary Rental Payment means a Rental Payment as described as such in Schedule 2 to the Forward Lease.
Termination Amount has the meaning given to it in the Purchase Undertaking or Sale Undertaking, as the case may be.
Third Party Insurance Policy means, in relation to the Forward Lease, the insurance policy referred to in Clause 13.2.1.
Total Loss means, in relation to the Forward Lease, in each case certified by the insurer, the total loss or destruction of, or damage to the whole (or a substantial part) of the Leased Asset or any event or occurrence that renders the whole (or a substantial part) of the Leased Asset permanently unfit for any economic use and the repair or remedial work in respect thereof is wholly uneconomical.
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Total Loss Proceeds means the insurance proceeds payable under an Insurance Policy on the occurrence of and relating to a Total Loss.
Total Loss/Expropriation Event Shortfall means, in relation to the Forward Lease, the difference between the Termination Amount that would have been payable if the Purchase Undertaking had been issued on the date when a Total Loss or an Expropriation Event occurs and:
(a) | any insurance proceeds has been irrevocably and unconditionally paid to and received by the Lessor (and for the sole benefit of the Lessor and the Secured Parties) under the Property Insurance Policy and/or the Operating Insurance Policy within 30 days from when the Total Loss occurs; and/or |
(b) | any Compensation has been irrevocably and unconditionally paid to and received by the Lessor (and for the sole benefit of the Lessor and the Secured Parties) within 30 days from when the Expropriation Event occurs. |
Variable Rental Payment means, in relation to the Forward Lease, the rental described as such in Schedule 2 to the Forward Lease.
1.2 | Construction |
1.2.1 | The principles of construction used in the Common Terms Agreement shall apply to this Agreement to the extent they are relevant to it and, subject to any necessary changes, as they apply to the Common Terms Agreement. |
1.2.2 | In relation to the Forward Lease, a reference to the Leased Asset means, as the context requires, such right, title and interest in the Leased Asset as the Lessor may have. |
1.3 | Third party rights |
1.3.1 | Subject to Clause 1.3.2, unless expressly provided to the contrary in this Agreement a person who is not a Party has no right under the Third Parties Act to enforce or to enjoy the benefit of any term of this Agreement. |
1.3.2 | Each Participant may, except as otherwise stated in the Transaction Documents, enforce or enjoy the benefit of any term of this Agreement which it would be able to enforce or enjoy if it were a party to this Agreement. |
1.3.3 | Notwithstanding any term of any Transaction Document, the Parties may rescind, vary, waive, release, assign, novate or otherwise dispose of all or any of their respective rights or obligations under this Agreement without the consent of any person who is not a Party. |
1.4 | Common Terms Agreement |
This Agreement and the rights and obligations of the Parties hereunder are subject to the provisions of the Common Terms Agreement. The provisions of the Common Terms Agreement that are expressed to apply to all Transaction Documents apply equally to this Agreement.
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2 | Conditions precedent |
2.1 | Initial conditions precedent |
Without limiting the provisions of Clause 2.2 (Further conditions precedent) and Clause 3 (Forward Lease limitations), the Lessee may not enter into the Forward Lease unless the terms of clause 2 (Initial conditions precedent) of the Common Terms Agreement have been satisfied.
2.2 | Further conditions precedent |
The Lessor shall only be obliged to enter into the Forward Lease if:
(a) | on the date of entry into the Forward Lease, no Default is continuing or would result from the entry into of the proposed Forward Lease and the Repeating Representations to be made by each Obligor are true in all material respects; and |
(b) | the Lessor has received all of the documents and other evidence listed in Schedule 1 (Specific conditions precedent in relation to the Forward Lease) to the Master Forward Lease Agreement in form and substance satisfactory to the Lessor. |
3 | Forward Lease limitations |
Without limiting the provisions of Clause 2 (Conditions precedent), the Lessor shall only be obliged to enter into the Forward Lease if:
(a) | all Advance Rental Payments and Rental Payments and other amounts payable under the Forward Lease are denominated in Dirhams; |
(b) | the Lease Term ends before the Cut Off Date; and |
(c) | it is not illegal or unlawful for the Lessor to enter into the Forward Lease. |
4 | Forward lease |
In relation to the Forward Lease and:
(a) | subject to the provisions of this Agreement and the Forward Lease; and |
(b) | in reliance on: |
(i) | certain representations and undertakings made by the Lessee in the Master Forward Lease Agreement and in the Forward Lease; and |
(ii) | the Lessee’s undertaking to pay the Advance Rental Payments and the Rental Payments, |
the Lessor leases (by way of a forward lease) the Leased Asset to the Lessee as from the Commencement Date for the Lease Term and the Lessee accepts such leasing arrangements.
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5 | Commencement of leasing and Lease Term |
In relation to the Forward Lease:
5.1 | Commencement of leasing and undertaking to renew |
5.1.1 | The Lease Term shall begin on the Commencement Date and end on the expiry of the Lease Term (if not terminated earlier as provided in this Agreement, the Forward Lease or in another Transaction Document). |
5.1.2 | Upon receipt of an Advance Variable Rental Payment Notice, the First Rental Payment Notice or a General Rental Payment Notice, as the case may be, the Lessee irrevocably undertakes to renew the leasing arrangements described in the Master Forward Lease Agreement and the Forward Lease for each Advance Variable Rental Period or Lease Period, as the case may be, and failure to so renew shall be an event that falls within clause 11.3 (Other obligations) of the Common Terms Agreement. |
5.2 | Failure of the Leased Asset to be available for leasing on the Commencement Date |
5.2.1 | If, in relation to the Forward Lease, the Commencement Date has not occurred by the Projected Completion Date: |
(a) | the Lessee may terminate the Forward Lease unless the reason for the leasing not beginning on the Projected Completion Date is because of the breach by the Lessee of the terms of this Agreement, the Forward Lease or any other Transaction Document; and |
(b) | the Lessor may terminate the Forward Lease if the reason for the leasing not beginning on the Projected Completion Date is because of the breach by the Lessee of the terms of this Agreement, the Forward Lease or any other Transaction Document. |
5.2.2 | On the termination of the Forward Lease pursuant to Clause 5.2.1(a), the Lessor shall return to the Lessee any Advance Fixed Rental Payments that it has received from the Lessee. |
5.2.3 | The Lessee declares and agrees the payment described in Clause 5.2.2 shall be the Lessee’s sole financial and legal remedy for the Commencement Date not having occurred by the Projected Completion Date. |
5.2.4 | The right of the Lessee to receive the payment described in Clause 5.2.2 is subject to any rights of set-off (whether by statute or by contact) that the Lessor may have in respect of any indemnity obligations of any Obligor including under clause 16 (Indemnity) of the Master Istisna’ Agreement and under clause 4 (Set-off by Finance Parties) of the Investment Agency Agreement. |
5.3 | Quiet enjoyment |
Subject to:
(a) | the terms of this Agreement and the other Transaction Documents; and |
(b) | the due performance by the Lessee of all its obligations under this Agreement and the other Transaction Documents, |
the Lessee shall be entitled throughout the Lease Term to hold and use the Leased Asset without interference from the Lessor.
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6 | Advance Rental Payments and Rental Payments |
In relation to the Forward Lease:
6.1 | Advance Fixed Rental Payments |
On each Advance Fixed Rental Payment Date, the Lessee shall pay an Advance Fixed Rental Payment.
6.2 | Advance Variable Rental Payments |
6.2.1 | On each Advance Variable Rental Payment Date, the Lessee shall pay an Advance Variable Rental Payment. |
6.2.2 | In respect of each Advance Variable Rental Period, the Lessor shall calculate the Advance Variable Rental Payment applicable to that Advance Variable Rental Period and serve an Advance Variable Rental Payment Notice on the Lessee as described in Clause 6.8 (Effect of an Advance Variable Rental Payment Notice, First Rental Payment Notice and General Rental Payment Notice). |
6.2.3 | Advance Variable Rental Payments shall be calculated in accordance with the provisions contained in Schedule 1 to the Forward Lease. |
6.3 | Additional Rental Payment |
6.3.1 | The Lessor confirms that each Advance Rental Payment is being paid on account of the Rental Payment obligations of the Lessee and will be taken into account in the calculation of the Rental Payments for the First Lease Period. |
6.3.2 | The Lessor shall set off the obligation to account to the Lessee for the Advance Rental Payments (as described in Clause 6.3.1 above) against the Lessee’s obligation to pay the matured Additional Rental Payment to the Lessor. |
6.3.3 | If the obligations described in Clause 6.3.2 are in different currencies, the Lessor may convert either obligation at a market rate of exchange in its usual course of business for the purpose of the set-off. |
6.4 | First Lease Period |
6.4.1 | On the Rental Payment Date at the end of the First Lease Period, the Lessee shall pay the Rental Payment as described in the First Rental Payment Notice and calculated on the following basis: |
(FR +VR + AR + ICA) – ADR
where:
FR | is the Fixed Rental Payment for the First Lease Period; |
VR | is the Variable Rental Payment for the First Lease Period; |
AR | is the Additional Rental Payment; |
ICA | is the Increased Costs Amount (if any); and |
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ADR | is an amount equal to the aggregate of all Advance Rental Payments. |
6.5 | Second and subsequent Lease Periods |
6.5.1 | On the Rental Payment Date at the end of the second and subsequent Lease Periods, the Lessee shall pay the Rental Payment as described in the General Rental Payment Notice and calculated on the following basis: |
FR + VR + SR + ICA
where:
FR | is the Fixed Rental Payment for that Lease Period; |
VR | is the Variable Rental Payment for that Lease Period; |
SR | is the Supplementary Rental Payment for that Lease Period (if any); and |
ICA | is the Increased Costs Amount (if any) |
6.6 | Supplementary Rental Payments |
6.6.1 | Supplementary Rental Payments shall be calculated and payable as described in Schedule 2 to the Forward Lease. |
6.6.2 | The amount of a Supplementary Rental Payment shall be advised by the Lessor as part of a General Rental Payment Notice. |
6.6.3 | There will be no Supplementary Rental Payment for the First Lease Period. |
6.7 | Increased Costs Amount |
Any Increased Costs Amount that is treated as part of an Advance Rental Payment or Rental Payment as described in Clause 21.2.3, shall be paid within three Business Days of the start of the applicable Advance Variable Rental Period or the Lease Period, as the case may be.
6.8 | Effect of an Advance Variable Rental Payment Notice, First Rental Payment Notice and General Rental Payment Notice |
6.8.1 | Each Advance Variable Rental Payment Notice, First Rental Payment Notice and General Rental Payment Notice constitutes the notification by the Lessor of: |
(a) | the renewal of the leasing arrangements in respect of the next Advance Variable Rental Period or Lease Period, as the case may be; and |
(b) | the Advance Variable Rental Payment or Rental Payment for the Advance Variable Rental Period or Lease Period, as the case may be, |
which is mentioned in that notice.
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6.8.2 | Subject to the occurrence of a Market Disruption Event, each such notice will be issued to the Lessee: |
(a) | in the case of the first Advance Variable Rental Payment Notice, on the date of the Forward Lease; and |
(b) | in all other cases, two Business Days prior to the start of the applicable Advance Variable Rental Period or Lease Period, as the case may be. |
7 | Various matters relating to the payment of Advance Rental Payments and Rental Payments |
In relation to the Forward Lease:
7.1 | Obligations to pay unaffected by various events |
The Lessee’s obligations to:
(a) | pay Advance Rental Payments, Rental Payments, the Termination Amount and any other amounts due under the Master Forward Lease Agreement, the Forward Lease and under any other Transaction Document; and |
(b) | perform its obligations under the Master Forward Lease Agreement, the Forward Lease or any other Transaction Document to which it is a party, |
shall not be affected or limited by the following:
(i) | any set-off, counterclaim, remedy, defence or other right which the Lessee may have against the Lessor or any other person; |
(ii) | the occurrence of any insolvency event, insolvency proceedings or creditor’s process as described in clauses 11.6 (Insolvency), 11.7 (Insolvency proceedings) and 11.8 (Creditors’ process) of the Common Terms Agreement; |
(iii) | any condition, design, operation, compliance with specifications or fitness for use of the Leased Asset or any part thereof on the basis that such matters have previously been approved and accepted by the Lessee; |
(iv) | any deduction on account of Tax; |
(v) | any Partial Loss of the Leased Asset; |
(vi) | any breach by the Lessee of any warranty, representation, covenant or undertaking contained in this Agreement, the Forward Lease or any other Transaction Document or given under or in connection with this Agreement, the Forward Lease or any other Transaction Document; |
(vii) | the occurrence of a Default, an Event of Default or an Event of Mandatory Prepayment; |
(viii) | any interruption or cessation in the use, operation or possession of the Leased Asset or any part of the Leased Asset unless caused by or attributable to any act, failure to act, negligence or default of the Lessor; |
(ix) | any necessary Authorisation required for the ownership, leasing, use, operation or location of the Leased Asset being absent or being withdrawn; or |
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(x) | any other circumstance, or event, whether or not similar to any listed in items (i) to (ix) above and including any defect in the Master Forward Lease Agreement or the Forward Lease or in its due execution by any party, unless it is caused by or is attributable to any act, failure to act, negligence or default of the Lessor. |
7.2 | Event of force majeure |
7.2.1 | Without prejudice to the rights described in clause 12 (Acceleration) of the Common Terms Agreement, the Lessee shall have no obligation to make Advance Rental Payments or Rental Payments as from the date the Lessee notifies the Lessor in writing that an event of force majeure has occurred and is continuing unless the Lessor in writing disputes that an event of force majeure has occurred and is continuing. |
7.2.2 | If the Lessor disputes that an event of force majeure has occurred and is continuing, the Lessee must continue to make Advance Rental Payments or Rental Payments, as the case may be, until the Lessee has obtained a final and binding court order confirming that an event of force majeure has arisen and is continuing such that the provisions of this Agreement and the Forward Lease are no longer enforceable against the Lessee and that it is entitled, amongst other matters, to cease making Advance Rental Payments or Rental Payments, as the case may be. |
7.3 | Illegality |
7.3.1 | If a Participant issues a notice pursuant to clause 14 (Illegality) of the Common Terms Agreement stating that it can no longer be a Participant then: |
(a) | if that notice does not require that Participant’s Percentage of the Rental Payments or Advance Rental Payments (as applicable) to be paid before the scheduled payment date, on the next Rental Payment Date the Lessee shall pay to the Lessor: |
(i) | the scheduled Rental Payments or Advance Rental Payments (as applicable) from,which the Lessor (as Investment Agent) shall pay the Participants, including the Participant that issued the notice, their respective Percentages of such amounts; and |
(ii) | (without double counting) an amount equal to that Participant’s Percentage of the Outstanding Fixed Rental or Outstanding Istisna’ Amount (as applicable); or |
(b) | if an earlier date is specified in such notice, on such earlier date the Lessee shall pay to the Lessor: |
(i) | that Participant’s Percentage of the Variable Rental Payment on the basis of the number of days that have actually elapsed up to the earlier payment date; and |
(ii) | (without double counting) an amount equal to that Participants Percentage of the Outstanding Fixed Rental or Outstanding Istisna’ Amount (as applicable). |
7.3.2 | The Outstanding Fixed Rental or Outstanding Istisna’ Amount (as applicable) and each Fixed Rental Payment or Advance Fixed Rental Payment (as applicable) payable to the remaining Participants shall be adjusted to reflect the payment to the Illegality Participant of its Percentage of the Outstanding Fixed Rental or Outstanding Istisna’ Amount (as applicable) as described in Clause 7.3.1(a)(ii) or 7.3.1(b)(ii). |
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7.3.3 | In the circumstances described in Clause 7.3.1(b) no early payment of any part of the Supplementary Rental Payment shall be made and, in accordance with the terms of Clause 7.3.6, the remaining Participants shall be entitled to such Supplementary Rental Payment. |
7.3.4 | On receipt of the amounts to be paid to the Participant under Clause 7.3.1, the Investment Agent shall pay such amounts to that Participant in accordance with the provisions of the Investment Agency Agreement. |
7.3.5 | On the Rental Payment Date or Advance Rental Payment Date, as the case may be, immediately following the date on which the payment described in Clause 7.3.1(b) occurred, the Lessee or the Seller (as applicable) shall pay to the Investment Agent (for the remaining Participants): |
(a) | any Fixed Rental Payment or Advance Fixed Rental Payment (as applicable), in each case adjusted as provided in Clause 7.3.2; |
(b) | any Variable Rental Payment or Advance Variable Rental Payment (as applicable), in each case adjusted to take into account the payment made to the Participant that issued the notice; and |
(c) | any Supplementary Rental Payment. |
7.3.6 | Upon the Participant which issued the notice being paid, the Participant will be deemed to have transferred its ownership rights in the Leased Asset and its rights, title and interests in the Transaction Documents to the remaining Participants pro rata their Percentages. |
7.4 | Adjustments of Advance Variable Rental Payments or Variable Rental Payments |
If the leasing arrangements end in accordance with the provisions of the Transaction Documents prior to the scheduled Advance Variable Rental Period or Lease Period so that an Advance Variable Rental Payment or a Variable Rental Payment is to be paid before the Advance Variable Rental Payment Date or the Rental Payment Date (as applicable):
(a) | the Advance Variable Rental Payment or a Variable Rental Payment shall be reduced and recalculated on the basis of the number of days that have actually elapsed up to the payment date; and |
(b) | the relevant Advance Variable Rental Payment Date or the Rental Payment Date shall be construed accordingly. |
8 | Warranties and other related matters |
In relation to the Forward Lease:
8.1 | Examination of the Specifications and the Leased Asset |
The Lessee represents and warrants that:
(a) | it has examined the Specifications; and |
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(b) | by proceeding with the leasing arrangements on the Commencement Date, it confirms that the Leased Asset is in good condition, in satisfactory working order and suitable for the Lessee’s purposes. |
8.2 | Disclaimer |
8.2.1 | As at the date of the Master Forward Lease Agreement, the Forward Lease and the Commencement Date, the Lessor expressly makes no representation or warranty, either expressly or implied, about: |
(a) | the design or condition of the Leased Asset; |
(b) | the durability, suitability or fitness for any particular purpose of the Leased Asset; |
(c) | the quality of the material or workmanship of the Leased Asset; |
(d) | the conformity of the Leased Asset or any part of the Leased Asset to the Specifications; |
(e) | any defects, either patent or latent, in the Leased Asset, any part of the Leased Asset or any item of the Leased Asset; or |
(f) | any other matter concerning the Leased Asset or any part of the Leased Asset. |
8.2.2 | The Lessee waives any claim, remedy, defence, right or recourse against the Lessor arising from: |
(a) | the Lessee’s possession and use of the Leased Asset or arising from the Lessee’s loss of possession or use of the Leased Asset for any reason whatsoever; or |
(b) | any direct or indirect personal injury or damage to persons or to the Leased Asset resulting from any defects. |
8.2.3 | The exculpatory provisions contained in Clause 8.2.1 and Clause 8.2.2 shall not apply if any of the matters described above has been caused by the gross negligence of the Lessor. |
8.2.4 | The Lessee acknowledges and agrees that the provisions of this Clause 8.2 are fair and reasonable in all the circumstances. |
9 | Protection of Lessor’s interests |
In relation to the Forward Lease:
9.1 | No prejudicial actions |
The Lessee shall not do or permit to be done anything which would prejudice or jeopardise the Lessor’s title, rights and interest in respect of the Leased Asset.
9.2 | Free of claims |
9.2.1 | The Lessee shall keep the Leased Asset free of all claims by other persons (including by way of confiscation, seizure, distress, execution, diligence, impounding or other legal process). |
9.2.2 | If there are any such claims, the lessee shall arrange for their immediate release. |
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9.2.3 | The Lessee shall keep the Lessor immediately informed of any event which might affect the rights of the Lessor or involve it in any legal proceedings or Losses in relation to the Leased Asset. |
9.3 | Plates and markings |
The Lessee shall affix or cause to be affixed to the Leased Asset such plates or other markings indicating the Lessor’s interest as the Lessor may require.
9.4 | Notifications |
9.4.1 | During the Lease Term the Lessee shall promptly notify: |
(a) | the holders of any Security over any of the Lessee’s assets; and | |
(b) | any landlord of the premises where the Leased Asset is at any time located, |
that the Leased Asset is the property of the Lessor.
9.4.2 | The Lessee shall provide satisfactory evidence of such notification and, when requested by the Lessor, a written acknowledgement from the holders of any such Security that the Leased Asset is not within the scope of any such Security or from any landlord that the Leased Asset has not and will not become a landlord’s fixture. |
9.5 | Negative undertakings |
The Lessee shall not:
(a) | hold itself out as owner of the Leased Asset; |
(b) | pledge the credit of the Lessor for the repair of the Leased Asset or for any other reason; |
(c) | sell, create or allow the creation of any Security over or otherwise dispose of the Leased Asset; |
(d) | abandon the Leased Asset; or |
(e) | sell, sub-let, sub-hire, assign, transfer, loan, part with possession or dispose of all or part of its interests in the Leased Asset (or attempt to do any of the foregoing) without the prior written approval of the Lessor which the Lessor in its absolute discretion can refuse to give or may give on such terms and subject to such conditions as it may decide in its absolute discretion. |
9.6 | Inspection rights |
The Lessor, its agents and representatives shall be entitled (but not obliged) at all reasonable times to inspect the Leased Asset (and for this purpose shall be entitled to enter on any premises on or in which the Leased Asset is reasonably believed to be situated) in order, without limitation, to:
(a) | undertake any repairs necessary to comply with the Lessor’s obligations under this Agreement and the Forward Lease; and |
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(b) | inspect the Leased Asset to ensure that the Lessee has undertaken its maintenance and repair obligations under this Agreement and the Forward Lease (and to the extent applicable, the other Transaction Documents) and, if the Lessee has not met such obligations, to undertake such repairs and maintenance at the Lessee’s cost |
9.7 | Ownership of alterations |
9.7.1 | All alterations, substitutions, improvements, replacements or additions to the Leased Asset shall become the property of the Lessor free of all claims and Security. |
9.7.2 | After the termination of the Forward Lease, the Lessor may keep the alterations, substitutions, improvements, replacements or additions made by the Lessee or the Lessor may require the Lessee to reinstate the Leased Asset to its original condition at the Lessee’s own cost and expense and/or to pay compensation if the Leased Asset is unable to be reinstated to its original condition. |
9.8 | General safeguard actions |
The Lessee shall, to the satisfaction of the Lessor (acting reasonably), do all things necessary under the laws of any relevant jurisdiction to protect and safeguard the Lessor’s right, title and interest in the Leased Asset, including the obtaining of all necessary Authorisations and, if required by the Lessor, the filing of this Agreement, the Forward Lease or any other applicable documents with any competent authority.
10 | Use of the Leased Asset |
In relation to the Forward Lease:
10.1 | Negative undertakings about the use of the Leased Asset |
10.1.1 | The Lessee shall not use or permit any of the Leased Asset to be used: |
(a) | for any purpose for which it is not expressly designed or reasonably suited; |
(b) | for any unlawful purpose; |
(c) | in a manner that may render void or voidable any of the Insurance Policies; or |
(d) | in such a manner that it is taken outside the Plant Site. |
10.1.2 | The Lessee shall not make any changes to or use the Leased Asset in any manner which would invalidate any warranty provided by the Main Contractor or any other person. |
10.1.3 | The Lessee shall not fix or permit the affixing of the Leased Asset to any land or building without first obtaining such waivers and consents as the Lessor may require from any person having an interest in such land or building. |
10.2 | Positive undertakings about the use of the Leased Asset |
10.2.1 | The Lessee shall use or procure the use of the Leased Asset in a skilful and proper manner and in accordance with any operating instructions issued by the Main Contractor and by properly qualified and licensed personnel. |
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11.2 | Performance of Ordinary Maintenance and Repair |
As from the Commencement Date, the Lessee shall, at its own cost and expense, perform all Ordinary Maintenance and Repair including carrying out all modifications, repairs to, or replacement of, any damaged, worn or lost parts or equipment in such manner (both as regards workmanship and quality of materials) as not to diminish the value of the Leased Asset. Without prejudice to the generality of the foregoing, the Lessee shall ensure that in performing Ordinary Maintenance and Repair, the Lessee shall:
(a) | conduct regular and comprehensive inspections of the Leased Asset; |
(b) | keep the Leased Asset in good and serviceable repair and condition (fair wear and tear excepted); |
(c) | always ensure that any repair or servicing of any Leased Asset is undertaken by properly skilled and qualified persons and in accordance with the instructions or recommendations of the constructor of the Leased Asset and any legal requirements; |
(d) | ensure that accurate, complete and current records are kept of all maintenance activities on the Leased Asset and shall provide copies of such records to the Lessor upon reasonable request; |
(e) | not allow any Security to be created over any of the Leased Asset in the performance of Ordinary Maintenance and Repair save for Permitted Security; |
(f) | comply with its obligations described in Clauses 9 (Protection of Lessor’s interests) and 10 (Use of the Leased Asset); |
(g) | only install parts on the Leased Asset which have been manufactured or approved by the Main Contractor for use on the Leased Asset; and |
(h) | at its own expense, enter into a maintenance contract with the Main Contractor its accredited agent (or such other party as the Lessor may authorise) and keep it in force throughout the Lease Term. |
11.3 | Payment of Taxes |
The Lessee shall pay all Taxes relating to the use and ownership of the Leased Asset other than Ownership Taxes.
12 | Major maintenance |
In relation to the Forward Lease:
12.1 | Lessor’s Responsibility |
12.1.1 | The Lessor shall be responsible for all Major Maintenance. |
12.2 | Lessee to notify |
12.2.1 | The Lessee shall notify the Lessor promptly of the need to carry out any Major Maintenance to the Leased Asset and until such time the Lessor shall not be under any responsibility or obligation to perform Major Maintenance. |
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10.2.2 | The Lessee (whether in its own capacity or as the Service Agent) shall only use and maintain the Leased Asset so that the Leased Asset is safe and without risk to the health or safety of employees or other persons using the Leased Asset in accordance with the recommendations of the Main Contractor. |
10.2.3 | The Lessee shall ensure that all necessary Authorisations remain valid at all times during the Lease Term and the Lessee shall comply with any applicable legal obligations in relation to the use and operation of the Leased Asset and comply with all other requirements as to inspection and testing as for the time being required by law. |
10.2.4 | The Lessee shall make available to the Lessor the records, certificates and other documents relating to the Leased Asset when the Leased Asset is returned to the Lessor or allow the Lessor (or any person nominated by the Lessor) to inspect them at reasonable times and following reasonable prior written notice. |
10.2.5 | The Lessee shall immediately pay any charges (including congestion charges), fines or other fixed penalties relating to the use and operation of Leased Asset. If the Lessee fails to do so the Lessor may pay the amount of the charge, fine or penalty for the Lessee. The Lessee will then repay that amount to the Lessor on demand plus such sum as the Lessor notifies the Lessee is required to cover the Lessor’s actual administration costs connected with the charge, fine or penalty. |
10.2.6 | The Lessee shall, if so requested by the Lessor, promptly deliver a written report in such detail as the Lessor shall reasonably require on the condition of the Leased Asset and with sufficient copies for all of the Participants. |
10.3 | General prohibition on alterations |
10.3.1 | The Lessee shall not, without the prior written approval of the Lessor, make any alterations, substitutions, improvements, replacements or additions to the Leased Asset except: |
(a) | to the extent required in the performance of its obligation to perform Ordinary Maintenance and Repairs; or |
(b) | where any such alterations, substitutions, improvements, replacements or additions to the Leased Asset are necessary in the case of an emergency (when such emergency works shall be at the cost, expense and risk of the Lessee (unless they relate to Major Maintenance)). |
10.3.2 | Any such alterations, substitutions, improvements, replacements or additions undertaken by the Lessee in breach of Clause 10.3.1 shall be at the Lessee’s own risk and cost. |
11 | Ordinary Maintenance and Repair of the Leased Asset |
In relation to the Forward Lease:
11.1 | Damage and deterioration |
As from the Commencement Date, the Lessee shall be liable to the Lessor for any damage or deterioration to the Leased Asset (apart from any Major Maintenance) which is not the result of normal wear and tear.
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12.3 | Service Agent |
12.3.1 | The Lessee agrees that the Lessor may discharge its obligations in relation to Major Maintenance by appointing the Lessee (in its capacity as the Service Agent) to perform these obligations. |
13 | Insurance policies |
In relation to the Forward Lease:
13.1 | Property Insurance Policy |
13.1.1 | The Lessor shall take out insurance on a fully comprehensive all risk basis for the Leased Asset during the Lease Term in accordance with the terms of Part 2 to Schedule 6 (insurance matters) (Property Insurance Policy). |
13.1.2 | The Property Insurance Policy shall be Shari’ah compliant to the extent that it is available on economically acceptable terms in the market. |
13.2 | Third Party Insurance Policy |
13.2.1 | During the Lease Term, the Lessee shall take out and maintain insurance in respect of any third party liability arising out or in connection with the use of the Leased Asset pursuant to and in accordance with the terms of Schedule 6 (Insurance Matters) (Third Party Insurance Policy). |
13.2.2 | The Lessee shall be solely liable for the premium in respect of the Third Party Insurance Policy. |
13.2.3 | The Third Party Insurance Policy shall be Shari’ah compliant to the extent that it is available on economically acceptable terms in the market. |
13.3 | Operating Insurance Policy |
13.3.1 | During the Lease Term, the Lessee shall take out and maintain an operating insurance policy (including cover for loss or rent and/or profits) in connection with the use of the Leased Asset pursuant to and in accordance with the terms of Schedule 6 (Insurance Matters) (Operating Insurance Policy). |
13.3.2 | The Lessee shall be solely liable for the premium in respect of the Operating Insurance Policy. |
13.3.3 | The Operating Insurance Policy shall be Shari’ah compliant to the extent that it is available on economically acceptable terms in the market. |
13.3.4 | All insurance proceeds payable and paid under the Insurance Policies shall be handled in accordance with paragraph 1.8 of Part 1 of Schedule 6 (Insurance mailers). |
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14 | Partial Loss, Total Loss and Expropriation Event |
In relation to the Forward Lease:
14.1 | Partial Loss |
14.1.1 | If the Partial Loss is caused by any act, failure to act, gross negligence or wilful misconduct of the Lessee, the Lessee shall: |
(a) | immediately reinstate the Leased Asset to its original condition (fair wear and tear excepted) and continue to pay the Rental Payments in accordance with the terms of this Agreement and the Forward Lease; and |
(b) | provide indemnification for any shortfall in the insurance proceeds as provided in Clause 22.1 (General indemnity). |
14.1.2 | If the Partial Loss is caused by any act, failure to act, gross negligence or wilful misconduct of the Lessor, the Lessor (acting through the Service Agent) shall re-instate the Leased Asset to its original condition (fair wear and tear excepted). |
14.2 | Total Loss and Expropriation Event |
14.2.1 | If a Total Loss or an Expropriation Event occurs: |
(a) | the leasing arrangements under the Forward Lease will terminate but without prejudice to any accrued rights and obligations or to terms that are stated to continue after termination; and |
(b) | the Lessor will be entitled to all insurance proceeds payable as a result of the Total Loss and/or any Compensation in the case of an Expropriation Event. |
14.2.2 | If the Total Loss or Expropriation Event was caused by any act, failure to act, gross negligence or wilful misconduct of the Lessee, the Lessee shall indemnify the Lessor for any Total Loss/Expropriation Event Shortfall in accordance with Clause 22.3 (Total Loss/Expropriation Event Shortfall indemnity). |
14.2.3 | If: |
(a) | the leasing arrangements under the Forward Lease terminate on a Total Loss or an Expropriation Event; and |
(b) | either: |
(i) | the Security Period has ended; or |
(ii) | at such earlier date as the Lessor acting on the instructions of the Majority Participants may decide, |
the Lessor may, acting on the instructions of the Majority Participants, require the Lessee to purchase the Leased Asset from the Lessor for the amount of AED 10 and the Lessee shall, at its own cost and expense, within ten days of that request (or such longer period as determined by the Lessor in its absolute discretion):
(iii) | enter into a sale and purchase agreement in such form as the Lessor requests for such rights that the Lessor has to the Leased Asset after the Total Loss or Expropriation Event; and |
(iv) | undertake any other action required to give effect to this Clause 14.2.3. |
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15 | Power to remedy defaults |
15.1 | Failure to comply with Clause 11 (Ordinary Maintenance and Repair of the Leased Asset) |
If the Lessee fails to comply with any of the provisions of Clause 11, (Ordinary Maintenance and Repair of the Leased Asset) (and without prejudice to the right of the Lessor to treat that non-compliance as an Event of Default), the Lessor may, at the Lessee’s expense, arrange for the repairs to be carried out, but without any obligation on the Lessor to do so.
15.2 | Failure to comply with Clause 13 (Insurance Policies) |
If the Lessee fails to comply with any of the provisions of Clause 13 (Insurance Policies) (and without prejudice to the right of the Lessor to treat that non-compliance as an Event of Default), the Lessor may, at the Lessee’s expense, take out and then maintain the Operating Insurance Policy and the Third Party Insurance Policy, but without any obligation on the Lessor to do so.
15.3 | Failure to comply with other obligations |
If the Lessee fails to comply with any other obligations under this Agreement or the Forward Lease (and without prejudice to the right of the Lessor to treat that non-compliance as an Event of Default), the Lessor may, at the Lessee’s expense, take such action as the Lessor deems expedient or necessary in order to arrange for compliance with such provisions, but without any obligation on the Lessor to do so.
15.4 | Obligation to pay Advance Rental Payments and Rental Payments |
Notwithstanding any exercise by the Lessor of any of the powers contained in this Clause 15, Advance Rental Payments (to the extent applicable) and Rental Payments shall continue to accrue and be payable during such time.
16 | Changes to the calculation of Advance Variable Rental Payments and Variable Rental Payments |
In relation to the Forward Lease:
16.1 | Alternative basis of calculation |
16.1.1 | If, when an Advance Variable Rental Payment or a Variable Rental Payment is to be calculated, a Market Disruption Event exists, then each Participant’s share of that Advance Variable Rental Payment or Variable Rental Payment shall be: |
where:
Y | is: |
(i) | in relation to an Advance Variable Rental Payment, the sum equal to that Participant’s Percentage of the amount expressed in A contained in the methodology for calculating Advance Variable Rental Payment in Schedule 1 to the Forward Lease; or |
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(ii) | in relation to a Variable Rental Payment, the sum equal to that Participant’s Percentage of the amount expressed in (AFRP-F) contained in the methodology for calculating Variable Rental Payment in Schedule 2 to the Forward Lease; |
B | is the rate notified to the Investment Agent by that Participant, prior to the commencement of the applicable Advance Variable Rental Period or the Lease Period (as the case may be), to be that which expresses as a percentage rate per annum the cost to that Participant of funding its participation in the amount expressed by Y above from whatever source it may reasonably select; |
C | is the Margin (expressed as a percentage); and |
T | is the number of days in the Advance Variable Rental Period or the Lease Period as applicable, |
and the Advance Variable Rental Payment or Variable Rental Payment, as the case may be, shall be the aggregate of each Participant’s share of it.
16.1.2 | If, in the case of a Market Disruption Event under limb (a) of the definition of that term in clause 13 (Market disruption) of the Common Terms Agreement, a Participant has not notified the Investment Agent of a percentage rate per annum pursuant to Clause 16.1.1, the cost to that Participant of funding its participation in that Advance Variable Rental Period or Lease Period, as the case may be, shall be deemed, for the purposes of Clause 16.1.1, to be: |
(a) | where any other Participant has notified to the Investment Agent its cost of funding its participation in that Advance Variable Rental. Period or Lease Period, as the case may be, the lowest such cost notified by a Participant to the Investment Agent; or |
(b) | where no other Participant has notified to the Investment Agent the cost to that Participant of funding its participation in that Advance Variable Rental Period or Lease Period, as the case may be, the most recent Screen Rate available prior to noon on the applicable quotation day for the relevant currency and period. |
16.1.3 | If, in the case of a Market Disruption Event under limb (b) of the definition of that term in clause 13 (Market disruption) of the Common Terms Agreement: |
(a) | the percentage rate per annum notified by a Participant pursuant to Clause 16.1.1 is less than EIBOR; or |
(b) | a Participant has not notified the Investment Agent of a percentage rate per annum pursuant to Clause 16.1.1, |
the cost to that Participant of funding its participation in that Advance Variable Rental Period or Lease Period, as the case may be, shall be deemed, for the purposes of Clause 16.1.1, to be EIBOR.
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17 | Lessee Events of Default |
In relation to the Forward Lease:
17.1 | Lessee Events of Default |
Each of the events or circumstances set out in this Clause 17.1 is a Lessee Event of Default:
17.1.1 | Total Loss or Expropriation Event |
A Total Loss or an Expropriation Event occurs in respect of the Leased Asset which is due to any act, failure to act, gross negligence or wilful misconduct of the Lessee (acting in any capacity).
17.1.2 | Non-renewal |
If the Lessee refuses to or is unable to renew the Forward Lease in accordance with the Lessee’s undertaking contained in Clause 5.1.2.
17.2 | Termination on an Event of Default or Event of Mandatory Prepayment |
Without limiting the rights of the Investment Agent under clause 12 (Acceleration) of the Common Terms Agreement, if an Event of Default or Event of Mandatory Prepayment occurs, the Lessor (in its capacity as the Investment Agent) may exercise, amongst other matters, its right to terminate the leasing of each Leased Asset.
18 | Voluntary early payment in respect of the Forward Lease |
18.1.1 | If the Commencement Date under the Forward Lease has occurred, the Lessee may: |
(a) | if it gives the Investment Agent not less than 7 Business Days’ prior notice (or such shorter period as the Majority Participants may agree), pay early any part of the Outstanding Fixed Rental under the Forward Lease on the next Rental Payment Date (but being an amount that reduces the Outstanding Fixed Rental in a minimum amount of AED4,500,000 and integral multiples of AED500,000); or |
(b) | if it wishes to prepay all of the Outstanding Fixed Rental, exercise its rights under the Sale Undertaking. |
18.1.2 | In relation to the Forward Lease, any early payment under Clause 18.1.1(a) that relates to part only of the Outstanding Fixed Rental shall satisfy the obligation to pay the Fixed Rental Payments in inverse order of maturity. |
19 | Right of repayment in relation to a single Participant |
In relation to the Forward Lease, if a notice is issued by the Lessee in accordance with clause 15.1 (Right of repayment and cancellation in relation to a single Participant) of the Common Terms Agreement:
(a) | if the Commencement Date under the Forward Lease has not occurred, the provisions of clause 15.1.4(a) of the Common Terms Agreement shall apply; or |
(b) | if the Commencement Date under the Forward Lease has occurred, the Lessee shall pay (through the Investment Agent) to the Participant mentioned in that notice: |
(i) | that Participant’s Percentage of the Outstanding Fixed Rental; |
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(ii) | that Participant’s Percentage of any accrued Variable Rental Payment; |
(iii) | any Increased Costs Amount which relates to that Participant; and |
(iv) | any other amounts due to that Participant under the Transaction Documents. |
20 | Purchase Undertaking and Sale Undertaking |
In relation to the Forward Lease:
20.1 | Purchase Undertaking |
20.1.1 | Without prejudice to any other rights or remedies that the Lessor (acting in any capacity) or any of the other Finance Parties may have under the Transaction Documents, the Lessor is entitled to require the Lessee to purchase the Leased Asset from the Lessor in accordance with the terms of the Purchase Undertaking. |
20.1.2 | If the Lessee does not comply with its obligations under the Purchase Undertaking the Lessor may, without limiting any of its other rights and remedies, dispose of the Leased Asset and apply it towards satisfaction of the Termination Amount. |
20.2 | Sale Undertaking |
The Lessee is entitled to require the Lessor to sell the Leased Asset to the Lessee in accordance with the terms of the Sale Undertaking.
21 | Increased Costs |
In relation to the Forward Lease:
21.1 | Increased Costs |
In this Agreement Increased Costs means:
(a) | a reduction in the rate of return from the leasing arrangements contained in the Forward Lease or on a Finance Party’s (or its Affiliate’s) overall capital; |
(b) | an additional or increased cost; or |
(c) | a reduction of any amount due and payable under any Transaction Document, |
which is incurred or suffered by that 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 Transaction Document.
21.2 | Increased Costs claims |
21.2.1 | Subject to Clause 21.3 (Exceptions), if a Finance Party or any of its Affiliates incurs any Increased Costs as a result of: |
(a) | the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation; |
(b) | compliance with any law or regulation made after the date of this Agreement; or |
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(c) | compliance with any law or regulation relating to capital adequacy, whether made before or after the date of this Agreement, |
and wishes to recover this amount, it shall notify the Lessor (acting as the Investment Agent) of the event giving rise to the claim, following which the Lessor shall promptly notify the Lessee.
21.2.2 | Each Finance Party shall, as soon as practicable after a demand by the Lessor (acting as the Investment Agent), provide a certificate confirming the amount of its Increased Costs. |
21.2.3 | An Increased Costs Amount shall be treated as a part of the next Advance Rental Payment, Rental Payment or Termination Amount, as applicable, after the date of the claim. Upon receipt of such amount by the Lessor (acting as the Investment Agent), the Investment Agent shall pay the Increased Costs Amount to the Finance Party that made the claim. |
21.3 | Exceptions |
Clause 21.1 (Increased Costs) does not apply to the extent any Increased Cost is:
(a) | attributable to a Tax Deduction required by law to be made by an Obligor; |
(b) | compensated for by clause 11.3 (Tax indemnity) of the Investment Agency Agreement (or would have been compensated for under clause 11.3 (Tax indemnity) of the Investment Agency Agreement but was not so compensated solely because any of the exclusions in clause 11.3.2 of the Investment Agency Agreement applied); or |
(c) | attributable to the wilful breach by the relevant Finance Party or its Affiliates of any law or regulation. |
22 | Indemnities |
In relation to the Forward Lease:
22.1 | General indemnity |
22.1.1 | The Lessee shall, within three Business Days of demand, indemnify each Secured Party and each Secured Party’s officers, employees and agents against any Losses incurred by that Secured Party or any of its officers, employees and agents as a result of: |
(a) | the possession, management or operation of the Leased Asset or the leasing, sub-leasing, removal, transportation, repossession, sale or disposal of the Leased Asset by the Lessor (or any person acting as the Lessor’s agent), whether attributable to any defect in the Leased Asset or the design, manufacture, testing or use of the Leased Asset, or in relation to any product or strict liability relating to the Leased Asset; |
(b) | preserving or enforcing (or attempting to preserve or enforce) the Lessor’s rights under this Agreement and the Forward Lease (including if the Lessee impugns the title to the Leased Asset) or this Agreement or in recovering or attempting to recover possession of the Leased Asset; |
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(c) | the preservation or defence of the Lessor’s title and interest in and to the Leased Asset caused by an act or failure to act by the Lessee, including keeping the Leased Asset free and clear from any and all Security; |
(d) | whether direct or indirect: |
(i) | the breach by the Lessee of any of its obligations under this Agreement, the Forward Lease or any other Transaction Document; or |
(ii) | any of the warranties and representations made in this Agreement, the Forward Lease or any other Transaction Document being untrue or inaccurate in any respect whatsoever when made; |
(e) | any breach by the Lessee of any representation, warranty or covenant contained in this Agreement or the Forward Lease; |
(f) | the performance or non-performance of Ordinary Maintenance and Repair of the Leased Asset; |
(g) | the infringement or alleged infringement of intellectual property or other rights; |
(h) | any Environmental Claim arising from the use, operation or management of the Leased Asset; |
(i) | preventing or attempting to prevent the confiscation, seizure, taking in execution, requisition, impounding or forfeiture of the Leased Asset, or in securing the release of the Leased Asset; |
(j) | suing for or recovering any sum due under the Forward Lease, the Master Forward Lease Agreement or any other Transaction Document; or |
(k) | the insurance proceeds payable under the Insurance Policies being insufficient to cover the re-instatement of the Leased Asset if a Partial Loss occurs in circumstances described in Clause 14.1.1. |
22.1.2 | The indemnities contained in Clause 22.1.1 shall not extend to any liability, loss or damage caused by the gross negligence or willful misconduct of any Secured Party. |
22.2 | Special indemnity relating to exercise of rights on an Event of Default |
In the circumstances described in Clause 20.1.2, the Lessee shall indemnify and hold harmless the Lessor in respect of any shortfall between:
(a) | the Termination Amount; and |
(b) | the proceeds obtained from selling or disposing of the Leased Asset. |
22.3 | Total Loss/Expropriation Event Shortfall indemnity |
If a Total Loss or an Expropriation Event is caused by any act, failure to act, gross negligence or wilful misconduct of the Lessee, within three Business Days of demand, the Lessee shall indemnify the Lessor (in its capacity as the Investment Agent) for any Total Loss/Expropriation Event Shortfall.
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22.4 | Indemnity in relation to Increased Costs |
To the extent that an Increased Costs Amount is not treated as part of an Advance Rental Payment or a Rental Payment as described in Clause 21.2.3, the Lessee shall, within three Business Days of demand by the Lessor (acting as the Investment Agent), pay to the Investment Agent, for the account of the relevant Finance Party, the Increased Costs Amount incurred and claimed by that Finance Party or any of its Affiliates, and shall indemnify the relevant Finance Party against any Losses which it may incur in relation to those amounts.
23 | Governing law |
23.1 | English law |
23.1.1 | Subject to Clause 23.1.2, this Master Istisna’ Agreement and the Istisna’ Agreement and all non-contractual obligations arising out of or connected with it shall be governed by, and construed in accordance with, English law. |
23.1.2 | The Parties agree that the creation and transfer of any proprietary rights of the Parties in relation to the Istisna’ Development shall be governed by, and construed in accordance with, the laws of Fujairah and the federal laws of the United Arab Emirates as applied by the civil courts of Fujairah, in each case, to the extent those laws do not conflict with Shari’a. In the event of any contradiction between the laws of Fujairah and the federal laws of the United Arab Emirates and the principles of Shari’a, the principles of Shari’a shall prevail. |
23.2 | Interest |
The Parties recognise and agree that the principle of the payment of interest is repugnant to the Shari’ah and accordingly, to the extent that any legal system would (but for the provisions of this Clause) impose (whether by contract or by statute) any obligation to pay interest, the Parties hereby irrevocably and unconditionally expressly waive and reject any entitlement to recover interest from each other.
24 | Enforcement |
24.1 | Jurisdiction |
24.1.1 | Subject to Clause 24.1.2, the Parties submit, and waive any objection, to the exclusive jurisdiction of the courts of the Dubai International Financial Centre, Emirate of Dubai, United Arab Emirates to settle any dispute arising out of or in connection with this Agreement and the Forward Lease (including a dispute relating to the existence, validity or termination of this this Agreement and the Forward Lease or any non-contractual obligation arising out of or in connection with this Agreement and the Forward Lease) (a Dispute). The Parties agree that the courts of the Dubai International Financial Centre, Emirate of Dubai, United Arab Emirates are the most appropriate and convenient courts to settle Disputes and accordingly no Party will argue to the contrary. |
24.1,2 | The Parties agree that the civil courts of Fujairah shall have the exclusive jurisdiction to settle any dispute arising out of or in connection with the creation and transfer of any proprietary rights of the Parties in relation to the Leased Asset. |
24.1.3 | Notwithstanding Clauses 24.1.1 and 24.1.2, the Parties agree that the Lessor may take proceedings relating to a Dispute in any other court with jurisdiction. To the extent allowed by law, the Lessor may take concurrent proceedings in any number of jurisdictions. This Clause 24.1.3 is for the benefit of the Lessor only. |
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24.2 | State Immunity |
24.2.1 | Each Party acknowledges and agrees, to the extent relevant, that its execution, performance and delivery of this Agreement and the Forward Lease shall constitute a private commercial transaction entered into entirely in its commercial capacity. |
24.2.2 | To the extent that any Party may in any jurisdiction claim for itself or its assets immunity from legal proceedings, and to the extent that in any jurisdiction there may be attributed to any Party or its assets such immunity (whether claimed or not), that Party irrevocably and unconditionally and to the full extent permitted by the laws of the Relevant Jurisdiction: |
(a) | agrees not to claim such immunity; |
(b) | waives any such immunity which it or its assets now has or may in future acquire; and |
(c) | consents, in any legal proceedings arising out of or in connection with this Agreement and the Forward Lease to the giving of relief by enforcement, execution (including the arrest, detention or sale of any state property) or attachment (whether before judgment, in aid of execution or otherwise) against any of its assets. |
24.2.3 | In relation to any legal proceedings that may be taken in England, the foregoing waiver of immunity shall have effect under, and be construed in accordance with, the State Immunity Act 1978. |
24.2.4 | For the purposes of this Clause 24.2: |
legal proceedings includes any service of process, suit, judgment, execution, attachment (whether before judgment, in aid of execution, or otherwise), arbitral proceedings or other dispute resolution mechanisms; and
asset includes any asset not used solely for commercial purposes.
This Agreement has been entered into on the date stated at the beginning of this Agreement.
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Execution Page of the Master Forward Lease Agreement
The Lessor
Signed by
duly authorised in accordance with the laws of Abu Dhabi, United Arab Emirates for and on behalf of National Bank of Abu Dhabi PJSC - Islamic Banking Division in its capacity as Investment Agent for and on behalf of the Participants in the presence of:
Signature of witness |
) ) ) ) ) ) ) )
) |
/s/ Aqeel Bughio /s/ Omar Katri |
Name of witness: | |||
Address of witness: | |||
The Lessee
Signed by | ) |
|
) | ||
duly authorised in accordance with the | ) | |
laws of Fujairah Free Zone, United Arab | ) | |
Emirates for and on behalf of Brooge | ) | |
Petroleum and Gas Investment Company | ) | |
FZC in the presence of: | ) | |
Signature of witness | ) |
Name of witness: | |||
Address of witness: | |||
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Exhibit 10.32
Forward Lease
Dated
National Bank of Abu Dhabi PJSC – Islamic Banking Division
(The Lessor, acting as Investment Agent for and on behalf of the Participants)
Brooge Petroleum and Gas Investment Company FZC
(The Lessee)
Dentons & Co Suite 1204 Al Ghaith Tower Hamdan Street PO Box 47656 Abu Dhabi United Arab Emirates |
|
Contents
1 | Definitions and interpretation | 1 |
2 | Lease of the Leased Assets | 2 |
3 | Master forward lease agreement | 2 |
4 | Counterparts | 2 |
5 | Governing law | 2 |
6 | Enforcement | 2 |
Schedule 1 to the Forward Lease – Advance Fixed Rental Payments and Advance Variable Rental Payments | 3 |
Schedule 2 to the Forward Lease – Rental Payments | 4 |
Page i
Forward Lease
This Forward Lease is made on this__day of_________________________ by and between:
(1) | National Bank of Abu Dhabi PJSC — Islamic Banking Division, of P. O. Box 40057, Abu Dhabi, United Arab Emirates (the Lessor) acting in its capacity as Investment Agent for an on behalf of the Participants; and |
(2) | Brooge Petroleum and Gas Investment Company FZC incorporated under the laws of Fujairah Free Zone, Fujairah, United Arab Emirates of P. O. Box 50170, Fujairah, United Arab Emirates (the Lessee). |
Recitals
A | In accordance with the Investment Agency Agreement, the Participants have, amongst other things, appointed the Investment Agent as their agent under and in connection with the Transaction Documents, including this Forward Lease. |
B | The Lessor and the Lessee entered into a master forward lease agreement on or about the date of this Forward Lease (the Master Forward Lease Agreement). |
C | The Investment Agent is entering into this Forward Lease in the capacity as the Lessor. |
D | The Lessor and the Lessee now wish to enter into this Forward Lease pursuant to the Master Forward Lease Agreement in relation to the Leased Asset described in this Forward Lease. |
It is agreed:
1 | Definitions and interpretation |
1.1 | Definitions |
1.1.1 | Terms defined (whether directly or indirectly) in the Master Forward Lease Agreement shall have the same meaning in this Forward Lease unless expressly defined in this Forward Lease. |
1.1.2 | In addition in this Forward Lease: |
Leased Asset means the Istisna’ Development described in that Istisna’ Agreement entered into on or about the date of this Agreement between the Lessee (acting as the Seller) and the Lessor (acting in its capacity as the Investment Agent).
Party means a party to this Forward Lease.
1.2 | Construction |
The principles of construction used in the Common Terms Agreement shall apply to this Forward Lease to the extent they are relevant to it and, subject to any necessary changes, as they apply to the Common Terms Agreement.
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1.3 | Third party rights |
The provisions of clause 1.3 (Third party rights) of the Master Forward Lease Agreement apply mutatis mutandis to this Forward Lease.
2 | Lease of the Leased Assets |
2.1 | Forward leasing |
In accordance with the terms of the Master Forward Lease Agreement and this Forward Lease, the Lessee forward leases from the Lessor and the Lessor forward leases to the Lessee, the Leased Assets.
2.2 | Commencement Date |
The Commencement Date shall be [2 March 2017] (subject to it being the Development Completion Date if the Development Completion Date occurs before this date).
2.3 | Lease Term |
The Lease Term shall:
(a) | commence on the Commencement Date; and |
(b) | end on [28 February 2029] (subject to earlier termination). |
2.4 | Payments of rent |
The Lessee shall pay the Advance Rental Payments and the Rental Payments in accordance with the terms of the Master Forward Lease Agreement and this Forward Lease including the Schedules to this Forward Lease.
3 | Master forward lease agreement |
This Forward Lease is supplemental to and should be read and construed as one document with the Master Forward Lease Agreement. The provisions of the Master Forward Lease Agreement are incorporated into this Forward Lease mutatis mutandis.
4 | Counterparts |
This Forward Lease may be executed in any number of counterparts, and this has the same effect as if the signatures on the counterparts were on a single copy of the Forward Lease.
5 | Governing law |
The provisions of clause 23 (Governing law) of the Master Forward Lease Agreement shall apply to this Forward Lease.
6 | Enforcement |
The provisions of clause 24 (Enforcement) of the Master Forward Lease Agreement shall apply to this Forward Lease.
Page 2
This Forward Lease has been entered into on the date stated at the beginning of this Forward Lease.
Page 3
Execution Page of the Forward Lease
The Lessor
Signed by | ) | /s/ Aqeel Bughio /s/ Omar Katri |
) | ||
duly authorised in accordance with the | ) | |
laws of the United Arab Emirates for and on | ) | |
behalf of National Bank of Abu Dhabi PJSC | ) | |
— Islamic Banking Division in its capacity as | ) | |
Investment Agent for and on behalf of the | ) | |
Participants in the presence of: | ||
Signature of witness | ) |
Name of witness: | ||
Address of witness: | ||
The Lessee
Signed by | ) |
|
) | ||
duly authorised in accordance with the | ) | |
laws of Fujairah Free Zone, United Arab | ) | |
Emirates for and on behalf of Brooge | ) | |
Petroleum and Gas Investment Company | ) | |
FZC in the presence of: | ) | |
Signature of witness | ) |
Name of witness: | ||
Address of witness: | ||
Execution page of the Forward Lease
Exhibit 10.33
EXECUTION VERSION [4]
Certain identified information has been excluded from the exhibit because it is both not material and would likely cause competitive harm to the registrant if publicly disclosed.
Common Terms Agreement
Dated 29-06-2015
Brooge Petroleum and Gas Investment Company FZC
(The Company, the Seller or the Lessee)
National Bank of Abu Dhabi PJSC — Islamic Banking Division
(The Investment Agent)
National Bank of Abu Dhabi PJSC — Islamic Banking Division
(The Account Bank)
National Bank of Abu Dhabi PJSC — Islamic Banking Division
(As Participant)
Dentons & Co Suite 1204 AI Ghaith Tower Hamdan Street PO Box 47656 Abu Dhabi United Arab Emirates |
|
Contents
1 | Definitions and interpretation | 1 |
2 | Initial conditions precedent | 14 |
3 | Late Payment Amounts | 15 |
4 | Representations and warranties | 15 |
5 | Information undertakings | 20 |
6 | Accounts | 23 |
7 | Financial covenants | 28 |
8 | Positive undertakings | 29 |
9 | Negative undertakings | 32 |
10 | Events of Mandatory Prepayment | 34 |
11 | Events of Default | 35 |
12 | Acceleration | 38 |
13 | Market Disruption | 39 |
14 | Illegality | 39 |
15 | Specific rights relating to early payment and cancellation | 40 |
16 | General provisions relating to certain notices and the cancellation of Commitments | 42 |
17 | Other indemnities | 43 |
18 | Assignment | 45 |
19 | Waiver of defences | 46 |
20 | Governing law | 46 |
21 | Enforcement | 46 |
Schedule 1 – Initial conditions precedent documents | 48 |
Contents (i)
Common Terms Agreement
Dated
Between
(1) | Brooge Petroleum and Gas Investment Company FZC incorporated under the laws of Fujairah Free Zone, Fujairah, United Arab Emirates of P.O. Box 50170, Fujairah, United Arab Emirates (the Company, the Seller or the Lessee); |
(2) | National Bank of Abu Dhabi PJSC — Islamic Banking Division, of P.O. Box 40057, Abu Dhabi, United Arab Emirates acting in its capacity as Investment Agent for an on behalf of the Participants (the Investment Agent); |
(3) | National Bank of Abu Dhabi PJSC — Islamic Banking Division, of P.O. Box 40057, Abu Dhabi, United Arab Emirates acting in its capacity as the Account Bank for an on behalf of the Participants (the Account Bank); and |
(4) | National Bank of Abu Dhabi PJSC — Islamic Banking Division, of P.O. Box 40057, Abu Dhabi, United Arab Emirates acting in its capacity as Participant (the Participant). |
Recitals
A. | In accordance with the Investment Agency Agreement, the Participants have, amongst other things, appointed the Investment Agent as their agent under and in connection with the Transaction Documents, including this Agreement. |
B. | The Master Istisna’ Agreement and the Master Forward Lease Agreement are being entered into on or around the date of this Agreement. |
C. | The Investment Agent is entering into this Agreement in its capacity as the Investment Agent and also in its capacity as the Lessor. |
D. | The Company is entering into this Agreement in its capacity as the Company and also in its capacity as the Seller, the Lessee and the Service Agent. |
E. | National Bank of Abu Dhabi PJSC — Islamic Banking Division is party to this Agreement in its capacity as Participant solely for the purposes of acknowledging and agreeing to the undertaking in Clause 15.2 (National Bank of Abu Dhabi PJSC - Islamic Banking Division payment undertaking). |
It is agreed:
1 | Definitions and interpretation |
1.1 | Definitions |
1.1.1 | Words and expressions defined in any specific Transaction Document shall have the same meanings in this Agreement unless expressly defined in this Agreement or the context requires otherwise. |
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1.1.2 | In this Agreement: |
Accounts means:
(a) | each Earnings Account; and |
(b) | the Facility Service Account. |
Account Pledge and Assignment means the assignment and pledge dated on or about the date of this Agreement granted by the Company in favour of the Security Agent over the Accounts.
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.
Agreed Form means an agreement or document which is to be entered into at a future date and whose terms have been agreed by the parties to that agreement or document as evidenced by the words “Agreed Form” appearing on the cover page and the signature of the parties appearing under the words “Agreed Form” to evidence that its contents are in final and settled form.
Applicable Period has the meaning given to it in Clause 3 (Late Payment Amounts).
Auditors means, at any time, PricewaterhouseCoopers or any other firm of chartered accountants of internationally recognised standing who, at that time, are the auditors of the Company.
Authorisation means an authorisation, consent, permission, approval, resolution, licence, exemption, filing, notarisation or registration.
Business Day means a day (other than a Friday, Saturday or public holiday) on which banks are open for general business in Abu Dhabi.
Certified Copy means a copy of an original document which is certified by a director of the relevant Group Company as being a copy of that document.
Charged Property means all assets of the Obligors which from time to time are, or are expressed to be, the subject of the Transaction Security.
Commercial Mortgage means a first priority commercial mortgage granted by the Company in favour of the Security Agent in form and substance satisfactory to the Investment Agent.
Compliance Certificate means a certificate substantially in the form set out in Schedule 2 (Form of Compliance Certificate).
Consolidated Total Debt means, at any time, the aggregate outstanding principal or capital amount of all Financial Indebtedness of the Group calculated on a consolidated basis.
Corporate Guarantee means each guarantee dated on or about the date of this Agreement granted by a Corporate Guarantor in favour of the Security Agent.
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Corporate Guarantor means each of:
(a) |
(b) |
Dangerous Materials means any element or substance (in any form) which is subject to regulatory control as being hazardous or dangerous or which is capable of causing harm or damage to the Environment.
Debt to Equity Ratio means, in respect of any Relevant Period, the ratio of Consolidated Total Debt to Shareholders’ Equity in respect of that Relevant Period.
Default means an Event of Default or any event or circumstance specified in Clause 11 (Events of Default) which would (with the expiry of a grace period, the giving of notice, the making of any determination or the satisfaction of any condition under the Transaction Documents or any combination of any of the foregoing) be an Event of Default.
Dirhams and AED mean the lawful currency for the time being of the United Arab Emirates.
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 Istisna’ Facility or the leasing arrangements contemplated by the Master Forward Lease Agreement (or otherwise in order for the transactions contemplated by the Transaction 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 (of a technical or systems-related nature) to the treasury or payments operations of a Party preventing that, or any other Party: |
(i) | from performing its payment obligations under the Transaction Documents; or |
(ii) | from communicating with other Parties in accordance with the terms of the Transaction Documents, |
and which (in either such case) is not caused by, and is beyond the control of, the Party whose operations are disrupted.
Dollars and USD mean the lawful currency for the time being of the United States of America.
Earnings means all monies whatsoever which are now, or later become, payable (actually or contingently) in relation to the Leased Asset and which arise out of the use or operation of the Leased Asset, including (but not limited to) all monies which are at any time payable under the Insurances in respect of loss of earnings.
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Earnings Account means:
(a) | the Dirham denominated investment account held with the relevant office of the Account Bank bearing account number specified in the Account Pledge and Assignment, and any renewal or redesignation thereof; and |
(b) | any other account (with any office of the Account Bank), which, in each case, is designated by the Account Bank acting reasonably as an Earnings Account for the purposes of this Agreement. |
EIBOR means the rate per annum equal to the inter-bank offer rate quoted on a spot basis by the banks in the UAE for Dirham for the relevant period two Business Days before the first day of the relevant period as appearing on the page “EBOR” of the Reuters Monitor Money Rate Service designated for the display of an official fixing rate for Dirham. If such page or service ceases to be available, the Investment Agent may specify another page or service displaying the relevant rate after consultation with the Company.
Environment means humans, animals, plants and all other living organisms including the ecological systems of which they form part and the following media:
(a)
|
air (including air within natural or man-made structures, whether above or below ground); |
(b) | water (including territorial, coastal and inland waters, water under or within land and water in drains and sewers); and |
(c) | land (including land under water). Used in the definitions of Dangerous Materials and Environmental Law. |
Environmental Claim means any claim, proceeding, formal notice or investigation by any person in respect of any Environmental Law.
Environmental Law means any applicable law or regulation which relates to:
(a) | the pollution or protection of the Environment; |
(b) | the conditions of the workplace; or |
(c) | the generation, handling, storage, use, release or spillage of any substance which, alone or in combination with any other, is capable of causing harm to the Environment, including any waste. |
Environmental Permit means any permit and other Authorisation and the filing of any notification, report or assessment required under any Environmental Law for the operation of the business of any member of the Group conducted on or from the properties owned or used by any member of the Group.
Event of Default means any of the events listed in Clause 11 (Events of Default).
Event of Mandatory Prepayment means any of the events listed in Clause 10 (Events of Mandatory Prepayment).
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Facility Office means the office or offices notified by a Participant to the Investment Agent in writing on or before the date it becomes a Participant (or, following that date, by not less than five Business Days’ written notice) as the office or offices through which it will perform its obligations under the Transaction Documents.
Facility Service Account means the Dirham denominated investment account specified in the Accounts Pledge Assignment Agreement held by the Company with the Account Bank established in accordance with Clause 6.1 (Establishment of Accounts), and any renewal or redesignation thereof.
Facility Service Coverage Ratio means, in respect of any Relevant Period, the ratio of Consolidated EBITDA divided by the sum of:
(a) | Finance Charges; and |
(b) | principal payments in respect of any Financial Indebtedness (but excluding, for this purpose, principal payments which are rolled over in full during that Relevant Period in respect of any working capital facilities and the items referred to in paragraphs (e) and (h) of the definition of Financial Indebtedness), |
in respect of that Relevant Period.
FATCA means:
(a) | sections 1471 to 1474 of the US Internal Revenue Code of 1986 or any associated regulations or other official guidance; |
(b) | any treaty, law, regulation or other official guidance enacted in 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 |
(c) | any agreement pursuant to the implementation of any treaty, law or regulation referred to in paragraphs (a) or (b) above with the US Internal Revenue Service, the US government or any governmental or taxation authority in any other jurisdiction. |
FATCA Deduction means a deduction or withholding from a payment under a Transaction Document required by FATCA.
FATCA Exempt Party means a Party that is entitled to receive payments free from any FATCA Deduction.
FATCA FFI means a foreign financial institution as defined in section 1471(d)(4) of the US Internal Revenue Code of 1986 which, if any Party is not a FATCA Exempt Party, could be required to make a FATCA Deduction
Fee Letter means the letter dated on or about the date of this Agreement to be signed by the Company.
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Finance Charges means, for any Relevant Period, the aggregate amount of the accrued profit, commission, fees, discounts, prepayment fees, premiums or charges and other finance payments in the nature of profit in respect of Financial Indebtedness whether paid, payable or capitalised by any member of the Group (calculated on a consolidated basis) in respect of that Relevant Period:
(a) | including any upfront fees or costs (whether paid, payable or capitalised); |
(b) | including fees payable in connection with the issue or maintenance of any bond letter of credit, guarantee or other assurance against financial loss which constitutes Financial Indebtedness and is issued by a third party on behalf of a member of the Group; |
(c) | including commitment, utilisation and non-utilisation fees; |
(d) | including the profit (but not the capital) element of payments in respect of Finance Leases; and |
(e) | including any commission, fees, discounts and other finance payments payable by (and deducting any such amounts payable to) any member of the Group under any profit rate hedging arrangement, |
and so that no amount shall be added (or deducted) more than once.
Financial Indebtedness means any indebtedness for or in respect of:
(a) | moneys borrowed (including any working capital facilities); |
(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, in accordance with IFRS, be treated as a finance or capital lease; |
(e) | receivables sold or discounted (other than any receivables to the extent they are sold on a non-recourse basis); |
(f) | any amount raised under any other transaction (including any forward sale or purchase agreement) having the commercial effect of a borrowing; |
(g) | any amount raised under any Islamic financing arrangement; |
(h) | any derivative transaction entered into in connection with protection against or benefit from fluctuation in any rate or price (and, when calculating the value of any derivative transaction, only the marked to market value shall be taken into account); |
(i) | 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; |
(j) | the supply of any assets or services which is more than 60 days past the original due date for payment; and |
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(k) | the amount of any liability in respect of any guarantee or indemnity for any of the items referred to in paragraphs 1.1.2(a)(a) to (j) above. |
Finance Lease means any lease, hire agreement, credit sale agreement, hire purchase agreement, conditional sale agreement or instalment sale and purchase agreement which should be treated in accordance with SSAP 21 (or any successor to SSAP 21) as a finance lease or in the same way as a finance lease.
Finance Party has the meaning given in the Investment Agency Agreement.
Financial Year means 1 January to 31 December.
General Assignment means a general assignment granted by the Company in favour of the Security Agent in form and substance satisfactory to the Investment Agent.
Group means the Company and its Subsidiaries for the time being and Group Company means any one of them.
Holding Company means, in relation to a company or corporation, any other company or corporation in respect of which it is a Subsidiary.
IFRS means international accounting standards within the meaning of the IAS Regulation 1606/2002 to the extent applicable to the relevant financial statements.
Investment Agency Agreement means the investment agency and security agent agreement dated on or around the date of this Agreement between, amongst others, the Investment Agent and the Participants.
Late Payment Amount has the meaning given to it in Clause 3 (Late Payment Amounts).
Legal Opinion means any legal opinion delivered to the Investment Agent under Clause 2 (Initial conditions precedent).
Legal Reservations means any general principles of law which are set out as qualifications or reservations to any of the Legal Opinions.
Limitation Acts means the Limitation Act 1980 and the Foreign Limitation Periods Act 1984.
Losses means any obligations, liabilities, losses, costs, claims, expenses, fees (including legal fees and expenses), damages, penalties, demands and judgments of every kind and nature (including all costs or charges paid or incurred in disputing or defending any of the foregoing).
Market Disruption Event has the meaning given to it in Clause 13 (Market disruption).
Master Istisna’ Agreement means that master istisna’ agreement dated on or around the date of this Agreement between the Seller and the Investment Agent.
Master Forward Lease Agreement means that master forward lease agreement dated on or around the date of this Agreement between the Seller and the Investment Agent.
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Material Adverse Effect means in the opinion of the Majority Participants a material adverse effect on:
(a) | the business, operations, assets, condition (financial or otherwise) or prospects of the Group taken as a whole; |
(b) | the ability of an Obligor to perform its payment or any other material obligations under the Transaction Documents; or |
(c) | the validity or enforceability of any Transaction Document or the rights or remedies of any Finance Party under any Transaction Document. |
Month means a period starting on one day in a calendar month and ending on the numerically corresponding day in the next calendar month, except that:
(a) | if the numerically corresponding day is not a Business Day, that period shall end on the next Business Day in that calendar month in which that period is to end if there is one or, if there is not, on the immediately preceding Business Day; and |
(b) | if there is no numerically corresponding day in the calendar month in which that period is to end, that period shall end on the last Business Day in that calendar month. |
Obligor means:
(a) | the Company; and |
(b) | each Corporate Guarantor, |
and Obligors means all of them.
Original Financial Statements means:
(a) | in relation to the Company, the audited consolidated financial statements (including all additional information and notes to the accounts) together with the relevant directors’ report and auditors’ report for its Financial Year ended 31 December 2014; and |
(b) | in relation to each Obligor other than the Company, its audited financial statements (including all additional information and notes to the accounts) together with the relevant directors’ report and auditors’ report for its Financial Year ended 31 December 2014. |
Party means a party to this Agreement and Parties means all of them.
Permitted Security means any Security falling into one of the categories in paragraphs (a) to (f) of Clause 9.4.4.
Purchase Undertaking means a purchase undertaking entered into by the Investment Agent in favour of the Company in connection with the Leased Asset under the Forward Lease.
Quasi-Security means any transaction described in Clause 9.4.3 (Negative pledge).
Relevant Jurisdiction means, in relation to each Obligor, its jurisdiction of incorporation, any jurisdiction where any asset subject to or intended to be subject to the Transaction Security to be created by that Obligor is situated, any jurisdiction where that Obligor conducts its business, and the jurisdiction whose laws govern the perfection of any Transaction Security Document entered into by that Obligor.
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Relevant Period means:
(a) | each period of twelve months ending on a Testing Date falling after the date of this Agreement; or |
(b) | such other period as specified as such in Clause 7 (Financial covenants). |
Repeating Representations means each of the representations and warranties set out in Clauses 4.1 (Status) to 4.7 (Governing law and enforcement), 4.9 (No filing or stamp taxes) to 4.11 (No default), 4.13 (Financial statements) to 4.15 (No proceedings pending or threatened) and 4.20 (Good title to assets) to 4.21 (Legal and beneficial ownership).
Required FSA Balance means:
(a) | for the period from the first Istasna’ Payment Date to the date three months thereafter and for each subsequent three month period, ending on the Commencement Date, an amount equal to the Advance Rental Payment due on the next Rental Payment Date; and |
(b) | for the period from the Commencement Date to the date three months thereafter and for each subsequent three month period, ending on the expiry of the Lease Term, an amount equal to the Rental Payment due on the next Rental Payment Date. |
Restricted Party means a person that is:
(a) | listed on, or owned or controlled by a person listed on, or acting on behalf of a person listed on, any Sanctions List; |
(b) | located in, incorporated under the laws of, or owned or (directly or indirectly) controlled by, or acting on behalf of, a person located 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 (“target of Sanctions” means a person with whom a US person or other national of a Sanctions Authority would be prohibited or restricted by law from engaging in trade, business or other activities). |
Sanctions means the economic sanctions laws, regulations, embargoes or restrictive measures administered, enacted or enforced by:
(a) | the US government; |
(b) | the United Nations; |
(c) | the European Union or its member states, including, without limitation, the United Kingdom of Great Britain and Northern Ireland; or |
(d) | any Sanctions Authority. |
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Sanctions Authorities means the respective governmental institutions and agencies of any of:
(a) | the UAE; |
(b) | the US; |
(c) | the United Nations; and |
(d) | the European Union or its member states, including, without limitation, the United Kingdom of Great Britain and Northern Ireland, |
including, without limitation:
(i) | the Office of Foreign Assets Control of the US Department of Treasury; |
(ii) | the US Department of State; and |
(iii) | Her Majesty’s Treasury, |
and Sanctions Authority shall mean any one of them.
Sanctions List means:
(a) | the “Specially Designated Nationals and Blocked Persons” list maintained by the Office of Foreign Assets Control of the US Department of Treasury; |
(b) | the Consolidated List of Financial Sanctions Targets and the Investment Ban List maintained by Her Majesty’s Treasury; or |
(c) | any similar list maintained by, or public announcement of Sanctions designation made by, any of the Sanctions Authorities. |
Sale Undertaking means a sale undertaking entered into by the Company in favour of the Investment Agent in connection with the Leased Asset under the Forward Lease.
Secured Liabilities means all obligations owing to the Finance Parties by the Obligors under or pursuant to the Transaction Documents, whether present or future, actual or contingent (and whether incurred by the Obligors alone or jointly, and whether as principal or surety or in some other capacity).
Secured Party means each Finance Party from time to time party to the Investment Agency Agreement and any Receiver.
Security means a mortgage, charge, pledge, lien, assignment by way of security, retention of title provision, trust or flawed asset arrangement (for the purpose of, or which has the effect of, granting security) or other security interest securing any obligation of any person or any other agreement or arrangement in any jurisdiction having a similar effect.
Security Period means the period starting on the date of this Agreement and ending on the date on which the Investment Agent is satisfied that all of the liabilities of the Obligors under each Transaction Document are irrevocably discharged in full and no Finance Party has any commitment or liability, whether present or future, actual or contingent, in relation to the Istisna’ Facility or the leasing arrangements under the Master Forward Lease Agreement.
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Seller Option Deed means an option deed entered into by the Investment Agent in favour of the Company in relation to the Istisna’ Development.
Service Agent means the Company acting in the capacity as a service agent under the Service Agency Agreement.
Service Agency Agreement means the agreement to be entered into between the Service Agent and the Investment Agent on or around the date of the Forward Lease in relation to the provision of the Services for the Leased Asset.
Shareholders’ Equity means, in relation to the Company, the aggregate of shareholders’ equity, including reserves for retained earnings and excluding revaluation reserves (but excluding the Company’s own shares or treasury shares).
Share Pledge means:
(a) | a share pledge granted by in favour of the Security Agent in form and substance satisfactory to the Investment Agent; and |
(b) | a share pledge granted by in favour of the Security Agent in form and substance satisfactory to the Investment Agent. |
Shari’ah means the rules and principles of Islamic law.
Subsidiary means, in relation to any Person (the first Person) at any particular time, any other Person (the second Person) whose affairs and policies the first Person controls or has the power to control, whether by ownership of share capital, contract, or the power to appoint or remove members of the governing body of the second Person.
Tax means any tax, zakat, levy, impost, duty or other charge or withholding of a similar nature (including any penalty or amount payable in connection with any failure to pay or any delay in paying any of the same).
Testing Date means 31 March, 30 June, 30 September and 31 December in each year.
Third Parties Act means the Contracts (Rights of Third Parties) Act 1999.
Transaction Documents means:
(a) | this Agreement; |
(b) | the Master Forward Lease Agreement; |
(c) | the Forward Lease; |
(d) | the Master Istisna’ Agreement; |
(e) | the Istisna’ Agreement; |
(f) | the Purchase Undertaking; |
(g) | the Sale Undertaking; |
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(h) | the Sale Documentation; |
(i) | the Service Agency Agreement; |
(j) | the Seller Option Deed; |
(k) | the Offer Letter; |
(l) | the Acceptance; |
(m) | each Istisna’ Instalment Notice; |
(n) | each Advance Variable Rental Payment Notice; |
(o) | the First Rental Payment Notice; |
(p) | each General Rental Payment Notice; |
(q) | the Fee Letter; |
(r) | the Investment Agency Agreement; |
(s) | each Transaction Security Document; and |
(t) | each Corporate Guarantee, |
together with any other document or agreement designated as such by the Investment Agent.
Transaction Security means the Security created or expressed to be created in favour of the Security Agent pursuant to the Transaction Security Documents.
Transaction Security Document means:
(a) | the Account Pledge and Assignment; |
(b) | the General Assignment; |
(c) | the Commercial Mortgage; and |
(d) | each Share Pledge, |
and any other document creating, evidencing or granting Security in favour of the Finance Parties (or any of them) in respect of the liabilities of the Obligors to the Finance Parties under or pursuant to the Transaction Documents, each in form and substance satisfactory to the Investment Agent.
Treasury Transaction means any derivative transaction entered into in connection with protection against or benefit from fluctuation in any rate or price.
Unpaid Sum means any sum which is not fully paid when due from an Obligor in accordance with the provisions of a Transaction Document, expressed in the currency in which that sum is due.
US means the United States of America.
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US Tax Obligor means a party:
(a) | which is resident for tax purposes in the US; or |
(b) | some or all of whose payments under the Transaction Documents are from sources within the US for US federal income tax purposes. |
VAT means value added tax or consumption or sales tax and any other tax of a similar nature imposed in any jurisdiction.
1.2 | Construction |
1.2.1 | Unless a contrary indication appears, any reference in this Agreement to: |
(a) | assets includes present, future, actual and contingent properties, revenues and rights of every description, whether tangible or intangible (including uncalled share capital); |
(b) | a Clause or Schedule is to be construed as a reference to the relevant clause of, or schedule to, this Agreement; |
(c) | debt or indebtedness includes any obligation, whether incurred as principal or as surety, for the payment or repayment of money, whether present or future, actual or contingent and whether owed jointly or severally or in any other capacity; |
(d) | a Transaction Document or any other agreement or instrument is a reference to that Transaction Document or other agreement or instrument as amended, novated, supplemented, extended, restated or replaced from time to time; |
(e) | guarantee means any guarantee, letter of credit, bond, indemnity, documentary or other credit or similar assurance against loss, or any obligation, direct or indirect, actual or contingent, to purchase or assume any indebtedness of any person or to make an investment in or loan to any person or to purchase assets of any person where, in each case, such obligation is assumed in order to maintain or assist the ability of such person to meet its indebtedness; |
(f) | the words include(s), including and in particular shall be construed as being by way of illustration or emphasis only and shall not be construed as, nor shall they take effect as, limiting the generality of any preceding words; |
(g) | liabilities includes any obligation whether incurred as principal or as surety, whether or not in respect of indebtedness, whether present or future, actual or contingent and whether owed jointly or severally or in any other capacity; |
(h) | the words other and otherwise shall not be construed ejusdem generis with any preceding words where a wider construction is possible; |
(i) | any person includes any assignee, transferee, successor in title, delegate, sub-delegate or appointee of that person (in the case of any party to any Transaction Document, in so far as such assignees, transferees, successors in title, delegates, sub-delegates or appointees are permitted) and, in the case of the Security Agent, includes any delegate or appointee, and any individual, firm, company, corporation, government, state or agency of a state or any association, trust, joint venture, consortium or partnership (whether or not having separate legal personality); |
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(j) | a regulation includes any regulation, rule, official directive, request or guideline (whether or not having the force of law) of any governmental, intergovernmental or supranational body, agency, department or of any regulatory, self-regulatory or other authority or organisation; |
(k) | any statute or statutory provision includes any statute or statutory provision which amends, extends, consolidates or replaces it, or which has been amended, extended, consolidated or replaced by it, and any orders, regulations, instruments or other subordinate legislation made under it; |
(l) | accounting terms shall be construed so as to be consistent with IFRS; and |
(m) | a time of day is a reference to Abu Dhabi time. |
1.2.2 | Section, Clause and Schedule headings are for ease of reference only. |
1.2.3 | A Default (other than an Event of Default) is continuing if it has not been remedied or waived in writing and an Event of Default is continuing if it has not been waived in writing. |
1.3 | Third party rights |
1.3.1 | Subject to Clause 1.3.2, unless expressly provided to the contrary in this Agreement, a person who is not a Party has no right under the Third Parties Act to enforce or to enjoy the benefit of any term of this Agreement. |
1.3.2 | Each Participant may, except as otherwise stated in the Transaction Documents, enforce or enjoy the benefit of any term of this Agreement which it would be able to enforce or enjoy if it were a party to this Agreement. |
1.3.3 | Notwithstanding any term of any Transaction Document, the Parties may rescind, vary, waive, release, assign, novate or otherwise dispose of all or any of their respective rights or obligations under this Agreement without the consent of any person who is not a Party. |
2 | Initial conditions precedent |
Without limiting the provisions of clause 4 (Conditions precedent) of the Master Istisna’ Agreement, the Company may not deliver the Offer Letter unless the Investment Agent has received all of the documents and other evidence listed in Schedule 1 (Initial conditions precedent documents) in form and substance satisfactory to the Investment Agent. The Investment Agent shall notify the Company and the Participants promptly upon being so satisfied.
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3 | Late Payment Amounts |
3.1 | Late Payment Amounts |
3.1.1 | In this Clause: |
Late Payment Amount means an amount calculated by the Investment Agent equal to L in the equation:
where:
U | is the Unpaid Sum; |
B | is EIBOR; |
C | is the Margin (expressed as a percentage); and |
A | is the Applicable Period. |
3.1.2 | For the purposes of Clause 3.1.1, if an Applicable Period exceeds one week it shall be deemed to be divided into successive sub-periods, each of which (other than the first) shall start on the last day of the preceding such period and the duration of which shall be selected by the Investment Agent (acting reasonably). |
3.1.3 | Each Obligor irrevocably undertakes to pay a Late Payment Amount in respect of any Unpaid Sum for each Applicable Period (or, if the Applicable Period exceeds one week, for each successive sub-period referred to in Clause 3.1.2). |
3.1.4 | Any Late Payment Amount shall be paid: |
(a) | to the Investment Agent for its own account or for the account of any other Finance Party to compensate it or that Finance Party for any actual out-of-pocket expenses (not to include any opportunity costs or funding costs) incurred by it or (as the case may be) that Finance Party; and |
(b) | as to the balance (if any) to the Investment Agent for payment on behalf of the Finance Parties to such charitable foundation(s) as may be selected by the Shari’ah Fatwa and Supervisory Board of the Investment Agent. |
3.1.5 | The Investment Agent shall promptly notify the relevant Obligor and each Participant of any Late Payment Amount and the method of its calculation. |
4 | Representations and warranties |
The Investment Agent and each other Finance Party have entered into and will enter into the Transaction Documents in reliance on the representations of the Company set out in this Clause 4, and the Company warrants to the Investment Agent and each other Finance Party on the date of this Agreement as set out in this Clause 4.
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4.1 | Status |
4.1.1 | It is (and each of its Subsidiaries is) a corporation, duly incorporated and validly existing under the law of its jurisdiction of incorporation. |
4.1.2 | It has (and each of its Subsidiaries has) the power to sue and be sued in its own name and to own its assets and carry on its business as that business is being and will be conducted. |
4.1.3 | It is not a FATCA FFI or a US Tax Obligor. |
4.2 | Binding obligations |
Subject to the Legal Reservations:
(a) | the obligations expressed to be assumed by it in each Transaction Document to which it is a party are legal, valid, binding and enforceable obligations; and |
(b) | (without limiting the generality of paragraph (a) above), each Transaction Security Document to which it is a party creates the security interests which that Transaction Security Document purports to create and those security interests are valid and effective. |
4.3 | Non-conflict with other obligations |
The entry into and performance by it of, and the transactions contemplated by, the Transaction Documents to which it is a party and the granting of the Transaction Security do not and will not conflict with:
(a) | any law or regulation applicable to it or binding on its assets; |
(b) | its or any of its Subsidiaries’ constitutional documents; or |
(c) | any agreement or instrument binding upon it or any of its Subsidiaries or any of its or any of its Subsidiaries’ assets or constitute a default or termination event (however described) under any such agreement or instrument. |
4.4 | Power and authority |
4.4.1 | It has the power to enter into, perform and deliver, and has taken all necessary action to authorise its entry into, performance and delivery of, the Transaction Documents to which it is a party and the transactions contemplated by those Transaction Documents. |
4.4.2 | No limit on its powers will be exceeded as a result of the financing arrangements, grant of security or giving of guarantees or indemnities contemplated by the Transaction Documents to which it is a party. |
4.5 | Validity and admissibility in evidence |
All Authorisations required or desirable:
(a) | to enable it lawfully to enter into, exercise its rights and comply with its obligations in the Transaction Documents to which it is a party; |
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(b) | to make the Transaction Documents to which it is a party admissible in evidence in each Relevant Jurisdiction; and |
(c) | to enable it and each of its Subsidiaries to carry on its business, trade and ordinary activities, |
have been obtained or effected and are in full force and effect.
4.6 | Certified Copies |
Any document provided to any Finance Party by or on behalf of a Group Company which purports to be a Certified Copy is a true, complete and accurate copy of the original document which has not been amended other than by a document a Certified Copy of which is attached to it.
4.7 | Governing law and enforcement |
4.7.1 | Subject to the Legal Reservations, the choice of governing law of the Transaction Documents will be recognised and enforced in its Relevant Jurisdictions. |
4.7.2 | Subject to the Legal Reservations, any judgment obtained in relation to a Transaction Document in the jurisdiction of the governing law of that Transaction Document will be recognised and enforced in its Relevant Jurisdictions. |
4.8 | Insolvency |
It has not (and none of its Subsidiaries has) taken any action nor (to the best of its knowledge and belief having made due and careful enquiry) have any steps been taken or legal proceedings been started or threatened against it for its winding-up, dissolution or reorganisation, for the enforcement of any Security over its assets or for the appointment of a liquidator, supervisor, receiver, administrator, administrative receiver, compulsory manager, trustee or other similar officer of it or in respect of any of its assets.
4.9 | No filing or stamp taxes |
Under the law of each Relevant Jurisdiction and the jurisdiction of incorporation of any of its Subsidiaries, it is not necessary that any of the Transaction Documents be filed, recorded or enrolled with any court or other authority in that jurisdiction, or that any stamp, registration or similar tax be paid on or in relation to any of the Transaction Documents or any of the transactions contemplated by the Transaction Documents except any filing, recording or enrolling or any tax or fee payable in relation to any Transaction Security Document which is referred to in any Legal Opinion and which will be made or paid promptly after the date of the relevant Transaction Document.
4.10 | Compliance with Tax laws |
It has (and each of its Subsidiaries has) complied in all material respects with all Tax laws in all jurisdictions in which it is subject to Tax and has paid all Taxes due and payable by it and no claims are being asserted against it in respect of Taxes except in relation to Tax liabilities arising in the ordinary course of its day-to-day trading activities or claims contested in good faith and in respect of which adequate provision has been made and disclosed in the latest financial statements or other information delivered to the Investment Agent under this Agreement.
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4.11 | No default |
4.11.1 | No Event of Default is continuing or might reasonably be expected to result from entering into any Transaction Document. |
4.11.2 | No other event or circumstance is outstanding which constitutes (or would do so with the expiry of a grace period, the giving of notice, the making of any determination, the satisfaction of any other condition or any combination of any of the foregoing) a default or termination event (howsoever described) under any other agreement or instrument which is binding on it or any of its Subsidiaries or to which its (or any of its Subsidiaries’) assets are subject. |
4.12 | No misleading information |
4.12.1 | All written information provided by or on behalf of the Company to the Investment Agent in relation to the Transaction Documents prior to the date of this Agreement (the Information) was, when taken as a whole, true, complete and accurate in all material respects as at the date it was provided or as at the date (if any) at which it is stated. |
4.12.2 | Any financial projection or forecast provided to the Investment Agent by or on behalf of the Company has been prepared on the basis of recent historical information and on the basis of reasonable assumptions and arrived at after careful consideration. |
4.12.3 | Nothing has occurred and no written information has been given or withheld that results in the Information being untrue or misleading in any material respect. |
4.13 | Financial statements |
4.13.1 | Its Original Financial Statements were prepared in accordance with IFRS consistently applied. |
4.13.2 | Its Original Financial Statements fairly represent its financial condition and operations (consolidated in the case of the Company) as at the end of and for the relevant Financial Year. |
4.14 | Pari passu ranking |
Its payment obligations under the Transaction Documents rank at least pari passu with the claims of all its other unsecured and unsubordinated creditors, except for obligations mandatorily preferred by law applying to companies generally.
4.15 | No proceedings pending or threatened |
No litigation, arbitration or administrative proceedings of or before any court, arbitral body or agency which, if adversely determined, might reasonably be expected to have a Material Adverse Effect, have (to the best of its knowledge and belief) been started or threatened against it or any of its Subsidiaries.
4.16 | No Security created |
The execution by it of the Transaction Documents to which it is a party and the exercise of its rights and the performance of its obligations under those Transaction Documents will not result in the creation of, or any obligation to create, any Security over or in respect of any of its assets other than in favour of the Finance Parties.
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4.17 | Environmental Laws |
4.17.1 | Each Group Company is in compliance with Clause 8.6 (Environmental compliance). |
4.17.2 | Each Group Company has obtained and holds in the name of the appropriate Group Company and, where applicable, has filed every Environmental Permit required under or pursuant to any Environmental Law in connection with the conduct by each Group Company of its business and the ownership, use, exploitation or occupation by each Group Company of its assets and to the best of its knowledge and belief (having made due and careful enquiry) no circumstances have occurred which would prevent such compliance in a manner or to an extent which has or is reasonably likely to have a Material Adverse Effect. |
4.17.3 | No Environmental Claim has been commenced or (to the best of its knowledge and belief (having made due and careful enquiry)) is threatened against any Group Company where that claim has or is reasonably likely, if determined against that Group Company, to have a Material Adverse Effect. |
4.17.4 | To the best of the Company’s information, knowledge and belief, (having made due and careful enquiry) no circumstances have arisen which would entitle any regulatory body to revoke, suspend, amend, vary, withdraw, transfer or refuse to amend any Environmental Permit or which might give rise to a claim against any Group Company which might reasonably be expected to have a Material Adverse Effect on the Group Company. |
4.17.5 | The Group has (to the best of its knowledge and belief, (having made due and careful enquiry) made adequate financial provision for the costs to it of compliance with Environmental Laws (including Environmental Permits). |
4.18 | Security and Financial Indebtedness |
4.18.1 | No Security or Quasi-Security exists over all or any of the present or future assets of any Group Company other than as permitted by this Agreement. |
4.18.2 | No Group Company has any Financial Indebtedness outstanding other than as permitted by this Agreement. |
4.19 | Ranking |
The Transaction Security has or will have the ranking in priority which it is expressed to have in the Transaction Security Documents and it is not subject to any prior ranking or pari passu ranking Security.
4.20 | Good title to assets |
It and each of its Subsidiaries has a good, valid and marketable title to, or valid leases or licences of, and all appropriate Authorisations to use, the assets necessary to carry on its business as presently conducted.
4.21 | Sanctions |
Neither it nor any other Group Company, nor any directors, officers or employees of it or any other Group Company nor (to the best of its knowledge and belief (having made due and careful enquiry)) any person acting on any of their behalf:
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(a) | is a Restricted Party or is engaging in or has engaged in any transaction or conduct that could result in it becoming a Restricted Party; |
(b) | is or ever has been subject to any claim, proceeding, formal notice or investigation with respect to Sanctions; |
(c) | is engaging or has engaged in any transaction that evades or avoids, or has the purpose of evading or avoiding, or breaches or attempts to breach, directly or indirectly, any Sanctions applicable to it; or |
(d) | has engaged or is engaging, directly or indirectly, in any trade, business or other activities with or for the benefit of any Restricted Party. |
4.22 | Legal and beneficial ownership |
It and each of its Subsidiaries is the sole legal and beneficial owner of the respective assets over which it purports to grant Security.
4.23 | Immunity |
In any proceedings taken against it in its jurisdiction of incorporation or place of domicile in relation to this Agreement, no Obligor will be entitled to claim for itself or any of its assets immunity from suit, execution, attachment or other legal process.
4.24 | Repetition |
The representations and warranties set out in this Clause 4 shall survive the execution of this Agreement and the Repeating Representations are deemed to be repeated by the Company by reference to the facts and circumstances then existing on:
(a) | the date of each Transaction Document; |
(b) | the Commencement Date; |
(c) | the first day of each Lease Period; |
(d) | the date of each Advance Rental Payment and each Rental Payment; and |
(e) | the date when the Termination Amount is paid, |
with reference in each case to the facts and circumstances then subsisting.
5 | Information undertakings |
The undertakings in this Clause 5 remain in force from the date of this Agreement until the expiry of the Security Period.
5.1 | Financial statements |
The Company shall supply to the Investment Agent in sufficient copies for all the Participants:
(a) | as soon as the same become available, but in any event within 180 days after the end of each of its Financial Years: |
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(i) | its audited consolidated financial statements for that Financial Year; and |
(ii) | the audited consolidated (if it has Subsidiaries) financial statements of each Obligor for that Financial Year; |
(b) | as soon as the same become available, but in any event within 60 days after the end of each half of each of its Financial Years: |
(i) | its consolidated financial statements for that half Financial Year; and |
(ii) | the financial statements of each Obligor for that half Financial Year; and |
(c) | as soon as the same become available (but in any event within 30 days after the end of each successive period of three Months during each of its Financial Years) the consolidated management accounts of each Obligor for that period, in form and substance satisfactory to the Investment Agent. |
5.2 | Compliance Certificates |
5.2.1 | The Company shall supply to the Investment Agent in sufficient copies for all the Participants, with each set of financial statements delivered pursuant to Clauses 5.1(a)(i) and 5.1(b)(i) and promptly at any other time if the Investment Agent so requests, a Compliance Certificate setting out (in reasonable detail) computations as to compliance with Clause 7 (Financial covenants) as at the date as at which those financial statements were drawn up. |
5.2.2 | Each Compliance Certificate shall be signed by two directors of the Company and, if required to be delivered with the financial statements delivered pursuant to Clause 5.1(a)(i), or if the Investment Agent so requests, shall be reported on by the Auditors in the form agreed by the Company and all the Participants before the date of this Agreement. |
5.3 | Requirements as to financial statements |
5.3.1 | Each set of financial statements delivered by the Company pursuant to Clause 5.1 (Financial statements) shall be certified by a director of the relevant company as, in the case of Clause 5.1(a), giving a true and fair view of, and in the case of Clause 5.1(b), fairly representing its (or, as the case may be, its consolidated) financial condition and operations as at the end of and for the period in relation to which those financial statements were drawn up. |
5.3.2 | Subject to Clause 5.3.3, the Company shall procure that each set of financial statements of an Obligor delivered pursuant to Clause 5.1 (Financial statements) is prepared using IFRS, accounting bases, policies, practices and procedures and financial reference periods consistent with those applied in the preparation of the Original Financial Statements for that Obligor. |
5.3.3 | In relation to all sets of financial statements, the Company shall notify the Investment Agent of any change in IFRS, the accounting bases, policies, practices and procedures or financial reference periods and the Auditors (or, if appropriate, the auditors of the Obligor) shall deliver to the Investment Agent as soon as reasonably practicable after that change: |
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(a) | a description of any change necessary for those financial statements to reflect the IFRS, accounting bases, policies, practices and procedures or financial reference periods upon which that Obligor’s Original Financial Statements were prepared; and |
(b) | sufficient information, in form and substance as may be reasonably required by the Investment Agent, to enable the Participants to determine whether Clause 7 (Financial covenants) has been complied with and make an accurate comparison between the financial position indicated in those financial statements and that Obligor’s Original Financial Statements. |
5.3.4 | Any reference in this Agreement to those financial statements shall be construed as a reference to those financial statements as adjusted to reflect the IFRS, accounting bases, policies, practices, procedures and financial reference periods upon which the Original Financial Statements were prepared. |
5.4 | Environmental Claims |
The Company shall, promptly upon becoming aware of the same, inform the Investment Agent in writing of:
(a) | any Environmental Claim against any Group Company which is current, pending or threatened; and |
(b) | any facts or circumstances which are reasonably likely to result in any Environmental Claim being commenced or threatened against any Group Company. |
5.5 | Information: miscellaneous |
The Company shall supply to the Investment Agent (in sufficient copies for all the Participants, if the Investment Agent so requests):
(a) | all documents dispatched by the Company to its shareholders (or any class of them) or its creditors generally at the same time as they are dispatched; and |
(b) | promptly upon becoming aware of them, the details of any litigation, arbitration or administrative proceedings which are current, threatened or pending against any Group Company, and which might, if adversely determined, have a Material Adverse Effect. |
(c) | promptly, such information as the Security Agent may reasonably require about the Charged Property and compliance of the Obligors with the terms of any Transaction Security Documents; and |
(d) | promptly, such further information regarding the financial condition, business, operations and prospects of any Group Company as any Finance Party (through the Investment Agent) may reasonably request. |
5.6 | Notification of default |
5.6.1 | The Company shall notify the Investment Agent of: |
(a) | any Default (and the steps, if any, being taken to remedy it) promptly upon becoming aware of its occurrence; |
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(b) | any litigation, arbitration or administrative proceedings which have (to the best of the Company’s knowledge and belief) been started or threatened against it or any of its Subsidiaries which, if adversely determined, would result in a liability exceeding AED250,000 (or its equivalent in any other currency or currencies); |
(c) | any Security (other than Permitted Security) or rights being created over or against any of the assets of any Group Company; and |
(d) | any other occurrence relating to a Group Company (including any third party claim or liability) which might reasonably be expected to have a Material Adverse Effect. |
5.6.2 | Promptly upon a request by the Investment Agent, the Company shall supply to the Investment Agent a certificate signed by two of its directors certifying that no Default and that none of the other events referred to in Clause 5.6.1 is continuing (or, if a Default or any of those events is continuing, specifying the event and the steps, if any, being taken to remedy it). |
6 | Accounts |
6.1 | Establishment of Accounts |
6.1.1 | The Company shall on the date of this Agreement, establish with the Account Bank and maintain in accordance with the requirements of this Agreement: |
(a) | the Earnings Accounts; and |
(b) | the Facility Service Account. |
6.2 | Payment of Earnings |
6.2.1 | The Company undertakes with the Investment Agent to ensure that: |
(a) | all Earnings are paid into the Earnings Account; and |
(b) | each counterparty to each contract for the employment of each Leased Asset is notified of the requirement to pay such Earnings directly into the Earnings Account. |
6.2.2 | On each Rental Payment Date, the Investment Agent shall (and is irrevocably authorised by the Company to) withdraw from any one or more of the Earnings Accounts such amount or amounts as it may determine for application in or towards the obligations of the Company under the Transaction Documents in the following order: |
(a) | first, towards the payment pro rata of any outstanding fees, actual costs and expenses due to the Purchaser, Investment Agent and the Security Agent from the Company under the Transaction Documents; |
(b) | secondly, in or towards payment pro rata of all Variable Rental Payments due but unpaid under the Transaction Documents; |
(c) | thirdly, in or towards payment pro rata of all Fixed Rental Payments due but unpaid under the Transaction Documents; |
(d) | fourthly, to the Facility Service Account such amount as necessary to cause the balance of the Facility Service Account to equal the Required FSA Balance; |
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(e) | fifthly, 50 per cent of the remaining balance (if any) against the outstanding Fixed Rental Payments in inverse order of maturity; and |
(f) | sixthly, the remaining 50 per cent (if any) to the Company (provided no Default is continuing). |
6.3 | Facility Service Account |
6.3.1 | The Company shall ensure that, at all times, the amount standing to the credit of the Facility Service Account is at least an amount equal to the Required FSA Balance. |
6.3.2 | If, on any Rental Payment Date, the aggregate amount standing to the credit of all of the Earnings Accounts is insufficient to enable the Investment Agent to withdraw from the Earnings Accounts the amounts set out in each of Clauses 6.2.2(b) and 6.2.2(c) in full, the Investment Agent shall (and is irrevocably authorised by the Company to) withdraw from the Facility Service Account and transfer to any one or more of the Earnings Accounts such amount or amounts as it may determine is necessary to enable the Security Agent to make the relevant withdrawals from the Earnings Accounts. |
6.3.3 | If, at any time on or after the date of this Agreement (including, for the avoidance of doubt, immediately following any withdrawal from the Facility Service Account pursuant to Clause 6.3.2), the amount standing to the credit of the Facility Service Account is less than the Required FSA Balance, the Company shall, within five Business Days, procure that the amount standing to the credit of the Facility Service Account is increased to an amount equal to the Required FSA Balance. |
6.3.4 | On the final Rental Payment Date, the Investment Agent shall (and is irrevocably authorised by the Company to) withdraw from the Facility Service Account such amount as it may determine for application in or towards the obligations of the Company under the Transaction Documents in the following order: |
(a) | first, towards the payment pro rata of any outstanding fees, actual costs and expenses due to the Purchaser, Investment Agent and the Security Agent from the Company under the Transaction Documents; |
(b) | secondly, in or towards payment pro rata of all accrued Variable Rental Payments due but unpaid under the Transaction Documents; |
(c) | thirdly, in or towards payment pro rata of all accrued Fixed Rental Payments due but unpaid under the Transaction Documents; |
(d) | forthly, in payment of the surplus (if any) to the Company (provided no Default is continuing). |
6.4 | Account Bank’s discretions |
The Account Bank may:
(a) | rely on any representation, notice, communication or document believed by it to be genuine, appropriately authorised and correct; |
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(b) | rely on any statement or matters of fact made by a manager, authorised signatory or employee of any person regarding any matters that may reasonably be assumed to be within his knowledge or within his powers to verify; |
(c) | engage, pay for and rely and act on the opinion or advice of, or information obtained from, legal or other professional advisers selected by it; and |
(d) | assume (unless it has received notice to the contrary in its capacity as the Account Bank) that: |
(i) | no Default has occurred; |
(ii) | any right, power, authority or discretion vested in the Investment Agent or the Security Agent has not been exercised; and |
(iii) | all conditions for the making of any payment out of the Accounts which are specified in any of the Transaction Documents have been satisfied, unless it has actual knowledge or actual notice to the contrary. |
6.5 | Excluded obligations of Account Bank |
Notwithstanding anything to the contrary expressed or implied herein, the Account Bank shall not:
(a) | be bound to enquire as to the occurrence or otherwise of a Default, the performance by any other party to any of the Transaction Documents of its obligations thereunder or whether or not any representation made by any Obligor in connection with the Transaction Documents is true; |
(b) | be bound to account to any other Party for any sum or the profit element of any sum received by it for its own account; |
(c) | disclose to any person any information relating to any other Party; or |
(d) | be under any obligations other than those for which express provision is made in the Transaction Documents. |
6.6 | Exclusion of Account Bank’s liabilities |
The Account Bank accepts no responsibility for:
(a) | the execution, genuineness, legality, validity, enforceability, effectiveness, adequacy or sufficiency of any Transaction Document or any other agreements, arrangements or documents entered into, made or executed in anticipation of or in connection with any Transaction Document; or |
(b) | the collectability of amounts payable under any Transaction Document or any other document; or |
(c) | the performance or non-performance by any Obligor of its respective obligations under any Transaction Document to which it is a Party; or |
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(d) | the adequacy, accuracy and/or completeness of any information (whether written or oral) made in or in connection with any Transaction Document or any other document, |
and the Account Bank shall not be under any liability as a result of taking or omitting to take any action in relation to the Accounts, save in the case of gross negligence or wilful misconduct.
6.7 | No actions against Account Bank |
6.7.1 | Without limiting Clause 6.7.2, the Account Bank shall not be liable to any other Party for any action taken or not taken by it under or in connection with its functions as the Account Bank, unless directly caused by its gross negligence or wilful misconduct. |
6.7.2 | No Party may take any proceedings against any officer or employee of the Account Bank in respect of any claim it might have against the Account Bank or in respect of any act or omission of any kind (including gross negligence or wilful misconduct) by that officer or employee. |
6.7.3 | The Account Bank shall not be liable for any delay (or any related consequences) in crediting an Account with an amount required under the Transaction Documents to be paid by the Account Bank if the Account Bank has taken all necessary steps as soon as reasonably practicable to comply with applicable regulations or operating procedures of any recognised clearing or settlement system used by the Account Bank for the purpose. |
6.8 | Account Bank’s business |
The Account Bank may:
(a) | accept deposits from, lend money to and carry on any business with any of the Obligors or any of its or their related entities or shareholders under transactions other than those contemplated by the Transaction Documents; |
(b) | act as agent or trustee for, or in relation to any financing involving, any of the Obligors or any of its or their related entities or shareholders under transactions other than those contemplated by the Transaction Documents; |
(c) | retain any profits or remuneration in connection with its activities under any Transaction Document or in relation to any of the foregoing; and |
(d) | be a Participant. |
6.9 | Resignation of Account Bank |
The Account Bank may, at any time, (without assigning any reason) notify the Investment Agent and the Purchaser in writing that it wishes to cease to be a Party as the Account Bank (an AC cessation notice). Upon receipt of an AC cessation notice the Investment Agent, after consultation with the Purchaser, shall seek the instructions of the Majority Participants regarding the nomination of a bank as a successor to the Account Bank. If no such nomination is made by the Majority Participants before the date specified in the AC cessation notice as being the date on which the Account Bank wishes to cease to be a Party hereto (the AC cessation date) (which date shall be a Business Day falling not less than 30 Business Days after the date of delivery of the AC cessation notice to the Investment Agent) then the Account Bank may nominate such successor itself.
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6.10 | Successor Account Bank |
If a successor Account Bank is nominated under the provisions of Clause 6.9 (Resignation of Account Bank), then on the AC cessation date and provided such successor has executed and delivered to the Investment Agent an assignment or a novation agreement in such form as the Investment Agent may require (and to which, if required by the Investment Agent, the Obligors shall become parties) undertaking to become a Party to and bound by the terms and conditions of this Agreement:
(a) | any amounts standing to the credit of the Accounts maintained by the retiring Account Bank shall be transferred to the accounts opened on the books of the successor Account Bank; |
(b) | the retiring Account Bank shall cease to be a Party as Account Bank and shall cease to have any obligation hereunder in such capacity (but without prejudice to any accrued liabilities under this Agreement (but shall retain the benefit of the provisions of this Clause 6.10); and |
(c) | the successor Account Bank and each of the other Parties shall have the same rights and obligations amongst themselves as they would have had if such successor Account Bank had been an original Party as the Account Bank. |
6.11 | Account Bank indemnity |
The Company shall on demand indemnify the Account Bank and its directors, agents, officers or employees from and against all or any actual losses, actual costs or actual expenses suffered or incurred by it acting as the Account Bank under the Transaction Documents but excluding any loss, cost or expense directly caused by reason of its gross negligence or wilful misconduct of the Account Bank.
6.12 | Miscellaneous |
6.12.1 | No withdrawal shall be made from an Account if it would cause such account to be overdrawn. |
6.12.2 | Each amount standing to the credit of each Account shall bear anticipated profit at such rate as may from time to time be agreed between the Account Bank and the Company, and any profit generated shall be credited to the Facility Service Account or the relevant Earnings Account, as the case may be, at such time or times as may be agreed by the Investment Agent and the Company. |
6.12.3 | The Account Bank, in its capacity as account holding bank, acknowledges that each Account held by it is the subject of Security granted in favour of the Security Agent pursuant to the terms of the Account Pledge and Assignment Agreement and acknowledges that prior to the end of the Security Period it is not entitled to, and undertakes not to claim or exercise, any lien, right of set-off, right to combine or consolidate accounts or any other Security over, against or with respect to the Accounts or moneys standing to the credit of the Accounts unless such claim or exercise is in connection with the recovery of Secured Liabilities outstanding under the Transaction Documents. |
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6.12.4 | The terms of this Agreement shall override (to the extent of any inconsistency) any terms agreed between the Borrower and the Account Bank (as account holding bank) in relation to the maintenance and operation of the Accounts. |
6.12.5 | The Company authorises the Account Bank to provide such information to the Investment Agent as the Investment Agent may from time to time require in order for the Investment Agent to be able to assess whether the Borrower is in compliance with its obligations under the Transaction Documents. |
7 | Financial covenants |
The undertakings in this Clause 7 remain in force from the date of this Agreement until the expiry of the Security Period.
7.1 | Financial covenants |
The Company undertakes that:
7.1.1 | Facility Service Coverage Ratio |
The Facility Service Coverage Ratio in respect of the Relevant Period ending on each Testing Date shall be greater than 1.50:1.
7.1.2 | Debt to Equity Ratio |
The Debt to Equity Ratio in respect of the Relevant Period ending on each Testing Date shall not be more than 65:35.
7.2 | Financial testing |
The financial covenants set out in Clause 7 (Financial condition) shall be calculated in accordance with IFRS and tested by reference to the latest financial statements, management accounts and other financial information of the Group Companies delivered pursuant to Clause 5.1 (Financial statements) and/or each Compliance Certificate delivered pursuant to Clause 5.2 (Compliance Certificates) for the Financial Year of the Company, or other period in relation to which the calculation falls to be made.
7.3 | Change in accounting principles |
7.3.1 | If there has been or is to be a change in IFRS, accounting bases, policies, practices, procedures or financial reference periods applied in the preparation of the Original Financial Statements of any Obligor, and the Investment Agent believes that the undertakings set out in Clause 7 (Financial condition) need to be amended as a result of any such change, the Company shall negotiate with the Investment Agent in good faith to amend the existing financial undertakings so as to provide the Participants with substantially the same protections as the undertakings set out in Clause 7 (Financial condition). |
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7.3.2 | If the Company and the Investment Agent cannot agree such amended undertakings within 30 days of that notice (or within any longer period permitted by the Investment Agent), the Investment Agent shall nominate a firm of chartered accountants to settle the amended financial undertakings, or in default of such nomination the Investment Agent shall request the President for the time being of the Institute of Chartered Accountants in England and Wales to nominate a firm of chartered accountants for that purpose. Those accountants shall act as experts and not arbitrators and their decision shall be final and binding on the Parties. The costs of the accountants shall be paid by the Company. |
8 | Positive undertakings |
The undertakings in this Clause 8 remain in force from the date of this Agreement until the expiry of the Security Period.
8.1 | Authorisations |
The Company shall (and shall ensure that each Obligor and each of their respective Subsidiaries will) promptly:
(a) | obtain, effect, comply with and do all that is necessary to maintain in full force and effect; and |
(b) | supply Certified Copies to the Investment Agent of, |
any Authorisation required under any law or regulation of any Relevant Jurisdiction to enable it to carry on its business, trade and ordinary activities and to perform its obligations under the Transaction Documents to which it is a party and to ensure the legality, validity, enforceability and admissibility in evidence in each Relevant Jurisdiction of any Transaction Document to which it is a party.
8.2 | Compliance with laws |
The Company shall (and shall procure that each Obligor and each of their respective Subsidiaries) comply in all respects with all laws to which it may be subject, if failure so to comply would materially impair its ability to perform its obligations under the Transaction Documents to which it is a party.
8.3 | Taxes |
The Company shall (and shall procure that each Obligor and each of their respective Subsidiaries) pay and discharge all Taxes and governmental charges payable by or assessed upon it before the date on which the same become overdue unless, and only to the extent that, such Taxes and charges shall be contested in good faith by appropriate proceedings, pending determination of which payment may lawfully be withheld, provided that adequate reserves shall be set aside with respect to any such Taxes or charges so contested.
8.4 | Access |
The Company shall (and shall procure that each Obligor and each of their respective Subsidiaries) permit the Investment Agent, the Security Agent and any person (being an accountant, auditor, solicitor, valuer or other professional adviser of the Investment Agent or the Security Agent) authorised by the Investment Agent or the Security Agent to have, at all reasonable times during normal business hours, and on reasonable notice, access to the officers, property, premises and accounting books and records of that Obligor.
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8.5 | Further documents |
The Company shall (and shall procure that each Obligor and each of their respective Subsidiaries) at the request of the Investment Agent, do or arrange for the doing of all such things and execute or arrange for the execution of all such documents as are, in the opinion of the Investment Agent, necessary or desirable to ensure that the Finance Parties obtain all the rights and benefits intended to be conferred on them under the Transaction Documents.
8.6 | Environmental compliance |
The Company shall (and shall procure that each Obligor and each of their respective Subsidiaries):
(a) | comply with all Environmental Laws; |
(b) | obtain, maintain, file (where applicable) and ensure compliance with all requisite Environmental Permits; and |
(c) | implement procedures to monitor compliance with and to prevent liability under any Environmental Law. |
8.7 | Dangerous Materials |
The Company shall (and shall procure that each Obligor and each of their respective Subsidiaries) ensure that all Dangerous Materials treated, kept and stored, produced, manufactured, generated, refined or used from, in, upon, or under any of the real property owned by it are held and kept upon such real property in such a manner and up to such standards as they would be kept by a prudent company carrying on the same trade as it.
8.8 | Service of notices |
The Company shall (and shall procure that each Obligor and each of their respective Subsidiaries) provide the Participants with copies within five Business Days of receipt of any notice, order, claim or other requirement from a regulatory body, court or third party, together with relevant background information, compliance with which will have or is likely to have a Material Adverse Effect.
8.9 | Insurance |
8.9.1 | The Company shall (and shall procure that each Obligor and each of their respective Subsidiaries): |
(a) | effect and maintain insurances at its own expense in respect of all its assets and business of an insurable nature with insurers specified by the Investment Agent, or otherwise with reputable insurers of good standing; |
(b) | comply with the requirements of all covenants, undertakings and conditions as to insurance which are imposed by the terms of any lease, agreement for lease or tenancy under which that Obligor or Subsidiary derives its estate or interest in those assets; |
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(c) | procure that those insurances: |
(i) | (subject to paragraph (b) above) provide cover on such terms and against such risks as the Investment Agent may require or otherwise which are normally insured against by prudent companies owning or possessing similar assets and carrying on similar businesses; and |
(ii) | are in such amounts as are in the circumstances prudent for such companies (including for the full replacement value from time to time of any assets destroyed or otherwise becoming a total loss); |
(d) | where the assets in question are the subject of Security in favour of the Security Agent, note the interest of the Security Agent as loss payee on the policies; |
(e) | duly and punctually pay all premiums and other moneys due and payable in respect of those insurances and promptly at the request of the Investment Agent produce receipts for the payment of the premiums; |
(f) | at the request of the Investment Agent, deposit with or produce for inspection (to the Investment Agent or, at the Investment Agent’s request, to the Security Agent) all policies and other contracts of insurance to be maintained by it in accordance with this Clause; and |
(g) | use all reasonable endeavours to prevent the happening of any act, omission, breach or default which would be reasonably likely to render void or voidable any insurances effected by it. |
8.9.2 | If any Obligor or Subsidiary fails to comply with any of its obligations under Clause 8.9.1, the Investment Agent may (but shall be not obliged to) effect or renew any insurance referred to in that Clause. |
8.9.3 | The Company shall indemnify each Secured Party and each Secured Party’s officers and employees against all Losses incurred by them in effecting or renewing any insurance in accordance with Clause 8.9.2, and shall pay a Late Payment Amount on the sums payable under this Clause 8.9 from the date on which the liability was incurred to the date of actual payment (both before and after judgment). |
8.9.4 | All moneys received under any insurances of the kind referred to in this Clause 8.9 shall be applied (subject to the rights and claims of any relevant lessor or landlord) at the direction of the Investment Agent either in making good the loss or damage in respect of which those moneys are received or in or towards the discharge of the liabilities of the Obligors to the Finance Parties under or pursuant to the Transaction Documents. |
8.10 | Payment shortfall undertaking |
8.10.1 | The Company shall promptly (and in any event no later than three Business Days) following receipt of notice from the Investment Agent of a shortfall in any payment received by a Finance Party under any Transaction Document pay the amount of the specified shortfall to the Investment Agent (a Shortfall Payment). |
8.10.2 | All Shortfall Payments shall be funded from the Company’s own sources. |
8.10.3 | Each Shortfall Payment received by the Investment Agent shall be applied by the Investment Agent in accordance with the provisions governing the application of the payment to which the Shortfall Payment relates. |
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8.10.4 | The undertaking in this Clause 8.10 is without prejudice to any rights or remedies available to any Finance Party in connection with non-payment of amounts when due under the Transaction Documents. |
9 | Negative undertakings |
The undertakings in this Clause 9 remain in force from the date of this Agreement until the expiry of the Security Period.
9.1 | Financial Indebtedness |
The Company shall not incur or permit to remain outstanding any Financial Indebtedness other than Financial Indebtedness:
(a) | incurred under the Transaction Documents; or |
(b) | that does not or will not result in any of the covenants contained in Clause 7 (Financial covenants) being breached. |
9.2 | Acquisitions |
The Company shall not:
(a) | acquire a company or any shares or a business or undertaking (or, in each case, any interest in any of them); |
(b) | incorporate a company; or |
(c) | enter into any option or similar arrangement under which a person has a present, future, actual or contingent right to require the Company to acquire any asset which, if exercised, would breach the terms of any of the Transaction Documents, |
without the prior written consent of the Lessor.
9.3 | Disposals |
Except as permitted by the Transaction Security Documents, the Company shall not enter into a single transaction or a series of transactions (whether related or not), whether voluntary or involuntary and whether at the same time or over a period of time, to sell, lease, transfer, license, loan or otherwise dispose of any asset or enter into an agreement to make any such disposal.
9.4 | Negative pledge |
9.4.1 | In this Clause 9.4, Quasi-Security means an arrangement or transaction described in Clause 9.4.3. |
9.4.2 | The Company shall not (and shall ensure that no other Group Company will) create or permit to subsist any Security over any of its assets. |
9.4.3 | The Company shall not (and shall ensure that no other Group Company will): |
(a) | sell, transfer or otherwise dispose of any of its assets on terms whereby they are or may be leased to or re-acquired by the Company or any other Group Company; |
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(b) | sell, transfer or otherwise dispose of any of its receivables on recourse terms; |
(c) | enter into any arrangement under which money or the benefit of a bank or other account may be applied, set off or made subject to a combination of accounts; or |
(d) | enter into any other preferential arrangement having a similar effect, |
in circumstances where the arrangement or transaction is entered into primarily as a method of raising Financial Indebtedness or of financing the acquisition of an asset.
9.4.4 | Clauses 9.4.2 and 9.4.3 do not apply to any Security or (as the case may be) Quasi-Security, listed below: |
(a) | any Security or Quasi-Security created pursuant to any Transaction Security Document; |
(b) | any lien arising by operation of law and in the ordinary course of its day-to-day trading activities, and not as a result of any default or omission by any Group Company, in respect of any obligation which is less than 60 days overdue or which is being contested in good faith and by appropriate means; |
(c) | any disposal required, or guarantee, indemnity or Security or Quasi-Security given, under any Transaction Document; |
(d) | any Security or Quasi-Security granted with the Investment Agent’s prior written consent; |
(e) | any Security or Quasi-Security created in favour of a plaintiff of defendant in any proceedings or arbitration as security for costs and expenses where the relevant Obligor is actively prosecuting or defending such proceedings or arbitration in good faith; and |
(f) | any Security or Quasi-Security arising by operation of law in respect of Taxes which are not overdue for payment or in respect of Taxes being contested in good faith by appropriate steps and in respect of which appropriate reserves have been made. |
9.5 | Merger |
The Company shall not enter into any amalgamation, demerger, merger or corporate reconstruction or any joint venture or partnership agreement.
9.6 | Incorporation of Subsidiaries |
The Company shall not incorporate any company as its Subsidiary.
9.7 | Change of business |
The Company shall procure that no substantial change is made to the general nature of the business of the Company or the Group from that carried on at the date of this Agreement.
9.8 | Dangerous Materials |
The Company shall not (and shall ensure that no other Group Company will) use, deposit, handle, store, produce, release, emit or dispose of any Dangerous Materials in, on, over or under any real property owned or occupied by any Group Company in a manner that might give rise to any proceedings or claims against, or liability of, any Group Company and which might reasonably be expected to have a Material Adverse Effect.
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9.9 | Sanctions |
9.10 | The Company shall not (and shall ensure that no other Group Company will), and shall not permit or authorise any other person to, directly or indirectly, use, lend, make payments of, contribute or otherwise make available, all or any part of the proceeds of any disbursement or other transaction contemplated by any Transaction Document to fund any trade, business or other activities: |
(a) | involving or for the benefit of any Restricted Party, or |
(b) | in any other manner that would reasonably be expected to result in the Lessee or any Participant being in breach of any Sanctions (if and to the extent applicable to either of them) or becoming a Restricted Party. |
9.11 | Without prejudice to the provisions of Clause 8.2 (Compliance with laws etc.), the Company shall not permit or authorise and shall prevent the Leased Assets (or any proceeds derived therefrom) being used directly or indirectly: |
(a) | by or for the benefit of any Restricted Party; and/or |
(b) | in any trade which could expose a Leased Asset or any party to a Transaction Document to enforcement proceedings or any other consequences whatsoever arising from Sanctions. |
9.12 | The Company shall not permit or authorise and shall prevent the Leased Assets from storing crude oil, petroleum products or petrochemical products if they originate in Iran, or are being exported from Iran to any other country. |
9.13 | Application of FATCA |
The Company shall not (and shall ensure that no other Group Company will) become a FATCA FFI or a US Tax Obligor.
9.14 | Extension of financial credit |
The Company shall not make any loans or grant any credit to or for the benefit of any person, other than in the normal course of its day-to-day trading activities where such loans do not, when aggregated with all such loans made in the Company exceed AED 500,000,000, without the prior written consent of the Investment Agent.
10 | Events of Mandatory Prepayment |
The event or circumstance set out in this Clause 10 is an Event of Mandatory Prepayment:
10.1 | An event of force majeure |
If an event of force majeure occurs as finally determined in accordance with clause 7.2 (Event of force majeure) of the Master Forward Lease Agreement.
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11 | Events of Default |
Each of the events or circumstances set out in this Clause 11 is an Event of Default.
11.1 | Non-payment |
An Obligor does not pay on the due date any amount payable pursuant to a Transaction Document at the place at and in the currency in which it is expressed to be payable unless:
(a) | its failure to pay is caused by: |
(i) | administrative or technical error which is not its fault; or |
(ii) | a Disruption Event; and |
(b) | payment is made within three Business Days of its due date. |
11.2 | Financial covenants |
Any requirement. of Clause 7 (Financial covenants) is not satisfied.
11.3 | Other obligations |
An Obligor does not comply with any provision of the Transaction Documents (other than those referred to in Clauses 11.1 (Non-payment) and 11.2 (Financial covenants)]) unless the failure to comply is, in the opinion of the Investment Agent, capable of remedy and is remedied within five Business Days of the earlier of (A) the Investment Agent giving notice to the Company and (B) the Company becoming aware of the failure to comply.
11.4 | Misrepresentation etc |
Any representation, warranty or statement made or given or deemed to be made or given by an Obligor in the Transaction Documents or any other document delivered by or on behalf of any Obligor under or in connection with any Transaction Document is or proves to have been incorrect or misleading in any material respect when made or deemed to be made.
11.5 | Cross default |
11.5.1 | Any Financial Indebtedness of any Obligor is not paid when due nor within any originally applicable grace period. |
11.5.2 | Any Financial Indebtedness of any Obligor is declared to be or otherwise becomes due and payable before its specified maturity. |
11.5.3 | Any commitment for any Financial Indebtedness of any Obligor is cancelled or suspended by a creditor of any Obligor as a result of an event of default (however described). |
11.5.4 | Any creditor of any Obligor becomes entitled to declare any Financial Indebtedness of any Obligor due and payable before its specified maturity as a result of an event of default (however described). |
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11.5.5 | No Event of Default will occur under this Clause 11.5 if the aggregate amount of Financial Indebtedness or commitment for Financial Indebtedness falling within Clauses 11.5.1 to 11.5.4 is less than AED8,750,000 (or its equivalent in any other currency or currencies). |
11.6 | Insolvency |
11.6.1 | Any Group Company is unable or admits inability to pay its debts as they fall due, suspends making payments on any of its debts or, by reason of actual or anticipated financial difficulties, commences negotiations with one or more of its creditors with a view to rescheduling any of its indebtedness. |
11.6.2 | The value of the assets of any Group Company is less than its liabilities (taking into account contingent and prospective liabilities). |
11.6.3 | A moratorium or other protection from its creditors is declared or imposed in respect of any indebtedness of any Group Company. |
11.7 | Insolvency proceedings |
Any corporate action, legal proceedings or other procedure or step is taken (including the making of an application, the presentation of a petition, the filing or service of a notice or the passing of a resolution) in relation to:
(a) | the suspension of payments, a moratorium of any indebtedness, winding-up, dissolution, striking-off, administration or reorganisation (by way of voluntary arrangement, scheme of arrangement or otherwise) of any Group Company other than a solvent liquidation or reorganisation of any Group Company which is not an Obligor; |
(b) | a composition, compromise, assignment or arrangement with any creditor of any Group Company; |
(c) | the appointment of a liquidator (other than in respect of a solvent liquidation of a Group Company which is not an Obligor), supervisor, receiver, administrative receiver, administrator, compulsory manager, trustee or other similar officer in respect of any Group Company or any of its assets; or |
(d) | enforcement of any Security over any assets of any Group Company, |
or any analogous procedure or step is taken in any jurisdiction.
This Clause 11.7 shall not apply to any winding-up petition which is frivolous or vexatious and is discharged, stayed or dismissed within 20 days of commencement.
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11.8 | Creditors’ process |
Any expropriation, attachment, sequestration, distress or execution affects any asset or assets of a Group Company having an aggregate value of AED1,000,000 and is not discharged within 30 days.
11.9 | Cessation of business |
Any Obligor suspends, ceases or threatens to suspend or cease to carry on all or a substantial part of its business.
11.10 | Unlawfulness |
It is or becomes unlawful for any Obligor to perform any of its obligations under the Transaction Documents.
11.11 | Repudiation |
11.11.1 | It is or becomes unlawful for an Obligor to perform any of its obligations under the Transaction Documents or any Transaction Security created or expressed to be created or evidenced by the Transaction Security Documents ceases to be effective. |
11.11.2 | Any obligation or obligations of any Obligor under any Transaction Document are not or cease to be legal, valid, binding or enforceable. |
11.11.3 | Any Transaction Document ceases to be in full force and effect or any Transaction Security ceases to be legal, valid, binding, enforceable or effective or is alleged by a party to it (other than a Finance Party) to be ineffective. |
11.12 | Transaction Documents and guarantees |
Any Transaction Document, or the guarantee of any Corporate Guarantor under or in connection with this Agreement, is not (or is claimed by any Obligor not to be) in full force and effect.
11.13 | Rescission of Transaction Documents |
Any Obligor rescinds or purports to rescind any Transaction Document in whole or in part.
11.14 | Enforcement of Security |
Any Security over any of the assets of any Group Company becomes enforceable.
11.15 | Sureties and providers of Security |
Any of the events referred to in this Clause 11 (except for Clauses 11.2 (Financial covenants)) occurs in relation to any surety for, or provider of Security in respect of, any Obligor’s obligations under any Transaction Document.
11.16 | Material adverse change |
Any event or series of events occurs which, in the opinion of the Majority Participants, has or could reasonably be expected to have a Material Adverse Effect.
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11.17 | Istisna’ Event of Default |
An Istisna’ Event of Default occurs.
11.18 | Lessee Event of Default |
A Lessee Event of Default occurs.
12 | Acceleration |
12.1 | Acceleration rights |
On and at any time after the occurrence of an Event of Default or an Event of Mandatory Prepayment which is continuing the Investment Agent may, and shall if so directed by the Majority Participants, by notice to the Company:
(a) | cancel the Istisna’ Facility and the Available Facility whereupon they shall immediately be cancelled; |
(b) | declare that the Company is no longer entitled to submit the Offer Letter; |
(c) | declare that the Seller is no longer entitled to submit any Istisna’ Instalment Notices; |
(d) | refuse to pay any Istisna’ Instalments; |
(e) | if in relation to the Forward Lease, the Commencement Date has not occurred, declare that: |
(i) | all Istisna’ Instalments that have been paid to the Company; |
(ii) | any accrued Advance Variable Rental Payment; |
(iii) | any accrued Advance Fixed Rental Payment; |
(iv) | any Increased Cost Amount; and |
(v) | any other amounts due under the Transaction Documents (including any indemnity claims made against the Seller under clause 16 (Indemnity) of the Master Istisna’ Agreement including any indemnity claim caused by the Company claiming the return of any Advance Rental Payment due to the Commencement Date not occurring because of the termination of the Istisna’ Agreement), |
to be immediately due and payable, whereupon the same shall become immediately due and payable;
(f) | if in relation to the Forward Lease, the Commencement Date has occurred; |
(i) | terminate the then existing Lease Period; and/or |
(ii) | exercise its rights under the Purchase Undertaking, including demanding payment of the Termination Amount; |
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(g) | declare that all or part of the amounts mentioned in paragraphs (e) and (f) above be payable on demand, whereupon they shall immediately become payable on demand by the Investment Agent on the instructions of the Majority Participants; |
(h) | terminate the Istisna’ Agreement, the Forward Lease, the Service Agency Agreement and any other Transaction Document; |
(i) | exercise any or all of its rights under any other Transaction Document (to the extent not previously described in this Clause 12.1); and/or |
(j) | exercise or direct the Security Agent to exercise any or all of its rights, remedies, powers or discretions under the Transaction Documents. |
12.2 | Continuing provisions |
The termination of the Istisna’ Agreement, the Forward Lease or any other Transaction Document (whether by passage of time or in the circumstances described in Clause 12.1) shall not affect any provisions that are expressly stated to continue beyond termination.
13 | Market Disruption |
In this Agreement, Market Disruption Event means:
(a) | at or about noon on the quotation day for the relevant Rental Period, the screen rate for EIBOR is not available; or |
(b) | the Lessor receives notification from a Finance Party or Finance Parties whose participations in |
(i) | the Base Amount for the applicable Advance Variable Rental Period; or |
(ii) | the Outstanding Fixed Rental for the applicable Lease Period, |
as the case may be, exceeds 662/3 per cent that, due solely to external circumstances beyond the control of the relevant Finance Party or Finance Parties, the expected profit rate charged to it in connection with obtaining matching deposits in the UAE interbank market would be in excess of EIBOR for the relevant period.
14 | Illegality |
If it becomes unlawful in any jurisdiction for a Participant to perform any of its obligations as contemplated by any Transaction Document or to fund or maintain its participation in the Istisna’ Agreement or in the leasing arrangements under any Forward Lease:
(a) | that Participant shall promptly notify the Investment Agent upon becoming aware of that event; and |
(b) | upon the Investment Agent notifying the Company, that Participant’s Commitment will be immediately cancelled. |
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15 | Specific rights relating to early payment and cancellation |
15.1 | Right of repayment and cancellation in relation to a single Participant |
15.1.1 | If: |
(a) | any sum payable to any Participant is required to be increased under clause 11 (Tax gross-up and indemnities; VAT) of the Investment Agency Agreement; and/or |
(b) | any Participant claims indemnification from the Company under clause 22.4 (Indemnity in relation to Increased Costs) of the Master Forward Lease Agreement or clause 11.3 (Tax indemnity) of the Investment Agency Agreement; and/or |
(c) | any Participant fails pay its Participant Contribution in accordance with clause 3.6 (Payments to the Investment Agent) of the Investment Agency Agreement, |
while the circumstance giving rise to the requirement or indemnification continues or within three Business Days of the Participant Contribution failure referred to in paragraph (c) above, as the case may be, the Company can give the Investment Agent not less than seven Business Days’ (or such shorter period as the Majority Participants may agree) prior notice of cancellation of the Commitment of that Participant or give the Investment Agent notice of its intention to replace that Participant in accordance with Clause 15.1.4 below.
That notice shall also state its intention to procure:
(d) | in relation to the Forward Lease where the Commencement Date has not occurred, the payment by the Company of the Participant’s participation in the Istisna’ Agreement and Forward Lease (through the Investment Agent) of: |
(i) | that Participant’s Participant Contributions that have been paid or which are to be paid and which the Participant has already put the Investment Agent in funds (less an amount equal to the Participant’s Percentage of any Advance Fixed Rental Payments that have been paid); |
(ii) | that Participant’s Percentage of any accrued Advance Variable Rental Payment; |
(iii) | any Increased Cost Amount which relates to the Participant; and |
(iv) | any other amounts due to the Participant under the Transaction Documents; or |
(e) | if in relation to the Forward Lease, the Commencement Date has occurred, the payment described in clause 19(b) of the Master Forward Lease Agreement. |
15.1.2 | On receipt of a notice referred to in Clause 15.1.1, the Commitment of that Participant shall immediately be reduced to zero. |
15.1.3 | On the next Advance Rental Payment Date or the Rental Payment Date, as the case may be, of the outstanding Forward Lease after the Company has given notice under Clause 15.1.1 (or, if earlier, the date specified by the Company in that notice), the Company shall pay to the Participant the applicable amounts mentioned in Clause 15.1.1. |
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15.1.4 | The Company may, in the circumstances set out in Clause 15.1.1, on seven Business Days’ prior notice to the Investment Agent and that Participant, replace that Participant by requiring that Participant to (and, to the extent permitted by law, that Participant shall) transfer pursuant to clause 16 (Changes to the Participants) of the Investment Agency Agreement all (and not part only) of its rights and obligations under the Transaction Documents to a Participant or other bank, financial institution, trust, fund or other entity selected by the Company which confirms its willingness to assume and does assume all the obligations of the transferring Participant in accordance with clause 16 (Changes to the Participants) of the Investment Agency Agreement for a purchase price in cash or other cash payment payable at the time of the transfer equal to the Participant’s Percentage in: |
(a) | in relation to the Forward Lease when the Commencement Date has not occurred, the Base Amount; or |
(b) | in relation to the Forward Lease where the Commencement Date has occurred, the Base Amount or the Outstanding Fixed Rental (as applicable), |
and all accrued Advance Variable Rental Payments or Variable Rental Payments, as the case may be and other amounts payable in relation thereto under the Transaction Documents.
15.1.5 | The replacement of a Participant pursuant to Clause 15.1.4 shall be subject to the following conditions: |
(a) | the Company shall have no right to replace the Investment Agent; |
(b) | neither the Investment Agent nor any Participant shall have any obligation to find a replacement Participant; and |
(c) | in no event shall the Participant replaced under Clause 15.1.4 be required to pay or surrender any of the fees received by such Participant pursuant to the Transaction Documents. |
15.1.6 | Other than in the circumstances described in Clause 15.1.4, upon the Participant being paid in accordance with Clause 15.1.3: |
(a) | in relation to the Forward Lease, prior to the Commencement Date occurring: |
(i) | the Purchase Price of the Istisna’ Agreement shall be reduced to reflect the repayment to the Participant of its Participant Contributions that have been paid and the Company confirms and agrees that the adjustment in the Purchase Price shall still represent a fair and reasonable price for the sale to the Investment Agent of the Istisna’ Development; |
(ii) | the Advance Rental Payments that have been paid shall not be adjusted but shall continue to be a credit against Rental Payments as provided in the Master Forward Lease Agreement; and |
(iii) | the Base Amount shall be reduced to reflect the payment to the Participant of its Participant Contributions; or |
(b) | in relation to the Forward Lease where the Commencement Date has occurred, the Outstanding Fixed Rental shall be reduced to reflect the payment to the Participant of its Percentage of the Outstanding Fixed Rental. |
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15.2 | National Bank of Abu Dhabi PJSC - Islamic Banking Division payment undertaking |
15.2.1 | National Bank of Abu Dhabi PJSC - Islamic Banking Division, in its capacity as Participant, undertakes to, on the later to occur of: |
(a) | two Business Days after National Bank of Abu Dhabi PJSC - Islamic Banking Division has received notice that any other Participant has (or shall) fail to pay its Participant Contribution in accordance with clause 3.6 (Payments to the Investment Agent) of the Investment Agency Agreement; and |
(b) | the Istisna’ Payment Date immediately following the date on which National Bank of Abu Dhabi PJSC - Islamic Banking Division has received notice that any other Participant has (or shall) fail to pay its Participant Contribution in accordance with clause 3.6 (Payments to the Investment Agent) of the Investment Agency Agreement, |
(the Additional Payment Date) make available to the Company the amount of any such payment shortfall (the Additional Payment) subject to:
(i) | there being no Event of Default which has occurred and is continuing on the Additional Payment Date; and |
(ii) | the Company promptly (and in any event within seven Business Days) after the Additional Payment Date, effecting a transfer of the defaulting Participant’s rights and obligations under the Transaction Documents to National Bank of Abu Dhabi PJSC - Islamic Banking Division as Participant in accordance with the procedure prescribed in Clause 15.1 (Right of repayment and cancellation in relation to a single Participant) and clause 16 (Changes to the Participants) of the Investment Agency Agreement. |
15.2.2 | For the avoidance of doubt, and subject only to their being no Event of Default which has occurred and is continuing, National Bank of Abu Dhabi PJSC - Islamic Banking Division as Participant confirms that it shall assume all the obligations of any transferring Participant transferred to it pursuant to Clause 15.2.1(b)(ii) for a purchase price determined in accordance with Clause 15.1 (Right of repayment and cancellation in relation to a single Participant). |
16 | General provisions relating to certain notices and the cancellation of Commitments |
16.1 | Various notices |
16.1.1 | Any: |
(a) | notice issued under Clause 15 (Specific rights relating to early payment and cancellation); |
(b) | Exercise Notice issued by the Seller under the Seller Option Deed; |
(c) | notice issued by the Seller pursuant to clause 15 (Early termination by the Seller before the Istisna’ Agreement exists) of the Master Istisna’ Agreement; or |
(d) | Sale Notice issued by the Lessee as promissee under the Sale Undertaking, shall be irrevocable. |
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16.1.2 | Unless a contrary indication appears in this Agreement or any other Transaction Document, it shall specify the date or dates upon which the relevant cancellation or payment is to be made and the amount of that cancellation or payment. |
16.1.3 | If the Investment Agent receives a notice as described in Clause 16.1.1, it shall promptly forward a copy of that notice to either the Company or the affected Participant or Participants, as appropriate. |
16.1.4 | The Seller (including in its capacity as the Lessee) shall not pay: |
(a) | any amounts arising under the Master Istisna’ Agreement, the Istisna’ Agreement; |
(b) | all or any part of the Base Amount, the Outstanding Fixed Rental or any other amounts arising under the Master Forward Lease Agreement or the Forward Lease; or |
(c) | any other amount under any other Transaction Document, |
except at the times and in the manner expressly provided for in this Agreement, the Master Istisna’ Agreement, the Istisna’ Agreement, the Master Forward Lease Agreement, the Forward Lease or any other Transaction Document.
16.1.5 | The Company may not utilise any part of the Istisna’ Facility which is repaid and the Commitments shall be reduced accordingly. |
16.2 | Cancellation |
16.2.1 | No amount of the Total Commitments that are cancelled may be subsequently reinstated. |
16.2.2 | Any cancellation under this Clause 16 or any provision of any other Transaction Document shall reduce the Commitments of the Participants rateably under the Istisna’ Facility unless that payment or prepayment is made pursuant to any provision of this Agreement or any other Transaction Document which requires the Commitment of one or more (but not all) of the Participants to be reduced. |
16.2.3 | Any cancellation of a Commitment arising from the provisions of any Transaction Document which requires the Commitment of one or more (but not all) of the Participants to be reduced, shall only cancel: |
(a) | in the case of the issue of an Illegality Notice, the Commitment of the Participant which has issued a notice in accordance with Clause 14 (illegality); or |
(b) | in the case of cancellation arising under the provisions of any other Transaction Document which requires the Commitment of one or more (but not all) of the Participants to be reduced, only such Participants. |
17 | Other indemnities |
17.1 | Currency indemnity |
17.1.1 | If any sum due from an Obligor under the Transaction 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: |
(a) | making or filing a claim or proof against that Obligor; or |
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(b) | obtaining or enforcing an order, judgment or award in relation to any litigation or arbitration proceedings, |
the Company shall, as an independent obligation, within three Business Days of demand, indemnify each Secured 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 (i) the rate of exchange used to convert that Sum from the First Currency into the Second Currency and (ii) the rate or rates of exchange available to that person at the time of its receipt of that Sum.
17.1.2 | The Company waives any right it may have in any jurisdiction to pay any amount under the Transaction Documents in a currency or currency unit other than that in which it is expressed to be payable. |
17.2 | Other indemnities |
The Company shall, within three Business Days of demand, indemnify each Secured Party and each Secured Party’s officers, employees and agents against any cost, loss or liability incurred by that Secured Party or any of its officers, employees and agents as a result of:
(a) | the occurrence of any Event of Default or Event of Mandatory Prepayment; |
(b) | a failure by an Obligor to pay any amount due under a Transaction Document on its due date, including any cost, loss or liability arising as a result of clause 5 (Sharing among the Finance Parties) of the Investment Agency Agreement; |
(c) | funding, or making arrangements to fund, its Participant Contribution but not made by reason of the operation of any one or more of the provisions of this Agreement or any other Transaction Document (other than by reason of default or negligence by that Finance Party alone); |
(d) | a payment not being prepaid in accordance with a notice of prepayment given by the Company; or |
(e) | any action taken by the Lessor in accordance with clause 15 (Power to remedy defaults) of the Master Forward Lease Agreement. |
17.3 | Communications indemnity |
17.3.1 | The Company shall promptly indemnify the Investment Agent and each Finance Party against any cost, loss or liability incurred by it (acting in good faith) as a result of acting or relying on any notice, request or instruction which it reasonably believes to be genuine, correct and appropriately authorised. |
17.3.2 | The Company hereby agrees that all telephone conversations made by or to the Parties concerning any transaction relating to the Transaction Documents may be recorded by the Investment Agent, and the Company: |
(a) | consents to the recording of such telephone conversations of trading, marketing and/or other personnel of the Company and its officers, employees, agents and Affiliates in connection with this Agreement or any other Transaction Document or the transactions contemplated by such documents; |
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(b) | agrees to obtain any necessary consent of and give notice of such recording to such personnel (as aforesaid); and |
(c) | agrees that recordings may be submitted in evidence in any proceedings relating to this Agreement or any other Transaction Document or the transactions contemplated by such documents. |
17.3.3 | The Company acknowledges that it is fully aware of the risk associated with communications via telephone or facsimile transmission. In relation to any communication received by the Investment Agent via telephone or facsimile transmission and in or purported to be in the Company’s name or the name of one or more authorised representatives of the Company, the Company irrevocably: |
(a) | authorises the Investment Agent or any Finance Party to accept, and rely and act upon such communication without further enquiry as to the authority or identity of the person sending such communications; |
(b) | agrees on demand to indemnify the Investment Agent and each Finance Party against all Losses incurred or sustained by the Investment Agent or any Finance Party as a result of the Investment Agent or any Finance Party accepting, relying and acting upon such communication; and |
(c) | acknowledges that the Investment Agent and each Finance Party shall have no liability for accepting, or relying or acting upon such communication and shall have no liability in the event that any facsimile transmission is not received, or is mutilated, illegible, interrupted, duplicated, incomplete, unauthorised or delayed for any reason. |
17.3.4 | The Company verifies that each person that the Company has identified (and may identify in the future) to the Investment Agent as an authorised representative is duly authorised to give or send instructions and other communications by telephone, facsimile transmission or letter. |
17.3.5 | The Investment Agent shall have absolute discretion whether or not to accept, or rely or act upon any communication received via telephone or facsimile transmission, and shall be entitled to request verification of any such communication by any method the Investment Agent deems appropriate. |
17.4 | General |
Any certificate of any Finance Party as to the amount of any Losses sustained or incurred by it shall be conclusive and binding on any Obligor except for any manifest error.
18 | Assignment |
18.1 | Benefit of agreement |
Each Transaction Document shall be binding upon and be for the benefit of each Party and its permitted successors and assigns.
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18.2 | No assignment or transfer by the Company |
The Company may not assign any of its rights or transfer any of its rights or obligations under any Transaction Document.
18.3 | Assignment and/or transfer by Investment Agent |
The Investment Agent can assign and/or transfer any of its rights and obligations under the Transaction Documents as part of the arrangements contemplated by clause 6.13 (Resignation of the Investment Agent) of the Investment Agency Agreement.
19 | Waiver of defences |
The Company waives any defences it might otherwise have in any jurisdiction which are based on the non-compliance of the Transaction Documents with the Shari’ah. This waiver applies irrespective of any law or any provision of a Finance Document to the contrary.
20 | Governing law |
20.1 | English law |
20.1.1 | Subject to Clause 20.1.2, this Agreement and all non-contractual obligations arising out of or connected with it shall be governed by, and construed in accordance with, English law. |
20.1.2 | The Parties agree that the creation and transfer of any proprietary rights of the Parties in relation to the Istisna’ Development or the Leased Assets shall be governed by, and construed in accordance with, the laws of Fujairah and the federal laws of the United Arab Emirates as applied by the civil courts of Fujairah, in each case, to the extent those laws do not conflict with Shari’a. In the event of any contradiction between the laws of Fujairah and the federal laws of the United Arab Emirates and the principles of Shari’a, the principles of Shari’a shall prevail |
20.2 | Interest |
The Parties recognise and agree that the principle of the payment of interest is repugnant to the Shari’ah and accordingly, to the extent that any legal system would (but for the provisions of this Clause) impose (whether by contract or by statute) any obligation to pay interest, the Parties hereby irrevocably and unconditionally expressly waive and reject any entitlement to recover interest from each other.
21 | Enforcement |
21.1 | Jurisdiction |
21.1.1 | Subject to Clause 21.1.2, the Parties submit, and waive any objection, to the exclusive jurisdiction of the courts of the Dubai International Financial Centre, Emirate of Dubai, United Arab Emirates to settle any dispute arising out of or in connection with this Agreement and the Forward Lease (including a dispute relating to the existence, validity or termination of this this Agreement and the Forward Lease or any non-contractual obligation arising out of or in connection with this Agreement and the Forward Lease) (a Dispute). The Parties agree that the courts of the Dubai International Financial Centre, Emirate of Dubai, United Arab Emirates are the most appropriate and convenient courts to settle Disputes and accordingly no Party will argue to the contrary. |
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21.1.2 | The Parties agree that the civil courts of Fujairah shall have the exclusive jurisdiction to settle any dispute arising out of or in connection with the creation and transfer of any proprietary rights of the Parties in relation to the Leased Asset. |
21.1.3 | Notwithstanding Clauses 21.1.1 and 21.1.2, the Parties agree that the Investment Agent may take proceedings relating to a Dispute in any other court with jurisdiction. To the extent allowed by law, the Lessor may take concurrent proceedings in any number of jurisdictions. This Clause 21.1.3 is for the benefit of the Investment Agent only. |
21.2 | State Immunity |
21.2.1 | Each Party acknowledges and agrees, to the extent relevant, that its execution, performance and delivery of this Agreement and the Forward Lease shall constitute a private commercial transaction entered into entirely in its commercial capacity. |
21.2.2 | To the extent that any Party may in any jurisdiction claim for itself or its assets immunity from legal proceedings, and to the extent that in any jurisdiction there may be attributed to any Party or its assets such immunity (whether claimed or not), that Party irrevocably and unconditionally and to the full extent permitted by the laws of the Relevant Jurisdiction: |
(a) | agrees not to claim such immunity; |
(b) | waives any such immunity which it or its assets now has or may in future acquire; and |
(c) | consents, in any legal proceedings arising out of or in connection with this Agreement and the Forward Lease to the giving of relief by enforcement, execution (including the arrest, detention or sale of any state property) or attachment (whether before judgment, in aid of execution or otherwise) against any of its assets. |
21.2.3 | In relation to any legal proceedings that may be taken in England, the foregoing waiver of immunity shall have effect under, and be construed in accordance with, the State Immunity Act 1978. |
21.2.4 | For the purposes of this Clause 21.2: |
legal proceedings includes any service of process, suit, judgment, execution, attachment (whether before judgment, in aid of execution, or otherwise), arbitral proceedings or other dispute resolution mechanisms; and
asset includes any asset not used solely for commercial purposes.
This Agreement is entered into by the Parties on the date stated at the beginning of this Agreement.
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Execution Page of the Common Terms Agreement
The Company |
|
|
Signed by | ) | |
) | ||
duly authorised in accordance with the
laws of Fujairah Free Zone, United Arab Emirates for and on behalf of Brooge Petroleum and Gas Investment Company FZC in the presence of: |
)
) ) ) ) |
|
Signature of witness | ) |
Name of witness: | ||
Address of witness: | ||
The Investment Agent | ||
Signed by | ) | /s/ Aqeel Bughio |
) | ||
duly authorised in accordance
with the
|
)
) ) ) ) |
/s/ Omar Katri |
Signature of witness | ) |
Name of witness: |
|
|
Address of witness: | ||
Execution Page of the Common Terms Agreement
The Account Bank | ||
Signed by | ) | /s/ Aqeel Bughio |
) | ||
duly authorised in accordance with the
laws of Abu Dhabi, United Arab Emirates for and on behalf of National Bank of Abu Dhabi PJSC — Islamic Banking Division in the presence of: |
)
) ) ) ) |
/s/ Omar Katri |
Signature of witness | ) |
Name of witness: |
|
|
Address of witness: | ||
The Participant | ||
Signed by | ) | /s/ Aqeel Bughio |
) | ||
duly authorised in accordance
with the
|
)
) ) ) ) |
/s/ Omar Katri |
Signature of witness | ) |
Name of witness: |
|
|
Address of witness: | ||
Execution Page of the Common Terms Agreement
Exhibit 10.34
Brooge Petroleum and Gas Investment Company FZC
(as Mortgagor)
and
National Bank of Abu Dhabi PJSC – Islamic Banking Division
(as Security Agent)
COMMERCIAL MORTGAGE
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THIS COMMERCIAL MORTGAGE is dated
(1) | Brooge Petroleum and Gas Investment Company FZC, a free zone company incorporated under the laws of Fujairah Free Zone, Fujairah, UAE with registration number 13-FZC-1117 and whose principal place of business is P.O. Box 50170, Fujairah, UAE and represented by (1) [●], a [●] national, holder of Emirates ID number [●]; and (2) [●], a [●] national, holder of Emirates ID number[●], in accordance with a power of attorney dated [●] notarised in Dubai under notarisation number [●] (the Mortgagor); and |
(2) | National Bank of Abu Dhabi PJSC — Islamic Banking Division, licensed by the Central Bank of the UAE and represented by [●], a [●] national holder of an Emirates ID number [●], in accordance with the power of attorney notarised in Dubai under number [●] on [●] (the Security Agent). |
BACKGROUND:
A. | This Commercial Mortgage is entered into by the Mortgagor in accordance with the Mortgagor’s board resolution dated [ ], and which is granted by the Mortgagor to secure the Secured Liabilities. |
B. | This Commercial Mortgage is a Transaction Document (as defined in the Common Terms Agreement). |
IT IS AGREED as follows:
1. | DEFINITIONS AND INTERPRETATIONS |
1.1 | Definitions |
In this Commercial Mortgage:
Addendum means an addendum to this Commercial Mortgage substantially in the form set out in Schedule 2 to this Commercial Mortgage.
Commercial Code means Federal Law No. 18 of 1993 regarding the law on commercial transactions.
Commercial Registers means each of the relevant registers maintained by the commercial registration section of the Industrial Development Bureau of the Emirate of Abu Dhabi and the relevant register maintained by the Fujairah Free Zone Authority.
Common Terms Agreement means the common terms agreement dated 29.06.2015 entered into between the Mortgagor (as the Company, the Seller and the Lessee) and National Bank of Abu Dhabi PJSC — Islamic Banking Division (as the Investment Agent, Account Bank and Participant).
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Equipment means the property, plant and equipment that constitute part of the Security Assets and which are more particularly described in Schedule 1 (Security Assets) to this Commercial Mortgage.
Finance Party has the meaning given to it in the Common Terms Agreement and each of their respective successors, transferees and assignees.
Phase I means the financed constructed assets of 14 oil tanks in addition to any related constructed facilities located on plot 130, Block A, Fujairah, UAE
Intellectual Property Rights means all know-how, patents, trade marks, service marks, designs, business names, topographical or similar rights, copyrights and other intellectual property rights and any interests (including by way of licence) in any of the foregoing (in each case whether registered or not and including all applications for the same) including in respect of the license agreements particularly described in Schedule 1 (Security Assets) to this Commercial Mortgage.
Inventory means all raw materials, work-in-process goods and products and finished goods and products in the possession of the Mortgagor and which are more particularly described in Schedule 1 (Security Assets) to this Commercial Mortgage.
New Assets means any lease, equipment, machinery or Intellectual Property Rights and in each under Phase I which are capable of being made the subject of a Security Interest under the Commercial Code and which are entered into, created or acquired by the Mortgagor after the date of this Mortgage and which are not subject to a Security Interest pursuant to any other Transaction Security Document.
Receivables means all payments, debts and sums of money receivable or payable or paid or due to the Mortgagor under all contracts and agreements entered into by the Mortgagor under Phase I.
Secured Liabilities has the meaning given to it in the Common Terms Agreement.
Security Assets means the assets the subject of the security created by this Commercial Mortgage which are detailed in Clause 2 (Security Assets) of this Commercial Mortgage, and any New Assets under Phase I in respect of which an Addendum has been duly executed, notarised and registered with the Commercial Register.
Security Period means the period from the date of this Commercial Mortgage up to and including date on which any and all amounts outstanding on any Transaction Document have been unconditionally and irrevocably paid or discharged in full.
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1.2 | Interpretations |
(a) | In this Commercial Mortgage unless the context otherwise requires, words and expressions defined (directly or indirectly) in the Common Terms Agreement shall have the same meaning when used in this Commercial Mortgage. |
(b) | The provisions set out in clauses 1.2 (Construction) and 1.3 (Third party rights) of the Common Terms Agreement apply to this Commercial Mortgage. |
(c) | If the Security Agent reasonably considers that an amount paid by the Mortgagor to the Security Agent or any Finance Party under a Transaction Security Document is capable of being avoided (acting reasonably) then the Security Agent shall be entitled not to release this Commercial Mortgage. |
(d) | Reference to “this Commercial Mortgage” includes all Schedules hereto. |
2. | SECURITY ASSETS |
The Mortgagor, as continuing security for the payment or discharge when due of the Secured Liabilities mortgages pursuant to Articles 49 to 56 of the Commercial Transactions Law No. 18 of 1993 in favour of the Security Agent, all of the Mortgagor’s rights, title, benefit and interest in, to and of:
(a) | the goodwill of the Mortgagor including the Mortgagor’s “commercial name”; |
(b) | all the Mortgagor’s Intellectual Property Rights including the Intellectual Property Rights described in Schedule 1 (Security Assets) to this Commercial Mortgage under Phase I; |
(c) | all of the Mortgagor’s equipment including the Equipment listed in Schedule 1 (Security Assets) to this Commercial Mortgage under Phase I; |
(d) | all of the Mortgagor’s rights under any contracts, agreements, deed or other documents entered into by the Mortgagor under Phasel; |
(e) | all of the Mortgagor’s inventory including the Inventory listed in Schedule 1 (Security Assets) to this Commercial Mortgage under Phase I; |
(f) | all of the Mortgagor’s receivables including the Receivables listed in Schedule 1 (Security Assets) to this Commercial Mortgage under Phase I; and |
(g) | all of the Mortgagor’s intangible assets under Phase I. |
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3. | REPRESENTATIONS AND WARRANTIES |
3.1 | Representations and Warranties |
The Mortgagor represents and warrants to the Security Agent that:
(a) | it is the legal owner of, and has full right, title and interest in and to the Security Assets under Phase I; |
(b) | the Security Assets under Phase I are free from any Security (other than any Security created by this Commercial Mortgage or any other Security expressly permitted by the Common Terms Agreement); |
(c) | no notice of any Security covering all or any part of the Security Assets under Phase 1 is on file in any recording office other than any such filings in connection with the Security Assets created by this Commercial Mortgage or any other Transaction Security Documents; and |
(d) | the Mortgagor does not have title to any assets under Phase I of whatever nature which assets are not secured under this Commercial Mortgage and which are capable of being made subject to a Security and whose value is equal to or more than AED 1,000,000 which have not either: (i) been reported to the Security Agent under Clause 4.4 (Addenda) of this Commercial Mortgage; or (ii) been made subject to a Security in favour of the Security Agent. |
3.2 | Times for making representations and warranties |
The representations and warranties set out in this Clause 3 are made on the date of this Commercial Mortgage and are deemed to be repeated by the Mortgagor on each date during the Security Period on which the Repeating Representations are deemed to be repeated with reference to the facts and circumstances then existing, and on each date the Mortgagor executes an Addendum pursuant to Clause 4.4(b) of this Commercial Mortgage.
4. | GENERAL UNDERTAKINGS |
4.1 | Duration |
During the Security Period, the Mortgagor shall comply with the following undertakings in this Clause 4.
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4.2 | Restrictions on Dealings |
The Mortgagor shall not:
(a) | create or permit to subsist any Security or any third party interest on or over any Security Asset under Phase I other than any Security created by this Commercial Mortgage or pursuant to any other Transaction Security Document or any Security expressly permitted by the Common Terms Agreement; or |
(b) | sell, transfer, grant, lease or otherwise dispose of any of the Security Assets under Phase I unless permitted to do so by the Common Terms Agreement. |
4.3 | Registration |
The Mortgagor shall:
(a) | at its own cost, register this Commercial Mortgage in the Commercial Registers as soon as possible, and in any event no later than 60 days after the date of this Commercial Mortgage such registration being in accordance with the applicable law for five years from the date of registration or the maximum period allowed under the applicable law; |
(b) | not less than one month prior to the date on which any registration (whether or not previously renewed) of this Commercial Mortgage in the Commercial Registers is scheduled to expire, at its own cost, renew such registration for a period not less than five years from the date of that renewal or the maximum period then allowed under the Commercial Transactions Law No. 18 of 1993 and provide to the Security Agent promptly and no more than five Business Days after the Mortgagor receives evidence of any registration a certificate of registration; and |
(c) | save as provided in Clause 14 (Release of Security), not apply for, or permit, any cancellation or amendment of any registration in the Commercial Registers of this Commercial Mortgage without the prior written consent of the Security Agent. |
4.4 | Addenda |
(a) | The Mortgagor shall notify the Security Agent within 21 days after its entry into or acquisition of (as applicable) any New Asset under Phase I whose value is equal to or exceeds AED 1,000,000 (or its equivalent in other currencies), in respect of which security has not already been created in favour of the Security Agent under this Commercial Mortgage or any other Transaction Security Document. |
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(b) | The Mortgagor shall execute and deliver to the Security Agent an Addendum in the following circumstances: |
(i) | within 10 days following the date of notification referred to in paragraph (a) above in respect of any New Assets under Phase I to which paragraph (a) above applies, together with all of its rights, title, benefit and interest in, to and of, the New Assets; |
(ii) | within the earlier of (A) 21 days after each financial year end of the Mortgagor; and (B) 45 days after the date any New Asset under Phase I is acquired, in respect of any New Asset under Phase I having a value individually in excess of AED 1,000,000 which it creates, acquires or enters into during the relevant preceding 12 month period in respect of which security has not already been created in favour of the Security Agent for itself and as agent and trustee for the Finance Parties under this Commercial Mortgage or any Addendum, together with all of the Mortgagor’s rights, title, benefit and interest in, to and of, the New Assets under Phase I; and |
(iii) | the Mortgagor shall at its own cost procure the registration in the Commercial Register of each Addendum required to be entered into pursuant to paragraph (b) above and provide to the Security Agent an extract of the Commercial Register evidencing registration of that Addendum and bearing an original stamp of the Commercial Registrar. |
(c) | Pending the execution, delivery and registration of any Addendum under paragraphs (b) and (c) above, the Mortgagor shall keep any New Assets under Phase I executed, acquired or created on or after the date of this Commercial Mortgage at the premises of the Mortgagor where such New Assets are intended to be kept in the normal course of the business operations of the Mortgagor (in the case of tangible assets) and shall hold such New Assets to the order of the Security Agent. |
5. | ENFORCEMENT OF SECURITY |
5.1 | The Security Agent shall at any time upon or after the occurrence of an Event of Default which is continuing, be entitled to (but shall not be obliged to): |
(a) | serve notice on the Mortgagor and demand payment of all or any part of the Secured Liabilities to the Security Agent pursuant to the terms of the Common Terms Agreement; and/or |
(b) | without prejudice and in addition to any other remedy which the Security Agent for itself or as agent and trustee for Finance Parties may have at law, contract or otherwise, apply to the court for an order to sell all or part of the Security Assets by public auction or in any manner it sees fit. |
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5.2 | Notwithstanding the mortgage created under this Commercial Mortgage and subject to the provisions of the Secured Facilities, the Security Agent hereby agrees that, until the occurrence of an Event of Default which is continuing, the Mortgagor shall be entitled to continue to deal with each counterparty to any Security Asset (as applicable) in relation to all aspects relating to the Security Asset including without limitation receiving and sending notices from and to each such counterparty. |
6. | APPLICATION OF PROCEEDS |
Subject to the provisions of the Common Terms Agreement, the Security Agent shall apply all monies and amounts in respect of the Security Assets received and recovered pursuant to this Commercial Mortgage towards the Secured Liabilities.
7. | EXPENSES AND INDEMNITY |
The Mortgagor shall forthwith on demand by the Security Agent pay all costs and expenses (including legal fees, travel, accommodation and subsistence costs) incurred by the Security Agent or any agent or other person appointed by the Security Agent in connection with the enforcement or preservation of any rights under this Commercial Mortgage or any other Transaction Document, and keep each of them indemnified against any failure or delay in paying the same.
8. | FURTHER ASSURANCES |
The Mortgagor shall, at its own expense, take whatever action the Security Agent may reasonably require for the purpose of:
(a) | perfecting or protecting the security intended to be created by this Commercial Mortgage, any Addendum or any renewal of the registration of this Commercial Mortgage or any Addendum over the Security Assets (including signing, notarising and registering further instruments and documents under Phase I); |
(b) | facilitating the realisation of any Security Asset or the exercise of any right, power or discretion exercisable, by the Security Agent in respect of any Security Asset under Phase I; and |
(c) | enabling the Security Agent to carry out the deeds and actions contemplated in Clause 9.3 (Position of Security Agent) of this Commercial Mortgage including the issuing by the Mortgagor of a separate power of attorney in favour of the Security Agent, if so requested by the Security Agent. |
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9. | POSITION OF SECURITY AGENT |
9.1 | The Mortgagor hereby acknowledges that the Finance Parties have appointed the Security Agent to act as trustee and agent for and on behalf of the Finance Parties pursuant to clause 7 (The Security Agent) of the Investment Agency Agreement. |
9.2 | All actions of the Security Agent under this Commercial Mortgage shall be performed by the Security Agent for itself and as agent and trustee for the Finance Parties, and all actions taken by the Security Agent pursuant to the provisions of this Commercial Mortgage shall be deemed to be on behalf of each Finance Party. |
9.3 | The Mortgagor acknowledges that the registration of the Commercial Mortgage in the Commercial Registers may be renewed by the Security Agent on behalf of the Finance Parties, without any notice to or consent from the Mortgagor, at any time during the Security Period and shall forthwith on demand pay to the Security Agent the amount of all costs and actual expenses incurred by the Security Agent in connection with such renewal and the Mortgagor hereby grants the Security Agent and any person nominated by the Security Agent an irrevocable power of attorney until the end of the Security Period to renew the registration of this Commercial Mortgage and any Addendum entered into pursuant to the- terms of this Commercial Mortgage, and to execute any Addendum on behalf of the Mortgagor in respect of any New Assets under Phase I. |
9.4 | The Security Agent is not liable for any loss of any kind (including any loss arising from fluctuations in exchange rates) which may occur as a result of the exercise or purported exercise of, or any delay or neglect to exercise, any of its rights under this Commercial Mortgage other than losses resulting from its gross negligence or wilful misconduct. |
10. | WAIVER, REMEDIES CUMULATIVE |
10.1 | The rights of the Security Agent as agent and trustee for the Finance Parties under this Commercial Mortgage: |
(a) | may be exercised as often as necessary; |
(b) | are cumulative and not exclusive of its rights under the general law; and |
(c) | may be waived only in writing and specifically. |
10.2 | Delay in exercising or non-exercise of any such right is not a waiver of that right. |
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11. | MISCELLANEOUS |
11.1 | Covenant to pay |
The Mortgagor shall pay or discharge the Secured Liabilities in the manner provided for in the Transaction Documents.
11.2 | Continuing security |
The security constituted by this Commercial Mortgage is continuing and will extend to the ultimate balance of all the Secured Liabilities, regardless of any intermediate payment or discharge in whole or in part.
11.3 | Additional security |
The security constituted by this Commercial Mortgage is in addition to and is not in any way prejudiced by any other security now or subsequently held by the Security Agent for any of the Secured Liabilities.
12. | SEVERABILITY |
If any provision of this Commercial Mortgage is or becomes illegal, invalid or unenforceable in any jurisdiction, that shall not affect:
(a) | the legality, validity or enforceability in that jurisdiction of any other provision of this Commercial Mortgage; or |
(b) | the legality, validity or enforceability in other jurisdictions of that or any other provision of this Commercial Mortgage. |
13. | SUCCESSORS IN TITLE |
13.1 | The Security Agent shall be entitled to assign or transfer all or any of its rights and/or obligations under this Commercial Mortgage to the same extent as the Security Agent has transferred its rights and/or obligations under the other Transaction Documents and the Mortgagor irrevocably consents to any such assignment or transfer. |
13.2 | The Mortgagor shall not have the right to assign or transfer any of its rights and/or obligations under this Commercial Mortgage unless with a prior written consent by the Security Agent. |
13.3 | The obligations of the Mortgagor under this Commercial Mortgage shall bind it and its successors and shall inure to the benefit of the Security Agent for itself and as trustee and agent for each Finance Party and its successors and assigns. |
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14. | RELEASE OF SECURITY |
Upon the expiry of the Security Period, the Security Agent shall, at the request and cost of the Mortgagor, take whatever action is necessary to release absolutely the Security Assets from the security constituted by this Commercial Mortgage.
15. | COUNTERPARTS |
This Commercial Mortgage may be executed in any number of counterparts and all of such counterparts taken together shall be deemed to constitute one and the same instrument.
16. | GOVERNING LAW |
16.1 | This Commercial Mortgage shall be governed by and construed in accordance with the laws of the Emirate of Abu Dhabi and the federal laws of the United Arab Emirates. |
16.2 | The parties agree, for the benefit of the Security Agent, that the courts of Abu Dhabi shall have non-exclusive jurisdiction to hear and determine any suit, action or proceedings arising out of or in connection with this Commercial Mortgage and, for that purpose, irrevocably submit to the non-exclusive jurisdiction of such courts. |
16.3 | The submission to the jurisdiction of the courts of Abu Dhabi shall not be construed so as to limit the right of the Security Agent to bring proceedings against the Mortgagor in any other court of competent jurisdiction to hear or determine any suit, action or proceedings arising out of or in connection with the Transaction Documents whether concurrently or not. |
17. | WAIVER OF IMMUNITY |
17.1 | To the extent that the Mortgagor may in any jurisdiction claim for itself or its assets any immunity from legal action, execution, attachment (whether in aid of execution, before judgment or otherwise) or other legal process and to the extent that in any such jurisdiction there may be attributed to itself or its assets such immunity (whether or not claimed), it hereby irrevocably agrees not to claim, and hereby irrevocably waives, such immunity to the full extent permitted by the laws of such jurisdiction. |
17.2 | The Mortgagor hereby consents generally in respect of any legal action or proceeding arising out of or in connection with this Commercial Mortgage to the giving of any relief or the issue of any process in connection with this Commercial Mortgage including the making, enforcement or execution against any property or assets under Phase I whatsoever (irrespective of its use or intended use) of any order or judgment which may be made or given in any proceedings. |
17.3 | The Mortgagor irrevocably and unconditionally acknowledges that the execution, delivery and performance of this Commercial Mortgage constitute private and commercial (and not public or governmental) acts of such party done and performed for private and commercial (and not public or governmental) purposes. |
This Commercial Mortgage has been entered into on the date stated at the beginning of this Commercial Mortgage.
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Execution page of the Commercial Mortgage
Signed by:
|
For and on behalf of
Brooge Petroleum and Gas Investment Company FZC
Signed by:
/s/ Ali Al Jarian | /s/ Ayman Ragheb Taher Nasser |
For and on behalf of
National Bank of Abu Dhabi PJSC – Islamic Banking Division
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Exhibit 10.35
Assignment of Contracts
Dated 29-06-2015
Brooge Petroleum and Gas Investment Company FZC
(the Assignor)
National Bank of Abu Dhabi PJSC - Islamic Banking Division
(the Security Agent)
Dentons & Co Suite 1204 Al Ghaith Tower
Hamdan Street PO Box 47656
Abu Dhabi
United Arab Emirates |
|
Contents
1 | Definitions and interpretation | 1 |
2 | Secured Liabilities | 2 |
3 | Grant of security | 2 |
4 | Perfection | 3 |
5 | Power of attorney | 4 |
6 | Representations and warranties | 4 |
7 | Undertakings | 5 |
8 | Effectiveness of security | 6 |
9 | Enforcement | 8 |
10 | Expenses | 9 |
11 | Currency conversion | 9 |
12 | Suspense Account | 9 |
13 | Further assurances | 10 |
14 | Calculations and certificates | 10 |
15 | Miscellaneous | 10 |
16 | Changes to the Parties | 11 |
17 | Notices | 12 |
18 | Counterparts | 12 |
19 | Governing law | 12 |
20 | Enforcement | 12 |
Schedule 1 - The Original Contracts | 13 |
Execution Page of Assignment of Contracts |
i
Assignment of Contracts
Dated
Between
(1) | Brooge Petroleum and Gas Investment Company FZC incorporated under the laws of Fujairah Free Zone, Fujairah, United Arab Emirates of P.O. Box 50170, Fujairah, United Arab Emirates (the Assignor); and |
(2) | National Bank of Abu Dhabi PJSC - Islamic Banking Division, as security agent for the Secured Parties (the Security Agent). |
Recitals
A | On or about the date of this assignment of contracts (the Assignment) the Assignor, the Account Bank and the Investment Agent entered into the Common Terms Agreement pursuant to which the Transaction Documents are to be, or have been, entered into. |
B | Pursuant to the terms of the Transaction Documents the Assignor has agreed to provide the Security under this Assignment to the Security Agent (as security agent for the Secured Parties) to secure the payment and discharge of the Secured Liabilities. |
It is agreed:
1 | Definitions and interpretation |
1.1 | Definitions |
1.1.1 | Unless the context otherwise requires or unless otherwise defined in this Assignment, words and expressions defined (directly or indirectly) in the Common Terms Agreement shall have the same meaning when used in this Assignment. |
1.1.2 | In addition, in this Assignment: |
Additional Contracts means each contract assigned to the Security Agent under the terms of this Assignment following the execution and delivery of a Supplemental Agreement.
Assigned Documents means each:
(a) | Additional Contract; and |
(b) | Original Contract. |
Assigned Rights means all right, title, benefit and interest of the Assignor (but none of its obligations), whether present or future, contingent, proprietary, contractual or otherwise, arising out of or in, to or under the Assigned Documents.
Common Terms Agreement means the common terms agreement dated or about the date of this Assignment and entered into between the Assignor, the Investment Agent and the Account Bank.
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Notice of Assignment means a notice of assignment to be delivered by the Assignor in the form set out in Schedule 3 (Form of Notice of Assignment) or otherwise in a form acceptable to the Security Agent.
Original Contract means all of the Contracts listed in Schedule 1 (The Original Contracts).
Party means a party to this Assignment.
Secured Liabilities means all obligations owing to the Finance Parties by the Obligors under or pursuant to the Transaction Documents, whether present or future, actual or contingent (and whether incurred by the Obligors alone or jointly, and whether as principal or surety or in some other capacity).
Supplemental Agreement means the supplemental agreement substantially the same form as set out in Schedule 2 (Form of Supplemental Agreement) or otherwise in a form acceptable to the Security Agent.
1.2 | Construction |
The principles of construction used in the Common Terms Agreement shall apply to this Assignment to the extent they are relevant to it and, subject to any necessary changes, as they apply to the Common Terms Agreement.
1.3 | Third party rights |
1.3.1 | Each Secured Party and its officers, employees and agents may enforce any term of this Assignment which purports to confer a benefit on that person, but no other person who is not a party to this Assignment has any right to enforce or to enjoy the benefit of any term of Assignment. |
1.3.2 | Notwithstanding any term of any Finance Document, the parties to this Assignment may rescind, vary, waive, release, assign, novate or otherwise dispose of all or any of their respective rights or obligations under Assignment without the consent of any person who is not a party to Assignment. |
2 | Secured Liabilities |
The Assignor covenants with the Security Agent that it shall pay on demand all monies due and payable to the Secured Parties pursuant to the Transaction Documents and shall otherwise discharge each of the Secured Liabilities on its due date and in accordance with the terms of the Transaction Documents.
3 | Grant of security |
3.1 | Assignment |
By way of continuing security for the payment and discharge of the Secured Liabilities, the Assignor assigns by way of security the Assigned Rights to the Security Agent.
3.2 | Release |
3,21 | Upon the expiry of the Security Period, the Security Agent shall, subject to Clause 8.5 (Avoidance of payments), at the request and cost of the Assignor, release the Assigned Rights and all the Security granted by this Assignment free of all Security created by the Security Agent, without recourse to, and without any representations or warranties by, the Security Agent or any of its nominee(s). |
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3.3 | Continuing security |
The Security created by this Assignment shall be a continuing Security for the payment and discharge of the Secured Liabilities from time to time, notwithstanding any intermediate payment, discharge or satisfaction of the whole or any part of the Secured Liabilities (or any settlement of accounts between the Assignor and the Security Agent).
3.4 | Nature of Assigned Rights |
The Assignor covenants with the Security Agent that:
(a) | the terms of this Assignment and the Security created by it apply to the Assigned Rights; and |
(b) | it will not at any time seek to rely on the non-existence of any part of the Assigned Rights at the date of this Assignment as releasing the Assignor from the performance, in whole or in part, of any of its liabilities or obligations arising under this Assignment or any other agreement relating to or concerning the Assigned Rights. |
4 | Perfection |
4.1 | Perfection |
4.1.1 | The Assignor agrees that in relation to (i) each Original Contract and (ii) each Additional Contract: |
(a) | it shall within five Business Days (or such longer period of time as may be agreed by the Security Agent) of a request being made by the Security Agent deliver to the Security Agent a dated Notice of Assignment addressed to the relevant counterparty duly executed by or on behalf of the Assignor if the Security Agent (acting on the instructions of the Majority Participants) considers that any event or circumstance, or series of events or circumstances, has occurred which has or could reasonably be expected to have a Material Adverse Effect; |
(b) | the Security Agent may deliver any Notice of Assignment to the relevant counterparty without any further notice to the Assignor; and |
(c) | it shall use its best endeavours to procure that the relevant counterparty acknowledges the Notice of Assignment by countersigning the Notice of Assignment and returning a copy of such acknowledgement to the Security Agent. |
4.1.2 | The Assignor agrees that in relation to each Additional Contract that contains the Assignment Clause, notice shall be deemed to have been given to the relevant counterparty by virtue of the Assignment Clause |
4.1.3 | Without prejudice to Clause 5 (Power of attorney), if requested by the Security Agent, the Assignor shall provide a notarised power of attorney to the Security Agent in form and substance satisfactory to the Security Agent. |
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4.2 | Supplemental Agreement |
4.2.1 | If the Assignor is required to assign any Additional Contract to the Security Agent in accordance with the terms of the Common Terms Agreement, the Assignor shall execute and deliver to the Security Agent a Supplemental Agreement within the relevant time period, as provided for within the Common Terms Agreement, pursuant to which all of the Assignor’s right, title and interest, present and future, in or relating to the Additional Contract(s) shall be assigned to the Security Agent on the terms set out in this Assignment. |
4.2.2 | The Parties acknowledge that the assignment pursuant to a Supplemental Agreement takes effect immediately upon signature by the Assignor, and failure by the Security Agent to execute a Supplemental Agreement shall in no way invalidate such assignment. |
5 | Power of attorney |
5.1 | Appointment |
The Assignor irrevocably appoints the Security Agent to be its attorney for and on its behalf and in its name to execute, deliver and perfect all documents and do all things which the Security Agent may consider to be necessary for carrying out any obligation of the Assignor under this Assignment which the Assignor has failed to perform and to enable the Security Agent to exercise any of the rights, powers and authority (including rights of enforcement) conferred on it by or pursuant to this Assignment.
5.2 | Delegation |
The Security Agent shall have full power to delegate the power conferred on it by this Clause 5 (Power of attorney), but no such delegation shall preclude the subsequent exercise of such power by the Security Agent itself or preclude the Security Agent from making a subsequent delegation thereof to some other person; any such delegation may be revoked by the Security Agent at any time. Any delegation of power under this Clause should be notified (in writing) to the Assignor as soon as reasonably possible.
5.3 | Ratification |
The Assignor ratifies and confirms and agrees to ratify and confirm whatever the Security Agent may lawfully do or attempt to do in exercise of any of the rights referred to in this Clause 5 (Power of attorney).
6 | Representations and warranties |
6.1 | Representations and warranties |
The Security Agent has entered into this Assignment in reliance on the Assignor’s representations and warranties that, and the Assignor represents and warrants that:
(a) | it is the sole legal and beneficial owner of the Assigned Rights; |
(b) | it has not disposed of, or agreed to dispose of, any interest in the Assigned Rights; |
(c) | it has the right, power and authority to assign the Assigned Rights to the Security Agent in the manner provided for in this Assignment; |
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(d) | there are no restrictions on the Assignor’s ability to assign the Assigned Rights to the Security Agent; |
(e) | the Assigned Rights are free of any Security (except for those created by or under this Assignment) and any other rights or interests in favour of third parties; |
(f) | each Original Contract and, on the date that any Contract becomes an Additional Contract, each Additional Contract is in full force and effect and is enforceable in accordance with their terms; |
(g) | there is no outstanding breach under any Original Contract and, on the date that any Contract becomes an Additional Contract, each Additional Contract; and |
(h) | there are no written or oral agreements or arrangements between it and a counter party which derogate from the obligations of any counterparty under an Original Contract and, on the date that any Contract becomes an Additional Contract, each Additional Contract. |
6.2 | Repetition |
The representations and warranties set out in this Clause 6 (Representations and warranties) shall survive the execution of this Assignment and are deemed to be made by the Assignor at the same time as the Repeating Representations are deemed to be made pursuant to clause 4.24 (Repeating representations) of the Common Terms Agreement.
7 | Undertakings |
7.1 | Negative pledge |
The Assignor shall not create or permit to subsist any Security on any part of the Assigned Rights (other than the Transaction Security).
7.2 | Not jeopardise |
The Assignor shall not do or permit to be done any act or thing which may, in the opinion of the Security Agent jeopardise the rights of the Security Agent in the Assigned Rights or which might adversely affect or diminish the value of the Assigned Rights during the Security Period or which might result in the receipt or recovery of moneys payable under or in connection with the Assigned Rights being delayed or prevented.
7.3 | Notify |
The Assignor shall promptly notify the Security Agent of any circumstances which might give rise or may reasonably be expected to give rise, to a claim on or in relation to the Assigned Rights.
7.4 | Actions in respect of Assigned Rights |
The Assignor shall (to the Security Agent’s satisfaction):
(a) | promptly pursue any remedies available to it in respect of any claim arising in relation to the Assigned Rights; |
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(b) | observe and perform and remain liable to do so, all of the obligations that are to be performed by it under or in relation to this Assignment and its obligations under each Assigned Document; |
(c) | promptly provide to the Security Agent any information relating to the Assigned Rights that the Security Agent may require; and |
(d) | ensure that all monies payable to it in relation to the Assigned Rights are paid in full and free and clear of any set-off deductions, withholding, counterclaims or other conditions. |
7.5 | Assigned Documents |
The Assignor covenants with the Security Agent that it will:
(a) | only cancel or terminate an Assigned Document or amend or otherwise modify an Assigned Document, or waive any default under or breach of an Assigned Document (or permit any such cancellation, termination or amendment) if: |
(i) | it has provided prior written notice of such actions to the Security Agent (provided however no notice shall be required if such actions would not have any Material Adverse Effect); and |
(ii) | the Assignor will not be in breach of clause 8.3 (Eligible Receivables) of the Common Terms Agreement as a result; |
(b) | perform, within all required time periods (after giving effect to any applicable grace periods), all of the obligations and enforce all of the rights (including taking legal proceedings where appropriate) under an Assigned Document; |
(c) | notify the Security Agent in writing, immediately on becoming aware of the same, of any intention or act (whether written or oral) by a counterparty to terminate or cancel an Assigned Document; |
(d) | ensure that all receivables in relation to (i) each Original Contract and (ii) each Additional Contract are paid in full to the Earnings Account by the Assignor no later than the first Business Day of the week immediately following receipt (if not paid directly into the Earnings Account by the relevant counterparty); |
(e) | not take or omit to take any action the taking or omission of which would or might impair the Security Agent’s interest in an Assigned Document or its rights under this Assignment; and |
(f) | if requested by the Security Agent, include in any Additional Contract, including any new, renewal or replacement Assigned Document, the wording substantially in the same form set out in Schedule 4 (Form of assignment clause) or otherwise in a form acceptable to the Security Agent acting reasonably. |
8 | Effectiveness of security |
8.1 | Cumulative security |
The Security constituted by this assignment shall be cumulative, in addition to and independent of every other Security which the Security Agent may at any time hold for the Secured Liabilities or any rights, powers and remedies provided by law. No prior Security held by the Security Agent over the whole or any part of the Assigned Rights shall merge into the security constituted by this Assignment.
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8.2 | No invalidity, etc. |
The Security created by or pursuant to this Assignment and the obligations of the Assignor under this Assignment shall not be discharged, impaired or otherwise affected by any unenforceability or invalidity of any other agreement or document, any failure by the Security Agent to realise, perfect or protect any other Security for the Secured Liabilities, by any impairment, amendment, variation, waiver or release of any of the Secured Liabilities, by any time or indulgence granted to the Assignor or by any other act, event or omission which might otherwise prejudice such Security.
8.3 | No liability |
Neither the Security Agent nor its nominee(s) shall be liable by reason of:
(a) | taking any action permitted by this Assignment; |
(b) | any neglect or default of any nature whatsoever in connection with the Assigned Rights; or |
(c) | the taking possession or realisation of all or any part of the Assigned Rights, |
except in the case of gross negligence, wilful default or fraud on its part.
8.4 | Immediate recourse |
The Assignor waives any right it may have of first requiring the Security Agent to proceed against or enforce any other rights or security or claim payment from any person before claiming from the Assignor under this Assignment. This waiver applies irrespective of any law or any provision of this Assignment to the contrary.
8.5 | Avoidance of payments |
Notwithstanding Clause 3.2 (Release), if the Security Agent considers that any amount paid or credited to it is capable of being.avoided or reduced by virtue of any bankruptcy, insolvency, liquidation or similar laws, the liability of the Assignor under this Assignment and the Security constituted by this Assignment shall continue and that amount shall not be considered to have been irrevocably paid.
8.6 | No prejudice |
The Security constituted by this Assignment and the rights, powers and remedies of the Security Agent provided by or pursuant to this Assignment or by law shall not be prejudiced by any unenforceability or invalidity of any other agreement or document or by any time or indulgence granted to the Assignor or any other person by the Security Agent or by any other thing which might otherwise prejudice the Security or any rights, powers and remedies of the Security Agent provided by or pursuant to this Assignment or by law.
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9 | Enforcement |
9.1 | Enforcement of security |
On and at any time after the occurrence of an Event of Default which is continuing, the Security Agent shall be entitled (without any notice to, or consent from, the Assignor) to exercise all the rights, powers and remedies conferred on it by law as an assignee of the Assigned Rights and to:
(a) | secure and perfect its title to all or any part of the Assigned Rights (including transferring the same into the name of the Security Agent or its nominee(s)) or otherwise exercise in relation to the Assigned Rights all the rights of an absolute owner; |
(b) | enforce all or any part of the Security constituted by this Assignment (at the times, in the manner and on the terms it thinks fit) and appropriate, hold, sell or otherwise dispose of all or any part of the Assigned Rights (at the times, in the manner and on the terms it thinks fit); |
(c) | collect, recover or compromise and give good discharge for any moneys paid or payable to the Assignor under or in respect of the Assigned Rights, and enforce (in any way whatsoever including by way of instituting proceedings in the Assignor’s name) any rights or claims arising or in respect of the Assigned Rights; |
(d) | apply, set off, transfer or assign all or any part of the Assigned Rights in or towards discharge of all or any part of the Secured Liabilities (without prior notice to the Assignor); |
(e) | take-over or commence or defend (if necessary using the name of the Assignor) any claims or proceedings to, or affecting, any Assigned Rights which the Security Agent may think fit, and abandon, release or settle in any way any of those claims or proceedings; and |
(f) | execute and do all such acts, agreements and things as the Security Agent may consider reasonably necessary or proper for or in relation to any of the above purposes. |
9.2 | Assignor as agent |
Any sums in respect of the Assigned Rights which are, upon the occurrence of an Event of Default or at any time thereafter, held by the Assignor, its bankers or other agents or representatives, shall be deemed to have been received by and be held by them as agent for the Security Agent, and the Assignor shall immediately notify such persons that this is the case.
9.3 | Rights at law |
The provisions of Clause 9.1 (Enforcement of security) are without prejudice and in addition to any other remedy which the Security Agent may have at law, contract or otherwise, including, the right to apply to the courts of Abu Dhabi for permission to dispose of all or any of the Assigned Rights.
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9.4 | Application |
The Security Agent shall apply all amounts received, recovered or obtained by it pursuant to this Assignment in or towards discharge of, or set-off against, the Secured Liabilities in accordance with the provisions of the Transaction Documents.
9.5 | Subsequent interests |
If the Security Agent at any time receives notice of any subsequent Security affecting all or any part of the Assigned Rights, all payments made by the Assignor to the Security Agent after that time shall be treated as having been credited to a new account of the Assignor and not as having been applied in reduction of the Secured Liabilities as at the time when the Security Agent received notice.
9.6 | Exercise of rights by the Security Agent |
The exercise of any rights arising under this Assignment by the Security Agent shall not put any person dealing with the Security Agent upon any enquiry as to whether the Security Agent is entitled to exercise the same and the exercise by the Security Agent of such right shall be conclusive evidence of its right to do so.
9.7 | Enforcing security |
The Security Agent shall not be bound to enforce any other rights, Security or guarantee or claim against any person before enforcing the security constituted by this Assignment, notwithstanding any non-mandatory provision of law or any provision of this Assignment to the contrary.
10 | Expenses |
The Assignor shall (promptly on demand from the Security Agent) pay to the Security Agent (on behalf of the relevant Finance Party) on a full indemnity basis the amount of all actual costs and expenses (including legal fees) incurred by it in connection with:
(a) | the enforcement of, or the preservation of any rights under this Assignment; and |
(b) | any proceedings instituted by the Security Agent as a consequence of taking or holding this Assignment or enforcing in relation to the Assigned Rights. |
11 | Currency conversion |
For the purpose of or pending the discharge of any of the Secured Liabilities, the Security Agent may convert any money received, recovered or realised or subject to application by it under this Assignment from one currency to another, as the Security Agent thinks fit or deems necessary and any such conversion shall be effected at the Security Agent’s Spot Rate of Exchange for the time being for obtaining such other currency with the first currency.
12 | Suspense Account |
All monies received, recovered or realised by the Security Agent under this Assignment (including the proceeds of any conversion of currency) may, at the discretion of the Security Agent, be credited to any suspense or impersonal account(s) maintained with a financial institution (including itself) and may be held in such account(s) for so long as the Security Agent may think fit (the profit being credited to the relevant account) pending their application, from time to time at the Security Agent’s discretion, in or towards the discharge of any of the Secured Liabilities.
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13 | Further assurances |
The Assignor shall (at its own cost) promptly execute all documents and instruments, make any filings, re-filings, notarisations, translations, registrations or re-registrations and do all things that the Security Agent may reasonably specify for the purpose of:
(a) | securing and perfecting its Security over, or title to, all or any part of the Assigned Rights (which may include the execution by the Assignor of a Security over all or any of the assets constituting, or intended to constitute, Assigned Rights); |
(b) | enabling the Security Agent to vest all or part of the Assigned Rights in its name (or in the name(s) of its nominees, agent or any purchaser); or |
(c) | otherwise facilitating the realisation of any Assigned Rights. |
14 | Calculations and certificates |
14.1 |
Accounts |
In any litigation or arbitration proceedings arising out of or in connection with this Assignment, the entries made in the accounts maintained by the Security Agent are prima facie evidence of the matters to which they relate.
14.2 | Certificates and determinations |
Any certification or determination by the Security Agent of a rate or amount under this Assignment is, in the absence of manifest error, prima facie evidence of the matters to which it relates.
15 | Miscellaneous |
15.1 | No liability for loss |
The Security Agent shall not be liable for any losses arising out of or in connection with the exercise or purported exercise in good faith of any of its rights under this Assignment nor for any omissions of any nature whatsoever in connection with all or any of the Assigned Rights other than as may be due to the breach, gross negligence, wilful misconduct or fraud of the Security Agent.
15.2 | Partial invalidity |
If, at any time, any provision of this Assignment is or becomes illegal, invalid or unenforceable in any respect under any law of any jurisdiction, neither the legality, validity or enforceability of the remaining provisions nor the legality, validity or enforceability of such provision under the law of any other jurisdiction will in any way be affected or impaired.
15.3 | Remedies and waivers |
No failure to exercise, nor any delay in exercising, on the part of the Security Agent, any right or remedy under this Assignment shall operate as a waiver, nor shall any single or partial exercise of any right or remedy prevent any further or other exercise or the exercise of any other right or remedy.
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15.4 | Cumulative rights |
The rights and remedies provided in this Assignment are cumulative and not exclusive of any rights or remedies arising by law and may be exercised from time to time and as often as the Security Agent may deem expedient.
15.5 | Waivers only in writing |
Any waiver by the Security Agent of any provision of this Assignment, or any consent or approval given by the Security Agent under or in connection with this Assignment, shall only be effective if given in writing and then only for the purpose and upon the terms for which it is given.
15.6 | Amendments |
Without prejudice to clause 13 (Amendments and waivers) of the Investment Agency Agreement, any amendments to this Assignment must be in writing and signed by the Assignor and the Security Agent.
15.7 | Waiver of immunity from suit and enforcement |
To the extent permitted by any applicable law, the Assignor irrevocably and unconditionally:
(a) | agrees that if the Security Agent brings proceedings against it or its assets in relation to this Assignment, no immunity from those proceedings (including suit, attachment prior to judgment, other attachment, the obtaining of judgment, execution or other enforcement) shall be claimed by or on behalf of itself or with relation to its assets; |
(b) | waives any such right of immunity which it or its assets now has or may subsequently acquire; and |
(c) | consents generally in relation to any such proceedings to the giving of any relief or the issue of any process in connection with those proceedings, including the making, enforcement or execution against any assets whatsoever (irrespective of its use or intended use) of any order or judgment which may be made or given in those proceedings. |
16 | Changes to the Parties |
16.1 | Assignments and transfers by the Security Agent |
The Security Agent shall be entitled to assign or transfer all or any of its rights under this Assignment in accordance with the terms of the Common Terms Agreement.
16.2 | Assignments and transfers by the Assignor |
The Assignor may not assign any of its rights or transfer any of its rights or obligations under this Assignment.
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16.3 | Successors |
The obligations of the Assignor under this Assignment shall bind it and its successors and shall inure to the benefit of the Security Agent and its successors and assigns.
17 | Notices |
The provisions of clause 20 (Notices) of the Investment Agency Agreement shall apply to this Assignment as though they were set out in full.
18 | Counterparts |
This Assignment may be executed in any number of counterparts, and this has the same effect as if the signatures on the counterparts were on a single copy of this Assignment.
19 | Governing law |
This Assignment and all non-contractual obligations arising from or connected with it are governed by the laws of the Emirate of Abu Dhabi and applicable federal laws of the UAE.
20 | Enforcement |
20.1 | Courts |
20.1.1 | The courts of the Emirate of Abu Dhabi shall have non-exclusive jurisdiction to settle any dispute arising out of or in connection with this Assignment (including a dispute relating to the existence, validity or termination of this Assignment or any non-contractual obligation arising out of or in connection with this Assignment) (a Dispute). |
20.1.2 | The Parties agree that the courts of the Emirate of Abu Dhabi are the most appropriate and convenient courts to settle Disputes and accordingly no Party will argue to the contrary. |
20.1.3 | This Clause 20.1 is for the benefit of the Finance Parties only. As a result, no Finance Party shall be prevented from taking proceedings relating to a Dispute in any other courts with jurisdiction. To the extent allowed by law, the Finance Parties may take concurrent proceedings in any number of jurisdictions. |
This Assignment has been entered into on the date stated at the beginning of this Assignment.
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Execution Page of Assignment of Contracts
The Assignor |
|
|
Signed by | ) | |
duly authorised in accordance with the | ) | |
laws of Fujairah Free Zone, United Arab | ) | |
Emirates for and on behalf of Brooge | ) | |
Petroleum and Gas Investment Company | ) | |
FZC in the presence of: | ) | |
) | ||
Signature of witness | ) | |
Name of witness: __________________________ | ||
Address of witness: __________________________ | ||
__________________________ | ||
__________________________ |
Exhibit 10.36
Certain identified information has been excluded from the exhibit because it is both not material and would likely cause competitive harm to the registrant if publicly disclosed.
Investment Agency Agreement
Dated 29-06-2015
Brooge Petroleum and Gas Investment Company FZC
(the Company)
National Bank of Abu Dhabi PJSC — Islamic Banking Division
(as Investment Agent)
National Bank of Abu Dhabi PJSC — Islamic Banking Division
(as Arranger,)
National Bank of Abu Dhabi PJSC — Islamic Banking Division
(as Security Agent)
National Bank of Abu Dhabi PJSC — Islamic Banking Division
(as Participant)
Al Brooge Capital Providing for Oil and Gas LLC
and
Emirates Investment Company LLC FZC
(together with the Company the Obligors)
Dentons & Co Suite 1204 Al Ghaith Tower Hamdan Street PO Box 47656 Abu Dhabi United Arab Emirates |
|
Contents
1 | Definitions and interpretation | 2 |
2 | Finance Parties’ rights and obligations | 6 |
3 | Payment mechanics | 6 |
4 | Set-off by Finance Parties | 10 |
5 | Sharing among the Finance Parties | 11 |
6 | Role of the Investment Agent and the Arranger | 12 |
7 | The Security Agent | 22 |
8 | Conduct of business by the Finance Parties | 36 |
9 | Fees | 36 |
10 | Costs and expenses | 36 |
11 | Tax gross-up and indemnities; VAT | 37 |
12 | Other indemnities | 40 |
13 | Amendments and waivers | 42 |
14 | Representations and warranties | 43 |
15 | Illegality | 44 |
16 | Changes to the Participants | 44 |
17 | “Know your customer” checks | 47 |
18 | Confidentiality | 48 |
19 | Mitigation by the Investment Agent and the Participants | 50 |
20 | Notices | 50 |
21 | Calculations and certificates | 53 |
22 | Partial invalidity | 53 |
23 | Remedies and waivers | 53 |
24 | Counterparts | 53 |
25 | Governing law | 53 |
26 | Enforcement | 54 |
Schedule 1 — The Original Participants |
24 June 2015
Page 1
Investment Agency Agreement
Dated
Between
(1) | Brooge Petroleum and Gas Investment Company FZC incorporated under the laws of Fujairah Free Zone, Fujairah, United Arab Emirates of P. O. Box 50170, Fujairah, United Arab Emirates (the Company); |
(2) | National Bank of Abu Dhabi PJSC — Islamic Banking Division, of P. O. Box 40057, Abu Dhabi, United Arab Emirates acting in its capacity as Investment Agent for an on behalf of the Participant (the Investment Agent); |
(3) | National Bank of Abu Dhabi PJSC — Islamic Banking Division, of P. O. Box 40057, Abu Dhabi, United Arab Emirates acting in its capacity as mandated lead arranger for an on behalf of the Participant (the Arranger); |
(4) | National Bank of Abu Dhabi PJSC — Islamic Banking Division, of P. O. Box 40057, Abu Dhabi, United Arab Emirates acting in its capacity as security agent for the Finance Parties for an on behalf of the Participants (the Security Agent); |
(5) | The Participants listed in Schedule 1 (the Original Participants); and |
(6) | Al Brooge Capital Providing for Oil and Gas LLC and Emirates Investment Company LLC FZC (together with the Company the Obligors). |
Recitals
A. | The Participants have agreed to appoint the Investment Agent and the Security Agent on the terms of this Agreement. |
B. | The Finance Parties have agreed to make facilities available on the terms of the Principal Agreement. |
C. | The Investment Agent has provided the Security Agent with a copy of the Transaction Documents. |
It is agreed:
1 | Definitions and interpretation |
1.1 | Definitions |
Words and expressions defined (directly or indirectly) in the Principal Agreement shall have the same meanings in this Agreement unless they are expressly defined in it and, in addition, in this Agreement:
Assignment Agreement means an agreement substantially in the form set out in Schedule 3 (Form of Assignment Agreement) or any other form agreed between the relevant assignor and assignee.
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Base Currency means Dirhams.
Charged Property means all assets of the Obligors which from time to time are, or are expressed to be, the subject of the Transaction Security.
Commitment means:
(a) | in relation to an Original Participant, the amount set opposite its name under the heading “Commitment” in Schedule 1 (The Participants) and the amount of any other Commitment transferred to it under this Agreement; and |
(b) | in relation to any other Participant, the amount of any Commitment transferred to it under this Agreement, |
to the extent not cancelled, reduced or transferred by it under the Transaction Documents.
Confidential Information means all information relating to an Obligor, the Transaction Documents or the Facility in respect of which a Finance Party becomes aware in its capacity as, or for the purpose of becoming, a Finance Party or which is received by a Finance Party in relation to, or for the purpose of becoming a Finance Party under, the Transaction Documents or the Facility from either:
(a) | the Company or any of its advisers, or |
(b) | another Finance Party, if the information was obtained by that Finance Party directly or indirectly from the Company or any of its advisers, |
in whatever form, and includes information given orally and any document, electronic file or any other way of representing or recording information which contains or is derived or copied from such information but excludes information that:
(i) | is or becomes public information other than as a direct or indirect result of any breach by that Finance Party of Clause 18 (Confidentiality); or |
(ii) | is identified in writing at the time of delivery as non-confidential by the Company or any of its advisers; or |
(iii) | is known by that Finance Party before the date the information is disclosed to it in accordance with paragraph (i) or (ii) above or is lawfully obtained by that Finance Party after that date, from a source which is, as far as that Finance Party is aware, unconnected with the Group and which, in either case, as far as that Finance Party is aware, has not been obtained in breach of, and is not otherwise subject to, any obligation of confidentiality. |
Confidentiality Undertaking means a confidentiality undertaking in a form and substance satisfactory to the Investment Agent.
Delegate means any delegate, agent, attorney, co-trustee, custodian or nominee appointed by the Security Agent, and includes any sub-delegate.
Fee Letter means any letter or letters dated on or about the date of this Agreement between the Company and all or any of the Arranger, the Investment Agent and the Security Agent setting out any of the fees referred to in Clause 9 (Fees).
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Finance Party means the Arranger, the Investment Agent, the Security Agent or a Participant.
Investment means the aggregate of all Participant Contributions that have been paid and remain outstanding from time to time.
Majority Participants means a Participant or Participants whose Commitments aggregate more than 662/3 per cent of the Total Commitments (or, if the Total Commitments have been reduced to zero, aggregated more than 662/3 per cent of the Total Commitments immediately before the reduction).
New Participant has the meaning given to it in Clause 16.1 (Assignments and transfers by the Participants).
Participant means:
(a) | any Original Participant; and |
(b) | any bank, financial institution, trust, fund or other entity which has become a Party in accordance with Clause 16 (Changes to the Participants), |
which in each case has not ceased to be a Party in accordance with the terms of this Agreement.
Participant Contribution means in relation to a Participant a payment to be made or made to the Investment Agent under this Agreement for application by the Investment Agent on behalf of the Participants as required under the Principal Agreement and the other Transaction Documents.
Participant Contribution Date means the date when a Participant Contribution is or is to be made.
Participant Contribution Request means a document substantially in the form set out in Schedule 4 (Form of Participation Contribution Request).
Participation means, in relation to a Participant, the aggregate amount of its Participant Contributions, as the same may be increased or decreased by assignments or transfers in accordance with the provisions of Clause 16.1 (Assignments and transfers by the Participants).
Party means a party to this Agreement.
Percentage means in relation to a Participant, the aggregate Participations made by that Participant as a percentage of the aggregate Participations made by all the Participants.
Principal Agreement means the Common Terms Agreement dated on or about the date of this Agreement between the Company and the Investment Agent.
Receiver means a receiver or receiver and manager or administrative receiver of the whole or any part of the Charged Property.
Related Fund in relation to a fund (the first fund), means a fund which is managed or advised by the same investment manager or investment adviser as the first fund or, if it is
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managed by a different investment manager or investment adviser, a fund whose investment manager or investment adviser is an Affiliate of the investment manager or investment adviser of the first fund.
Remittance means any payment made or owing by an Obligor under any Transaction Document in relation to the Investment which is remitted to or received by the Investment Agent (in its capacity as such) for onward payment to the Participants pursuant to this Agreement.
Representative means any delegate, agent, manager, administrator, nominee, attorney, trustee or custodian.
Separate Trustee means any separate trustee appointed by the Security Agent under Clause 7.24 (Additional Security Agents).
Total Commitments means the aggregate of the Commitments, being 310,718,000 at the date of this Agreement.
Transaction Request means:
(a) | the Offer Letter; or |
(b) | an Instisna’ Instalment Notice. |
Transfer Certificate means a certificate substantially in the form set out in Schedule 2 (Form of Transfer Certificate) or any other form agreed between the Investment Agent and the Company.
Transfer Date means, in relation to an 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 Investment Agent executes the relevant Assignment Agreement or Transfer Certificate. |
1.2 | Construction |
The principles of construction used in the Principal Agreement shall apply to this Agreement as they apply to the Principal Agreement.
1.3 | Third party rights |
1.3.1 | Unless expressly provided to the contrary in this Agreement a person who is not a Party has no right under the Third Parties Act to enforce or to enjoy the benefit of any term of this Agreement. |
1.3.2 | Notwithstanding any term of any Transaction Document, the Parties may rescind, vary, waive, release, assign, novate or otherwise dispose of all or any of their respective rights or obligations under this Agreement without the consent of any person who is not a Party. |
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2 | Finance Parties’ rights and obligations |
2.1 | Several obligations |
The obligations of each Finance Party under the Transaction Documents are several. Failure by a Finance Party to perform its obligations under the Transaction Documents does not affect the obligations of any other Party under the Transaction Documents. No Finance Party is responsible for the obligations of any other Finance Party under the Transaction Documents.
2.2 | Separate and independent rights |
The rights of each Finance Party under or in connection with the Transaction Documents are separate and independent rights and any debt arising under the Transaction Documents to a Finance Party from an Obligor shall be a separate and independent debt.
2.3 | Separate enforcement |
A Finance Party may, except as otherwise stated in the Transaction Documents, separately enforce its rights under the Transaction Documents.
3 | Payment mechanics |
3.1 | Receipt of Transaction Request |
The Investment Agent shall notify the Participants of its receipt of each duly completed Transaction Request.
3.2 | Issue of Participant Contribution Request |
If a Transaction Request complies with the provisions of the Transaction Documents the Investment Agent shall use all reasonable endeavours to issue a Participant Contribution Request no less than three Business Days before the proposed Participant Contribution Date.
3.3 | Calculation of Participant Contributions |
Each Participant’s Participant Contribution to the Istisna’ Instalment requested in a compliant Transaction Request will be equal to the proportion borne by its Available Commitment to the Available Facility immediately prior to the proposed Participant Contribution Date.
3.4 | Participant Contribution payment |
No less than two Business Days after the date of issue of the relevant Participant Contribution Request, and in any event no less than one Business Days before the relevant Participant Contribution Date, each Participant shall pay its Participant Contribution to the Investment Agent in accordance with the relevant Participant Contribution Request and Clause 3.6 (Payments to the Investment Agent).
3.5 | Entitlement arising from payment of Participant Contributions |
3.5.1 | Subject to Clauses 3.5.2 and 3.5.3, following payment of its Participant Contribution in accordance with this Clause, a Participant shall be entitled to its Percentage of Remittances or other payments relating to the Investment that the Investment Agent receives or recovers in relation to that Participant Contribution. |
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3.5.2 | To the extent that a Remittance or other payment is made: |
(a) | in respect of a loss, cost or reduction suffered or incurred by; |
(b) | in respect of a service performed or supplied by; or |
(c) | in accordance with the Transaction Documents for the sole benefit of, |
a particular Participant or any of its Affiliates (including a payment or recovery of or on account of Increased Costs, fees or incentives), all of that payment shall be paid to the Participant concerned.
3.5.3 | Where a payment due to a Finance Party has been calculated in accordance with clausel3 (Market Disruption) of the Principal Agreement, the Participants shall share any Remittance or other payment made in respect of that payment pro rata to their respective shares of that payment as determined under those clauses. |
3.6 | Payments to the Investment Agent |
3.6.1 | On each date on which an Obligor or a Participant is required to make a payment under a Transaction Document, that Obligor or Participant shall make the same available to the Investment Agent (unless a contrary indication appears in a Transaction Document) for value on the due date at the time and in such funds specified by the Investment Agent as being customary at the time for settlement of transactions in the relevant currency in the place of payment. |
3.6.2 | Payment shall be made to such account in the principal financial centre of the country of that currency (or, in relation to euro, in London or in a principal financial centre in a Participating Member State, as specified by the Investment Agent) and with such bank as the Investment Agent, in each case, specifies. |
3.6.3 | In respect of its Participant Contribution, each Participant shall confirm (before 11.00 a.m. Abu Dhabi time) two Business Days prior to the Participant Contribution Date) its payment instructions by authenticated SWIFT message to the Investment Agent to such SWIFT number as the Investment Agent shall have notified to the Participants for this purpose. |
3.7 | Distributions by the Investment Agent |
Each payment received by the Investment Agent under the Transaction Documents for another Party (including Remittances for the Participants) shall, subject to Clause 3.9 (Distributions to an Obligor) and Clause 3.10 (Clawback if no actual receipt by the Investment Agent), be made available by the Investment Agent as soon as practicable after receipt to the Party entitled to receive payment in accordance with this Agreement (in the case of a Participant, for the account of its Facility Office), to such account as that Party may notify to the Investment Agent by not less than five Business Days’ notice with a bank in the principal financial centre of the country of that currency.
3.8 | Distributions to the Participants |
3.8.1 | The Investment Agent’s obligation to make payments to the Participants under this Agreement is conditional upon it receiving or recovering the applicable Remittance in accordance with the provisions of the Transaction Documents. |
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3.8.2 | Each of the Participants agrees for the benefit of the Investment Agent that its entitlement to each payment made by the Investment Agent in respect of Remittances which it receives ranks pari passu with the entitlements of each other Participant and that the amount to be paid to each Participant shall be that Participant’s Percentage of each such payment. |
3.9 | Distributions to an Obligor |
The Investment Agent may (with the consent of the relevant Obligor or in accordance with Clause 4 (Set-off by Finance Parties)) apply any amount received by it for an Obligor in or towards payment (on the date and in the currency and funds of receipt) of any amount due from that Obligor under the Transaction Documents or in or towards purchase of any amount of any currency to be so applied.
3.10 | Clawback if no actual receipt by the Investment Agent |
3.10.1 | Where a sum is to be paid to the Investment Agent under the Transaction Documents for another Party, the Investment Agent is not obliged to pay that sum to that other Party (or to enter into or perform any related exchange contract) until it has been able to establish to its satisfaction that it has actually received and is irrevocably entitled to retain that sum. |
3.10.2 | If the Investment Agent pays an amount to another Party and it proves to be the case that the Investment Agent had not actually received or was not irrevocably entitled to retain that amount, then the Party to whom that amount (or the proceeds of any related exchange contract) was paid by the Investment Agent shall on demand refund the same to the Investment Agent. That amount shall be treated as an Unpaid Sum (where the paid Party is the Company) or Participant Unpaid Sum (where the paid Party is a Participant) from the date of payment by the Investment Agent to the date of receipt of the refund by the Investment Agent, and shall be payable to the Investment Agent together with a Late Payment Amount (where the paid Party is the Company) on that amount. |
3.11 | Partial payments |
3.11.1 | If the Investment Agent or the Security Agent receives or recovers a Remittance that is insufficient to discharge all the amounts then due and payable by any Obligor under the Transaction Documents, the Investment Agent (or, as the case may be, the Security Agent) shall apply that payment towards the obligations of that Obligor under the Transaction Documents in the following order: |
(a) | if received on or after the first Ististna’ Payment Date but before the Commencement Date: |
(i) | first, in or towards payment pro rata of any outstanding fees, actual costs and expenses due to the Arranger, the Investment Agent and the Security Agent under the Transaction Documents; |
(ii) | secondly, in or towards payment pro rata of any accrued Advance Variable Rental Payments due but unpaid under the Transaction Documents; |
(iii) | thirdly, in or towards payment pro rata of any accrued Advance Fixed Rental Payments due but unpaid under the Transaction Documents; and |
(iv) | fourthly, in or towards payment pro rata of any other sum due but unpaid under the Transaction Documents; or |
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(b) | if received on or after the Commencement Date: |
(i) | first, in or towards payment pro rata of any outstanding fees, actual costs and expenses due to the Arranger, the Investment Agent and the Security Agent under the Transaction Documents; |
(ii) | secondly, in or towards payment pro rata of any accrued Variable Rental Payments due but unpaid under the Transaction Documents; |
(iii) | thirdly, in or towards payment pro rata of any accrued Fixed Rental Payments due but unpaid under the Transaction Documents; and |
(iv) | fourthly, in or towards payment pro rata of any other sum due but unpaid under the Transaction Documents. |
3.11.2 | The Investment Agent shall, if so directed by the Majority Participants, vary the order set out in Clauses 3.11.1(a) or 3.11.1(b). |
3.11.3 | Clauses 3.11.1 and 3.11.2 shall override any appropriation made by any Obligor. |
3.12 | No set-off by the Obligors |
All payments to be made by any Obligor under this Agreement and the other Transaction Documents shall be calculated and be made without (and free and clear of any deduction for) set-off or counterclaim.
3.13 | Business Days |
Any payment under the Transaction Documents which is due to be made on a day that is not a Business Day shall be made on the next Business Day in the same calendar month (if there is one) or the preceding Business Day (if there is not).
3.14 | Currency of account |
3.14.1 | Subject to Clauses 3.14.2 and 3.14.3, the Base Currency is the currency of account and payment for any sum due from the Company or an Obligor under any Transaction Document. |
3.14.2 | Each payment in respect of costs, expenses or Taxes shall be made in the currency in which the costs, expenses or Taxes are incurred. |
3.14.3 | Any amount expressed to be payable in a currency other than the Base Currency shall be paid in that other currency. |
3.15 | Change of currency |
3.15.1 | Unless otherwise prohibited by law, if more than one currency or currency unit are at the same time recognised by the central bank of any country as the lawful currency of that country, then: |
(a) | any reference in the Transaction Documents to, and any obligations arising under the Transaction Documents in, the currency of that country shall be translated into, or paid in, the currency or currency unit of that country designated by the Investment Agent (after consultation with the Company); and |
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(b) | any translation from one currency or currency unit to another shall be at the official rate of exchange recognised by the central bank for the conversion of that currency or currency unit into the other, rounded up or down by the Investment Agent (acting reasonably). |
3.15.2 | If a change in any currency of a country occurs, this Agreement will, to the extent the Investment Agent (acting reasonably and after consultation with the Company) specifies to be necessary, be amended to comply with any generally accepted conventions and market practice in the relevant market and otherwise to reflect the change in currency. |
3.16 | Disruption to payment systems etc. |
If either the Investment Agent determines (in its discretion) that a Disruption Event has occurred or the Investment Agent is notified by the Company that a Disruption Event has occurred:
(a) | the Investment Agent may, and shall if requested to do so by the Company, consult with the Company with a view to agreeing with the Company such changes to the operation or administration of the facilities to be made available under the Principal Agreement as the Investment Agent may deem necessary in the circumstances; |
(b) | the Investment Agent shall not be obliged to consult with the Company in relation to any changes mentioned in paragraph (a) above if, in its opinion, it is not practicable to do so in the circumstances and, in any event, shall have no obligation to agree to such changes; |
(c) | the Investment Agent may consult with the Finance Parties in relation to any changes mentioned in paragraph (a) above but shall not be obliged to do so if, in its opinion, it is not practicable to do so in the circumstances; |
(d) | any such changes agreed upon by the Investment Agent and the Company shall (whether or not it is finally determined that a Disruption Event has occurred) be binding upon the Parties as an amendment to (or, as the case may be, waiver of) the terms of the Transaction Documents notwithstanding the provisions of Clause 13 (Amendments and waivers); |
(e) | the Investment Agent shall not be liable for any damages, costs or losses to any person, any diminution in value or any liability whatsoever (including for negligence, gross negligence or any other category of liability whatsoever but not including any claim based on the fraud of the Investment Agent) arising as a result of its taking, or failing to take, any actions pursuant to or in connection with this Clause 3.16; and |
(f) | the Investment Agent shall notify the Finance Parties of all changes agreed pursuant to paragraph (d) above. |
4 | Set-off by Finance Parties |
A Finance Party may set off any matured obligation due from an Obligor under the Transaction Documents (to the extent beneficially owned by that Finance Party or by any Finance Party for whom that Finance Party acts as agent) against any matured obligation owed by that Finance Party to that Obligor, regardless of the place of payment, booking branch or currency of either obligation. If the obligations are in different currencies, the Finance Party may convert either obligation at a market rate of exchange in its usual course of business for the purpose of the set-off.
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5 | Sharing among the Finance Parties |
5.1 | Payments to Finance Parties |
If a Finance Party (a Recovering Finance Party) receives or recovers any amount from the Company or any other person other than in accordance with Clause 3 (Payment mechanics) and applies that amount to a payment due under the Transaction Documents (a Recovered Amount) then:
(a) | the Recovering Finance Party shall, within three Business Days, notify details of the receipt or recovery to the Investment Agent; |
(b) | the Investment Agent shall determine whether the receipt or recovery is in excess of the amount the Recovering Finance Party would have been paid had the receipt or recovery been received or made by the Investment Agent and distributed in accordance with Clause 3 (Payment mechanics), without taking account of any Tax which would be imposed on the Investment Agent in relation to the receipt, recovery or distribution; and |
(c) | the Recovering Finance Party shall, within three Business Days of demand by the Investment Agent, pay to the Investment Agent an amount (the Sharing Payment) equal to such receipt or recovery less any amount which the Investment Agent determines may be retained by the Recovering Finance Party as its share of any payment to be made, in accordance with Clause 3.11 (Partial payments). |
5.2 | Redistribution of payments |
The Investment Agent shall treat the Sharing Payment as if it had been paid by the relevant Obligor and distribute it between the Finance Parties (other than the Recovering Finance Party) (the Sharing Finance Parties) in accordance with Clause 3.11 (Partial payments) towards the obligations that Obligor to the Sharing Finance Parties.
5.3 | Recovering Finance Party’s rights |
On a distribution by the Investment Agent under Clause 5.2 (Redistribution of payments) of a payment received or recovered by a Recovering Finance Party from an Obligor, as between the relevant Obligor and the Recovering Finance Party, an amount of the Recovered Amount equal to the Sharing Payment shall be treated as not having been paid by that Obligor.
5.4 | Reversal of redistribution |
If any part of the Sharing Payment received or recovered by a Recovering Finance Party becomes repayable and is repaid by that Recovering Finance Party, then:
(a) | each Sharing Finance Party shall, upon the request of the Investment Agent, pay to the Investment Agent for the account of that Recovering Finance Party an amount equal to the appropriate part of its share of the Sharing Payment (together with an amount as is necessary to reimburse that Recovering Finance Party for its proportion of any return on the Sharing Payment which that Recovering Finance Party is required to pay) (the Redistributed Amount); and |
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(b) | as between the relevant Obligor and each relevant Sharing Finance Party, an amount equal to the relevant Redistributed Amount shall be treated as not having been paid by that Obligor. |
5.5 | Exceptions |
5.5.1 | This Clause 5 shall not apply to the extent that the Recovering Finance Party would not, after making any payment pursuant to this Clause, have a valid and enforceable claim against the relevant Obligor. |
5.5.2 | A Recovering Finance Party is not obliged to share with any other Finance Party any amount which the Recovering Finance Party has received or recovered as a result of taking legal or arbitration proceedings, if: |
(a) | it notified the other Finance Party of the legal or arbitration proceedings; and |
(b) | the other Finance Party had an opportunity to participate in those legal or arbitration proceedings but did not do so as soon as reasonably practicable having received notice and did not take separate legal or arbitration proceedings. |
6 | Role of the Investment Agent and the Arranger |
6.1 | Appointment of the Investment Agent |
6.1.1 | Each Participant irrevocably: |
(a) | appoints the Investment Agent to act as its agent in connection with the Transaction Documents and the Investment Agent hereby accepts such appointment; and |
(b) | authorises and instructs the Investment Agent to enter into each Transaction Document to which the Investment Agent is expressed to be a party as its agent on its behalf and to take such action on its behalf and to exercise such rights, remedies, powers and discretions as are delegated to the Investment Agent by this Agreement, together with such rights, remedies, powers and discretions as are reasonably incidental thereto. |
6.1.2 | Extent of duties |
The Investment Agent shall not have any duties, obligations or liabilities (whether fiduciary or otherwise) to the Participants beyond those expressly stated in this Agreement.
6.1.3 | Binding |
Any action taken by the Investment Agent under or in relation to the Transactions Documents with requisite authority, or on the basis of appropriate instructions, received from the Participants (or as otherwise duly authorised) shall be binding on the Participants as principals.
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6.2 | Instructions |
6.2.1 | The Investment Agent shall: |
(a) | unless a contrary indication appears in a Transaction Document, exercise or refrain from exercising any right, power, authority or discretion vested in it as Investment Agent in accordance with any instructions given to it by: |
(i) | all Participants if the relevant Transaction Document stipulates the matter is an all Participant decision; and |
(ii) | in all other cases, the Majority Participants; and |
(b) | not be liable for any act (or omission) if it acts (or refrains from acting) in accordance with Clause 6.2.1(a) above. |
6.2.2 | The Investment Agent shall be entitled to request instructions, or clarification of any instruction, from the Majority Participants (or, if the relevant Transaction Document stipulates the matter is a decision for any other Participant or group of Participants, from that Participant or group of Participants) as to whether, and in what manner, it should exercise or refrain from exercising any right, power, authority or discretion and the Investment Agent may refrain from acting unless and until it receives those instructions or that clarification. |
6.2.3 | Save in the case of decisions stipulated to be a matter for any other Participant or group of Participants under the relevant Transaction Document and unless a contrary indication appears in a Transaction Document, any instructions given to the Investment Agent by the Majority Participants shall override any conflicting instructions given by any other Parties and will be binding on all Finance Parties save for the Security Agent. |
6.2.4 | The Investment Agent may refrain from acting in accordance with any instructions of any Participant or group of Participants until it has received any indemnification and/or security that it may in its discretion require (which may be greater in extent than that contained in the Transaction Documents and which may include payment in advance) for any cost, loss or liability which it may incur in complying with those instructions. |
6.2.5 | In the absence of instructions, the Investment Agent may act (or refrain from acting) as it considers to be in the best interest of the Participants. |
6.2.6 | The Investment Agent is not authorised to act on behalf of a Participant (without first obtaining that Participant’s consent) in any legal or arbitration proceedings relating to any Transaction Document. This Clause 6.2.6 shall not apply to any legal or arbitration proceeding relating to the perfection, preservation or protection of rights under the Transaction Security Documents or enforcement of the Transaction Security or Transaction Security Documents. |
6.3 | Duties of the Investment Agent |
6.3.1 | The Investment Agent’s duties under the Transaction Documents are solely mechanical and administrative in nature. |
6.3.2 | Subject to Clause 6.3.3, the Investment Agent shall promptly forward to a Party the original or a copy of any document which is delivered to the Investment Agent for that Party by any other Party. |
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6.3.3 | Without prejudice to Clause 16.7 (Copy of Transfer Certificate or Assignment Agreement to Company), Clause 6.3.2 shall not apply to any Transfer Certificate. |
6.3.4 | Except where a Transaction Document specifically provides otherwise, the Investment Agent is not obliged to review or check the adequacy, accuracy or completeness of any document it forwards to another Party. |
6.3.5 | If the Investment Agent receives notice from a Party referring to this Agreement or the Principal Agreement, describing a Default and stating that the circumstance described is a Default, it shall promptly notify the other Finance Parties. |
6.3.6 | If the Investment Agent is aware of the non-payment of any amount payable to a Finance Party (other than the Investment Agent, the Arranger or the Security Agent) under any Transaction Document it shall promptly notify the other Finance Parties. |
6.3.7 | The Investment Agent shall have only those duties, obligations and responsibilities expressly specified in the Transaction Documents to which it is expressed to be a party (and no others shall be implied). |
6.4 | Role of the Arranger |
Except as specifically provided in the Transaction Documents, the Arranger has no obligations of any kind to any other Party under or in connection with any Transaction Document.
6.5 | No fiduciary duties |
6.5.1 | Nothing in any Transaction Document constitutes the Investment Agent or the Arranger as a trustee or fiduciary of any other person. |
6.5.2 | Neither the Investment Agent nor the Arranger shall be bound to account to any Participant for any sum or the profit element of any sum received by it for its own account. |
6.6 | Agent’s rights to act and to deal |
The Investment Agent and the Arranger and any associated company of either of them may:
(a) | act in an agency, trustee, fiduciary or other capacity on behalf of any other banks or financial institutions providing facilities to any Group Company, or any associated company of a Group Company, as freely in all respects as if it had not been appointed to act as agent and/or trustee for the Arranger or the Participants under this Agreement and without regard to the effect on the Participants of acting in such capacity; and |
(b) | subscribe for, hold, be beneficially entitled to or dispose of shares or securities, or options or other rights to and interests in shares or securities in any Group Company or any associated company of a Group Company (in each case, without liability to account). |
6.7 | Business with the Group |
The Investment Agent and the Arranger and any associated company of either of them may accept deposits from, lend money to and generally engage in any kind of banking or other business with any Group Company without any obligation to disclose to the Participants, or to account to them in respect of, any such arrangement or activity.
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6.8 | Rights and discretions |
6.8.1 | The Investment Agent may rely on: |
(a) | any representation, warranty, communication notice or document believed by it to be genuine, correct and appropriately authorised; |
(b) | assume that: |
(i) | any instructions received by it from the Majority Participants, any Participants or any group of Participants are duly given in accordance with the terms of the Transaction Documents; and |
(ii) | unless it has received notice of revocation, that those instructions have not been revoked; and |
(c) | rely on a certificate from any person: |
(i) | as to any matter of fact or circumstance which might reasonably be expected to be within the knowledge of that person; or |
(ii) | to the effect that such person approves of any particular dealing, transaction, step, action or thing, |
as sufficient evidence that that is the case and, in the case of paragraph (i) above, may assume the truth and accuracy of that certificate.
6.8.2 | The Investment Agent may assume (unless it has received notice to the contrary in its capacity as agent for the Participants) that: |
(a) | no Default has occurred (unless it has actual knowledge of a Default arising under clause 11.1 (Non-payment) of the Principal Agreement); |
(b) | no Transaction Document has been changed or amended; |
(c) | no Transaction Security has become enforceable; |
(d) | any right, power, authority or discretion vested in any Party or any group of Participants has not been exercised; and |
(e) | any notice or request delivered or made by the Company (other than a Transaction Request) is made on behalf of and with the consent and knowledge of all the Obligors. |
6.8.3 | The Investment Agent may engage and pay for the advice or services of any lawyers, accountants, tax advisers, surveyors or other professional advisers or experts. |
6.8.4 | Without prejudice to the generality of Clause 6.8.3 above or Clause 6.8.5 below, the Investment Agent may at any time engage and pay for the services of any lawyers to act as independent counsel to the Investment Agent (and so separate from any lawyers instructed by the Participants) if the Investment Agent in its reasonable opinion deems this to be desirable. |
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6.8.5 | The Investment Agent may rely on the advice or services of any lawyers, accountants, tax advisers, surveyors or other professional advisers or experts (whether obtained by the Investment Agent or by any other Party) and shall not be liable for any damages, costs or losses to any person, any diminution in value or any liability whatsoever arising as a result of its so relying. |
6.8.6 | The Investment Agent may act in relation to the Transaction Documents through its officers, employees and agents and the Investment Agent shall not: |
(a) | be liable for any error of judgment made by any such person; or |
(b) | be bound to supervise, or be in any way responsible for any loss incurred by reason of misconduct, omission or default on the part, of any such person, |
unless such error or such loss was directly caused by the Investment Agent’s gross negligence or wilful misconduct.
6.8.7 | Unless a Transaction Document expressly provides otherwise the Investment Agent may disclose to any other Party and to any person engaged by it or through whom it acts in accordance with this Clause 6 any information it reasonably believes it has received as agent under this Agreement. |
6.8.8 | Notwithstanding any other provision of any Transaction Document to the contrary, neither the Investment Agent nor the Arranger is obliged to do or omit to do anything if it would or might in its reasonable opinion constitute a breach of any law or regulation or a breach of a fiduciary duty or duty of confidentiality. |
6.8.9 | The Investment Agent is not obliged to disclose to any Finance Party any details of the rate notified to the Investment Agent by any Participant or the identity of any such Participant for the purpose of clause 13 (Market Disruption) of the Principal Agreement. |
6.8.10 | Notwithstanding any provision of any Transaction Document to the contrary neither the Investment Agent nor the Arranger is obliged to expend or risk its own funds or otherwise incur any financial liability in the performance of its duties, obligations or responsibilities or the exercise of any right, power, authority or discretion if it has grounds for believing the repayment of such funds or adequate indemnity against, or security for, such risk or liability is not reasonably assured to it. |
6.9 | Responsibility for documentation and customer identification |
Neither the Investment Agent nor the Arranger, nor any of their respective officers, employees or agents from time to time is responsible or liable for:
(a) | the adequacy, accuracy and/or completeness of any information (whether oral or written) supplied by the Investment Agent, the Arranger, an Obligor or any other person given in or in connection with any Transaction Document or the transactions contemplated in the Transaction Documents or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Transaction Document; |
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(b) | the legality, validity, effectiveness, adequacy or enforceability of any Transaction Document or the Transaction Security or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Transaction Document or the Transaction Security; or |
(c) | any determination as to whether any information provided or to be provided to any Finance Party is non-public information the use of which may be regulated or prohibited by applicable law or regulation relating to insider dealing or otherwise. |
6.10 | No duty to monitor |
The Investment Agent shall not be bound to enquire:
(a) | whether or not any Default has occurred; |
(b) | as to the performance, default or any breach by any Party of its obligations under any Transaction Document; or |
(c) | whether any other event specified in any Transaction Document has occurred. |
6.11 | Exclusion of liability |
6.11.1 | Without limiting Clause 6.11.3 and subject to Clause 6.11.2 (and without prejudice to any other provision of any Transaction Document excluding or limiting the liability of the Investment Agent), the Investment Agent shall not be liable (including for negligence or any other category of liability) for: |
(a) | any damages, costs or losses to any person, any diminution in value, or any liability whatsoever arising as a result of taking or not taking any action under or in connection with any Transaction Document or the Transaction Security; |
(b) | exercising, or not exercising, any right, power, authority or discretion given to it by, or in connection with, any Transaction Document, the Transaction Security or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with, any Transaction Document or the Transaction Security; or |
(c) | without prejudice to the generality of Clauses 6.11.1(a) and 6.11.1(b), any damages, costs or losses to any person, any diminution in value or any liability whatsoever arising as a result of: |
(i) | any act, event or circumstance not reasonably within its control; or |
(ii) | the general risks of investment in, or the holding of assets in, any jurisdiction, |
including (in each case and without limitation) such damages, costs, losses, diminution in value or liability arising as a result of: nationalisation, expropriation or other governmental actions; any regulation, currency restriction, devaluation or fluctuation; market conditions affecting the execution or settlement of transactions or the value of assets (including any Disruption Event); breakdown, failure or malfunction of any third party transport, telecommunications, computer services or systems; natural disasters or acts of God; war, terrorism, insurrection or revolution; or strikes or industrial action.
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6.11.2 | The Investment Agent shall not be excluded from liability under Clause 6.11.1 for any damages, costs, losses, diminution in value or liability (as applicable) arising directly as a result of the Investment Agent’s gross negligence or wilful default. |
6.11.3 | No Party (other than the Investment Agent) may take any proceedings against any officer, employee or agent of the Investment Agent, in respect of any claim it might have against the Investment Agent, or in respect of any act or omission of any kind by that officer, employee or agent in relation to any Transaction Document or any Transaction Document and any officer, employee or agent of the Investment Agent may rely on this Clause subject to Clause 1.3 (Third party rights) and the provisions of the Third Parties Act. |
6.11.4 | The Investment Agent shall not be liable for any delay (or any related consequences) in crediting an account with an amount required under the Transaction Documents to be paid by the Investment Agent if the Investment Agent has taken all necessary steps as soon as reasonably practicable to comply with the regulations or operating procedures of any recognised clearing or settlement system used by the Investment Agent for that purpose. |
6.11.5 | Nothing in this Agreement shall oblige the Investment Agent or the Arranger to carry out: |
(a) | any “know your customer” or other checks in relation to any person; or |
(b) | any check on the extent to which any transaction contemplated by this Agreement might be unlawful for any Participant, |
on behalf of any Participant and each Participant confirms to the Investment Agent and the Arranger that it is solely responsible for any such checks it is required to carry out and that it may not rely on any statement in relation to such checks made by the Investment Agent or the Arranger.
6.11.6 | Without prejudice to any provision of any Transaction Document excluding or limiting the Investment Agent’s liability, any liability of the Investment Agent arising under or in connection with any Transaction Document or the Transaction Security shall be limited to the amount of actual loss which has been finally judicially determined to have been suffered (as determined by reference to the date of default of the Investment Agent or, if later, the date on which the loss arises as a result of such default) but without reference to any special conditions or circumstances known to the Investment Agent at any time which increase the amount of that loss. In no event shall the Investment Agent be liable for any loss of profits, goodwill, reputation, business opportunity or anticipated saving, or for special, punitive, indirect or consequential damages, whether or not the Investment Agent has been advised of the possibility of such loss or damages. |
6.11.7 | Notwithstanding the provisions of Clause 3 (Payment mechanics), the Investment Agent shall not be liable to the Company or any Participant for the failure, or the consequences of any failure, of any cross-border payment system to effect same-day settlement to an account of the Company or any Participant. |
6.12 | Participants’ indemnity to the Investment Agent |
6.12.1 | Each Participant shall (in proportion to its share of the Total Commitments or, if the Total Commitments are then zero, to its share of the Total Commitments immediately before their reduction to zero) indemnify the Investment Agent and its officers and employees, within three Business Days of demand, against any actual cost, loss or liability (including for negligence or any other category of liability whatsoever) incurred by the Investment Agent or any of its officers and employees (otherwise than by reason of the Investment Agent’s gross negligence or wilful misconduct) in acting as Investment Agent under the Transaction Documents (unless the Investment Agent or an officer or employee has been reimbursed by an Obligor pursuant to a Transaction Document). |
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6.12.2 | Subject to Clause 6.12.3 below, the Company shall immediately on demand reimburse any Participant for any payment that Participant makes to the Investment Agent pursuant to Clause 6.12.1 above. |
6.12.3 | Clause 6.12.2 above shall not apply to the extent that the indemnity payment in respect of which the Participant claims reimbursement relates to a liability of the Investment Agent to an Obligor. |
6.13 | Resignation of the Investment Agent |
6.13.1 | The Investment Agent may resign and appoint one of its Affiliates acting through an office as successor by giving notice to the Participants and the Company. |
6.13.2 | Alternatively the Investment Agent may resign by giving 30 days’ notice to the Participants and the Company, in which case the Majority Participants (after consultation with the Company) may appoint a successor Investment Agent. |
6.13.3 | If the Majority Participants have not appointed a successor Investment Agent in accordance with Clause 6.13.2 within 20 days after notice of resignation was given, the retiring Investment Agent (after consultation with the Company) may appoint a successor Investment Agent. |
6.13.4 | The retiring Investment Agent shall make available to the successor Investment Agent such documents and records and provide such assistance as the successor Investment Agent may reasonably request for the purposes of performing its functions as Agent under the Transaction Documents. The Company shall, within three Business Days of demand, reimburse the retiring Investment Agent for the amount of all actual costs and expenses (including legal fees) properly incurred by it in making available such documents and records and providing such assistance. |
6.13.5 | The Investment Agent’s resignation notice shall only take effect upon the appointment of a successor. |
6.13.6 | Upon the appointment of a successor, the retiring Investment Agent shall be discharged from any further obligation in respect of the Transaction Documents (other than its obligations under Clause 6.13.4 above) but shall remain entitled to Clause 12.3 (Indemnity to the Investment Agent) and this Clause 6 (and any agency fees for the account of the retiring Agent shall cease to accrue from (and shall be payable on) that date). Any successor and each of the other Parties shall have the same rights and obligations amongst themselves as they would have had if such successor had been an original Party. |
6.14 | Replacement of the Investment Agent |
6.14.1 | After consultation with the Company, the Majority Participants may, by giving 30 days’ notice to the Investment Agent, replace the Investment Agent by appointing a successor Investment Agent. |
6.14.2 | The retiring Investment Agent shall (at the expense of the Participants) make available to the successor Investment Agent such documents and records and provide such assistance as the successor Investment Agent may reasonably request for the purposes of performing its functions as Investment Agent under the Transaction Documents. |
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6.14.3 | The appointment of the successor Investment Agent shall take effect on the date specified in the notice from the Majority Participants to the retiring Investment Agent. As from this date, the retiring Investment Agent shall be discharged from any further obligation in respect of the Transaction Documents (other than its obligations under Clause 6.14.2 above) but shall remain entitled to the benefit of Clause 12.3 (Indemnity to the Investment Agent) and this Clause 6 (and any agency fees for the account of the retiring Investment Agent shall cease to accrue from (and shall be payable on) that date). |
6.14.4 | Any successor Investment Agent and each of the other Parties shall have the same rights and obligations amongst themselves as they would have had if such successor had been an original Party. |
6.15 | Confidentiality and disclosure |
6.15.1 | In acting as agent for the Finance Parties under this Agreement, the Investment Agent shall be regarded as acting through its agency division which shall be treated as a separate entity from any other of its divisions or departments. |
6.15.2 | If information is received by another division or department of the Investment Agent, it may be treated as confidential to that division or department and the Investment Agent shall not be deemed to have notice of it. |
6.15.3 | Notwithstanding any other provision of any Transaction Document to the contrary, neither the Investment Agent nor the Arranger is obliged to disclose to any other person: |
(a) | any confidential information; or |
(b) | any other information, |
if the disclosure would or might in its reasonable opinion constitute a breach of any law or a breach of a fiduciary duty.
6.15.4 | Each Obligor consents to the disclosure, by each of the Secured Parties to any other Secured Party, of any information in a Secured Party’s possession regarding that Obligor. |
6.16 | Relationship with the Participants |
6.16.1 | The Investment Agent may treat the person shown in its records as Participant at the opening of business (in the place of the Investment Agent’s principal office as notified to the Finance Parties from time to time) as the Participant acting through its Facility Office: |
(a) | entitled to or liable for any payment due under any Transaction Document on that day; and |
(b) | entitled to receive and act upon any notice, request, document or communication or make any decision or determination under any Transaction Document made or delivered on that day, |
unless it has received not less than five Business Days’ prior notice from that Participant to the contrary in accordance with the terms of this Agreement.
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6.16.2 | Any Participant may by notice to the Investment Agent appoint a person to receive on its behalf all notices, communications, information and documents to be made or despatched to that Participant under the Transaction Documents. Such notice shall contain the address, fax number and (where communication by electronic mail or other electronic means is permitted under Clause 20.5 (Electronic communication)) electronic mail address and/or any other information required to enable the sending and receipt of information by that means (and, in each case, the department or officer, if any, for whose attention communication is to be made) and be treated as a notification of a substitute address, fax number, electronic mail address, department and officer by that Participant for the purposes of Clause 20.2 (Addresses) and Clause 20.5 (Electronic communication) and the Investment Agent shall be entitled to treat such person as the person entitled to receive all such notices, communications, information and documents as though that person were that Participant. |
6.17 | Credit appraisal by the Participants |
Without affecting the responsibility of any Obligor for information supplied by it or on its behalf in connection with any Transaction Document, each Participant confirms to the Investment Agent and the Arranger that it has been, and will continue to be, solely responsible for making its own independent appraisal and investigation of all risks arising under or in connection with any Transaction Document including:
(a) | the financial condition, status and nature of each Group Company and any surety for, or provider of Security in respect of, any Obligor’s obligations under any Transaction Document; |
(b) | the legality, validity, effectiveness, adequacy or enforceability of any Transaction Document, the Transaction Security and any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Transaction Document or the Transaction Security; |
(c) | whether that Participant has recourse, and the nature and extent of that recourse, against any Party or any of its respective assets under or in connection with any Transaction Document, the Transaction Security, the transactions contemplated by the Transaction Documents, the Transaction Security or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Transaction Document or the Transaction Security; |
(d) | the adequacy, accuracy and/or completeness of and any other information provided by the Investment Agent, any Party or by any other person under or in connection with any Transaction Document, the transactions contemplated by any Transaction Documents or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Transaction Document; |
(e) | the right or title of any person in or to, or the value or sufficiency of any part of the Charged Property, the priority of any of the Transaction Security or the existence of any Security affecting the Charged Property; and |
(f) | the Shari’ah-compliance of the Transaction Documents. |
6.18 | Deduction from amounts payable by the Investment Agent |
If any Party owes an amount to the Investment Agent under the Transaction Documents the Investment Agent may, after giving notice to that Party, deduct an amount not exceeding that amount from any payment to that Party which the Investment Agent would otherwise be obliged to make under the Transaction Documents and apply the amount deducted in or towards satisfaction of the amount owed. For the purposes of the Transaction Documents that Party shall be regarded as having received any amount so deducted.
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6.19 | Reliance and engagement letters |
Each Finance Party and each Secured Party which is a Party confirms that each of the Arranger and the Investment Agent has authority to accept on its behalf (and ratifies the acceptance on its behalf of any letters or reports already accepted by the Arranger or Agent) the terms of any reliance letter or engagement letters relating to any reports or fetters provided by accountants in connection with the Transaction Documents or the transactions contemplated in the Transaction Documents and to bind it in respect of the reports or letters and to sign such letters on its behalf and further confirms that it accepts the terms and qualifications set out in such letters.
7 | The Security Agent |
7.1 | Security Agent as trustee and custodian |
7.1.1 | The Security Agent declares that it holds the Transaction Security, the proceeds of the Transaction Security and all rights, powers, discretions and remedies vested in the Security Agent by the Transaction Documents or by law on trust and as custodian for the Finance Parties on the terms contained in this Agreement. |
7.1.2 | Each Party agrees that, in relation to any jurisdiction the courts of which would not recognise or give effect to the trusts expressed to be constituted by this Agreement, the relationship of the Finance Parties to the Security Agent, or, in the case of any trust other than that constituted under Clause 7.1.1, the relationship between any other relevant Parties, shall, in the case of each of the trusts constituted by this Agreement, be construed simply as one of principal and agent. However, to the fullest extent permissible under the laws of each and every such jurisdiction, this Agreement shall have full force and effect as between the Parties. |
7.1.3 | Each of the Investment Agent, the Arranger and each Participant authorises the Security Agent to perform the duties, obligations and responsibilities and to exercise the rights, powers, authorities and discretions specifically given to the Security Agent under or in connection with the Transaction Documents together with any other incidental rights, powers, authorities and discretions. |
7.2 | Authority to Security Agent |
7.2.1 | Each Finance Party confirms its approval of the Transaction Security and the Transaction Security Documents, and each Finance Party (other than the Security Agent) authorises and instructs the Security Agent to: |
(a) | execute and deliver the Transaction Security Documents; |
(b) | perform the duties and exercise the rights, powers, discretions and remedies given to the Security Agent under or in connection with the Transaction Documents, and to exercise any other incidental rights, powers and discretions; and |
(c) | give or make any Authorisations and confirmations to be given by the Security Agent on behalf of the Finance Parties under the Transaction Security Documents. |
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7.3 | Parallel debt (Covenant to pay the Security Agent) |
7.3.1 | Notwithstanding any other provision of this Agreement, the Company hereby irrevocably and unconditionally undertakes to pay to the Security Agent, as creditor in its own right and not as representative of the other Secured Parties, sums equal to and in the currency of each amount payable by the Company to each of the Secured Parties under each of the Finance Documents as and when that amount falls due for payment under the relevant Finance Document or would have fallen due but for any discharge resulting from failure of another Secured Party to take appropriate steps, in insolvency proceedings affecting the Company, to preserve its entitlement to be paid that amount. |
7.3.2 | The Security Agent shall have its own independent right to demand payment of the amounts payable by the Company under this Clause 7.3 irrespective of any discharge of the Company’s obligation to pay those amounts to the other Secured Parties resulting from failure by them to take appropriate steps, in insolvency proceedings affecting the Company, to preserve their entitlement to be paid those amounts. |
7.3.3 | Any amount due and payable by the Company to the Security Agent under this Clause 7.3 shall be decreased to the extent that the other Secured Parties have received (and are able to retain) payment in full of the corresponding amount under the other provisions of the Finance Documents and any amount due and payable by the Company to the other Secured Parties under those provisions shall be decreased to the extent that the Security Agent has received (and is able to retain) payment in full of the corresponding amount under this Clause 7.3. |
7.4 | Enforcement through Security Agent only |
The Secured Parties shall not have any independent power to enforce, or have recourse to, any of the Transaction Security or to exercise any right, power, authority or discretion arising under the Transaction Security Documents except through the Security Agent.
7.5 | Instructions |
7.5.1 | The Security Agent shall: |
(a) | subject to Clauses 7.5.4 and 7.5.5 exercise or refrain from exercising any right, power, authority or discretion vested in it as Security Agent in accordance with any instructions given to it by the Majority Participants (or the Investment Agent on their behalf); |
(b) | not be liable for any act (or omission) if it acts (or refrains from acting) in accordance with Clause 7.5.1(a) (or if this Agreement stipulates the matter is a decision for any other Participant or group of Participants in accordance with instructions given to it by that Participant or group of Participants). |
7.5.2 | The Security Agent shall be entitled to request instructions, or clarification of any instruction, from the Majority Participants (or the Investment Agent on their behalf) (or, if this Agreement stipulates the matter is a decision for any other Participant or group of Participants, from that Participant or group of Participants) as to whether, and in what manner, it should exercise or refrain from exercising any right, power, authority or discretion and the Security Agent may refrain from acting unless and until it receives those instructions or that clarification. |
7.5.3 | Save in the case of decisions stipulated to be a matter for any other Participant or group of Participants under the Transaction Documents and unless a contrary intention appears in a Transaction Document, any instructions given to the Security Agent by the Majority Participants shall override any conflicting instructions given by any other Parties and will be binding on all Secured Parties. |
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7.5.4 | Clause 7.5.1 shall not apply: |
(a) | where a contrary indication appears in a Transaction Document; |
(b) | where a Transaction Document requires the Security Agent to act in a specified manner or to take a specified action; or |
(c) | in respect of any provision which protects the Security Agent’s own position in its personal capacity as opposed to its role of Security Agent for the Finance Parties including, without limitation, Clauses 7.8 (No duty to account) to Clause 7.13 (Exclusion of liability), Clause 7.16 (Confidentiality and disclosure) to Clause 7.22 (Custodians and nominees) and Clause 7.25 (Acceptance of title) to Clause 7.29 (Disapplication of Trustee Acts). |
7.5.5 | The Security Agent may refrain from acting in accordance with any instructions of any Participant or group of Participants until it has received any indemnification and/or security that it may in its discretion require (which may be greater in extent than that contained in the Transaction Documents and which may include payment in advance) for any cost, loss or liability (together with any associated VAT) which it may incur in complying with those instructions. |
7.5.6 | Without prejudice to the provisions of the remainder of this Clause 7.5, in the absence of instructions, the Security Agent may, but shall not be obliged to, act (or refrain from acting) as it considers in its discretion to be appropriate. |
7.6 | Duties of the Security Agent |
7.6.1 | The Security Agent’s duties under the Transaction Documents are solely mechanical and administrative in nature. |
7.6.2 | The Security Agent shall promptly: |
(a) | forward to the Investment Agent a copy of any document received by the Security Agent from any Obligor under any Transaction Document; and |
(b) | forward to a Party the original or a copy of any document which is delivered to the Security Agent for that Party by any other Party. |
7.6.3 | Except where a Transaction Document specifically provides otherwise, the Security Agent is not obliged to review or check the adequacy, accuracy or completeness of any document it forwards to another Party. |
7.6.4 | If the Security Agent receives notice from a Party referring to any Transaction Document, describing a Default and stating that the circumstance described is a Default, it shall promptly notify the Participants. |
7.6.5 | Security Agent shall have only those duties, obligations and responsibilities expressly specified in the Transaction Documents to which it is expressed to be a party (and no others shall be implied). |
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7.7 | No fiduciary duties to Obligors |
Nothing in this agreement constitutes the Security Agent as an agent, trustee or fiduciary of any Obligor.
7.8 | No duty to account |
The Security Agent shall not be bound to account to any other Secured Party for any sum or the profit element of any sum received by it for its own account.
7.9 | Business with the Group |
7.9.1 | In this Clause 7.9 Authorised Activity means, in the case of the Security Agent and any associated company of the Security Agent: |
(a) | acting in an agency, trustee, fiduciary or other capacity on behalf of any banks or financial institutions providing facilities to any Group Company or any associated company of a Group Company, other than those provided under the Transaction Documents; |
(b) | subscribing for, holding, being beneficially entitled to or disposing of shares or securities, or options or other rights to and interests in shares or securities, in any Group Company or any associated company of a Group Company; and |
(c) | accepting deposits from, lending money or providing finance (including Shari’ah compliant finance) to and generally engaging in any kind of banking or other business with any other Party. |
7.9.2 | The Security Agent and any associated company of the Security Agent may carry on any Authorised Activity: |
(a) | as freely in all respects as if the Security Agent had not been appointed to act as trustee and custodian for the Finance Parties under this Agreement; |
(b) | without regard to the effect on any of the Parties of carrying on that Authorised Activity; and |
(c) | without liability to: |
(i) | disclose that Authorised Activity to any other Party; or |
(ii) | account to any other Party for sums or other benefits received in respect of that Authorised Activity. |
7.10 | Rights and discretions |
7.10.1 | The Security Agent may: |
(a) | rely on any representation, communication, notice or document believed by it to be genuine, correct and appropriately authorised; |
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(b) | assume that: |
(i) | any instructions received by it from the Majority Participants, the Participants or any group of Participants are duly given in accordance with the terms of the Transaction Documents; |
(ii) | unless it has received actual notice of revocation, that those instructions have not been revoked; and |
(iii) | if it receives any instructions to act in relation to the Transaction Security, that all applicable conditions under the Transaction Documents for so acting have been satisfied; and |
(c) | rely on a certificate from any person: |
(i) | as to any matter of fact or circumstance which might reasonably be expected to be within the knowledge of that person; or |
(ii) | to the effect that such person approves of any particular dealing, transaction, step, action or thing, |
as sufficient evidence that that is the case and, in the case of Clause 7.10.1(c)(i), may assume the truth and accuracy of that certificate.
7.10.2 | The Security Agent may assume (unless it has received notice to the contrary in its capacity as security agent for the Finance Parties) that |
(a) | no Default has occurred; |
(b) | any right, power, authority or discretion vested in any Party or any group of Participants has not been exercised; and |
(c) | any notice made by an Obligor is made on behalf of and with the consent and knowledge of all the Obligors. |
7.10.3 | The Security Agent may engage and pay for the advice or services of any lawyers, accountants, tax advisers, surveyors or other professional advisers or experts. |
7.10.4 | Without prejudice to the generality of Clause 7.10.3 or Clause 7.10.5, the Security Agent may at any time engage and pay for the services of any lawyers to act as independent counsel to the Security Agent (and so separate from any lawyers instructed by the Participants and/or the Investment Agent) if the Security Agent in its reasonable opinion deems this to be desirable. |
7.10.5 | The Security Agent may rely on the advice or services of any lawyers, accountants, tax advisers, surveyors or other professional advisers or experts (whether obtained by the Security Agent or by any other Secured Party) and shall not be responsible or liable for any losses to any person, any diminution in value or any liability arising as a result of its so relying. |
7.10.6 | The Security Agent, any Receiver and any Delegate may act in relation to the Transaction Documents and the Transaction Security through its officers, employees and agents and shall not: |
(a) | be liable for any error of judgment made by any such person; or |
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b) | be bound to supervise, or be in any way responsible for any loss incurred by reason of misconduct, omission or default on the part of any such person, |
unless such error or such loss was directly caused by the Security Agent’s, Receiver’s or Delegate’s gross negligence or wilful misconduct.
7.10.7 | Unless this Agreement expressly specifies otherwise, the Security Agent may disclose to any other Party any information it reasonably believes it has received as security agent under this Agreement. |
7.10.8 | Notwithstanding any other provision of any Transaction Document to the contrary, the Security Agent is not obliged to do or omit to do anything if it would, or might in its reasonable opinion, constitute a breach of any law or regulation or a breach of a fiduciary duty or duty of confidentiality. |
7.10.9 | Notwithstanding any provision of any Transaction Document to the contrary, the Security Agent is not obliged to expend or risk its own funds or otherwise incur any financial liability in the performance of its duties, obligations or responsibilities or the exercise of any right, power, authority or discretion if it has grounds for believing the repayment of such funds or adequate indemnity against, or security for, such risk or liability is not reasonably assured to it, |
7.11 | Responsibility for documentation |
None of the Security Agent, any Receiver nor any Delegate is responsible or liable for:
(a) | the adequacy, accuracy or completeness of any information (whether oral or written) supplied by the Security Agent, an Obligor or any other person in or in connection with any Transaction Document or the transactions contemplated in the Transaction Documents or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Transaction Document; |
(b) | the legality, validity, effectiveness, adequacy or enforceability of any Transaction Document, the Transaction Security or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Transaction Document or the Transaction Security; or |
(c) | any determination as to whether any information provided or to be provided to any Secured Party is non-public information the use of which may be regulated or prohibited by applicable law or regulation relating to insider dealing or otherwise. |
7.12 | No duty to monitor |
The provisions of Clause 7.12 (No duty to monitor) shall apply to the Security Agent as they apply to the Investment Agent and so that references to the Investment Agent and its capacity as agent in that clause shall be construed as references to the Security Agent and its capacity as security agent respectively.
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7.13 | Exclusion of liability |
Without limiting Clause 7.13.3 and subject to Clause 7.13.2 (and without prejudice to any their provision of any Transaction Document excluding or limiting the liability of the Security Agent, any Receiver or Delegate), none of the Security Agent, any Receiver nor any Delegate will be liable (including for negligence or any other category of liability) for:
(a) | any damages, costs or losses to any person, any diminution in value, or any liability whatsoever arising as a result of taking or not taking any action under or in connection with any Transaction Document or the Transaction Security; |
(b) | exercising or not exercising any right, power, authority or discretion given to it by, or in connection with, any Transaction Document, the Transaction Security or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with, any Transaction Document or the Transaction Security; |
(c) | any shortfall which arises on the enforcement or realisation of the Transaction Security; |
(d) | the loss of any Transaction Security Document, title deed or other document relating to the Transaction Security; or |
(e) | without prejudice to the generality of Clauses 7.13.1(a) to 7.13.1(d), any damages, costs, losses, diminution in value or liability whatsoever arising as a result of: |
(i) | any act, event or circumstance not reasonably within its control; or |
(ii) | the general risks of investment in, or the holding of assets in, any jurisdiction, |
including (in each case and without limitation) such damages, costs, losses, diminution in value or liability arising as a result of: nationalisation, expropriation or other governmental actions; any regulation, currency restriction, devaluation or fluctuation; market conditions affecting the execution or settlement of transactions or the value of assets; breakdown, failure or malfunction of any third party transport, telecommunications, computer services or systems; natural disasters or acts of God; war, terrorism, insurrection or revolution; or strikes or industrial action.
7.13.2 | The Security Agent shall not be excluded from liability under Clause 7.13.1 for any damages, costs, losses, diminution in value or liability (as applicable) arising directly as a result of the Security Agent’s gross negligence or wilful default. |
7.13.3 | No Party (other than the Security Agent, that Receiver or that Delegate (as applicable)) may take any proceedings against any officer, employee or agent of the Security Agent, a Receiver or a Delegate in respect of any claim it might have against the Security Agent, a Receiver or a Delegate or in respect of any act or omission of any kind by that officer, employee or agent in relation to any Transaction Document or any Transaction Security and any officer, employee or agent of the Security Agent, a Receiver or a Delegate may rely on this Clause subject to Clause 1.3 (Third party rights) and the provisions of the Third Parties Act. |
7.13.4 | Nothing in this Agreement shall oblige the Security Agent to carry out: |
(a) | any “know your customer” or other checks in relation to any person; or |
(b) | any check on the extent to which any transaction contemplated by this Agreement might be unlawful for any other Secured Party, on behalf of any other Secured Party and each other Secured Party confirms to the Security Agent that it is solely responsible for any such checks it is required to carry out and that it may not rely on any statement in relation to such checks made by the Security Agent. |
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7.13.5 | Without prejudice to any provision of any Transaction Document excluding or limiting the liability of the Security Agent, any Receiver or Delegate, any liability of the Security Agent, any Receiver or Delegate arising under or in connection with any Transaction Document or the Transaction Security shall be limited to the amount of actual loss which has been finally judicially determined to have been suffered (as determined by reference to the date of default of the Security Agent, Receiver or Delegate (as the case may be) or, if later, the date on which the loss arises as a result of such default) but without reference to any special conditions or circumstances known to the Security Agent, Receiver or Delegate (as the case may be) at any time which increase the amount of that loss. In no event shall the Security Agent, any Receiver or Delegate be liable for any loss of profits, goodwill, reputation, business opportunity or anticipated saving, or for special, punitive, indirect or consequential damages, whether or not the Security Agent, Receiver or Delegate (as the case may be) has been advised of the possibility of such loss or damages. |
7.14 | Participants’ indemnity to the Security Agent |
7.14.1 | Each Participant shall (in the proportion that its Commitments bear to the Total Commitments for the time being (or, if the Total Commitments are zero, immediately prior to their being reduced to zero)): |
(a) | indemnify the Security Agent and every Receiver and every Delegate, within three Business Days of demand, against any cost, loss or liability incurred by any of them (otherwise than by reason of the relevant Security Agent’s, Receiver’s or Delegate’s gross negligence or wilful misconduct) in acting as Security Agent and custodian, Receiver or Delegate under, or exercising any authority conferred under, the Transaction Documents (unless the relevant Security Agent, Receiver or Delegate has been reimbursed by an Obligor pursuant to a Transaction Document); and |
(b) | indemnify the Security Agent and any Delegate and their respective officers and employees, within three Business Days of demand, against any liabilities incurred by the Security Agent or an officer or employee as a result of the Security Agent or an officer or employee distributing any moneys or other assets referred to in Clause 7.31.3 or taking any action to enforce its rights under that Clause. |
7.14.2 | Subject to Clause 7.14.3, the Company shall immediately on demand reimburse any Participant for any payment that Participant makes to the Security Agent pursuant to Clause 7.14.1. |
7.14.3 | Clause 7.14.2 shall not apply to the extent that the indemnity payment in respect of which the Participant claims reimbursement relates to a liability of the Security Agent to an Obligor. |
7.15 | Resignation of the Security Agent |
7.15.1 | The Security Agent may resign and appoint one of its Affiliates as successor by giving notice to the Participants and the Company |
7.15.2 | Alternatively the Security Agent may resign by giving 30 days notice to the Participants and the Company, in which case the Majority Participants may appoint a successor Security Agent. |
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7.15.3 | If the Majority Participants have not appointed a successor Security Agent in accordance with Clause 7.15.2 within 20 days after notice of resignation was given, the retiring Security Agent (after consultation with the Investment Agent) may appoint a successor Security Agent |
7.15.4 | The retiring Security Agent shall, make available to the successor Agent such documents and records and provide such assistance as the successor Security Agent may reasonably request for the purposes of performing its functions as Security Agent under the Transaction Documents. The Company shall, within three Business Days of demand, reimburse the retiring Security Agent for the amount of all actual costs and expenses (including legal fees) properly incurred by it in making available such documents and records and providing such assistance. |
7.15.5 | The Security Agent’s resignation notice shall only take effect upon: |
(a) | the appointment of a successor; and |
(b) | the transfer of all the Transaction Security to that successor. |
7.15.6 | Every appointment of a successor Security Agent shall be by deed. |
7.15.7 | Upon the appointment of a successor, the retiring Security Agent shall be discharged from any further obligation in respect of the Transaction Documents (other than its obligations under Clause 7.27(b) (Winding up of trust) and Clause 7.15.4) but shall remain entitled to the benefit of this Clause 7 and Clause 12.4 (Indemnity to the Security Agent) (and any Security Agent fees for the account of the retiring Security Agent shall cease to accrue from (and shall be payable on) that date). Any successor and each of the other Parties shall have the same rights and obligations amongst themselves as they would have had if that successor had been an original Party. |
7.15.8 | The Majority Participants may, by notice to the Security Agent, require it to resign in accordance with Clause 7.15.2. In this event, the Security Agent shall resign in accordance with Clause 7.15.4 [but the cost referred to in Clause 7.15.4 shall be for the account of the Company]. |
7.16 | Confidentiality and disclosure |
The provisions of Clause 6.15 (Confidentiality and disclosure) shall apply to the Security Agent and its trustee division as they apply to the Investment Agent and its agency division and so that references to the Finance Parties, the Investment Agent and its capacity as agent in that clause shall be construed as references to the Secured Parties, the Security Agent and its capacity as security agent respectively.
7.17 | Information from the Participants |
Each Participant shall supply the Security Agent with any information that the Security Agent may reasonably specify as being necessary or desirable to enable the Security Agent to perform its functions as Security Agent.
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7.18 | Credit appraisal by the Secured Parties |
Without affecting the responsibility of any Obligor for information supplied by it or on its behalf in connection with any Transaction Document, each Secured Party confirms to the Security Agent that it has been, and will continue to be, solely responsible for making its own independent appraisal and investigation of all risks arising under or in connection with any Transaction Document including but not limited to:
(a) | the financial condition, status and nature of each Group Company and any surety for, or provider of Security in respect of, any Obligor’s obligations under any Transaction Document; |
(b) | the legality, validity, effectiveness, adequacy or enforceability of any Transaction Document, the Transaction Security and any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Transaction Document or the Transaction Security; |
(c) | whether that Secured Party has recourse, and the nature and extent of that recourse, against any Party or any of its respective assets under or in connection with any Transaction Document, the Transaction Security, the transactions contemplated by the Transaction Documents or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Transaction Document or the Transaction Security; |
(d) | the adequacy, accuracy or completeness of any information provided by the Security Agent, any Party or by any other person under or in connection with any Transaction Document, the transactions contemplated by any Transaction Document or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Transaction Document; and |
(e) | the right or title of any person in or to, or the value or sufficiency of any part of the Charged Property, the priority of any of the Transaction Security or the existence of any Security affecting the Charged Property, |
and each Secured Party warrants to the Security Agent that it has not relied on and will not at any time rely on the Security Agent in respect of any of these matters.
7.19 | Reliance and engagement letters |
The Security Agent may obtain and rely on any certificate or report from any Obligors auditor and may enter into any reliance letter or engagement letter relating to that certificate or report on such terms as it may consider appropriate (including, without limitation, restrictions on the auditor’s liability and the extent to which that certificate or report may be relied on or disclosed).
7.20 | No responsibility to perfect Transaction Security |
7.20.1 | The Security Agent shall not be responsible for: |
(a) | requiring the deposit with it of any deed or document certifying, representing or constituting the title of any Obligor to any of the Charged Property; |
(b) | obtaining any licence, consent or other authority for the execution, delivery, legality, validity, enforceability or admissibility in evidence of any Transaction Document or the Transaction Security; |
(c) | registering, filing or recording or otherwise protecting any of the Transaction Security (or the priority of any of the Transaction Security) under any law or regulation or to give notice to any person of the execution of any Transaction Document or of the Transaction Security; |
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(d) | taking, or requiring any Obligor to take, any step to perfect its title to any of the Charged Property or to render the Transaction Security effective or to secure the creation of any ancillary Security under any law or regulation; or |
(e) | requiring any further assurance in relation to any Transaction Security Document. |
7.21 | Insurance by Security Agent |
7.21.1 | The Security Agent shall not be obliged: |
(a) | to insure any of the Charged Property; |
(b) | to require any other person to maintain any insurance; or |
(c) | to verify any obligation to arrange or maintain insurance contained in any Transaction Document, |
and the Security Agent shall not be liable for any damages, costs or losses to any person as a result of the lack of, or inadequacy of, any such insurance.
7.21.2 | Where the Security Agent is named on any insurance policy as an insured party, it shall not be liable for any damages, costs or losses to any person as a result of its failure to notify the insurers of any material fact relating to the risk assumed by such insurers or any other information of any kind, unless the Majority Participants request it to do so in writing and the Security Agent fails to do so within fourteen days after receipt of that request. |
7.22 | Custodians and nominees |
The Security Agent may appoint and pay any person to act as a custodian or nominee on any terms in relation to any asset of the trust as the Security Agent may determine, including for the purpose of depositing with a custodian this Agreement or any document relating to the trust created under this Agreement and the Security Agent shall not be responsible for any loss, liability, expense, demand, cost, claim or proceedings incurred by reason of the misconduct, omission or default on the part of any person appointed by it under this Agreement or be bound to supervise the proceedings or acts of any person.
7.23 | Delegation by the Security Agent |
7.23.1 | Each of the Security Agent, any Receiver and any Delegate may, at any time, delegate by power of attorney or otherwise to any person for any period, all or any right, power, authority or discretion vested in it as Security Agent, Receiver or Delegate. |
7.23.2 |
That delegation may be made upon any terms and conditions
(including the power to sub-delegate) and subject to any restrictions that the Security Agent, that Receiver or that rlia.4.1 Delegate
(as the case may be) may, in its discretion, think fit in the interests of the Secured
Parties. |
7.23.3 | The Security Agent, Receiver or Delegate shall not be bound to supervise, or be in any way responsible for any loss incurred by reason of any misconduct, omission or default on the part, any such delegate or sub-delegate. |
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7.24 | Additional Security Agents |
7.24.1 | The Security Agent may at any time appoint (and subsequently remove) any person to act as a separate trustee or as a co-trustee jointly with it: |
(a) | if it considers that appointment to be in the interests of the Secured Parties; or |
(b) | for the purposes of conforming to any legal requirement, restriction or condition which the Security Agent deems to be relevant; or |
(c) | for obtaining or enforcing any judgment in any jurisdiction, |
and the Security Agent shall give prior notice to the Company and the Participants of that appointment.
7.24.2 | Any person so appointed shall have the rights, powers, authorities and discretions (not exceeding those given to the Security Agent under or in connection with the Transaction Documents) and the duties, obligations and responsibilities that are given or imposed by the instrument of appointment. |
7.24.3 | The remuneration that the Security Agent may pay to that person, and any actual and expenses (together with any applicable VAT) incurred by that person in performing its functions pursuant to that appointment shall, for the purposes of this Agreement, be treated as actual costs and expenses incurred by the Security Agent. |
7.25 | Acceptance of title |
The Security Agent shall be entitled to accept without enquiry, and shall not be obliged to investigate, any right and title that any Obligor may have to any of the Charged Property and shall not be liable for, or bound to require any Obligor to remedy, any defect in its right or title.
7.26 | Releases |
Upon a disposal of any of the Charged Property pursuant to the enforcement of the Transaction Security by a Receiver or the Security Agent, the Security Agent is irrevocably authorised (at the cost of the Obligors and without any consent, sanction, authority or further confirmation from any other Secured Party) to release, without recourse or warranty, that property from the Transaction Security, any release of the Transaction Security or other claim over that asset and to issue any certificates of may be required or desirable.
7.27 | Winding up of trust |
If the Security Agent, with the approval of the Investment Agent, determines that:
(a) | all of the Secured Liabilities and all other obligations secured by the Transaction Security Documents have been fully and finally discharged; and |
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(b) | no Secured Party is under any commitment, obligation or liability (actual or contingent) to make advances or provide other financial accommodation to any Obligor pursuant to the Transaction Documents, |
then:
(i) | the trusts set out in this Agreement shall be wound up and the Security Agent shall release, without recourse or warranty, all of the Transaction Security and the rights of the Security Agent under each of the Transaction Security Documents; and |
(ii) | any Security Agent which has resigned pursuant to Clause 7.15 (Resignation of the Security Agent) shall release, without recourse or warranty, all of its rights under each Transaction Security Document. |
7.28 | Powers supplemental to Trustee Acts |
The rights, powers, authorities and discretions given to the Security Agent under or in connection with the Transaction Documents shall be supplemental to the Trustee Act 1925 and the Trustee Act 2000 and in addition to any which may be vested in the Security Agent by law or regulation or otherwise.
7.29 | Disapplication of Trustee Acts |
Section 1 of the Trustee Act 2000 shall not apply to the duties of the Security Agent in relation to the trusts constituted by this Agreement. Where there are any inconsistencies between the Trustee Act 1925 or the Trustee Act 2000 and the provisions of this Agreement, the provisions of this Agreement shall, to the extent allowed by law and regulation, prevail and, in the case of any inconsistency with the Trustee Act 2000, the provisions of this Agreement shall constitute a restriction or exclusion for the purposes of that Act.
7.30 | Enforcement of Transaction Security |
7.30.1 | The Security Agent may refrain from enforcing the Transaction Security unless instructed to do so in accordance with Clause 7.5 (Instructions). |
7.30.2 | The Security Agent shall enforce the Transaction Security in such manner (including, without limitation, the selection of any administrator of any Obligor to be appointed by the Security Agent) as it is instructed in accordance with Clause 7.5 (Instructions). |
7.30.3 | If the Security Agent enforces the Transaction Security over any asset of any Obligor, the Security Agent shall have the entire conduct of any sale of such asset. |
7.30.4 | Notwithstanding any other provision of this Agreement or any Transaction Document, nothing contained in any of the Transaction Documents shall oblige the Security Agent to become a mortgagee in possession or assume the obligations of any other person under the Transaction Documents or take any action which could in its opinion (acting in good faith), be reasonably expected to render it liable to such person unless in each case, it has been indemnified and/or secured (whether by payment in advance or otherwise) to its satisfaction against all liabilities (including any liabilities in respect of applicable environmental or taxation legislation) which it may incur as a consequence of so acting. |
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7.31 | Application of proceeds |
7.31.1 | All amounts from time to time received or recovered by the Security Agent pursuant to the terms of any Transaction Documents or in connection with the realisation or enforcement of all or any part of the Transaction Security shall be held by the Security Agent on trust to apply them at any time as the Security Agent (in its discretion) sees fit, to the extent permitted by applicable law, in the following order of priority: |
(a) | in discharging any sums owing to the Security Agent (in its capacity as such), any Receiver or any Delegate; |
(b) | in payment or distribution to the Investment Agent, on its behalf and on behalf of the other Secured Parties, for application towards the discharge of all sums due and payable by any Obligor under any of the Transaction Documents in accordance with Clause 3.11 (Partial payments); |
(c) | if none of the Obligors is under any further actual or contingent liability under any Transaction Document, in payment or distribution to any person to whom the Security Agent is obliged to pay or distribute in priority to any Obligor; and |
(d) | the balance, if any, in payment or distribution to the relevant Obligor. |
7.31.2 | If any future or contingent liability included in the calculation of the amount due to a Secured Party finally matures, or is settled, for less than the future or contingent amount provided for in the calculation, the relevant Secured Party shall notify the Security Agent of that fact and that Secured Party shall pay to the Security Agent for distribution in accordance with Clause 7.31.1 (Application of proceeds) the amount which is necessary to put the relevant recipients into the position they would have been in (but taking no account of the time cost of money) had the original distribution been made on the basis of the actual as opposed to the future or contingent liability. |
7.31.3 | If the Security Agent has distributed any moneys or other assets to a Secured Party: |
(a) | which the Security Agent received in consequence of holding or enforcing any Transaction Security which is subsequently set aside, avoided or held to be invalid; or |
(b) | for application in or towards settlement of any liabilities which are subsequently set aside, avoided or held to be invalid, |
then the Secured Party to whom that distribution was made shall on demand refund or retransfer the same to the Security Agent.
7.32 | Investment of proceeds |
Prior to the application of the proceeds of the Transaction Security in accordance with Clause 7.31 (Application of proceeds) the Security Agent may, at its discretion, hold all or part of those proceeds in one or more profit bearing suspense or impersonal accounts in the name of the Security Agent with any financial institution (including itself) and for so long as the Security Agent thinks fit (the interest being credited to the relevant account) pending the application from time to time of those monies at the Security Agent’s discretion in accordance with the provisions of Clause 7.31 (Application of proceeds).
7.33 | Currency conversion |
7.33.1 | For the purpose of, or pending the discharge of, any of the Secured Liabilities the Security Agent may convert any moneys received or recovered by the Security Agent from one currency to another, at the spot rate at which the Security Agent is able to purchase the currency in which the Secured Liabilities are due with the amount received. |
7.33.2 | The obligations of any Obligor to pay in the due currency shall only be satisfied to the extent of the amount of the due currency purchased after deducting the costs of conversion. |
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7.34 | Permitted Deductions |
The Security Agent shall be entitled in its discretion (a) to set aside by way of reserve amounts required to meet and (b) to make and pay, any deductions and withholdings (on account of Taxes or otherwise) which it is or may be required by any law or regulation to make from any distribution or payment made by it under this Agreement, and to pay all Taxes which may be assessed against it in respect of any of the Charged Property, or as a consequence of performing its duties or exercising its rights, powers, authorities and discretions, or by virtue of its capacity as Security Agent under any of the Transaction Documents or otherwise (other than in connection with its remuneration for performing its duties under this Agreement).
7.35 | Good discharge |
7.35.1 | Any distribution or payment to be made in respect of the Secured Liabilities by the Security Agent may be made to the Investment Agent on behalf of the Participants and any distribution or payment made in that way shall be a good discharge, to the extent of that payment or distribution, by the Security Agent. |
7.35.2 | The Security Agent is under no obligation to make payment to the Investment Agent in the same currency as that in which any Unpaid Sum is denominated. |
7.36 | Amounts received by Obligors |
If any of the Obligors receives or recovers any amount which, under the terms of any of the Transaction Documents, should have been paid to the Security Agent, that Obligor will hold the amount received or recovered on trust for the Security Agent and promptly pay that amount to the Security Agent for application in accordance with the terms of this Agreement.
8 | Conduct of business by the Finance Parties |
No provision of any Transaction Document will:
(a) | interfere with the right of any Finance Party to arrange its affairs (tax or otherwise) in whatever manner it thinks fit; |
(b) | oblige any Finance Party to investigate or claim any credit, relief, remission or repayment available to it or the extent, order and manner of any claim; or |
(c) | oblige any Finance Party to disclose any information relating to its affairs (tax or otherwise) or any computations in respect of Tax. |
9 | Fees |
The Company shall pay to the Arranger an arrangement fee in the amount and at the times agreed in a Fee Letter.
10 | Costs and expenses |
10.1 | Transaction expenses |
The Company shall promptly on demand pay the Arranger, the Investment Agent and the Security Agent the amount of all actual costs and expenses (including legal fees) reasonably incurred by any of them from time to time (and, in the case of the Security Agent, by any Receiver) in connection with the negotiation, preparation, printing, execution, notarisation, syndication and perfection of the Transaction Documents, including the registration at or with any applicable register or authority of any Transaction Document or of any related transfer or interest in any asset.
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10.2 | Amendment costs |
If:
(a) | an Obligor requests an amendment, waiver or release of, or consent in relation to, any Transaction Document; or |
(b) | an amendment is required to any Transaction Document pursuant to Clause 3.15 (Change of currency), |
the Company shall, within three Business Days of demand, reimburse each of the Finance Parties for the amount of all actual costs and expenses (including legal fees) reasonably incurred by that Finance Party in responding to, evaluating, negotiating or complying with that request or requirement.
10.3 | Enforcement and preservation costs |
The Company, within three Business Days of demand, shall pay to each Secured Party the amount of all actual costs and expenses (including legal fees) incurred by it in connection with the enforcement of, or the preservation of any rights under, any Transaction Document and the Transaction Security and any Proceedings instituted by or against the Security Agent as a consequence of taking or holding the Transaction Security or enforcing these rights, or the investigation of any possible Default.
11 | Tax gross-up and indemnities; VAT |
11.1 | Definitions |
In this Agreement:
Tax Credit means a credit against, relief from, or remission or repayment of any Tax.
Tax Deduction means a deduction or withholding for or on account of Tax from a payment under a Transaction Document.
Tax Payment means either an increase in a payment made by an Obligor to a Finance Party under Clause 11.2 (Tax gross-up) or a payment under Clause 11.3 (Tax indemnity).
11.2 | Tax gross-up |
11.2.1 | Each Obligor shall make all payments to be made by it under the Transaction Documents without any Tax Deduction, unless a Tax Deduction is required by law. |
11.2.2 | The Company shall promptly upon becoming aware that an Obligor has had or will have to make a Tax Deduction (or that there has been or will be any change in the rate at which or the basis on which any Tax Deduction has to be made) notify the Investment Agent accordingly. Similarly, a Participant shall notify the Investment Agent on becoming so aware in respect of a payment payable to that Participant. If the Investment Agent receives such a notification from a Participant it shall notify the Company and the Obligor in question. |
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11.2.3 | If a Tax Deduction is required by law to be made by an Obligor, the amount of the payment in respect of which the Tax Deduction is required to be made shall be increased to the amount which (after the Tax Deduction) will leave an amount equal to the payment which would have been due if no Tax Deduction had been required. |
11.2.4 | If an Obligor is required to make a Tax Deduction, the Obligor shall make the Tax Deduction, and any payment required in connection with the Tax Deduction within the time allowed and in the minimum amount required by law. |
11.2.5 | Within thirty days of making a Tax Deduction or a payment required in connection with a Tax Deduction, the Obligor making the Tax Deduction or payment shall deliver to the Investment Agent evidence reasonably satisfactory to that Finance Party that the Tax Deduction or payment has been made. |
11.3 | Tax indemnity |
11.3.1 | If any Finance Party is or will be subject to any liability or required to make any payment for or on account of Tax in relation to any sum received or receivable (or any sum deemed for Tax purposes to be received or receivable) under any Transaction Document, the Company shall (within three Business Days of demand by the Investment Agent) pay to that Finance Party the amount determined by that Finance Party in its absolute discretion to be equal to the loss, liability or cost which will be or has been (directly or indirectly) suffered for or on account of Tax by that Finance Party as a result of that liability or payment. |
11.3.2 | Clause 11.3.1 shall not apply: |
(a) | in relation to any Tax assessed on a Finance Party: |
(i) | under the law of the jurisdiction in which 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 |
(ii) | under the law of the jurisdiction in which that Finance Party’s Facility Office is located, in respect of amounts received or receivable in that jurisdiction, |
if 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
(b) | to the extent that the liability or requirement is compensated for by an increased payment under Clause 11.2 (Tax gross-up). |
11.3.3 | A Finance Party making, or intending to make, a claim under Clause 11.3.1 above shall promptly notify the Investment Agent of the event which will give, or has given, rise to the claim, following which the Investment Agent shall notify the Company accordingly. |
11.3.4 | A Finance Party shall, on receiving a payment from an Obligor under this Clause 11.3, notify the Investment Agent. |
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11.4 | Tax Credit |
If an Obligor makes a Tax Payment and the relevant Finance Party determines that:
(a) | a Tax Credit is attributable to an increased payment of which that Tax Payment forms part, to that Tax Payment or to a Tax Deduction in consequence of which that Tax Payment was required; or |
(b) | that Finance Party has obtained and utilised that Tax Credit, |
the Finance Party shall pay an amount to the Obligor which that Finance Party 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 the Obligor.
11.5 | Stamp taxes |
Each Obligor shall within three Business Days of demand, indemnify each Finance Party, any Receiver and their respective officers and employees against any cost, loss or liability which that Finance Party or its Receiver or any of their respective officers and employees incurs in relation to any stamp duty, registration tax or other similar Tax which is payable in respect of any of the Transaction Documents.
11.6 | Value added tax |
11.6.1 | All amounts expressed to be payable under a Transaction Document by any Party to a Finance Party which (in whole or in part) constitute the consideration for any supply for VAT purposes are deemed to be exclusive of any VAT which is chargeable on that supply, and accordingly, subject to Clause 11.6.2 below, if VAT is or becomes chargeable on any supply made by any Finance Party to any Party under a Transaction Document and such Finance Party is required to account to the relevant tax authority for the VAT, that Party must pay to such Finance Party (in addition to and at the same time as paying any other consideration for such supply) an amount equal to the-amount of the VAT (and such Finance Party must promptly provide an appropriate VAT invoice to that Party). |
11.62 | If VAT is or becomes chargeable on any supply made by any Finance Party (the Supplier) to any other Finance Party (the Recipient) under a Transaction Document, and any Party other than the Recipient (the Relevant Party) is required by the terms of any Transaction Document to pay an amount equal to the consideration for that supply to the Supplier (rather than being required to reimburse or indemnify the Recipient in respect of that consideration): |
(a) | (where the Supplier is the person required to account to the relevant tax authority for the VAT) the Relevant Party must also pay to the Supplier (at the same time as paying that amount) an additional amount equal to the amount of the VAT. The Recipient must (where this paragraph (a) applies) promptly pay to the Relevant Party an amount equal to any credit or repayment the Recipient receives from the relevant tax authority which the Recipient reasonably determines relates to the VAT chargeable on that supply; and |
(b) | (where the Recipient is the person required to account to the relevant tax authority for the VAT) the Relevant Party must promptly, following demand from the Recipient, pay to the Recipient an amount equal to the VAT chargeable on that supply but only to the extent that the Recipient reasonably determines that it is not entitled to credit or repayment from the relevant tax authority in respect of that VAT. |
11.6.3 | Where a Transaction Document requires any Party to reimburse or indemnify a Finance Party for any cost or expense, that Party shall reimburse or indemnify (as the case may be) such Finance Party for the full amount of such cost or expense, including such part thereof as represents VAT, save to the extent that such Finance Party reasonably determines that it is entitled to credit or repayment in respect of such VAT from the relevant tax authority. |
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12 | Other indemnities |
12.1 | Currency indemnity |
12.1.1 | If any sum due from an Obligor under the Transaction 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: |
(a) | making or filing a claim or proof against that Obligor; or |
(b) | obtaining or enforcing an order, judgment or award in relation to any litigation or arbitration proceedings, |
that Obligor shall, as an independent obligation, within three Business Days of demand, indemnify each Secured 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 (i) the rate of exchange used to convert that Sum from the First Currency into the Second Currency and (ii) the rate or rates of exchange available to that person at the time of its receipt of that Sum.
12.1.2 | Each Obligor waives any right it may have in any jurisdiction to pay any amount under the Transaction Documents in a currency or currency unit other than that in which it is expressed to be payable. |
12.2 | Other indemnities |
The Company shall (or shall procure that an Obligor will), within three Business Days of demand, indemnify each Secured Party and each Secured Party’s officers and employees against any cost, loss or liability incurred by that Secured Party or any of its officers and employees 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 Transaction Document on its due date, including any cost, loss or liability arising as a result of Clause 5 (Sharing among the Finance Parties); |
(c) | funding, or making arrangements to fund, its participation in the Istisna’ Agreement or the Forward Lease (as applicable) requested by the Company in a Transaction Request but not made by reason of the operation of any one or more of the provisions of a Transaction Document (other than by reason of default or negligence by that Finance Party alone); or |
(d) | any amount not being paid early in accordance with a notice of early payment given by the Company. |
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12.3 | Indemnity to the Investment Agent |
The Company shall promptly indemnify the Investment and its officers and employees:
(a) | against any cost, loss or liability incurred by the Investment Agent or any of its officers and employees (acting reasonably) as a result of: |
(i) | investigating any event which it reasonably believes is a Default; or |
(ii) | entering into or performing any foreign exchange contract for the purposes of Clause 3.15 (Change of currency); or |
(iii) | acting or relying on any notice, request or instruction which it reasonably believes to be genuine, correct and appropriately authorised; or |
(iv) | instructing lawyers, accountants, tax advisers, surveyors or other professional advisers or experts as permitted under the Transaction Documents; and |
(b) | any cost, loss or liability (including, without limitation, for negligence or any other category of liability whatsoever) incurred by the Investment Agent (otherwise than by reason of the Investment Agent’s gross negligence or wilful misconduct) in acting as Investment Agent under the Transaction Documents. |
12.4 | Indemnity to the Security Agent |
12.4.1 | Each Obligor shall jointly and severally promptly indemnify the Security Agent and every Receiver and Delegate and their respective officers and employees against any cost, loss or liability incurred by any of them as a result of: |
(a) | any failure by the Company to comply with its obligations under Clause 10 (Costs and expenses); |
(b) | acting or relying on any notice, request or instruction which it reasonably believes to be genuine, correct and appropriately authorised; |
(c) | the taking, holding, protection or enforcement of the Transaction Security, |
(d) | the exercise of any of the rights, powers, discretions, authorities and remedies vested in the Security Agent and each Receiver and Delegate by the Transaction Documents or by law; |
(e) | any default by any Obligor in the performance of any of the obligations expressed to be assumed by it in the Transaction Documents; or |
(f) | acting as Security Agent and custodian, Receiver or Delegate under the Transaction Documents or which otherwise relates to any of the Charged Property (otherwise, in each case, than by reason of the relevant Security Agent’s, Receiver’s or Delegate’s gross negligence or wilful misconduct). |
12.4.2 | The Security Agent and every Receiver and Delegate may, in priority to any payment to the Secured Parties, indemnify itself and its officers and employees out of the Charged Property in respect of, and pay and retain, all sums necessary to give effect to the indemnity in this Clause 12.4 and shall have a lien on the Transaction Security and the proceeds of the enforcement of the Transaction Security for all moneys payable to it. |
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13 | Amendments and waivers |
13.1 | Required consents |
13.1.1 | Subject to Clauses 13.2 (All Participant matters) and 13.3 (Exceptions), any term of the Transaction Documents may be amended or waived only with the written consent of the Majority Participants and the Company, and any such amendment or waiver shall be binding on all Parties. |
13.1.2 | The Investment Agent may effect, on behalf of any Finance Party, any amendment or waiver permitted by this Clause 13. |
13.1.3 | Without prejudice to the generality of Clauses 6.8.3, 6.8.4 and 6.8.5 (Rights and discretion) the Investment Agent may engage, pay for and rely on the services of lawyers in determining the consent level required for and effecting any amendment, waiver or consent under this Agreement. |
13.1.4 | Each Obligor agrees to any amendment or waiver permitted by this Clause 8 which is agreed to by the Company. |
13.2 | All Participant matters |
An amendment or waiver or (in the case of a Transaction Security Document) a consent in relation to any term of any Transaction Document that has the effect of changing or which relates to:
(a) | the definition of Majority Participants in Clause 1.1 (Definitions); |
(b) | an extension to the date of payment of any amount under or in connection with the Transaction Documents; |
(c) | a reduction in the amount of any payment, fees or commission payable under or in connection with any Transaction Document; |
(d) | a change in the currency of any payment under or in connection with any Transaction Document; |
(e) | an increase in or an extension of any Commitment or the Total Commitments, an extension of any Availability Period or any requirement that a cancellation of Commitments reduces the Commitments rateably under any Transaction Document; |
(f) | an extension of the Availability Period; |
(g) | any provision which expressly requires the consent of all the Participants; |
(h) | Clauses 2 (Finance Parties’ rights and obligations), 5 (Sharing among the Finance Parties), 16 (Changes to the Participants), this Clause 13, Clause 25 (Governing law) or 26 (Enforcement); |
(i) | Clause 16 (General provisions relating to certain notices the cancellation of Commitments) of the Principal Agreement; |
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(j) | (other than as expressly permitted by the provisions of any Transaction Document) the nature or scope of: |
(i) | the Charged Property; or |
(ii) | the manner in which the proceeds of enforcement of the Transaction Security are distributed, |
except insofar as it relates to a sale or disposal of an asset which is the subject of the Transaction Security where such sale or disposal is expressly permitted under this Agreement or any other Transaction Document; or
(k) | the release or partial release of any Transaction Security, in each case unless permitted under this Agreement or any other Transaction Document or relating to a sale or disposal of an asset which is the subject of the Transaction Security where such sale or disposal is expressly permitted under this Agreement or any other Transaction Document, |
shall not be made or given without the prior consent of all the Participants.
13.3 | Other exceptions |
13.3.1 | An amendment or waiver which relates to, or would otherwise affect, the rights or obligations of the Arranger, the Investment Agent or the Security Agent (each in its capacity as such) may not be effected without the consent of the Arranger, the Investment Agent, or, as the case may be, the Security Agent. |
14 | Representations and warranties |
The Investment Agent and the Security Agent have entered into this Agreement in reliance on the representations of each Participant and each Obligor set out in this Clause 14, and each Participant and each Obligor warrants to the Investment Agent and the Security Agent on the date of this Agreement that:
(a) | it has entered into the Transaction Documents after having independently reviewed them for the purposes of ensuring their compliance with the Shari’ah and, to the extent it has considered this necessary, with independent advice from advisers specialising in matters of Shari’ah; |
(b) | following that review, it is satisfied that the Transaction Documents comply with the Shari’ah; |
(c) | it has not relied on any statement, representation or warranty made by or on behalf of the Investment Agent or the Security Agent as to the Shari’ah-compliance of the transactions contemplated by the Transaction Documents or any of them; and |
(d) | it does not have any objections, nor will it raise any objections, as to matters of Shari’ah-compliance in respect of or otherwise in relation to any of the provisions of the Transaction Documents. |
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15 | Illegality |
If, in any applicable jurisdiction, it becomes unlawful for a Participant to perform any of its obligations as contemplated by this Agreement and the other Transaction Documents or to fund or maintain its Participation:
(a) | the Participant shall promptly notify the Investment Agent upon becoming aware of that event; and |
(b) | Clause 14 (Illegality) in the Principal Agreement shall apply. |
16 | Changes to the Participants |
16.1 | Assignments and transfers by the Participants |
Subject to this Clause 16, a Participant (the Existing Participant) may:
(a) | assign any of its rights; or |
(b) | transfer by novation any of its rights and obligations, |
under any Transaction Document to another bank or financial institution or to a trust, fund or other entity which is regularly engaged in or established for the purpose of making, purchasing or investing in loans, securities or other financial assets (the New Participant).
16.2 | Conditions of assignment or transfer 16.2.1 An assignment will only be effective on: |
(a) | receipt by the Investment Agent (whether in the Assignment Agreement or otherwise) of written confirmation from the New Participant (in form and substance satisfactory to the Investment Agent) that the New Participant will assume the same obligations to the other Finance Parties and the other Secured Parties as it would have been under if it had been an Original Participant; and |
(b) | performance by the Investment Agent of all necessary “know your customer” and other similar checks under all applicable laws and regulations in relation to such assignment to a New Participant, the completion of which the Investment Agent shall promptly notify to the Existing Participant and the New Participant. |
16.2.2 | A transfer will only be effective if the procedure set out in Clause 16.5 (Procedure for transfer) is complied with. |
16.2.3 | Each New Participant, by executing the relevant Transfer Certificate or Assignment Agreement, confirms, for the avoidance of doubt, that the Investment Agent has authority to execute on its behalf any amendment or waiver that has been approved by or on behalf of the requisite Participant or Participants in accordance with this Agreement on or prior to the date on which the transfer becomes effective in accordance with this Agreement and that it is bound by that decision to the same extent as the Existing Participant would have been had it remained a Participant. |
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16.3 | Assignment or transfer fee |
The New Participant shall, on the date upon which an assignment or transfer takes effect, pay to the Investment Agent (for its own account) a fee of 0.25 percent of the amount assigned or transferred.
16.4 | Limitation of responsibility of Existing Participants |
16.4.1 | Unless expressly agreed to the contrary, an Existing Participant makes no representation or warranty and assumes no responsibility to a New Participant for: |
(a) | the legality, validity, effectiveness, adequacy or enforceability of the Transaction Documents, the Transaction Security or any other documents; |
(b) | the financial condition of any Obligor; |
(c) | the performance and observance by any Obligor of its obligations under the Transaction Documents or any other documents; or |
(d) | the accuracy of any statements (whether written or oral) made in or in connection with any Transaction Document or any other document, |
and any representations or warranties implied by law are excluded.
16.4.2 | Each New Participant confirms to the Existing Participant, the other Finance Parties and the Secured Parties that it: |
(a) | has made (and shall continue to make) its own independent investigation and assessment of the financial condition and affairs of any Obligor and its related entities in connection with its participation in this Agreement and has not relied exclusively on any information provided to it by the Existing Participant in connection with any Transaction Document or the Transaction Security; and |
(b) | will continue to make its own independent appraisal of the creditworthiness of any Obligor and its related entities whilst any amount is or may be outstanding under the Transaction Documents or any Commitment is in force. |
16.4.3 | Nothing in any Transaction Document obliges an Existing Participant to: |
(a) | accept a re-transfer or re-assignment from a New Participant of any of the rights and obligations assigned or transferred under this Clause 16; or |
(b) | support any losses directly or indirectly incurred by the New Participant by reason of the non-performance by any Obligor of its obligations under the Transaction Documents or otherwise. |
16.5 | Procedure for transfer |
16.5.1 | Subject to the conditions set out in Clause 16.2 (Conditions of assignment or transfer) a transfer is effected in accordance with Clause 16.5.4 when the Investment Agent executes an otherwise duly completed Transfer Certificate delivered to it by the Existing Participant and the New Participant. |
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16.5.2 | The Investment Agent shall, subject to Clause 16.5.3, execute the Transfer Certificate referred to in Clause 16.5.1 as soon as reasonably practicable after receipt by it of a duly completed Transfer Certificate appearing on its face to comply with the terms of this Agreement and delivered in accordance with the terms of this Agreement. |
16.5.3 | The Investment Agent shall only be obliged to execute a Transfer Certificate delivered to it by the Existing Participant and the New Participant once it is satisfied it has complied with all necessary “know your customer” or other similar checks under its own internal procedures and all applicable laws and regulations in relation to the transfer to such New Participant. |
16.5.4 | On the Transfer Date: |
(a) | to the extent that in the Transfer Certificate the Existing Participant seeks to transfer by novation its rights and obligations under the Transaction Documents, each of the Obligors and the Existing Participant shall be released from further obligations towards one another under the Transaction Documents and their respective rights against one another under the Transaction Documents shall be cancelled (being the Discharged Rights and Obligations); |
(b) | each of the Obligors and the New Participant shall assume obligations towards one another and/or acquire rights against one another which differ from the Discharged Rights and Obligations only insofar as that Obligor and the New Participant have assumed and/or acquired the same in place of that Obligor and the Existing Participant; |
(c) | the Arranger, the investment Agent, the Security Agent, the New Participant and the other Participants shall acquire the same rights and assume the same obligations between themselves as they would have acquired and assumed had the New Participant been an Original Participant with the rights and/or obligations acquired or assumed by it as a result of the transfer and to that extent the Arranger, the Investment Agent, the Security Agent and the Existing Participant shall each be released from further obligations to each other under the Transaction Documents; and |
(d) | the New Participant shall become a Party as a Participant. |
16.6 | Procedure for assignment |
16.6.1 | Subject to the conditions set out in Clause 16.2 (Conditions of assignment or transfer) an assignment may be effected in accordance with Clause 16.6.3 when the Investment Agent executes an otherwise duly completed Assignment Agreement delivered to it by the Existing Participant and the New Participant. The Investment Agent shall, subject to. Clause 16.6.2, as soon as reasonably practicable after receipt by it of a duly completed Assignment Agreement appearing on its face to comply with the terms of this Agreement and delivered in accordance with the terms of this Agreement, execute that Assignment Agreement. |
16.6.2 | The Investment Agent shall only be obliged to execute an Assignment Agreement delivered to it by the Existing Participant and the New Participant once it is satisfied it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations in relation to the assignment to such New Participant. |
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16.6.3 | On the Transfer Date: |
(a) | the Existing Participant will assign absolutely to the New Participant the rights under the Transaction Documents expressed to be the subject of the assignment in the Assignment Agreement; |
(b) | the Existing Participant will be released by each Obligor and the other Finance Parties from the obligations owed by it (the Relevant Obligations) and expressed to be the subject of the release in the Assignment Agreement; and |
(c) | the New Participant shall become a Party as a “Participant” and will be bound by obligations equivalent to the Relevant Obligations. |
16.6.4 | Participants may utilise procedures other than those set out in this Clause 16.6 to assign their rights under the Transaction Documents (but not, without the consent of the relevant Obligor or unless in accordance with Clause 16.5 (Procedure for transfer), to obtain a release by that Obligor from the obligations owed to that Obligor by the Participants nor the assumption of equivalent obligations by a New Participant) provided that they comply with the conditions set out in Clause 16.2 (Conditions of assignment or transfer). |
16.7 | Copy of Transfer Certificate or Assignment Agreement to Company |
The Investment Agent shall, as soon as reasonably practicable after it has executed a Transfer Certificate or Assignment Agreement, send to the Company a copy of that Transfer Certificate or Assignment Agreement.
16.8 | Assignments and transfers by Obligors |
No Obligor may assign any of its rights or transfer any of its rights or obligations under the Transaction Documents.
17 | “Know your customer” checks |
17.1 | Requests for documentation |
If the Investment Agent, the Security Agent or any Participant (or, in the case of paragraph (c) below, any prospective new Participant) is obliged by:
(a) | the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation made after the date of this Agreement; |
(b) | any change in the status or shareholders of an Obligor after the date of this Agreement; or |
(c) | a proposed assignment or transfer by a Participant of any of its rights and obligations under this Agreement to a party that is not a Participant before such assignment or transfer, |
to comply with “know your customer” or similar identification procedures in circumstances here the necessary information is not already available to it, each Obligor shall promptly upon the request of the Investment Agent or any Participant supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Investment Agent (for itself or on behalf of the Security Agent or any Participant) or any Participant (for itself or in the case of the event described in paragraph (c) above, on behalf of any prospective new Participant) in order for the Investment Agent, the Security Agent or such Participant or, in the case of the event described in paragraph (c) above, any prospective new Participant to carry out and be satisfied it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the Transaction Documents.
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17.2 | Supply of documentation |
Each Participant shall promptly upon the request of the Investment Agent supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Investment Agent (for itself or the Security Agent) in order for the Investment Agent or the Security Agent to carry out and be satisfied it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the Transaction Documents.
18 | Confidentiality |
18.1 | Confidential Information |
Each Finance Party agrees to keep all Confidential Information confidential and not to disclose it to anyone, save to the extent permitted by Clause 18.2 (Disclosure of Confidential Information), and to ensure that all Confidential Information is protected with security measures and a degree of care that would apply to its own confidential information.
18.2 | Disclosure of Confidential Information Any Finance Party may disclose: |
(a) | to any of its Affiliates and Related Funds and any of its or their officers, directors, employees, professional advisers, auditors, partners and Representatives such Confidential Information as that Finance Party shall consider appropriate if any person to whom the Confidential Information is to be given pursuant to this paragraph (a) is informed in writing of its confidential nature and that some or all of such Confidential Information may be price-sensitive information except that there shall be no such requirement so to inform if the recipient is subject to professional obligations to maintain the confidentiality of the information or is otherwise bound by requirements of confidentiality in relation to the Confidential Information; |
(b) | to any person: |
(i) | to (or through) whom it assigns or transfers (or may potentially assign or transfer) all or any of its rights and/or obligations under one or more Transaction Documents or which succeeds (or which may potentially succeed) it as Agent or Security Agent and, in each case, to any of that person’s Affiliates, Representatives and professional advisers; |
(ii) | with (or through) whom it enters into (or may potentially enter into), whether directly or indirectly, any sub-participation in relation to, or any other transaction under which payments are to be made or may be made by reference to, one or more Transaction Documents and/or one or more Obligors and to any of that person’s Affiliates, Representatives and professional advisers; |
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(iii) | appointed by any Finance Party or by a person to whom Clauses 18.2(a) or 18.2(b)(i) or (ii) above applies to receive communications, notices, information or documents delivered pursuant to the Transaction Documents on its behalf (including any person appointed under Clause 6.16.2); |
(iv) | who invests in or otherwise finances (or may potentially invest in or otherwise finance), directly or indirectly, any transaction referred to in Clauses 18.2(b)(i) or (ii) above, and where such transaction is a securitisation, any person who is a transaction party to such securitisation; |
(v) | to whom information is required or requested to be disclosed by any court of competent jurisdiction or governmental, banking, taxation or other regulatory authority or similar body, the rules of any relevant stock exchange or pursuant to any applicable law or regulation; |
(vi) | to whom information is required to be disclosed in connection with, and for the purposes of, any litigation, arbitration, administrative or other investigations, proceedings or disputes; |
(vii) | who is a Party; or |
(viii) | with the consent of the Company, |
in each case, such Confidential Information as that Finance Party shall consider appropriate.
18.3 | Entire agreement |
This Clause 18 (Confidentiality) constitutes the entire agreement between the Parties in relation to the obligations of the Finance Parties under the Transaction Documents regarding Confidential Information and supersedes any previous agreement, whether express or implied, regarding Confidential Information.
18.4 | Inside information |
Each of the Finance Parties acknowledges that some or all of the Confidential Information is or may be price-sensitive information and that the use of such information may be regulated or prohibited by applicable legislation including securities law relating to insider dealing and market abuse and each of the Finance Parties undertakes not to use any Confidential Information for any unlawful purpose.
18.5 | Notification of disclosure |
Each of the Finance Parties agrees (to the extent permitted by law and regulation) to inform the Company:
(a) | of the circumstances of any disclosure of Confidential Information made pursuant to Clause 18.2(b)(v) except where such disclosure is made to any of the persons referred to in that paragraph during the ordinary course of its supervisory or regulatory function; and |
(b) | upon becoming aware that Confidential Information has been disclosed in breach of this Clause 18 (Confidentiality). |
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19 | Mitigation by the Investment Agent and the Participants |
19.1 | Mitigation |
19.1.1 | Each Finance Party shall, in consultation with the Company, take all reasonable steps to mitigate any circumstances which arise and which would result in any amount becoming payable under or pursuant to, or cancelled pursuant to, any of clause 14 (Illegality) of the Principal Agreement, clause 21 (Increased Costs) of the Master Forward Lease Agreement or Clause 11 (Tax gross-up and indemnities; VAT) or including transferring its rights and obligations under the Transaction Documents to another Affiliate or Facility Office. |
19.1.2 | Clause 19.1.1 does not in any way limit the obligations of any Obligor under the Transaction Documents. |
19.2 | Limitation of liability |
The Company shall promptly indemnify each Finance Party for all costs and expenses reasonably incurred by that Finance Party because of steps taken by it under Clause 19.1 (Mitigation).
20 | Notices |
20.1 | Communications in writing |
Any communication to be made under or in connection with the Transaction Documents shall be made in writing and, unless otherwise stated, may be made by fax or letter.
20.2 | Addresses |
20.2.1 | The address and fax number (and the department or officer, if any, for whose attention the communication is to be made) of each Party for any communication or document to be made or delivered under or in connection with the Transaction Documents is: |
(a) | in the case of each Obligor, the Investment Agent and the Security Agent, that identified with their respective names in Clause 20.2.2; and |
(b) | in the case of each Participant, that notified in writing to the Investment Agent on or before the date on which it becomes a Party, |
or any substitute address or fax number or department or officer as the Party may notify to the Investment Agent (or the Investment Agent may notify to the other Parties, if a change is made by the Investment Agent) by not less than five Business Days’ notice.
20.2.2 | The addresses referred to in Clause 20.2.1 are as follows: |
(a) | The Obligors: |
Address: | P. O. Box 50170, Fujairah, United Arab Emirates |
Attention: |
Fax: | 02 6333152 |
(b) | The Investment Agent: |
Address: | P. O. Box 40057, Abu Dhabi, United Arab Emirates |
Attention: |
Fax: | 02 6220949 |
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(c) | The Security Agent: |
Address: | P. O. Box 40057, Abu Dhabi, United Arab Emirates |
Attention: |
Fax: | 02 6220949 |
20.3 | Delivery |
20.3.1 | Any communication or document made or delivered by one person to another under or in connection with the Transaction Documents will only be effective: |
(a) | if by way of fax, when received in legible form; or |
(b) | if by way of letter, (i) when it has been left at the relevant address or (ii) two Business Days (or, in the case of airmail, five Business Days) after being deposited in the post postage prepaid (or, as the case may be, airmail postage prepaid), in an envelope addressed to it at that address, |
and, if a particular department or officer is specified as part of its address details provided under Clause20.2.2 (Addresses) if addressed to that department or officer.
20.3.2 | Any communication or document to be made or delivered to the Investment Agent or the Security Agent will be effective only when actually received by the Investment Agent or (as the case may be) the Security Agent and then only if it is expressly marked for the attention of the department or officer identified in Clause 20.2.2 (or any substitute department or officer) as the Investment Agent or (as the case may be) the Security Agent shall specify for this purpose. |
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20.3.3 | All notices under this Agreement from or to any Obligor shall be sent through the Investment Agent. |
20.3.4 | Any communication or document made or delivered to any Obligor in accordance with this Clause will be deemed to have been made or delivered to that Obligor. |
20.3.5 | Any communication or document which becomes effective, in accordance with Clauses 20.3.1 to 20.3.4 above, after 5.00 p.m. in the place of receipt shall be deemed only to become effective on the following day. |
20.4 | Notification of address and fax number |
Promptly upon receipt of notification of an address or fax number or change of address or fax number pursuant to Clause 20.2.1 (Addresses) or changing its own address or fax number, the Investment Agent shall notify the other Parties.
20.5 | Electronic communication |
20.5.1 | Any communication to be made between any two Parties under or in connection with the Transaction Documents may be made by electronic mail or other electronic means, to the extent that those two Parties agree that, unless and until notified to the contrary, this is to be an accepted form of communication and if those two Parties: |
(a) | notify each other in writing of their electronic mail address and/or any other information required to enable the sending and receipt of information by that means; and |
(b) | notify each other of any change to their address or any other such information supplied by them by not less than five Business Days’ notice. |
20.5.2 | Any electronic communication made between those two Parties will be effective only when actually received in readable form and in the case of any electronic communication made by a Party to the Investment Agent or the Security Agent only if it is addressed in such a manner as the Investment Agent or the Security Agent shall specify for this purpose. |
20.5.3 | Any electronic communication which becomes effective, in accordance with Clause 20.5.2 above, after 5.00 p.m. in the place of receipt shall be deemed only to become effective on the following day. For this purpose, the place of receipt of any electronic communication shall be deemed to be the address of the receiving Party under Clause 20.2 (Addresses). |
20.6 | English language |
20.6.1 | Any notice given under or in connection with any Transaction Document must be in English |
20.6.2 | All other documents provided under or in connection with any Transaction Document must be: |
(a) | in English; or |
(b) | if not in English, and if so required by the Investment Agent, accompanied by a certified English translation and, in this case, the English translation will prevail unless the document is a constitutional, statutory or other official document. |
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21 | Calculations and certificates |
21.1 | Accounts |
In any litigation or arbitration proceedings arising out of or in connection with a Transaction Document, the entries made in the accounts maintained by a Finance Party are prima facie evidence of the matters to which they relate.
21.2 | Certificates and determinations |
Any certification or determination by a Finance Party of a rate or amount under any Transaction Document is, in the absence of manifest error, conclusive evidence of the matters to which it relates.
21.3 | Day count convention |
Any payment, commission or fee accruing under a Transaction Document will accrue from day to day and is calculated on the basis of the actual number of days elapsed and a year of 360 days or, in any case where the practice in the relevant interbank market differs, in accordance with that market practice.
22 | Partial invalidity |
If, at any time, any provision of a Transaction Document is or becomes illegal, invalid or unenforceable in any respect under any law of any jurisdiction, neither the legality, validity or enforceability of the remaining provisions nor the legality, validity or enforceability of such provision under the law of any other jurisdiction will in any way be affected or impaired.
23 | Remedies and waivers |
No failure to exercise, nor any delay in exercising, on the part of any Finance Party or Secured Party, any right or remedy under a Transaction Document shall operate as a waiver of any such right or remedy or constitute an election to affirm any of the Transaction Documents. No election to affirm any of the Transaction Documents on the part of any Finance Party shall be effective unless it is in writing. No single or partial exercise of any right or remedy shall prevent any further or other exercise or the exercise of any other right or remedy. The rights and remedies provided in each Transaction Document are cumulative and not exclusive of any rights or remedies provided by law.
24 | Counterparts |
Each Transaction Document may be executed in any number of counterparts, and this has the same effect as if the signatures on the counterparts were on a single copy of the Transaction Document.
25 | Governing law |
25.1 | English law |
This Agreement, its interpretation and all non-contractual obligations arising out of or connected with it shall be governed by, and construed in accordance with, English law.
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25.2 | Interest |
The Parties recognise and agree that the principle of the payment of interest is repugnant to the Shari’ah and accordingly, to the extent that any legal system would (but for the provisions of this Clause) impose (whether by contract or by statute) any obligation to pay interest, the Parties hereby irrevocably and unconditionally expressly agree to pay any amounts of interest that they receive to charity as designated by the Shari’ah Fatwa and Supervisory Board of the Investment Agent.
26 | Enforcement |
26.1 | Jurisdiction |
26.1.1 | Subject to Clause 26.1.2, the Parties submit, and waive any objection, to the exclusive jurisdiction of the courts of the Dubai International Financial Centre, Emirate of Dubai, United Arab Emirates to settle any dispute arising out of or in connection with this Agreement (including a dispute relating to the existence, validity or termination of this this Agreement or any non-contractual obligation arising out of or in connection with this Agreement) (a Dispute). The Parties agree that the courts of the Dubai International Financial Centre, Emirate of Dubai, United Arab Emirates are the most appropriate and convenient courts to settle Disputes and accordingly no Party will argue to the contrary. |
26.1.2 | This Clause 26.1 is for the benefit of the Finance Parties only. No Finance Party shall be prevented from taking proceedings relating to a Dispute in any other courts with jurisdiction. To the extent allowed by law, the Finance Parties may take concurrent proceedings in any number of jurisdictions. |
26.2 | State Immunity |
26.2.1 | Each Party acknowledges and agrees, to the extent relevant, that its execution, performance and delivery of this Agreement shall constitute a private commercial transaction entered into entirely in its commercial capacity. |
26.2.2 | To the extent that any Party may in any jurisdiction claim for itself or its assets immunity from legal proceedings, and to the extent that in any jurisdiction there may be attributed to any Party or its assets such immunity (whether claimed or not), that Party irrevocably and unconditionally and to the full extent permitted by the laws of the Relevant Jurisdiction: |
(a) | agrees not to claim such immunity; |
(b) | waives any such immunity which it or its assets now has or may in future acquire; and |
(c) | consents, in any legal proceedings arising out of or in connection with this Agreement, to the giving of relief by enforcement, execution (including the arrest, detention or sale of any state property) or attachment (whether before judgment, in aid of execution, or otherwise) against any of its assets. |
26.2.3 | In relation to any legal proceedings that may be taken immunity shall have effect under, and be construed in Act 1978. |
26.2.4 | For the purposes of this Clause: |
legal proceedings includes any service of process, suit, judgment, execution, attachment (whether before judgment, in aid of execution, or otherwise), arbitral proceedings or other dispute resolution mechanisms; and
asset includes any asset not used solely for commercial purposes.
This Agreement is entered into by the Parties on the date stated at the beginning of this Agreement.
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Execution Page of Investment Agency Agreement
The Investment Agent | ||
Signed by | ) | /s/ Aqeel Bughio |
) | Sector Head – Corporate | |
duly authorised in accordance with the | ) | |
laws of Abu Dhabi, United Arab Emirates for | ) | |
and on behalf of National Bank of Abu | ) | /s Omar Katri |
Dhabi PJSC – Islamic Banking Division in | ) | Sector Head - Commercial |
the presence of: | ) | |
Signature of witness | ) |
Name of witness: | |||
Address of witness: | |||
The Arranger
Signed by | ) | Aqeel Bughio |
) | Sector Head – Corporate | |
duly authorised in accordance with the | ) | |
laws of Abu Dhabi, United Arab Emirates for | ) | Omar Katri |
and on behalf of National Bank of Abu | ) | Sector Head - Commercial |
Dhabi PJSC – Islamic Banking Division in | ) | |
the presence of: | ) | |
Signature of witness | ) |
Name of witness: | |||
Address of witness: | |||
Execution Page of Investment Agency Agreement
The Security Agent
Signed by | ) | /s/ Aqeel Bughio |
) | ||
duly authorised in accordance with the | ) | |
laws of Abu Dhabi, United Arab Emirates for | ) | /s/ Omar Katri |
and on behalf of National Bank of Abu | ) | |
Dhabi PJSC – Islamic Banking Division in | ) | |
the presence of: | ) | |
Signature of witness | ) |
Name of witness: | |||
Address of witness: | |||
The Participant
Signed by | ) | /s/ Aqeel Bughio |
) | ||
duly authorised in accordance with the | ) | |
laws of Abu Dhabi, United Arab Emirates for | ) | /s/ Omar Katri |
and on behalf of National Bank of Abu | ) | |
Dhabi PJSC – Islamic Banking Division in | ) | |
the presence of: | ) | |
Signature of witness | ) |
Name of witness: | |||
Address of witness: | |||
Execution Page of Investment Agency Agreement
The Obligors
The Company
Signed by | ) |
|
duly authorised in accordance with the | ) | |
laws of Fujairah Free Zone, United Arab | ) | |
Emirates for and on behalf of Brooge | ) | |
Petroleum and Gas Investment Company | ) | |
FZC in the presence of: | ) | |
Signature of witness | ) |
Name of witness: |
|
||
Address of witness: | |||
Obligor
Signed by | ) |
|
) | ||
duly authorised in accordance with the | ) | |
laws of Fujairah Free Zone, United Arab | ) | |
Emirates for and on behalf of Emirates | ) | |
Investment Company LLC FZC in the | ) | |
presence of: | ) | |
Signature of witness | ) |
Name of witness: |
|
||
Address of witness: | |||
Execution Page of Investment Agency Agreement
Obligor
Signed by | ) |
|
) | ||
duly authorised in accordance with the | ) | |
laws of Abu Dhabi, United Arab Emirates for | ) | |
and on behalf Al Brooge Capital Providing | ) | |
for Oil and Gas LLC in the presence of: | ) | |
Signature of witness | ) |
Name of witness: |
|
||
Address of witness: | |||
Exhibit 10.37
Service Agency Agreement
Dated 29-06-2015
Brooge Petroleum and Gas Investment Company FZC
(The Service Agent)
National Bank of Abu Dhabi PJSC - Islamic Banking Division
(The Lessor)
Dentons & Co
Suite 1204 Al Ghaith Tower
Hamdan Street
PO Box 47656
Abu Dhabi
United Arab Emirates |
|
Contents
24 June 2015 | Contents (i) |
Service Agency Agreement (Agreement)
Dated
Between
(1) | Brooge Petroleum and Gas Investment Company FZC incorporated under the laws of Fujairah Free Zone, Fujairah, United Arab Emirates of P. O. Box 50170, Fujairah, United Arab Emirates (the Service Agent); and |
(2) | National Bank of Abu Dhabi PJSC - Islamic Banking Division, of P. O. Box 40057, Abu Dhabi, United Arab Emirates (the Lessor) acting in its capacity as Investment Agent for an on behalf of the Participants. |
Recitals
A. | Pursuant to the terms of the Forward Lease, the Investment Agent (acting in the capacity as the Lessor) has agreed to lease the Leased Asset to the Lessee. |
B. | The Lessor wishes to appoint the Service Agent as its service agent to perform the Services and the Service Agent is willing to accept this appointment in accordance with the terms of this Agreement. |
It is agreed:
1 | Definitions and interpretation |
1.1 | Definitions |
1.1.1 | Unless the context otherwise requires or unless expressly defined in this Agreement, words and expressions defined in clause 1.1 (Definitions) of the Common Terms Agreement (whether directly or indirectly) have the same meanings in this Agreement. |
1.1.2 | In addition, in this Agreement: |
Common Terms Agreement means the common terms agreement dated on or around the date of the Master Forward Lease Agreement between, amongst others, the Investment Agent and the Service Agent (in the capacity as the Company).
Forward Lease means that Forward Lease dated on or around the date of this Agreement entered into between the Lessor and the Service Agent (as Lessee) pursuant to the Master Forward Lease Agreement.
Leased Asset has the meaning given to it in the Forward Lease.
Party means a party to this Agreement.
Service Charge Amount means the expenses incurred by the Service Agent during a Lease Period in providing the Services.
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Service Charge Reimbursement Date means the date when the Lessor pays a Service Charge Amount to the Service Agent which shall correspond to:
(a) | the Rental Payment Date in respect of the Lease Period which commences immediately after the Lease Period in which a Service Charge Amount arose; or |
(b) | the Termination Amount Payment Date. |
Services means the services performed by the Service Agent under this Agreement in relation to the Forward Lease with respect to the Property Insurance Policy, Major Maintenance, the payment of Ownership Taxes.
1.2 | Construction |
The principles of construction used in the Common Terms Agreement shall apply to this Agreement to the extent they are relevant to it and, subject to any necessary changes, as they apply to the Common Terms Agreement.
1.3 | Third party rights |
1.3.1 | Subject to Clause 1.3.2, unless expressly provided to the contrary in this Agreement a person who is not a Party has no right under the Third Parties Act to enforce or to enjoy the benefit of any term of this Agreement. |
1.3.2 | Each Participant may, except as otherwise stated in the Transaction Documents, enforce or enjoy the benefit of any term of this Agreement which it would be able to enforce or enjoy if it were a party to this Agreement. |
1.3.3 | Notwithstanding any term of any Transaction Document, the Parties may rescind, vary, waive, release, assign, novate or otherwise dispose of all or any of their respective rights or obligations under this Agreement without the consent of any person who is not a Party. |
1.4 | Common Terms Agreement |
This Agreement and the rights and obligations of the Parties hereunder are subject to the provisions of the Common Terms Agreement. The provisions of the Common Terms Agreement that are expressed to apply to all Transaction Documents apply equally to this Agreement.
2 | Effective date |
This Agreement will only become effective on the Commencement Date.
3 | Appointment and fee |
3.1 | Appointment |
As from the Commencement Date, the Lessor appoints the Service Agent to act as its agent to perform the Services in accordance with the terms of this Agreement.
3.2 | Fee |
In consideration of the Service Agent acting as the Service Agent, the Lessor (as agent for the Participants) shall pay to the Service Agent a fee of AED100 and the Service Agent acknowledges the receipt and adequacy of the fee.
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4 | Insurance |
4.1 | Property Insurance Policy |
4.1.1 | During the Lease Term, the Service Agent shall take out and maintain in force the Property Insurance Policy. |
4.1.2 | Without limiting the obligations of the Service Agent described in Clause 4.1.1, the Service Agent must perform this obligation so that: |
(a) | the Lessor at all times complies with clause 13.1 (Property Insurance Policy) of the Master Forward Lease Agreement; and |
(b) | it complies with all of the provisions contained in Parts 1, 2 and 3 of schedule 6 (Insurance matters) to the Master Forward Lease Agreement (other than terms which are expressed to only apply to the Operating Insurance Policy or the Third Party Insurance Policy). |
4.1.3 | The Service Agent shall promptly pay premia in relation to the Property Insurance Policy. |
4.2 | Level of insurance cover |
4.2.1 | The Service Agent shall at all times ensure that the sum insured under the Property Insurance Policy in the event of a Total Loss or Expropriation Event is an amount equal to: |
(a) | the full replacement value of the Leased Asset; or |
(b) | the Termination Amount from time to time, |
whichever is greater.
5 | Maintenance matters |
5.1 | Obligation to perform Major Maintenance |
During the Lease Term, the Service Agent shall perform all Major Maintenance relating to the Leased Asset in accordance with good industry practice.
5.1.1 | Without limiting the obligations of the Service Agent described in Clause 5.1 (Obligation to perform Major Maintenance), the Service Agent must perform Major Maintenance so that it conforms with the performance obligations contained in clause 11.2 (Performance of Ordinary Maintenance and Repair) of the Master Forward Lease Agreement as if references to “Ordinary Maintenance and Repair” were references to “Major Maintenance”. |
5.1.2 | The Service Agent shall promptly pay all fees, costs and expenses that are payable to third persons for the performance of Major Maintenance. |
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5.2 | Subcontracting |
Without prejudice to the Service Agent’s obligations under this Agreement, the Service Agent may sub-contract all or part of its obligation to perform Major Maintenance on the following terms:
(a) | the terms of such sub-contracting shall not conflict in any respect with the terms of this Agreement and must be such that any such sub-contracting shall instantly terminate upon a termination for whatever reason of the leasing of the Leased Asset; |
(b) | any sub-contractor shall perform any Major Maintenance strictly in accordance with the terms of this Agreement; |
(c) | any sub-contracting agreement shall not permit any further sub-contracting; |
(d) | the Service Agent shall not be released from any of its obligations under this Agreement in consequence of any such sub-contracting (save that due performance by a sub-contractor of any obligation of the Service Agent shall constitute a good discharge of such obligation to the extent of such performance); and |
(e) | the Service Agent shall, on request from the Lessor from time to time, promptly provide the Lessor with details of any sub-contractor and sub-contracting and copies of any relevant sub-contract agreement. |
5.3 | Inspection |
When undertaking any Major Maintenance, the Service Agent shall provide all necessary assistance to allow the Lessor and the Lessor’s agents or representatives to inspect or survey the Leased Asset and the Major Maintenance that is being undertaken.
6 | Ownership Taxes |
6.1.1 | During the Lease Term, the Service Agent must pay all Ownership Taxes on or in relation to: |
(a) | the Leased Asset or any part of it; or |
(b) | any disposition or other transaction that gives rise to an Ownership Tax in relation to the Leased Asset or any part of it. |
6.1.2 | Upon becoming aware that an Ownership Tax has or will become payable, the Service Agent shall promptly notify the Lessor accordingly. |
6.1.3 | If an Ownership Tax is required to be paid, the Service Agent shall make the payment, and any payment required in connection with the Ownership Tax, within the time allowed and in the minimum amount required by law. |
6.1.4 | Within 30 days of paying an Ownership Tax or a payment required in connection with the Ownership Tax, the Service Agent shall deliver to the Lessor evidence reasonably satisfactory to the Lessor that the Ownership Tax or other payment has been made. |
7 | Loss and damage to the Leased Asset |
7.1 | Partial Loss |
7.1.1 | The Service Agent must give prompt notice to the Lessor of any Partial Loss in the manner described in paragraph 1.7(a)(ii) (Claims) of Part 1 of schedule 6 to the Master Forward Lease Agreement. |
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7.1.2 | If there is a Partial Loss, the Service Agent shall: |
(a) | oversee and arrange for the timely performance of the repair work so that the Leased Asset is reinstated to its original condition fair wear and tear excepted; |
(b) | subject to the provisions of paragraph 1.8 (Insurance proceeds) of Part 1 of schedule 6 (Insurance matters) to the Master Forward Lease Agreement, apply the insurance proceeds from the Property Insurance Policy in relation to paying for the repair works, or if the insurer elects to make payments to the contractors or other persons undertaking the repair works, co-operate with the insurer as may be required in connection with this procedure. |
7.2 | Total Loss or Expropriation Event |
7.2.1 | The Service Agent must give prompt notice to the Lessor of any Total Loss or Expropriation Event in the manner described in paragraph 1.7(a)(ii) (Claims of Part 1 of schedule 6 to the Master Forward Lease Agreement. |
7.2.2 | The Service Agent shall arrange that within 30 days of when the Total Loss or Expropriation Event, as the case may be, occurred: |
(a) | all Total Loss Proceeds; and/or |
(b) | all Compensation payable on an Expropriation Event, |
are paid to and received by the Security Agent.
7.2.3 | If a Total Loss or Expropriation Event occurs and: |
(a) | the Service Agent has failed to take out and maintain the Property Insurance Policy as contemplated by Clause 4.1 (Property Insurance Policy); or |
(b) | no Total Loss Proceeds or Compensation is paid within 30 days of when the Total Loss or Expropriation Event occurred; or |
(c) | Total Loss Proceeds or Compensation is been paid within 30 days of when the Total Loss or Expropriation Event occurred but where there is a Total Loss/Expropriation Event Shortfall, |
this shall be evidence that the Service Agent has not performed its obligations in relation to the, Property Insurance Policy and the Service Agent shall, within three Business Days of demand, indemnify the Lessor (in its capacity as the Investment Agent) for the Total Loss/Expropriation Event Shortfall.
7.2.4 | If the Total Loss/Expropriation Event Shortfall is irrevocably and unconditionally paid in full to the Investment Agent or the Security Agent, the Lessor shall, at the cost and expense of the Lessee, take such reasonable action as the Lessee may request so that it is the beneficiary of any future insurance proceeds under the Property Insurance Policy or future Compensation in relation to the Leased Asset. |
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8. | General indemnity |
8.1 | Indemnity provisions |
The Service Agent shall, within three Business Days of demand, indemnify each Secured Party and each Secured Party’s officers, employees and agents against any Losses incurred by each Secured Party or any of its officers, employees and agents in connection with this Agreement including any Losses arising in connection with:
(a) | the Service Agent’s failure to perform its obligations under the terms of this Agreement; |
(b) | any infringement or alleged infringement of any intellectual property by the use or possession of the Leased Asset; and |
(c) | any claims or actions relating to the protection and defence of the title and interest to the Leased Asset of each Secured Party. |
8.2 | Indemnity survives termination |
The indemnity described in Clause 8.1 (Indemnity Provisions) shall survive the expiration or termination of this Agreement or any other Transaction Document.
8.3 | Exclusions |
The indemnity described in Clause 8.1 (Indemnity Provisions) does not extend to Losses caused by the gross negligence or wilful misconduct of the Lessor or any of its officers, employees or agents seeking indemnification.
9 | Failure to perform |
9.1 | Failure to perform undertakings |
If the Service Agent does not comply with any of its obligations in relation to the Services, the Lessor has the right (but not the obligation) to undertake any required action to effect compliance by the Service Agent, including re-taking possession of the Leased Asset.
9.2 | Indemnification |
In the circumstances described in Clause 9.1 (Failure to perform undertakings), the Lessor shall be entitled to require indemnification under Clause 8.1 (Indemnity provisions).
10 | Service Charge Amount |
10.1 | Procedure |
10.1.1 | If the Service Agent wants to claim a Service Charge Amount, no later than three Business Days before the end of the then current Lease Period, the Service Agent must: |
(a) | notify the Lessor in writing of the Service Charge Amount; and |
(b) | provide the Lessor with an invoice supported with copies of commercial invoices, premium notes and other evidence of payment) supporting the claimed Service Charge Amount. |
10.1.2 | If the Service Agent does not make a claim in accordance with Clause 10.1.1, the Service Agent shall be deemed to have irrevocably and unconditionally waived its right to claim that Service Charge Amount and the Lessor shall be under no obligation to pay that Service Charge Amount. |
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10.2 | Payment of Service Charge Amount |
Subject to:
(a) | the Service Agent having complied with the provisions of Clause 10.1 (Procedure); |
(b) | there being no Event of Default or Event of Mandatory Prepayment that is continuing; and |
(c) | the set-off provisions contained in Clause 10.3 (Set-off), |
on the Service Charge Reimbursement Date relating to the Service Charge Amount being claimed, the Lessor shall pay the Service Charge Amount.
10.3 | Set-off |
10.3.1 | The Lessor may set off a matured Service Charge Amount owed by it to the Service Agent against: |
(a) | a matured Supplementary Rental Payment; or |
(b) | that part of the matured Termination Amount which corresponds to an amount equal to the Service Charge Amount. |
owed by the Service Agent (acting in its capacity as the Lessee) to the Lessor.
10.3.2 | If the obligations are in different currencies, the Lessor may convert either obligation at a market rate of exchange in its usual course of business for the purpose of the set-off. |
10.4 | Termination |
When the leasing arrangements contemplated by the Forward Lease terminate:
(a) | the obligation of the Lessor to pay the Service Charge Amount shall end on the same date; |
(b) | the Service Agent must continue to perform its obligations under this Agreement (but with no payment of the Service Charge Amount) until such time as the Lessor notifies the Service Agent that: |
(i) | it no longer requires the Service Agent to continue performing the Services; or |
(ii) | the Security Period has expired. |
11 | Knowledge of the Forward Lease and the other Transaction Documents |
The Service Agent represents and warrants to the Lessor that it has full knowledge of all of the terms of the Forward Lease and the other Transaction Documents including those obligations in the Forward Lease that the Service Agent must perform under this Agreement.
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12 | No authority to pledge credit |
In the performance of the Services, the Service Agent has no authority to pledge the credit of the Lessor (or any other Finance Party) or to create any Security over the Leased Asset.
13 | Assignment |
13.1 | No assignment or transfer by Service Agent |
The Service Agent may not assign any of its rights or transfer any of its rights or obligations under this Agreement.
13.2 | Assignment and/or transfer by Lessor |
The Lessor may assign and/or transfer any of its rights and obligations under this Agreement as part of the arrangements contemplated by clause 6.13 (Resignation of the Investment Agent) of the Investment Agency Agreement.
14 | Governing law |
14.1 | English law |
14.1.1 | Subject to Clause 14.1.2, this Agreement and all non-contractual obligations arising out of or connected with it shall be governed by, and construed in accordance with, English law. |
14.12 | The Parties agree that the creation and transfer of any proprietary rights of the Parties in relation to the Leased Asset shall be governed by, and construed in accordance with, the laws of Fujairah and the federal laws of the United Arab Emirates as applied by the civil courts of Fujairah, in each case, to the extent those laws do not conflict with Shari’a. In the event of any contradiction between the laws of Fujairah and the federal laws of the United Arab Emirates and the principles of Shari’a, the principles of Shari’a shall prevail. |
14.2 | Interest |
The Parties recognise and agree that the principle of the payment of interest is repugnant to the Shari’ah and accordingly, to the extent that any legal system would (but for the provisions of this Clause) impose (whether by contract or by statute) any obligation to pay interest, the Parties hereby irrevocably and unconditionally expressly waive and reject any entitlement to recover interest from each other.
15 | Enforcement |
15.1 | Jurisdiction |
15.1.1 | Subject to Clause 15.1.2, the Parties submit, and waive any objection, to the exclusive jurisdiction of the courts of the Dubai International Financial Centre, Emirate of Dubai, United Arab Emirates to settle any dispute arising out of or in connection with this Agreement (including a dispute relating to the existence, validity or termination of this Agreement or any non-contractual obligation arising out of or in connection with this Agreement) (a Dispute). The Parties agree that the courts of the Dubai International Financial Centre, Emirate of Dubai, United Arab Emirates are the most appropriate and convenient courts to settle Disputes and accordingly no Party will argue to the contrary. |
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15.1.2 | The Parties agree that the civil courts of Fujairah shall have the exclusive jurisdiction to settle any dispute arising out of or in connection with the creation and transfer of any proprietary rights of the Parties in relation to the Leased Asset. |
15.1.3 | Notwithstanding Clauses 15.1.1 and 15.1.2, the Parties agree that the Investment Agent may take proceedings relating to a Dispute in any other court with jurisdiction. To the extent allowed by law, the Investment Agent may take concurrent proceedings in any number of jurisdictions. This Clause 15.1.3 is for the benefit of the Investment Agent only. |
15.2 | State immunity |
15.2.1 | Each Party acknowledges and agrees, to the extent relevant, that its execution, performance and delivery of this Agreement shall constitute a private commercial transaction entered into entirely in its commercial capacity. |
15.2.2 | To the extent that any Party may in any jurisdiction claim for itself or its assets immunity from legal proceedings, and to the extent that in any jurisdiction there may be attributed to any Party or its assets such immunity (whether claimed or not), that Party irrevocably and unconditionally and to the full extent permitted by the laws of the Relevant Jurisdiction: |
(a) | agrees not to claim such immunity; |
(b) | waives any such immunity as it or its assets now has or may in future acquire; and |
(c) | consents, in any legal proceedings arising out of or in connection with this Agreement, to the giving of relief by enforcement, execution (including the arrest, detention or sale of any state property) or attachment (whether before judgment, in aid of execution, or otherwise) against any of its assets. |
15.2.3 | In relation to any legal proceedings that may be taken in England, the foregoing waiver of immunity shall have effect under, and be construed in accordance with, the State Immunity Act 1978. |
15.2.4 | For the purposes of this Clause 15.2 (State immunity): |
legal proceedings includes any service of process, suit, judgment, execution, attachment (whether before judgment, in aid of execution, or otherwise), arbitral proceedings or other dispute resolution mechanisms; and
asset includes any asset not used solely for commercial purposes.
This Agreement is entered into by the Parties on the date stated at the beginning of this Agreement.
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Execution Page of Service Agency Agreement
The Service Agent | ||
Signed by | ) |
|
) | ||
duly authorised in accordance with the | ) | |
laws of Fujairah Free Zone, United Arab | ) | |
Emirates for and on behalf of Brooge | ) | |
Petroleum and Gas Investment Company | ) | |
FZC in the presence of: | ) | |
Signature of witness | ) |
Name of witness: | |||
Address of witness: | |||
The Lessor | ||
Signed by | ) | /s/ Aqeel Bughio |
) | ||
duly authorised in accordance with the | ) | |
laws of Abu Dhabi, United Arab Emirates for | ) | |
and on behalf of National Bank of Abu | ) | |
Dhabi PJSC - Islamic Banking Division in | ) | |
its capacity as Investment Agent for and on | ) | |
behalf of the Participants in the presence of: | ||
Signature of witness | ) | /s/ Omar Katri |
Signature of witness | ) |
Name of witness: | |||
Address of witness: | |||
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Exhibit 10.38
Purchase Undertaking
Dated 29-06-2015
Brooge Petroleum and Gas Investment Company FZC
(The Company)
in favour of
National Bank of Abu Dhabi PJSC - Islamic Banking Division
(The Investment Agent)
Dentons & Co Suite 1204 Al Ghaith Tower Hamdan Street PO Box 47656 Abu Dhabi United Arab Emirates |
|
Contents
1 | Definitions and interpretations | 1 |
2 | Effective date | 3 |
3 | Purchase Notice | 3 |
4 | Undertaking to buy the Leased Asset | 3 |
5 | Sale Documentation | 4 |
6 | Assignment | 4 |
7 | Governing law | 4 |
8 | Enforcement | 5 |
24 June 2015 | Contents (i) |
Purchase Undertaking
Dated |
By |
(1) | Brooge Petroleum and Gas Investment Company FZC incorporated under the laws of Fujairah Free Zone, Fujairah, United Arab Emirates of P. O. Box 50170, Fujairah, United Arab Emirates (the Company) |
in favour of
(2) | National Bank of Abu Dhabi PJSC - Islamic Banking Division, of P. O. Box 40057, Abu Dhabi, United Arab Emirates acting in its capacity as Investment Agent for an on behalf of the Participants (the Investment Agent); |
Recitals |
A. | Pursuant to the terms of the Forward Lease, the Lessor (acting in the capacity as Investment Agent) has agreed to lease the Leased Asset to the Company (acting in the capacity as the Lessee). |
B. | It is a requirement of the leasing arrangements that the Company enters into this Purchase Undertaking. |
The Company undertakes:
1 | Definitions and interpretations |
1.1 | Definitions |
1.1.1 | Unless the context otherwise requires on unless expressly defined in this Purchase Undertaking, words and expressions defined in clause 1.1 (Definitions) of the Common Terms Agreement (whether directly or indirectly) have the same meanings in this Purchase Undertaking unless expressly defined in this Purchase Undertaking. |
1.1.2 | In addition, this Purchase Undertaking: |
Common Terms Agreement means the common terms agreement dated on or around the date of the Master Forward Lease Agreement between, amongst others, the Investment Agent and the Company.
Forward Lease means that lease dated on or around the date of this Purchase Undertaking in relation to the Leased Asset entered into between the Company (as Lessee) and the Investment Agent (as Lessor) pursuant to the Master Forward Lease Agreement.
Leased Asset has the meaning given to it in the Forward Lease.
Party means a party to or beneficiary of this Purchase Undertaking.
Purchase Notice means a notice substantially in the form contained in Schedule 1.
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Termination Amount means:
(a) | If the rights under this Purchase Undertaking are exercised on the grounds mentioned in paragraph (a) of the definition of “Undertaking Exercise Event”, the Termination Amount shall be the aggregate of: |
(i) | the Outstanding Fixed Rental; |
(ii) | any accrued and unpaid Variable Rental Payment; |
(iii) | any accrued and unpaid Supplementary Rental Payment; |
(iv) | any Increased Costs Amount; |
(v) | an amount equal to any Service Charge Amount that has accrued and not been set off against a Supplementary Rental Payment; and |
(vi) | the actual costs and expenses of the Lessor paid or incurred as a result of the termination of the Forward Lease. |
(b) | If the rights under this Purchase Undertaking are exercised on the grounds mentioned in paragraph (b) of the definition of “Undertaking Exercise Event”, the Termination Amount shall be the aggregate of: |
(i) | AED 100; |
(ii) | any accrued and unpaid Supplementary Rental Payment; |
(iii) | any Increased Costs Amount; and |
(iv) | an amount equal to any Service Charge Amount that has accrued and not been set off against a Supplementary Rental Payment. |
Termination Amount Payment Date means the date when the Termination Amount is to be paid or is paid.
Undertaking Exercise Event means:
(a) | if the rights described in clause 11 (Acceleration) of the Common Terms Agreement become exercisable by the Investment Agent; or |
(b) | the date when the scheduled Lease Term and the Security Period have ended. |
1.2 | Construction |
The principles of construction used in the Common Terms Agreement shall apply to this Purchase Undertaking to the extent they are relevant to it and, subject to any necessary changes, as they apply to the Common Terms Agreement.
1.3 | Third party rights |
1.3.1 | Subject to Clause 1.3.2, unless expressly provided to the contrary in this Purchase Undertaking a person who is not a Party has no right under the Third Parties Act to enforce or to enjoy the benefit of any term of this Purchase Undertaking. |
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1.3.2 | Each Participant may, except as otherwise stated in the Transaction Documents, enforce or enjoy the benefit of any term of this Purchase Undertaking which it would be able to enforce or enjoy if it were a party to this Purchase Undertaking. |
1.3.3 | Notwithstanding any term of any Transaction Document, the Parties may rescind, vary, waive, release, assign, novate or otherwise dispose of all or any of their respective rights or obligations under this Purchase Undertaking without the consent of any person who is not a Party. |
1.4 | Common Terms Agreement |
This Purchase Undertaking and the rights and obligations of the Parties are subject to the provisions of the Common Terms Agreement. The provisions of the Common Terms Agreement that are expressed to apply to all Transaction Documents apply equally to this Purchase Undertaking.
2 | Effective date |
This Purchase Undertaking shall become effective on the Commencement Date relating to the Forward Lease.
3 | Purchase Notice |
The Investment Agent may issue a Purchase Notice to the Company if an Undertaking Exercise Event has occurred.
4 | Undertaking to buy the Leased Asset |
4.1 | Undertaking to pay and buy |
The Company irrevocably and unconditionally undertakes in favour of the Investment Agent that, upon receipt of the Purchase Notice, it shall on the Termination Amount Payment Date:
(a) | pay the Termination Amount to the Investment Agent; and |
(b) | buy and take possession of the Leased Asset but subject to any Security existing on that date. |
4.2 | Conditions of sale |
The Company agrees that:
(a) | it shall buy the Leased Asset from the Investment Agent on an “as is, where is” basis and with such title as the Investment Agent may have; |
(b) | neither the Investment Agent nor any other Finance Party Secured Party gives or makes to the Company any implied, statutory or other warranty or representation about the Leased Asset (including conditions, warranties or representations as to the description, suitability, merchantability, value or condition of the Leased Asset); and |
(c) | without prejudice to paragraphs (a) and (b) above, any such warranty or representation is expressly excluded to the fullest extent that the law allows. |
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5 | Sale Documentation |
5.1 | Signed Sale Documentation |
Upon the Investment Agent receiving the Termination Amount, it shall, at the cost of the Company, provide the Company with the Sale Documentation signed by the Investment Agent and with such counterparts as may be reasonably required.
5.2 | Payment of costs and expenses |
The Company shall promptly on demand pay the Investment Agent and the Security Agent, the amount of all costs and expenses (including legal fees) reasonably incurred by either of them (and, in the case of the Security Agent, by any Receiver) in connection with the negotiation, preparation, printing, execution or notarisation of the Sale Documentation, including the registration at or with any applicable register or authority of the Sale Documentation or of the related transfer or interest in the Leased Asset.
5.3 | Failure to sign the Sale Documentation |
If the Company does not sign the Sale Documentation this will not adversely affect the Investment Agent’s rights and remedies against the Company including the right to bring legal proceedings for the Termination Amount and to recover any Losses caused by the Company’s failure to sign the Sale Documentation.
5.4 | Failure to pay the Termination Amount on the Termination Amount Payment Date |
Without prejudice to any other rights and remedies that the Investment Agent and the Secured Parties may have against the Company and any other Obligor, if the Company does not pay the Termination Amount on the Termination Amount Payment Date, it shall be an Unpaid Sum on which the Investment Agent may demand Late Payment Amounts to be paid.
6 | Assignment |
6.1 | No assignment or transfer by the Company |
The Company may not assign any of its rights or transfer any of its rights or obligations under this Purchase Undertaking.
6.2 | Assignment and/or transfer by Investment Agent |
The Investment Agent may assign and/or transfer any of its rights and obligations under this Purchase Undertaking as part of the arrangements contemplated by clause 6.13 (Resignation of the Investment Agent) of the Investment Agency Agreement.
7 | Governing law |
7.1 | English law |
7.1.1 | Subject to Clause 7.1.2, this Purchase Undertaking and all non-contractual obligations arising out of or connected with it shall be governed by, and construed in accordance with, English law. |
7.1.2 | The parties agree that the creation and transfer of any proprierty rights of the parties in relation to the Leased Asset shall be governed by, and construed in accordance with, the laws of Fujairah and the federal laws of the United Arab Emirates as applied by the civil courts of Fujairah, in each case, to the extent those laws do not conflict with Shari’a. In the event of any contradiction between the laws of Fujairah and the federal laws of the United Arab Emirates and the principles of Shari’a, the principles of Shari’a shall prevail. |
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7.2 | Interest |
The Parties recognise and agree that the principle of the payment of interest is repugnant to the Shari’ah and accordingly, to the extent that any legal system would (but for the provisions of this Clause) impose (whether by contract or by statute) any obligation to pay interest, the Parties hereby irrevocably and unconditionally expressly waive and reject any entitlement to recover interest from each other.
8 | Enforcement |
8.1 | Jurisdiction |
8.1.1 | Subject to Clause 8.1.2, the Parties submit, and waive any objection, to the exclusive jurisdiction of the courts of the Dubai International Financial Centre, Emirate of Dubai, United Arab Emirates to settle any dispute arising out of or in connection with this Purchase Undertaking (including a dispute relating to the existence, validity or termination of this Purchase Undertaking or any non-contractual obligation arising out of or in connection with this Purchase Undertaking) (a Dispute). The Parties agree that the courts of the Dubai International Financial Centre, Emirate of Dubai, United Arab Emirates are the most appropriate and convenient courts to settle Disputes and accordingly no Party will argue to the contrary. |
8.1.2 | The Parties agree that the civil courts of Fujairah shall have the exclusive jurisdiction to settle any dispute arising out of ,or in connection with the creation and transfer of any proprietary rights of the Parties in relation to the Leased Asset. |
8.1.3 | Notwithstanding Clauses 8.1.1 and 8.1.2, the Parties agree that the Investment Agent may take proceedings relating to a Dispute in any other court with jurisdiction. To the extent allowed by law, the Investment Agent may take concurrent proceedings in any number of jurisdictions. This Clause 8.1.3 is for the benefit of the Investment Agent only. |
8.2 | State immunity |
8.2.1 | The Company acknowledges and agrees, to the extent relevant, that its execution, performance and delivery of this Purchase Undertaking and the Sale Documentation shall constitute a private commercial transaction entered into entirely in its commercial capacity. |
8.2.2 | To the extent that the Company may in any jurisdiction claim for itself or its assets immunity from legal proceedings, and to the extent that in any jurisdiction there may be attributed to the Company or its assets such immunity (whether claimed or not), the Company irrevocably and unconditionally and to the full extent permitted by the laws of the Relevant Jurisdiction: |
(a) | agrees not to claim such immunity; |
(b) | waives any such immunity as it or its assets now has or may in future acquire; and |
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(c) | consents, in any legal proceedings arrising out of or in connection with this Purchase Undertaking, to the giving of relief by enforcement, execution (including the arrest, detention or sale of any state property) or attachment (whether before judgment, in aid of execution, or otherwise) against any of its assets. |
8.2.3 | In relation to any legal proceedings that may be taken in England, the foregoing waiver of immunity shall have effect under, and be construed in accordance with, the State Immunity Act 1978. |
8.2.4 | For the purposes of this Clause 7 (State immunity): |
legal proceedings includes any service of process, suit, judgment, execution, attachment (whether before judgment, in aid of execution, or otherwise), arbitral proceedings or other dispute resolution mechanisms; and
asset includes any asset not used solely for commercial purposes.
This Purchase Undertaking is executed by the Company as a deed on the date stated at the beginning of this Purchase Undertaking.
24 June 2015 | Page 6 |
Execution Page of the Purchase Undertaking
The Company | ||
Signed by | ) |
|
) | ||
duly authorised in accordance with the | ) | |
laws of Fujairah Free Zone, United Arab | ) | |
Emirates for and on behalf of Brooge | ) | |
Petroleum and Gas Investment Company | ) | |
FZC in the presence of: | ) | |
Signature of witness | ) |
Name of witness: |
|
|
Address of witness: | ||
24 June 2015 | |
Execution Page of the Purchase Undertaking |
Exhibit 10.39
EXECUTION VERSION
Sale Undertaking
Dated 29-06-2015
National Bank of Abu Dhabi PJSC - Islamic Banking Division
(The Investment Agent)
in favour of
Brooge Petroleum and Gas Investment Company FZC
(The Company)
Dentons & Co
Suite 1204 Al Ghaith Tower
Hamdan Street
PO Box 47656
Abu Dhabi
United Arab Emirates |
|
Contents
1 | Definitions and interpretation | 2 |
2 | Effective date | 4 |
3 | Sale Notice | 4 |
4 | Undertaking to sell | 5 |
5 | Conditions of sale | 5 |
6 | Sale Documentation | 5 |
7 | Assignment | 6 |
8 | Obligations of the Company | 6 |
9 | Governing law | 6 |
10 | Enforcement | 7 |
Contents (i)
Sale Undertaking
Dated
By
(1) | National Bank of Abu Dhabi PJSC - Islamic Banking Division, of P. O. Box 40057, Abu Dhabi, United Arab Emirates acting in its capacity as Investment Agent for an on behalf of the Participants (the Investment Agent); |
in favour of
(2) | Brooge Petroleum and Gas Investment Company FZC incorporated under the laws of Fujairah Free Zone, Fujairah, United Arab Emirates of P. O. Box 50170, Fujairah, United Arab Emirates (the Company) |
Recitals
A. | Pursuant to the terms of the Forward Lease, the Lessor (acting in the capacity as Investment Agent) has agreed to lease the Leased Asset to the Company (acting in the capacity as the Lessee). |
B. | It is a requirement of the leasing arrangements that the Investment Agent enters into this Sale Undertaking. |
The Investment Agent undertakes:
1 | Definitions and interpretation |
1.1 | Definitions |
1.1.1 | Words and expressions defined (whether directly or indirectly) in clause 1.1 of the Common Terms Agreement have the same meanings in this Sale Undertaking unless expressly defined in this Sale Undertaking. |
1.1.2 | In this Sale Undertaking: |
Common Terms Agreement means the common terms agreement dated on or around the date of the Master Forward Lease Agreement between, amongst others, the Investment Agent and the Company.
Early Termination Event means if the Company elects to prepay all Outstanding Fixed Rental and other outstanding amounts under the Forward Lease in accordance with the terms of clause 15.1.1 of the Common Terms Agreement.
End of Lease Term Event means the date when the scheduled Lease Term and the Security Period have ended.
Exercise Event means:
(a) | an Early Termination Event; or |
(b) | an End of Lease Term Event. |
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Forward Lease means that lease dated on or around the date of this Sale Undertaking in relation to the Leased Asset entered into between the Company (as Lessee) and the Investment Agent (as Lessor) pursuant to the Master Forward Lease Agreement.
Leased Asset has the meaning given to it in the Forward Lease.
Party means a party to or beneficiary of this Sale Undertaking.
Sale Notice means a notice substantially in the form contained in Schedule 1.
Termination Amount means:
(a) | if the rights under this Sale Undertaking are exercised on the grounds of an Early Termination Event, the Termination Amount shall be the aggregate of: |
(i) | the Outstanding Fixed Rental; |
(ii) | an amount equal to one per cent of the Outstanding Fixed Rental; |
(iii) | any accrued and unpaid Variable Rental Payment; |
(iv) | any accrued and unpaid Supplementary Rental Payment; |
(v) | any Increased Costs Amount; |
(vi) | an amount equal to any Service Charge Amount that has accrued and not been set off against a Supplementary Rental Payment; and |
(vii) | the actual costs and expenses of the Lessor paid or incurred as a result of the termination of the Forward Lease. |
(b) | if the rights under this Sale Undertaking are exercised on the grounds of an End of Lease Term Event, the Termination Amount shall be the aggregate of: |
(i) | AED 100; |
(ii) | any accrued and unpaid Supplementary Rental Payment; |
(iii) | any Increased Costs Amount; and |
(iv) | an amount equal to any Service Charge Amount that has accrued and not been set off against a Supplementary Rental Payment. |
and, in relation to both paragraph (a) and (b), with the Termination Amount being agreed with the Investment Agent before the Sale Notice is issued.
Termination Amount Payment Date means the date when the Termination Amount is to be paid or is paid.
1.2 | Construction |
The principles of construction used in the Common Terms Agreement shall apply to this Sale Undertaking to the extent they are relevant to it and, subject to any necessary changes, as they apply to the Common Terms Agreement.
Page 3
1.3 | Third party rights |
1.3.1 | Subject to Clause 1.3.2, unless expressly provided to the contrary in this Sale Undertaking a person who is not a Party has no right under the Third Parties Act to enforce or to enjoy the benefit of any term of this Sale Undertaking. |
1.3.2 | Each Participant may, except as otherwise stated in the Transaction Documents, enforce or enjoy the benefit of any term of this Sale Undertaking which it would be able to enforce or enjoy if it were a party to this Sale Undertaking. |
1.3.3 | Notwithstanding any term of any Transaction Document, the Parties may rescind, vary, waive, release, assign, novate or otherwise dispose of all or any of their respective rights or obligations under this Sale Undertaking without the consent of any person who is not a Party. |
1.4 | Common Terms Agreement |
This Sale Undertaking and the rights and obligations of the Parties are subject to the provisions of the Common Terms Agreement. The provisions of the Common Terms Agreement that are expressed to apply to all Transaction Documents apply equally to this Sale Undertaking.
2 | Effective date |
This Sale Undertaking shall become effective on the Commencement Date relating to the Forward Lease.
3 | Sale Notice |
3.1 | Occurrence of an Exercise Event |
Provided that no Event of Default or Event of Mandatory Prepayment has occurred and is continuing and subject to the provisions of Clauses 3.2 (Sale Notice based on an Early Termination Event) and 3.3 (Sale Notice based on an End of Lease Term Event), the Company may issue a Sale Notice to the Investment Agent if an Exercise Event has occurred.
3.2 | Sale Notice based on an Early Termination Event |
A Sale Notice can only be issued based on an Early Termination Event if:
(a) | the Termination Amount Payment Date falls within three Business Days of the Sale Notice; |
(b) | the Investment Agent has, prior to the issue of the Sale Notice, confirmed that the Termination Amount is correct; and |
(c) | the Termination Amount Payment Date occurs on the Rental Payment Date next occurring after the date of the Sale Notice. |
3.3 | Sale Notice based on an End of Lease Term Event |
A Sale Notice can only be issued based on an End of Lease Term Event, if:
(a) | the scheduled Lease Term has ended; |
Page 4
(b) | the Investment Agent has, prior to the issue of the Sale Notice, confirmed that: |
(i) | the scheduled Lease Term and the Security Period have ended; and |
(ii) | the Termination Amount is correct. |
(c) | the Termination Amount Payment Date falls within three Business Days of the Sale Notice. |
4 | Undertaking to sell |
Upon the Investment Agent receiving the Sale Notice, the Investment Agent shall, subject to receiving the Termination Amount on the Termination Amount Payment Date, sell the Leased Asset to the Company in accordance with the terms described in this Sale Undertaking.
5 | Conditions of sale |
The sale by the Investment Agent to the Company shall be on the following terms:
(a) | the sale from the Investment Agent shall be on an “as is, where is” basis and with such title as the Investment Agent may have; |
(b) | neither the Investment Agent nor any Finance Party Secured Party gives or makes to the Company any implied, statutory or other warranty or representation about the Leased Asset (including conditions, warranties or representations as to the description, suitability, merchantability, value or condition of the Leased Asset); and |
(c) | without prejudice to paragraphs (a) and (b) above, any such warranty or representation is expressly excluded to the fullest extent that the law allows. |
6 | Sale Documentation |
6.1 | Signed Sale Documentation |
Upon the Investment Agent receiving the Termination Amount, it shall, at the cost of the Company, provide the Company with the Sale Documentation signed by the Investment Agent and with such counterparts as may be reasonably required.
6.2 | Payment of costs and expenses |
The Company shall promptly on demand pay the Investment Agent and the Security Agent, the amount of all costs and expenses (including legal fees) reasonably incurred by either of them (and, in the case of the Security Agent, by any Receiver) in connection with the negotiation, preparation, printing, execution or notarisation of the Sale Documentation, including the registration at or with any applicable register or authority of the Sale Documentation or of the related transfer or interest in the Leased Asset.
6.3 | Failure to sign the Sale Documentation |
If the Company does not sign the Sale Documentation this will not adversely affect the Investment Agent’s rights and remedies against the Company including the right to bring legal proceedings for the Termination Amount and to recover any Losses caused by the Company’s failure to sign the Sale Documentation.
Page 5
6.4 | Failure to pay the Termination Amount on the Termination Amount Payment Date |
Without prejudice to any other rights and remedies that the Investment Agent and the Secured Parties may have against the Company and any other Obligor, if the Company does not pay the Termination Amount on the Termination Amount Payment Date, it shall be an Unpaid Sum on which the Investment Agent may demand Late Payment Amounts to be paid.
7 | Assignment |
7.1 | No assignment or transfer by the Company |
The Company may not assign any of its rights or transfer any of its rights or obligations under this Sale Undertaking.
7.2 | Assignment and/or transfer by Investment Agent |
The Investment Agent may assign and/or transfer any of its rights and obligations under this Sale Undertaking as part of the arrangements contemplated by clause 6.13 (Resignation of the Investment Agent) of the Investment Agency Agreement.
8 | Obligations of the Company |
Upon the issue of the Sale Notice the Company shall be deemed to have agreed to any terms in this Sale Undertaking that create obligations on it or create rights in favour of the Investment Agent.
9 | Governing law |
9.1 | English law |
9.1.1 | Subject to Clause 9.1.2, this Sale Undertaking and all non-contractual obligations arising out of or connected with it shall be governed by, and construed in accordance with, English law. |
9.1.2 | The Parties agree that the creation and transfer of any proprietary rights of the Parties in relation to the Leased Asset shall be governed by, and construed in accordance with, the laws of Fujairah and the federal laws of the United Arab Emirates as applied by the civil courts of Fujairah, in each case, to the extent those laws do not conflict with Shari’a. In the event of any contradiction between the laws of Fujairah and the federal laws of the United Arab Emirates and the principles of Shari’a, the principles of Shari’a shall prevail. |
9.2 | Interest |
The Parties recognise and agree that the principle of the payment of interest is repugnant to the Shari’ah and accordingly, to the extent that any legal system would (but for the provisions of this Clause) impose (whether by contract or by statute) any obligation to pay interest, the Parties hereby irrevocably and unconditionally expressly waive and reject any entitlement to recover interest from each other.
Page 6
10 | Enforcement |
10.1 | Jurisdiction |
10.1.1 | Subject to Clause 10.1.2, the Parties submit, and waive any objection, to the exclusive jurisdiction of the courts of the Dubai International Financial Centre, Emirate of Dubai, United Arab Emirates to settle any dispute arising out of or in connection with this Sale Undertaking (including a dispute relating to the existence, validity or termination of this Sale Undertaking or any non-contractual obligation arising out of or in connection with this Sale Undertaking) (a Dispute). The Parties agree that the courts of the Dubai International Financial Centre, Emirate of Dubai, United Arab Emirates are the most appropriate and convenient courts to settle Disputes and accordingly no Party will argue to the contrary. |
10.1.2 | The Parties agree that the civil courts of Fujairah shall have the exclusive jurisdiction to settle any dispute arising out of or in connection with the creation and transfer of any proprietary rights of the Parties in relation to the Leased Asset. |
10.1.3 | Notwithstanding Clauses 10.1.1 and 10.1.2, the Parties agree that the Investment Agent may take proceedings relating to a Dispute in any other court with jurisdiction. To the extent allowed by law, the Investment Agent may take concurrent proceedings in any number of jurisdictions. This Clause 10.1.3 is for the benefit of the Investment Agent only. |
10.2 | State Immunity |
10.2.1 | The Company acknowledges and agrees, to the extent relevant, that its execution, performance and delivery of this Sale Undertaking and the Sale Documentation shall constitute a private commercial transaction entered into entirely in its commercial capacity. |
10.2.2 | To the extent that the Company may in any jurisdiction claim for itself or its assets immunity from legal proceedings, and to the extent that in any jurisdiction there may be attributed to the Company or its assets such immunity (whether claimed or not), the Company irrevocably and unconditionally and to the full extent permitted by the laws of the Relevant Jurisdiction: |
(a) | agrees not to claim such immunity; |
(b) | waives any such immunity as it or its assets now has or may in future acquire; and |
(c) | consents, in any legal proceedings arising out of or in connection with this Sale Undertaking, to the giving of relief by enforcement, execution (including the arrest, detention or sale of any state property) or attachment (whether before judgment, in aid of execution, or otherwise) against any of its assets. |
10.2.3 | In relation to any legal proceedings that may be taken in England, the foregoing waiver of immunity shall have effect under, and be construed in accordance with, the State Immunity Act 1978. |
10.2.4 | For the purposes of this Clause 9.1 (State Immunity): |
legal proceedings includes any service of process, suit, judgment, execution, attachment (whether before judgment, in aid of execution, or otherwise), arbitral proceedings or other dispute resolution mechanisms; and
asset includes any asset not used solely for commercial purposes.
This Sale Undertaking is executed by the Investment Agent as a deed on the date stated at the beginning of this Sale Undertaking.
Page 7
Execution Page of the Sale Undertaking
The Investment Agent | ||
Signed by | ) | /s/ Aqeel Bughio |
) | ||
duly authorised in accordance with the laws of | ) | |
Abu Dhabi, united Arab Emirates for and on | ) | |
behalf of National Bank of Abu Dhabi PJSC | ) | |
- Islamic Banking Division in the presence | ) | |
of: | ) | /s/ Omar Katri |
Signature of witness | ) |
Name of witness: | |||
Address of witness: | |||
Exhibit 10.40
|
EXECUTION VERSION |
Seller Option Deed
Dated 29-06-2015
National Bank of Abu Dhabi PJSC – Islamic Banking Division
(The Investment Agent)
in favour of
Brooge Petroleum and Gas Investment Company FZC
(The Seller)
Dentons & Co Suite 1204 Al Ghaith Tower Hamdan Street P.O. Box 47656 Abu Dhabi United Arab Emirates |
|
Contents
1 | Definitions and interpretation | 1 |
2 | Exercise Notice | 2 |
3 | Indemnity amount | 3 |
4 | Assignment | 3 |
5 | Governing law | 3 |
6 | Enforcement | 3 |
Contents (i)
Seller Option Deed
Dated
By
(1) | National Bank of Abu Dhabi PJSC – Islamic Banking Division, of P. O. Box 40057, Abu Dhabi, United Arab Emirates acting in its capacity as Investment Agent for an on behalf of the Participant (the Investment Agent) |
in favour of
(2) | Brooge Petroleum and Gas Investment Company FZC incorporated under the laws of Fujairah Free Zone, Fujairah, United Arab Emirates of P. O. Box 50170, Fujairah, United Arab Emirates (the Seller). |
Recitals
A. | Pursuant to the terms of the Master Istisna’ Agreement, the Investment Agent (for and on behalf of the Participants) has agreed to enter into an Istisna’ Agreement in relation to the Istisna’ Development. |
B. | The Investment Agent hereby provides this Seller Option Deed in favour of the Seller with respect to the Istisna’ Agreement. |
It is agreed:
1 | Definitions and interpretation |
1.1 | Definitions |
1.1.1 | Unless the context otherwise requires or unless otherwise defined in this Seller Option Deed, words and expressions defined in the Common Terms Agreement (whether directly or indirectly) shall have the same meaning when used in this Seller Option Deed. |
1.1.2 | In addition, in this Seller Option Deed: |
Common Terms Agreement means the common terms agreement dated on or about the date of this Seller Option Deed between the Company and the Investment Agent.
Exercise Date means the date of the next Advance Variable Rental Payment Date.
Exercise Notice means a notice substantially in the form contained in Schedule 1 (Exercise Notice).
Forward Lease means the lease dated on or about the date of this Seller Option Deed in relation to the Istisna’ Development.
Indemnity Amount means all any actual Losses arising out of the termination of the Istisna’ Agreement through the issue of the Exercise Notice and which shall include any claim that the Seller (acting as the Lessee) may have against the Investment Agent (acting as the Lessor) under the Forward Lease (including the return of any Advance Rental Payments) on the grounds that the Commencement Date will not occur on or before the Projected Completion Date (including due to the termination of the Istisna’ Agreement) or for any other reason.
Page 1
Istisna’ Agreement means the istisna’ agreement dated on or around the date of this Seller Option Deed entered into between the Seller and the Investment Agent pursuant to the Master Istisna’ Agreement.
Istisna’ Development is the development described in the Istisna’ Agreement.
Option Payment means:
(a) | the aggregate of all Istisna’ Payments that have been paid to and received by the Seller under the Istisna’ Agreement as of the Exercise Date; less |
(b) | the Advance Fixed Rental Payments that the Seller (acting as the Lessee) has paid under the Forward Lease as of the Exercise Date. |
Party means a party to or beneficiary of this Seller Option Deed.
1.2 | Construction |
The principles of construction used in the Common Terms Agreement shall apply to this Seller Option Deed to the extent they are relevant to it and, subject to any necessary changes, as they apply to the Common Terms Agreement.
1.3 | Third party rights |
1.3.1 | Subject to Clause 1.3.2, unless expressly provided to the contrary in this Seller Option Deed a person who is not a Party has no right under the Third Parties Act to enforce or to enjoy the benefit of any term of this Seller Option Deed. |
1.3.2 | Each Participant may, except as otherwise stated in the Transaction Documents, enforce or enjoy the benefit of any term of this Seller Option Deed which it would be able to enforce or enjoy if it were a party to this Seller Option Deed. |
1.3.3 | Notwithstanding any term of any Transaction Document, the Parties may rescind, vary, waive, release, assign, novate or otherwise dispose of all or any of their respective rights or obligations under this Seller Option Deed without the consent of any person who is not a Party. |
1.4 | Common Terms Agreement |
This Seller Option Deed and the rights and obligations of the Parties are subject to the provisions of the Common Terms Agreement. The provisions of the Common Terms Agreement that are expressed to apply to all Transaction Documents apply equally to this Seller Option Deed.
2 | Exercise Notice |
2.1 | Issue of an Exercise Notice |
In accordance with clause 15 (Early termination by the Seller before the Istisna’ Agreement exists) of the Master Istisna’ Agreement, the Seller may issue an Exercise Notice provided that the Exercise Notice is given to the Investment Agent not less than five Business Days prior to the Exercise Date (or such shorter period as the Majority Participants may agree).
Page 2
2.2 | Consequences of the Exercise Notice |
2.2.1 | On the Exercise Date the Seller must pay the Option Payment to the Investment Agent. |
2.2.2 | Upon receipt of the payment described above the Istisna’ Agreement and all other Transaction Documents relating to that Istisna’ Development shall terminate, other than for any provisions which are expressly stated to continue beyond termination. |
3 | Indemnity amount |
If the Seller issues the Exercise Notice, the Seller indemnifies the Investment Agent and the Participants on demand by the Investment Agent for the Indemnity Amount. This indemnity obligation shall survive the termination of the Istisna’ Agreement or any other Transaction Document or the exercise of the Seller’s rights under this Seller Option Deed.
4 | Assignment |
4.1 | No assignment or transfer by the Seller |
The Seller may not assign any of its rights or transfer any of its rights or obligations under this Seller Option Deed.
4.2 | Assignment and/or transfer by Investment Agent |
The Investment Agent can assign and/or transfer any of its rights and obligations under this Seller Option Deed as part of the arrangements contemplated by clause 6.13 (Resignation of the Investment Agent) of the Investment Agency Agreement.
5 | Governing law |
5.1 | English law |
This Seller Option Deed, its interpretation and all non-contractual obligations arising out of or connected with it shall be governed by, and construed in accordance with, English law.
5.2 | Interest |
The Parties recognise and agree that the principle of the payment of interest is repugnant to the Shari’ah and accordingly, to the extent that any legal system would (but for the provisions of this Clause) impose (whether by contract or by statute) any obligation to pay interest, the Parties hereby irrevocably and unconditionally expressly agree to pay any amounts of interest that they receive to charity as designated by the Shari’ah Fatwa and Supervisory Board of the Investment Agent.
6 | Enforcement |
6.1 | Jurisdiction |
6.1.1 | Subject to Clause 6.1.2, the Parties submit, and waive any objection, to the exclusive jurisdiction of the courts of the Dubai International Financial Centre, Emirate of Dubai, United Arab Emirates to settle any dispute arising out of or in connection with this Seller Option Deed (including a dispute relating to the existence, validity or termination of this this Seller Option Deed or any non-contractual obligation arising out of or in connection with this Seller Option Deed) (a Dispute). The Parties agree that the courts of the Dubai International Financial Centre, Emirate of Dubai, United Arab Emirates are the most appropriate and convenient courts to settle Disputes and accordingly no Party will argue to the contrary. |
Page 3
6.1.2 | This Clause 6.1 is for the benefit of the Finance Parties only. No Finance Party shall be prevented from taking proceedings relating to a Dispute in any other courts with jurisdiction. To the extent allowed by law, the Finance Parties may take concurrent proceedings in any number of jurisdictions. |
6.2 | State Immunity |
6.2.1 | Each Party acknowledges and agrees, to the extent relevant, that its execution, performance and delivery of this Seller Option Deed shall constitute a private commercial transaction entered into entirely in its commercial capacity. |
6.2.2 | To the extent that any Party may in any jurisdiction claim for itself or its assets immunity from legal proceedings, and to the extent that in any jurisdiction there may be attributed to any Party or its assets such immunity (whether claimed or not), that Party irrevocably and unconditionally and to the full extent permitted by the laws of the Relevant Jurisdiction: |
(a) | agrees not to claim such immunity; |
(b) | waives any such immunity which it or its assets now has or may in future acquire; and |
(c) | consents, in any legal proceedings arising out of or in connection with this Seller Option Deed, to the giving of relief by enforcement, execution (including the arrest, detention or sale of any state property) or attachment (whether before judgment, in aid of execution, or otherwise) against any of its assets. |
6.2.3 | In relation to any legal proceedings that may be taken in England, the foregoing waiver of immunity shall have effect under, and be construed in accordance with, the State Immunity Act 1978. |
6.2.4 | For the purposes of this Clause: |
legal proceedings includes any service of process, suit, judgment, execution, attachment (whether before judgment, in aid of execution, or otherwise), arbitral proceedings or other dispute resolution mechanisms; and
asset includes any asset not used solely for commercial purposes.
This Seller Option Deed is executed by the Seller as a deed on the date stated at the beginning of this Seller Option Deed.
Page 4
Execution Page of the Seller Option Deed
The Investment Agent | ||
Executed as a deed by | ) | /s/ Aqeel Bughio |
) | Sector Head - Corporate | |
duly authorised in accordance with the | ) | |
laws of Abu Dhabi, United Arab Emirates for | ) | |
and on behalf of National Bank of Abu | ) | /s/ Omar Katri |
Dhabi PJSC - Islamic Banking Division in | ) | Sector Head - Commercial |
the presence of: | ) | |
) | ||
Signature of witness | ) |
Name of witness: |
|
||
Address of witness: | |||
The Seller
Executed as a deed by | ) |
|
) | ||
duly authorised in accordance with the | ) | |
laws of Fujairah Free Zone, United Arab | ) | |
Emirates for and on behalf of Brooge | ) | |
Petroleum and Gas Investment Company | ) | |
FZC in the presence of: | ||
Signature of witness | ) |
Name of witness: | |||
Address of witness: | |||
Exhibit 10.41
Certain identified information has been excluded from the exhibit because it is both not material and would likely cause competitive harm to the registrant if publicly disclosed.
Account Pledge and Assignment
Dated
Brooge Petroleum and Gas Investment Company FZC
(the Lessee)
National Bank of Abu Dhabi PJSC – Islamic Banking Division
(as Security Agent acting for and on behalf of the Participants)
Dentons & Co Suite 1204 Al Ghaith Tower Hamdan Street P.O. Box 47656 Abu Dhabi United Arab Emirates |
|
Contents
1 | Definitions and interpretation | 1 |
2 | Covenant to pay | 3 |
3 | Grant of security | 3 |
4 | Representations and warranties | 5 |
5 | Covenants | 6 |
6 | New accounts | 6 |
7 | Protection of security | 6 |
8 | Enforceability and Security Agent’s powers | 7 |
9 | Application of moneys | 9 |
10 | Further assurances | 9 |
11 | Power of attorney | 10 |
12 | Supplemental | 11 |
13 | Governing law | 12 |
14 | Jurisdiction | 12 |
Execution page of the Account Pledge and Assignment | 13 |
Agreement
Dated
By
(1) | Brooge Petroleum and Gas Investment Company FZC incorporated under the laws of Fujairah Free Zone, Fujairah, United Arab Emirates of P.O. Box 50170, Fujairah, United Arab Emirates (the Lessee); and |
(2) | National Bank of Abu Dhabi PJSC – Islamic Banking Division, of P.O. Box 40057, Abu Dhabi, United Arab Emirates acting in its capacity as Security Agent for and on behalf of the Participants (the Security Agent). |
Recitals
A | The Lessor and the Lessee entered into the Transaction Documents. |
B | Pursuant to the Transaction Documents, the Lessee is required to enter into this Agreement. |
C | For the purposes of the Transaction Documents, this Agreement is the Account Pledge and Assignment. |
It is agreed:
1 | Definitions and interpretation |
1.1 | Definitions |
Words and expressions defined (directly or indirectly) in the Common Terms Agreement shall have the same meanings in this Agreement unless defined otherwise in this Agreement. The following definitions also apply to this Agreement:
Assigned Rights means all rights, title and interests of every kind which the Lessee now or at any later time has to, in or in connection with:
(a) | the Earnings Account; |
(b) | the Facility Service Account; and |
(c) | each Deposit. |
Common Terms Agreement means the common terms agreement dated 29.06.2015 between Brooge Petroleum and Gas Investment Company FZC (as the Company, the Seller and the Lessee) and National Bank of Abu Dhabi PJSC – Islamic Banking Division (as the Investment Agent, Account Bank and Participant).
Deposit means each credit balance from time to time in each of:
(a) | the Earnings Account; and |
(b) | the Facility Service Account, |
and all rights, benefits and proceeds in respect thereof.
Page 1
Earnings Account means the Dirham denominated investment account held with the relevant office of the Account Bank bearing account number with account title “Brooge Petroleum and Gas Investment Company FZC” established in accordance with clause 6 (Accounts) of the Common Terms Agreement, and any renewal or redesignation thereof.
Facility Service Account means the Dirham denominated investment account held with the relevant office of the Account Bank bearing account number with account title “Brooge Petroleum and Gas Investment Company FZC” established in accordance with clause 6 (Accounts) of the Common Terms Agreement, and any renewal or redesignation thereof.
Party means a party to this Agreement.
Receiver means a receiver or receiver and manager or administrative receiver of the whole or any part of the Secured Property.
Secured Liabilities means all obligations owing to the Finance Parties by the Obligors under or pursuant to the Transaction Documents, whether present or future, actual or contingent (and whether incurred by the Obligors alone or jointly, and whether as principal or surety or in some other capacity).
Security Assets means:
(a) | the Earnings Account; |
(b) | the Facility Service Account; |
(e) | each Deposit; and |
(d) | the Assigned Rights. |
Secured Property means all assets of the Obligors which from time to time are, or are expressed to be, the subject of the Transaction Security.
Security Period means the period from the date of this Agreement up to and including the date on which any and all amounts outstanding under any Transaction Document have been unconditionally and irrevocably paid or discharged in full.
Supplemental Agreement means an agreement supplemental to this Agreement.
1.2 | Interpretation |
The provisions of clause 1.2 (Construction) of the Common Terms Agreement shall apply to this Agreement as though they were set out in full in this Agreement, except that references to “this Agreement” in the Common Terms Agreement are to be construed as references to this Agreement.
1.3 | Common Terms Agreement |
This Agreement and the rights and obligations of the Parties under it are subject to the provisions of the Common Terms Agreement. The provisions of the Common Terms Agreement that are expressed to apply to all Transaction Documents apply equally to this Agreement.
Page 2
1.4 | Third party rights |
1.4.1 | Unless expressly provided to the contrary in this Agreement a person who is not a Party has no right to enforce or to enjoy the benefit of any term of this Agreement. |
1.4.2 | Notwithstanding any term of any Transaction Document, the Parties may rescind, vary, waive, release, assign, novate or otherwise dispose of all or any of their respective rights or obligations under this Agreement without the consent of any person who is not a Party. |
1.5 | Conflicting provisions |
This Agreement shall be read together with the other Transaction Documents. If there is any conflict between the provisions of the Common Terms Agreement and this Agreement, the provisions of the Common Terms Agreement shall prevail.
2 | Covenant to pay |
The Lessee covenants with the Security Agent:
(a) | duly and punctually to pay the Secured Liabilities to the Security Agent; and |
(b) | to observe and perform all its other obligations under the Transaction Documents. |
3 | Grant of security |
3.1 | Pledge and assignment |
The Lessee:
(a) | assigns by way of first ranking assignment and agrees to so assign the Assigned Rights; and |
(b) | pledges by way of first ranking pledge: |
(i) | the Earnings Account; |
(ii) | the Facility Service Account; and |
(iii) | each Deposit, |
to the Security Agent as continuing security for the payment and discharge when due of the Secured Liabilities.
3.2 | Continuing security |
The Security Interests created by Clause 3.1 (Pledge and assignment) are fixed and this Agreement shall remain in force until the end of the Security Period or as otherwise set out in Clause 3.7 (Release of security) as a continuing security and, in particular:
(a) | the Security Interests created by Clause 3.1 (Pledge and assignment) shall not be satisfied by any intermediate payment or satisfaction of the Secured Liabilities; |
(b) | the Security Interests created by Clause 3.1 (Pledge and assignment), and the rights of the Security Agent under this Agreement, are only capable of being extinguished, limited or otherwise adversely affected by an express and specific term in a document signed by or on behalf of the Security Agent; and |
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(c) | this Agreement shall be additional to, and shall not in any way impair or be impaired by: |
(i) | any other Security Interest whether in relation to property of the Lessee or that of a third party; or |
(ii) | any other right of recourse as against the Lessee or any third party. |
which the Security Agent or any other creditor now or subsequently has in respect of any of the Secured Liabilities.
3.3 | Principal and independent obligor |
The Lessee shall be liable under this Agreement as a principal and independent obligor and accordingly it shall not have, as regards this Agreement, any of the rights or defences of a surety.
3.4 | No obligations imposed on Security Agent |
The Lessee shall remain liable to perform all obligations connected with the Security Assets and the Security Agent shall not, in any circumstances, have or incur any obligation of any kind in connection with the Security Assets.
3.5 | Notice of assignment |
The Parties agree that the execution of this Agreement by the Lessee and the Security Agent and execution of any Supplemental Agreement from time to time by the Lessee and the Security Agent constitutes notice to, and acknowledgement by, the Security Agent of the assignments created in respect of the Assigned Rights.
3.6 | Negative pledge |
Other than a Security Interest created under this Agreement or a Security Interest (if any) created under any other Transaction Document, the Lessee shall not sell, create any Security Interest over or otherwise dispose of the Security Assets or any right relating to any Security Asset.
3.7 | Release of security |
At the end of the Security Period, or as otherwise set out in the Common Terms Agreement, the Security Agent will, at the request and cost of the Lessee, re-assign (without any warranty, representation, covenant or other recourse) to the Lessee such rights as the Security Agent then has to, or in connection with, the Security Assets.
3.8 | Additional Deposits |
3.8.1 | The Lessee covenants with the Security Agent that during the Security Period: |
(a) | upon written notice by the Security Agent, the Lessee shall execute a Supplemental Agreement relating to the Deposit standing as at the date of the relevant Supplemental Agreement, although the failure to execute a Supplemental Agreement shall not affect the Security over the Security Assets arising after the date of this Agreement; and |
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(b) | it will not seek to rely on the non-existence of any part of the Security Assets at the date of this Agreement as releasing it from the performance of its liabilities or obligations arising out of this Agreement or any other agreement relating to or concerning the Security Assets. |
3.8.2 | The Parties acknowledge and agree that: |
(a) | the Deposit will continually change, earn profit and, as permitted in accordance with clause 6 (Accounts) of the Common Terms Agreement, turnover during the term of this Agreement; |
(b) | the pledge contained in this Agreement will apply to the Deposit on the date of this Agreement and also at any time in the future including the date of enforcement of the Security contained in this Agreement; and |
(c) | the description of the Deposit is of sufficient certainty to cover all monies standing to the credit of the Account at any time. |
3.9 | Holding of passbook |
From the date of this Agreement until the date the security created by or pursuant to this Agreement is released in accordance with Clause 3.7 (Release of security), the Lessee shall hold the passbooks and any other instruments evidencing the Lessee’s interest in the Security Assets, on behalf of, and to the order of, the Security Agent.
4 | Representations and warranties |
4.1 | General |
The Lessee represents and warrants to the Security Agent as follows.
4.2 | Repetition of Common Terms Agreement representations and warranties |
The representations and warranties in clause 4 (Representations and warranties) of the Common Terms Agreement remain true and not misleading if repeated on the date of this Agreement with reference to the circumstances now existing.
4.3 | Right to assign |
The Lessee has the right (without requiring the concurrence, consent or authority of any other person) to create the Security Interests over the Security Assets in favour of the Security Agent.
4.4 | No third party Security Interests |
No third party has any Security Interest or any other right, interest or claim over, in or in relation to any Security Asset.
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5 | Covenants |
5.1 | General |
The Lessee shall comply with the following provisions of this Clause 5 at all times during the Security Period.
5.2 | No impairing of Security Agent’s rights |
The Lessee shall not:
(a) | do or permit any act or thing to be done that may delay, prevent or impair the recovery of any moneys payable under this Agreement; or |
(b) | take or omit to take any action which may impair the Security Agents interest in the Security Assets. |
5.3 | Withdrawals |
5.3.1 | Subject to Clause 5.3.2, the Lessee shall not be entitled to receive, withdraw or otherwise transfer all or any part of the credit balance from time to time on the Earnings Account, the Facility Service Account and any Deposit. |
5.3.2 | The Lessee shall be entitled to receive, withdraw or otherwise transfer all or any part of the credit balance from time to time on the Earnings Account, the Facility Service Account and any Deposit: |
(a) | with the prior written consent of the Security Agent; or |
(b) | as expressly permitted under the terms of the Transaction Documents. |
6 | New accounts |
6.1.1 | If any subsequent charge or other interest affects any Security Asset, the Security Agent may open a new account (the New Account) in the name of the Lessee. |
6.1.2 | If the Security Agent does not open a New Account, it will nevertheless be treated as if it had done so at the time when it received or was deemed to have received notice of that charge or other interest affecting any Security Asset (the Relevant Time). |
6.1.3 | As from the Relevant Time, all payments made to the Security Agent will be credited or be treated as having been credited to the New Account and will not operate to reduce the amount secured by this Agreement at the Relevant Time. |
7 | Protection of security |
The Security Agent may take any action which it may think fit for the purpose of protecting or maintaining the security created by this Agreement or for any similar or related purpose.
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8 | Enforceability and Security Agent’s powers |
8.1 | Right to enforce security |
On the occurrence of an Event of Default but without the necessity for any court order in any jurisdiction (unless required by law) to the effect that an Event of Default has occurred or that the security constituted by this Agreement has become enforceable, and irrespective of whether a notice has been served under clause 12.1 (Acceleration rights) of the Common Terms Agreement:
(a) | the security constituted by this Agreement shall immediately become enforceable; and |
(b) | the Security Agent shall be entitled at any time or times: |
(i) | to exercise the powers set out in Clauses 8.2 (Rights) and 8.3 (Right to appoint Receiver or administrator) and in any other Transaction Document; and |
(ii) | to exercise the powers possessed by it in relation to the Security Assets as conferred by the law. |
8.2 | Rights |
On the occurrence of an Event of Default, the Security Agent shall be entitled then or at any later time or times:
(a) | to apply, set off, transfer or assign all or any part of the Security Assets in or towards discharge of all or any part of the Secured Liabilities (without prior notice to the Lessee); |
(b) | to the extent that any such items are attributable to or caused by the Lessee, to collect, recover and give a good discharge for any moneys or claims forming part of, or arising in relation to, any Security Asset; |
(c) | to exercise any right forming part of the Security Assets; |
(d) | to the extent that any such items are attributable to or caused by the Lessee, to collect and require payment of any amount payable under, or which otherwise forms part of, the Security Assets, and to take possession of any other Security Assets; |
(e) | to sell, mortgage, exchange, invest or in any other way deal with any Security Asset in any manner and for any consideration; |
(f) | to enter into all kinds of Shari’a-compliant transactions for the purpose of hedging risks which have arisen or which the Security Agent considers may arise in respect of any Security Asset out of movements in exchange rates, rates of return or other risks of any kind; |
(g) | to employ the service of any lawyers or other experts or advisers of any time or description whether or not similar to the foregoing; |
(h) | to appoint all kinds of agents, whether to enforce or exercise any right under or in connection with any Security Asset or for any other purpose; |
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(i) | to take over or commence or defend (if necessary using the name of the Lessee) any claims or proceedings (including but not limited to legal or arbitration proceedings) relating to, or affecting, any Security Asset which the Majority Participants may think fit and to abandon, release or settle in any way any of those claims or proceedings; and |
(j) | generally, to enter into any transaction or arrangement of any kind and to do anything in relation to any Security Asset which the Majority Participants may think fit. |
8.3 | Right to appoint Receiver or administrator |
8.3.1 | At any time, and from time to time, after the occurrence of an Event of Default, the Security Agent may: |
(a) | appoint a receiver and/or manager (or joint receivers and/or managers) of all or any part of the Security Assets; and/or |
(b) | to the extent permitted by law, appoint an administrator of the Lessee. |
8.4 | No liability of Security Agent or Receiver |
Neither the Security Agent nor any Receiver shall be obliged to check the nature or sufficiency of any payment received by it or him under this Agreement or to preserve, exercise or enforce any right forming part of, or relating to, any Security Asset.
8.5 | No requirement to commence proceedings against the Lessee |
Neither the Security Agent nor any other Secured Party will need to commence any proceedings under, or enforce any Security created by, any other Transaction Document before commencing proceedings under, or enforcing any Security created by, this Agreement.
8.6 | Conclusive evidence of certain matters |
Notwithstanding Clause 8.5 (No requirement to commence proceedings against the Lessee), as against the Lessee:
(a) | any judgment or order of a relevant court in connection with the Transaction Documents; and |
(b) | any statement or admission of the Lessee in connection with the Transaction Documents, |
shall be binding and conclusive as to all matters of fact and law to which it relates.
8.7 | Exercise of rights by the Security Agent |
The exercise of any right arising under this Agreement by the Security Agent shall not put any person dealing with the Security Agent upon any enquiry as to whether the Security Agent is entitled to exercise the same and the exercise by the Security Agent of such right shall be conclusive evidence of its right to do so.
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9 | Application of moneys |
All sums received by the Security Agent or by a Receiver shall be applied in accordance with the Investment Agency Agreement.
10 | Further assurances |
10.1 | Lessee’s obligation to take further steps |
Without limiting its obligations under any other Transaction Document, the Lessee shall do anything including but not limited to:
(a) | executing and delivering to the Security Agent (or as the Security Agent may direct), in each case in form and substance satisfactory to the Security Agent, any assignment, mortgage, security document, power of attorney, proxy or other document governed by the law of such country as the Security Agent may, in any particular case, specify; |
(b) | effecting any registration, deregistration or notarisation; |
(c) | giving any notice; and |
(d) | taking any other step, |
which the Security Agent asks and considers necessary for the purposes of:
(i) | validly and effectively creating, perfecting, preserving and protecting any Security Interest or right of any kind which the Security Agent determines should be created by or pursuant to this Agreement or any other Transaction Document or otherwise to vest in the Security Agent the title to any particular Security Asset; |
(ii) | protecting the priority, or increasing the effectiveness, in any jurisdiction of any Security Interest which is created, or which the Security Agent intended should be created, by or pursuant to this Agreement or any other Transaction Document; |
(iii) | enabling or assisting the Security Agent or any Receiver, any administrator or any delegate to sell or otherwise deal with any Security Asset, to transfer title to, or grant any interest or right relating to, any Security Asset or to exercise any power which is referred to in Clause 8.1 (Right to enforce security) or which is conferred by any Transaction Document; or |
(iv) | enabling or assisting the Security Agent to enter into any transaction to commence, defend or conduct any proceedings and/or to take any other action relating to the Security Assets in any country or under the law of any country. |
10.2 | Terms of further assurances |
The Security Agent may specify the terms of any document to be executed by the Lessee under Clause 10.1 (Lessee’s obligation to take further steps) and those terms may include any covenants, powers and provisions which the Security Agent considers appropriate to protect its, any other creditor’s or a Receiver’s interests.
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10.3 | Obligation to comply with notice |
The Lessee shall comply with a notice under Clause 10.1 (Lessee’s obligation to take further steps) by the date specified in that notice.
10.4 | Additional corporate action |
At the same time as the Lessee delivers to the Security Agent any document executed under Clause 10.1(a), the Lessee shall also deliver to the Security Agent a certificate signed by two of the Lessee’s directors which shall:
(a) | set out the text of a resolution of the Lessee’s directors specifically authorising the execution of the document specified by the Security Agent; and |
(b) | state that either the resolution was duly passed at a meeting of the directors validly convened and held throughout which a quorum of directors entitled to vote on the resolution was present or that the resolution has been signed by all the directors and is valid under the Lessee’s articles of association or other constitutional documents. |
10.5 | Costs of further steps and undertaking |
Everything the Lessee is required to do under this Clause 10 is at the Lessee’s expense. The Lessee agrees to pay or reimburse the actual costs of the Security Agent in connection with anything the Lessee is required to do under this Clause 10.
11 | Power of attorney |
11.1 | Appointment |
11.1.1 | For the purpose of exercising, securing, enforcing or realising the Security Agent’s powers, rights and interest to, in or in relation to the Security Assets and the due and punctual performance of its obligations and liabilities to the Security Agent under this Agreement and every other Transaction Document, the Lessee irrevocably and by way of security appoints the Security Agent as its attorney, on behalf of the Lessee and in its name or otherwise, to, subject to Clause 11.1.2, execute or sign any document and do any act or thing which the Lessee is obliged to do under any Transaction Document. |
11.1.2 | The power of attorney granted shall not permit the Security Agent to sign any Transaction Document in the name of the Lessee. |
11.2 | Ratification of actions of attorney |
The power conferred pursuant to Clause 11.1 (Appointment) shall, subject to the limitation set out in Clause 11.1.2, be a general power of attorney and the Lessee ratifies and confirms, and agrees to ratify and confirm, any deed, assurance, agreement, instrument, transaction, act or thing which the Security Agent may execute, do or take pursuant thereto, including that which the Security Agent considers was or might have been outside the Security Agent’s powers or otherwise invalid without that further authorisation.
11.3 | Delegation |
The Security Agent may sub-delegate to any person all or any of the powers (including the discretions) conferred on the Security Agent by Clauses 11.1 and/or 11.2, and may do so on terms authorising successive sub-delegations. No such delegation shall preclude the subsequent exercise of those powers by the Security Agent itself or preclude the Security Agent from making subsequent delegations and any such delegation may be revoked by the Security Agent at any time.
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12 | Supplemental |
12.1 | No restriction on other rights |
Nothing in this Agreement shall be taken to exclude or restrict any power, right or remedy which the Security Agent or any other creditor may at any time have under:
(a) | any other Transaction Document; or |
(b) | the law of any country or territory the courts of which have or claim any jurisdiction in respect of the Lessee, or the Security Assets. |
12.2 | Exercise of other rights |
The Security Agent may exercise any right under this Agreement before it or any other creditor has exercised any right referred to in Clause 12.1(a) or 12.1(b).
12.3 | Invalidity of Transaction Documents |
In the event of:
(a) | any Transaction Document to which the Lessee is a party now being or later becoming void, illegal, unenforceable or otherwise invalid for any reason whatsoever; or |
(b) | a bankruptcy of the Lessee, the introduction of any law or any other matter resulting in the Lessee being discharged from liability under any Transaction Document, or any Transaction Document ceasing to operate (for example, by profit ceasing to accrue), |
this Agreement shall cover any amount which would have been or become payable under or in connection with any Transaction Document if that Transaction Document had been and remained entirely valid and enforceable and the Lessee had remained fully liable under it (each a Disputed Amount) and references in this Agreement to amounts payable by the Lessee under or in connection with any such Transaction Document shall include all such Disputed Amounts.
12.4 | Release, settlement or discharge conditional |
12.4.1 | Any release, settlement or discharge under this Agreement between the Security Agent and the Lessee shall be conditional upon no security or payment to the Security Agent by the Lessee or any other person being set aside, adjusted or ordered to be repaid, whether under any insolvency law or otherwise. |
12.4.2 | If any security or payment is avoided, set aside or ordered to be refunded, the Security Agent shall be entitled to enforce this Agreement against the Lessee as if that release, discharge or settlement had not occurred and that security or payment had not been made. |
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13 | Governing law |
13.1 | Abu Dhabi law |
This Agreement shall be governed by, and construed in accordance with, the laws of Abu Dhabi and the federal laws of the United Arab Emirates to the extent that those laws do not conflict with Shari’a. In the event of contradiction between the laws of Abu Dhabi and the federal laws of the United Arab Emirates and the principles of Shari’a, the principles of Shari’a shall prevail.
13.2 | Interest |
13.2.1 | The Parties recognise and agree that the principle of the payment of interest is prohibited under Shari’a and accordingly, to the extent that any court or legal system would (but for the provisions of this Clause) impose (whether by contract or by statute) any obligation to pay interest, the Parties hereby irrevocably and unconditionally expressly waive and reject any entitlement to recover interest from each other. |
13.2.2 | For the avoidance of doubt, nothing in this Clause 13.2 shall be construed as a waiver of rights in respect of Rental Payments payable by the Lessee pursuant to the Transaction Documents howsoever such Rental Payments may be described or re-characterised by any court or arbitral tribunal. |
14 | Jurisdiction |
14.1 | The Parties submit, and waive any objection, to the exclusive jurisdiction of the courts of Abu Dhabi, United Arab Emirates to settle any dispute arising out of or in connection with this Agreement (including a dispute relating to the existence, validity or termination of this Agreement or any non-contractual obligation arising out of or in connection with this Agreement) (a Dispute). |
14.2 | The Parties agree that the courts of Abu Dhabi, United Arab Emirates are the most appropriate and convenient courts to settle Disputes and accordingly no Party will argue to the contrary. |
14.3 | Notwithstanding Clauses 14.1 and 14.2, the Security Agent may take proceedings relating to a Dispute in any court with jurisdiction (for the avoidance of doubt, including but not limited to the courts of England). To the extent allowed by law, the Security Agent may take concurrent proceedings in any number of jurisdictions. This Clause 14.3 is for the benefit of the Security Agent only. |
This Agreement has been entered into on the date stated at the beginning of this Agreement.
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Execution page of the Account Pledge and Assignment
The Lessee
Signed by | ) |
) | |
duly authorised in accordance with | ) |
the laws of the Republic of Panama | ) |
for and on behalf of | ) |
Brooge Petroleum and Gas Investment | ) |
Company FZC | ) |
in the presence of: | ) |
Signature of witness | ) |
|
Name of witness: | ||
Address of witness: | ||
The Security Agent
Signed by | ) |
) | |
duly authorised for and on behalf of | ) |
National Bank of Abu Dhabi PJSC – | ) |
Islamic Banking Division | ) |
in its capacity as Security Agent for and on | ) |
behalf of the Participants | ) |
in the presence of: | ) |
Signature of witness | ) | /s/ Ali Al Jarian /s/ Ayman Ragheb Taher Nasser |
Name of witness: | ||
Address of witness: | ||
Exhibit 10.42
To:
Brooge Petroleum and Gas Investment Company FZC
P.O. Box 50170
Fujairah
United Arab Emirates
29-6-2015
Dear Sirs
Brooge Petroleum and Gas Investment Company FZC (the Company) - conditional waiver letter
1 | We refer to: |
(a) | clauses 2.1 (Initial conditions precedent) and 2.2 (Further conditions precedent) the Master forward lease agreement dated on or about the date of this letter between Brooge Petroleum and Gas Investment Company FZC as Lessee and National Bank of Abu Dhabi PJSC — Islamic Banking Division as Lessor and Investment Agent, as amended, novated, supplemented, extended, restated or replaced from time to time (the Master Forward Lease Agreement); | |
(b) | clauses 4.1 (Initial conditions precedent) and 4.2 (Further conditions precedent) of the Master Istisna’ Agreement dated on or about the date of this letter between Brooge Petroleum and Gas Investment Company FZC as Seller and National Bank of Abu Dhabi PJSC — Islamic Banking Division as the Investment Agent, as amended, novated, supplemented, extended, restated or replaced from time to time (the Master Istisna’ Agreement); and | |
(c) | clause 2 (Initial conditions precedent) of the Common Terms Agreement dated on or about the date of this letter between Brooge Petroleum and Gas Investment Company FZC as the Company and National Bank of Abu Dhabi PJSC — Islamic Banking Division as the Investment Agent and Account Bank, as amended, novated, supplemented, extended, restated or replaced from time to time (the Common Terms Agreement), | |
(the Master Forward Lease Agreement, Master Istisna’ Agreement and Common Terms Agreement each an Agreement and together the Agreements). |
2 | Words and expressions defined (directly or indirectly) in the Common Terms Agreement shall have the same meanings in this letter. |
3 | We write as Investment Agent under the Agreements and with the consent of the sole Participant. |
4 | Pursuant to the clauses noted in paragraphs 1(a), 1(b) and 1(c) above, delivery of the Transaction Security Documents in form and substance satisfactory to the Investment Agent is a condition precedent to the matters noted respectively in each of those clauses. On the date of this letter the Transaction Security Documents have not been delivered in the required form |
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5 | We hereby agree to conditionally waive delivery of the Transaction Security Documents in the required form as a condition precedent to each of the clauses noted in paragraphs 1(a), 1(b) and 1(c) above subject to satisfaction on or before: |
(a) | the date falling three Months after the date of this letter; or | |
(b) | such later date as determined by the Investment Agent on the instructions of all the Participants, | |
(the Conditional Waiver End Date). |
6 | Failure to satisfy the condition set out in paragraph 5 above by the Conditional Waiver End Date shall constitute an Event of Default |
7 | Other than as specified in paragraph 5, nothing in this letter is, or should be construed as: |
(a) | a waiver of, or consent to, any breach or potential breach (present or future) of any provision of the Transaction Documents; or | |
(b) | a waiver of any of the rights of any Finance Party under the Transactions Documents. |
8 | The Investment Agent reserves the right to waive such other conditions precedent to the Transaction Document on terms acceptable to the Investment Agent, as notified to the Company. |
9 | This letter is a Transaction Document. |
10 | The parties may sign this letter in any number of copies and on separate copies. Each signed copy counts as an original of this letter and all the signed copies form one instrument. |
11 | This letter is governed by English law. |
12 | By signing and dating the acceptance of this letter and returning it to us you confirm your agreement: |
(a) | to the terms of this letter; and | |
(b) | that failure to satisfy the condition specified in paragraph 5 by the Conditional Waiver End Date shall constitute an Event of Default. |
Yours faithfully
|
|
|
Name:
For and on behalf of
National Bank of Abu Dhabi PJSC - Islamic Banking Division
as Investment Agent
Page 2 |
We acknowledge, confirm and agree to the terms of the letter above.
|
||
Signed by
duly authorised in accordance with the |
)
) ) |
|
laws of Fujairah Free Zone, United Arab | ) | |
Emirates for and on behalf of Brooge | ) | |
Petroleum and Gas Investment Company | ) | |
FZC in the presence of: | ) | |
Signature of witness
Name of witness: __________________________
Address of witness: __________________________
__________________________
__________________________ |
) |
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Exhibit 10.43
Certain identified information has been excluded from the exhibit because it is both not material and would likely cause competitive harm to the registrant if publicly disclosed.
DATE: 31/03/2016 2016
PORT OF FUJAIRAH
and
BROOGE PETROLEUM AND GAS INVESTMENT COMPANY FZC
common user pipe rack 3 concession agreement |
related to the ownership, operation and
concession of right to use of a common user
pipe rack and related infrastructure facilities
TABLE OF CONTENTS
2
THIS COMMON USER PIPE RACK 3 CONCESSION AGREEMENT is made this 31st day of March 2016 (the “Effective Date”).
BETWEEN:
(1) | PORT OF FUJAIRAH, an authority established by Emiri Decree Number 1 of 15 February 1984, with its registered address at PO Box 787, Fujairah, United Arab Emirates (“POF”), and |
(2) | BROOGE PETROLEUM AND GAS INVESTMENT COMPANY FZC is a company duly incorporated under the free zone Laws of the Emirate of Fujairah, United Arab Emirates (“UAE”), with license number 3090, registered address P.O. Box 50170. Fujairah being a user of the CUPR3 (the “User”). |
WHEREAS:
(A) | The User is in the business of dealing in Petroleum Products via the Port Facilities. |
(B) | POF is the owner and operator of the Port of Fujairah and owns/controls the land on which the CUPR3 is erected. |
(C) | POF, at the request of and by an informal arrangement with the Collective Users of the CUPR3, has commissioned the CUPR3 carrying the pipelines of the Collective Users which are connected to their facilities and to the POF M.M. |
(D) | The User acknowledges that the Port owns and manages the CUPR3 for it and the Collective Users to use. |
(E) | POF as owner of CUPR3 will provide maintenance of the CUPR3 on terms and conditions set forth in this Agreement. |
(F) | POF and the User now wish to enter into this Agreement to set out their respective roles, duties, rights, obligations and interests in relation to the CUPR3. |
NOW THEREFORE, IT IS AGREED as follows:
1. | DEFINITIONS AND INTERPRETATION |
1.1 | Capitalised terms not otherwise defined in this Agreement have the meanings assigned there to in this Clause 1.1 as follows: |
“AED” means the lawful currency of the U.A.E.
“Agreement” means this Agreement.
“Applicable Laws” means, with respect to the Parties or any person, all laws, statutes, codes, acts, treaties, ordinances, orders, judgments, writs, decrees, injunctions, rules, regulations, government approvals, directives, requirements, policies, procedures and standards enacted or adopted by the Emirate of Fujairah or the Federal Government of the U.A.E. and shall include the International Ship and Port Facility Security Code, all relevant applicable international conventions implemented in the U.A.E. and the Consents.
“Collective Users” means all users of the CUPR3 present and future and shall include the specific User party to this Agreement, as defined.
3
“Collective Users’ Facilities” means the tanks, storage and pipelines and such other facilities of the Collective Users.
“Consents” means all authorisations, consents, decrees, licenses, permits, waivers, privileges and approvals from all filings with the Governmental Instrumentalities necessary for the performance of the obligations of the Parties to this Agreement, including any approval, consent, license, or other authorisation that is required from any Governmental Instrumentality under the laws of the Emirate of Fujairah or the U.A.E.
“CUPR3” means the common user pipe rack, designated pipe rack No.3 by Port of Fujairah and shown in the attached diagram, physically supporting the collective Users pipelines, which provides common access for the Products of the Collective Users to the Port Facilities.
“Effective date” means the date of execution of this Agreement.
“Force Majeure” means any event, act or circumstance beyond the control of the Parties, acting reasonably and prudently, including, but not limited to, the following:
(a) | Act of God, fire, flood, lightning, storm, typhoon, earthquake, perils of the sea, soil erosion, or epidemics; |
(b) | War, battle, revolution, riot, civil disturbances, looting, insurrection, sabotage, acts of public enemies, blockage, boycott, or embargo; |
(c) | Strikes, lockouts, or other industrial disturbances; provided, however, that the resolution of any strike, lockout, or other industrial disturbance shall be deemed to be within the control of either Party affected thereby if the same may be resolved by acceding to the lawful and reasonable demands of other parties to any labour dispute giving rise to such circumstance; |
(d) | Rupture or explosion of or damage to equipment, mechanical breakdown of equipment, failure of equipment (excluding mal operation or rupture breakdowns or failure of equipment that are attributed to maintenance, or lack thereof, that has not been performed in accordance with the manufacturers’ recommendations), water used to extinguish fires, burst pipe, breached bund, damage by aircraft or vessel, obstructions to shipping or roads that prevent access to or egress from the POF Facilities and any other facilities, terminals and installations of POF; |
(e) | Compliance with laws, regulations, directions, orders, and acts of any Governmental Instrumentality; provided, however, that acts of a Governmental Instrumentality shall not constitute an event, act or circumstance of Force Majeure with respect to any obligation of POF hereunder unless the same are general application to all industries at the Port, in all regions of the U.A.E., and are not discriminatory against the User; |
(f) | Specifically excluded from Force Majeure conditions are delayed by Government of Fujairah and/or POF in placing contracts for construction of, and financing of contracts for the design, build, and placing into service of CUPR3 unless caused by Force Majeure conditions (a) to (e) above. |
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“Fujairah Government” means the Government of the Emirate of Fujairah.
“Good Industry Practice” means the exercise of the degree of skill, diligence, prudence and practice which could reasonably and ordinarily be expected from a skilled and experienced operator engaged (a) in respect of POF; in the operation of a port facility comparable in capacity and type to the Port of Fujairah (b) in respect of the User operations comparable in nature to the User’s operations, taking into account, in either case, the location of the port of Fujairah, the Collective User’s Facilities and the prevailing circumstances.
“Governmental Instrumentality” means the federal government of the U.A.E., the Fujairah Government or any ministry, department or political subdivision thereof, and any person exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government or any other governmental entity, instrumentality, agency, authority, corporation, committee or commission under the direct or indirect control of the Fujairah Government including successors and assigns of the same and any privatised agency or body established by the Fujairah Government as successor to the functions of the same.
“Party” means POF or the User, as the case may be, and “Parties” means collectively the POF and the User.
“Port of Fujairah” or “POF” means the Port of Fujairah described hereinabove and includes the land on which the CUPR3 has been constructed.
“POF Facilities” means the facilities of POF which are connected to the CUPR3.
“POF M.M.” means the Port of Fujairah matrix manifold.
“Port Ordinance” means the Port of Fujairah Ordinance of 1982 as replaced or amended from time to time.
“Port Regulations” means any rules, regulations, ordinances, procedures, directives, requirements, policies, standards or information of any kind, whether currently in force or introduced from time to time, produced by POF in connection with the Port and with which users of the Port (including the Company) and its Customers) are required to comply with including the Port Ordinance, the Port Guidelines, Port Rules for operations and the Tariffs.
“Products” means all petroleum products of the User.
“Released Claims” means any claim whatsoever and howsoever arising out of or in connection with any damage suffered by the User in connection with the CUPR3 use and operation and caused by: (i) any of the other Collective Users, (ii) Force Majeure, and/or (iii) external factors, all including but not limited to, shut down time due to maintenance and repairs and/or damages due to negligence and/or lack of maintenance by the maintenance company that may be appointed by POF under Clause 5.1.
“Term” has the meaning set forth in Clause 8 hereof.
“U.A.E.” means the United Arab Emirates.
1.2 | In the interpretation of this Agreement, unless the context otherwise requires: |
(a) | references to “persons” include individuals, corporations, limited liability companies, bodies corporate, association, partnerships, unincorporated entities, and any organisation having legal capacity and any Governmental Instrumentality (whether or not having a separate legal personality); |
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(b) | where the context admits, the singular include the plural and vice versa, and words importing any gender include the other gender; |
(c) | references to any Party or person mean and include a reference to that Party or person, its successor in title, permitted assignees, estates and legal personal representatives; |
(d) | reference to this Agreement or any other document include (i) this Agreement or such other document (as the case may be) as amended, supplemented or novated from time to time, and (ii) any document that amends, supplement or novates this Agreement or, as the case may be, such other document notwithstanding any change in the identity of the Parties, and (iii) any all schedules, appendices, exhibits, annexes and tables to this Agreement or to any such other document; provided, however, that no Party shall assume any additional obligation or liability under this Agreement by reason of any such amendment, supplement or novation unless such Party has consented to the same in writing; |
(e) | The table of contents and the headings to Clauses, Appendices and paragraphs of this Agreement are inserted for convenience and are to be ignored in construing and interpreting the provisions of this Agreement. |
1.3 | The Schedules together with the Appendices, attached hereto are incorporated herein by reference to and form a part of this Agreement. In the event of any conflict, discrepancy or inconsistency between this Agreement and any provision of any Schedule, the provisions of this Agreement and any provision of any Schedule, the provisions of this Agreement together with the Appendices (not including the Schedules) shall prevail. |
1.4 | This Agreement expresses and incorporates the commercial agreement between the Parties in relation to the subject matter and is subject to the Port Rules and Regulations for the time being in force. |
2. | FINANCE AND CONSTRUCTION |
2.1 | The User acknowledges that the costs of the construction of the CUPR3 have been paid in advance by POF. |
2.2 | The User shall be charged a fee in proportion to its utilization of the CUPR3. |
2.3 | Any amounts which have been paid by the User prior to execution of the Agreement are to be considered as advance payment(s) towards the applicable fees as set forth in Clause 11.1. |
3. | OWNERSHIP |
The User hereby confirm that ownership and legal title to the CUPR3 are vested in POF and the User has no claim, interest or entitlement in the CUPR3 other than as expressly provided in this Agreement.
4. | GRANT OF RIGHTS |
4.1 | POF hereby grants to the User a non-exclusive right to: |
(a) | Subject to successful application to POF, position its pipe(s) on the CUPR3, as directed by POF in its sole discretion; |
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(b) | Utilise the CUPR3, on a non-exclusive, collective, basis as may be allocated to the Users by POF, including access right for the User, on the terms and conditions set forth in this Agreement; |
(c) | Exercise and enjoy all incidental rights, including any rights reasonably necessary for the User to enjoy the rights granted by this Agreement. |
4.2 | For the avoidance of doubt, it is understood and agreed that the User shall not own the CUPR3 and that the CUPR3 and all related infrastructure shall remain the property of POF throughout the Term. |
5. | ADMINISTRATION AND MAINTENANCE |
5.1 | POF shall be responsible for the administration and the continued maintenance of the CUPR3. Such obligation shall be free from the assumption of any liability by POF whatsoever, unless caused by its wilful misconduct. In this regard POF shall: |
(a) | maintain the CUPR3 in accordance with Good Industry Practice; |
(b) | carry out periodic inspections and maintenance, including painting, as may be required; |
(c) | attend to any breakdown or emergency situations; |
(d) | respond appropriately to the User’s notification and complaints, if any; |
(e) | insure the CUPR3 in accordance with Clause 13.2 and pursue all insurance claims; |
(f) | endeavour to keep the User advised of any extraordinary circumstances leading to stoppage of the CUPR3 service, however POF shall not be liable for damage arising out of any stoppage of services due to non-availability of the CUPR3 for any reason whatsoever. |
5.2 | POF’s maintenance obligation mentioned in Clause 5.1 can be discharged either by POF directly or by appointment by POF (in its own absolute discretion) of a company to carry out the maintenance of the CUPR3, and such appointment shall be final evidence of POF having in all respects carry out its maintenance obligations in a professional manner with due care and diligence. Following such appointment POF will use best endeavours to resolve any outstanding concerns the User may have with the performance of such maintenance. |
5.3 | In order to fully discharge the requirements listed above, POF may, in its sole discretion, subcontract the whole or part of the works or nominate a company which shall be responsible for the whole maintenance services towards POF and the User. POF shall have the sole right, in its absolute discretion, to appoint subcontractors or to nominate and remove any maintenance service providers. |
5.4 | Without prejudice to the foregoing, POF shall promptly notify the User of any circumstance or event relating to the maintenance of the CUPR3 that is likely to have an impact on the use of the CUPR3 by the User. |
5.5 | The User, when utilising the CUPR3, shall act as a single operator. |
6. | TITLE |
Nothing in this Agreement shall provide POF with any right or interest in the Products or User’s Facilities, and likewise the User shall have no right or interest whatsoever in the CUPR3.
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7. | RISK OF LOSS OR DAMAGE |
7.1 | Notwithstanding anything else contained in this Agreement, POF shall not be responsible for loss or damage to customer properties and personnel including their pipelines and products, howsoever caused, including without limitation Force Majeure, third party damage, and loss or contamination to any Products passing through the User’s Facilities on the CUPR3, unless caused by the wilful misconduct of POF. |
7.2 | In the event of any damage caused by the User to any other Collective User: |
(a) | the entity which suffered damage shall only have recourse against the User, and shall only pursue its claim directly with the User, and not POF; and |
(b) | the User agrees not to sue, commence, voluntarily aid in any way, prosecute or cause to be commenced or prosecuted against POF or its parent, subsidiaries, assigns, transferees, representatives, principals, agents, officers or directors any action, suit or other proceeding concerning the Released Claims, in any jurisdiction. |
7.3 | In the event of any damage to the CUPR3 by external sources (including but not limited to damages due to negligence and/or lack of maintenance by the maintenance company that may be appointed by POF under Clause 5.1) the responsibility of the POF shall be limited to remedying the defects and any liability whatsoever of the POF towards the User is hereby expressly excluded and waived by the User. |
7.4 | The User expressly waives any claim for indirect or consequential losses against POF under any circumstances. |
8. | TERM, TERMINATION, EXTENSION |
8.1 | This Agreement comes into force on the Effective Date. |
8.2 | The duration of this agreement is 25 (twenty five) years from the commissioning date of CUPR3. |
8.3 | The Parties agree in principle that this Agreement may be extended for a further period of time (the “Extended Term”); however, such extension is subject to mutual agreement on the renewal of the Agreement’s terms. |
9. | TERMS OF USE |
9.1 | Without limiting the generality of its obligations under this Agreement including but without limitation, as required by Applicable Laws, at all times during the Term, POF shall: |
(a) | grant the User the right to use the CUPR3: |
(i) | in a commercially reasonable manner and in accordance with the provisions of this Agreement; |
(ii) | in accordance with Good Industry Practice, the Port Ordinance, and the Port Regulations and any amendments thereto; and |
(iii) | in accordance with POF’s Standard of Use and any amendments thereto. |
(b) | provide the User with the operation and maintenance services described in Clause 5. |
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9.2 | Notwithstanding anything else in this Agreement, POF shall not be responsible or liable for any malfunction whatsoever of the CUPR3 unless caused by its wilful misconduct. |
10. | OBLIGATIONS OF THE USER |
10.1 | Without limiting its obligations under this Agreement, at all times during the Term, the User shall: |
(a) | duly and properly perform its obligations under this Agreement: |
(i) | in a commercially reasonable manner and in accordance with the provisions of this Agreement; |
(ii) | in accordance with Good Industry Practice and with the standards of skill, diligence, prudence and foresight required there under; |
(iii) | in accordance with the Port Ordinance and the Port Regulations. |
(b) | pay POF the fees and charges as set forth in Clause 11 in full and on due dates; |
(c) | promptly notify POF of any emergency situation, or any defects requiring remedy; |
(d) | ensure that appropriate safety arrangements are in place; |
(e) | follow the reasonable instructions of POF in relation to the User’s operations in Fujairah; |
(f) | give all required notices and procure and maintain at their own expense all consents necessary for them to perform this Agreement; and |
(g) | use their best endeavours to obtain revisions to their Consents, as needed from time to time, to ensure that such Consents allow the performance of their duties and obligations, and exercise of their respective rights. |
10.2 | It is further agreed and understood that the User shall: |
(a) | use the CUPR3 in compliance with the highest standards of skill, diligence, prudence and foresight required; and |
(b) | install and remedy defects in their pipes and equipment so as not to cause damage or loss to other Collective Users; and |
(c) | comply with reasonable requirements set out by Port of Fujairah, from time to time, for CUPR3 use. |
11. | FEES AND CHARGES |
11.1 | Concession Fees. The concession fees, as detailed in Appendix 1, which have been determined by POF in proportion to the User’s pipeline requirements, shall be paid by the User upon demand for payment as made by POF. |
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11.2 | Annual Charges. POF shall charge the User, in proportion to the User’s CUPR3 requirements, Annual charges (including Administration and maintenance for the services described in Clause 5) (the “Annual Charges”). Such charges shall be invoiced periodically and balanced on yearly basis. |
11.3 | Review. The User recognises that the effective amount of the Annual Charges will require periodic review by POF and the User accordingly agrees and undertakes to be bound by any decision taken by POF in this regard. |
11.4 | Payment Terms. Payment terms for the Annual Charges shall be 15 days from date of the POF invoice. Each invoice (or supporting documentation accompanying the invoice) shall provide the applicable charges details. |
11.5 | Items in Dispute. POF invoices shall be accompanied by all reasonably necessary supporting data and information, however, even if an invoice is disputed by the User, either in part or in the whole, the User shall make the payment on the due date and shall liaise with POF for resolution. Where applicable a credit note or refund may be issued by POF in the case of manifest errors in calculation. |
12. | ENVIRONMENTAL, HEALTH, SAFETY AND SECURITY MATTERS |
The User shall comply with the Port Ordinance, the Port Regulations, and all other relevant marine laws applicable in the U.A.E. in connection with their respective business operations and comply with the environmental health, safety and security and all other relevant environmental laws applicable in the U.A.E.
13. | INSURANCE |
13.1 | The User shall ensure that it is adequately insured, at all times for the duration of the Term, for all risks to be assumed by it under this Agreement to the reasonable satisfaction of POF. POF may request to be provided, and the User agrees it shall provide within three (3) days of such request by POF, evidence that such insurance is in place. |
13.2 | POF shall insure the CUPR3 for property risk and for any other risks as may be required. For the sake of clarity POF insurance will not include any assets or obligations of the users towards each other or towards the third parties. |
14. | TERMINATION, EVENTS OF DEFAULT AND REMEDIES |
14.1 | Termination. This Agreement shall be terminated upon the first to occur of any of the following: |
(a) | an agreement in writing between the Parties to terminate this Agreement; or |
(b) | failure by the User to make payment of any amounts due to POF under this Agreement, which failure continues for a period of 45 (forty five) days after notice of such failure is given by POF to the User; or |
(c) | a notice of termination from the non-Defaulting Party to the Defaulting Party upon the occurrence of an Event of Default which, where capable of remedy, has not been remedied within ninety (90) days’ of notice from the non-Defaulting Party to remedy, provided that an Event of Default shall not be deemed to have occurred hereunder if such failure can reasonably be remedied, but not within such ninety (90) days period, and the Defaulting Party has commenced and is diligently pursuing such remedy within such ninety (90) days period, in which case the Defaulting Party shall have an additional period of time (not to exceed one hundred and twenty (120) days after receipt of written notice of such default) to remedy such failure. |
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14.2 | Events of Default. An event of default (“Event of Default”) under this Agreement shall exist upon the occurrence or continuance of any one (1) or more of the following events (the Party in default, whether by act or omission set out below, being the “Defaulting Party” and the Party not in default being the “non-Defaulting Party”): |
(a) | failure by either Party to perform or meet in any material respect any material term, condition, covenant, agreement or obligation on the part of the User to be performed or met; |
(b) | the making by the User of an assignment for the benefit of creditors, the filing by or against the User of a petition in bankruptcy, or the appointment of a receiver or trustee for the User or its properties; |
(c) | any representation or warranty made by the User under this Agreement is false or incorrect in any material respect at the time it is made and is not remedied within thirty (30) days after receipt of a request from POF to do so. |
14.3 | Remedies. |
(a) | Upon the occurrence and during the continuance of any Event of Default hereunder, the non-Defaulting Party shall have the right to pursue any remedy given under this Agreement, or now or hereafter existing under any Applicable Law. |
(b) | The exercise by the non-Defaulting Party of any right or remedy against the Defaulting Party shall not preclude the simultaneous or successive exercise against the Defaulting Party of any other right or remedy provided for herein or permitted under any Applicable Law, whether or not such rights or remedies are consistent or inconsistent with any other right or remedy. |
14.4 | Effect of Termination. |
(a) | If this Agreement is terminated POF shall be released and discharged from any obligations and liabilities arising or accruing under this Agreement from and after the date of termination. Termination of this Agreement shall however not discharge or relieve the User from any obligations or liabilities which may have accrued under this Agreement prior to such termination, or which may accrue out of or in respect of such termination. |
(b) | The concession fees paid are not refundable but the concession rights are transferable to another party whom this Agreement may, with the express written consent of POF, be assigned so that the new party becomes the new user of the shared CUPR3. |
15. | GOVERNING LAW AND DISPUTE RESOLUTION |
This Agreement shall be governed by the laws of the U.A.E., and any dispute arising out of, or in connection with this Agreement, including any question regarding its existence, validity or termination, shall be subject to the exclusive jurisdiction of the courts of Fujairah.
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16. | LIABILITIES AND INDEMNITIES |
16.1 | It is understood and agreed that POF, its directors, employees, servants and agents shall not be liable or accountable to the User for any loss, damage, claim, demand, liability, cost or expense of any nature or kind whatsoever sustained by the User or its agents, employees or third parties either directly or indirectly resulting from any inadequacy for any purpose, or any defect (including latent defect) or mechanical failure of the CUPR3, or for loss or interruption of use of the CUPR3, or any loss of business profits or any other damage of any nature whatsoever and howsoever arising, unless caused by the wilful misconduct of POF. |
16.2 | The User acknowledges that POF is not the builder of the CUPR3 and that POF, its directors, employees, servants and agents have not made and POF do not make in this Agreement, any representations as to merchantability, satisfactory quality, condition, fitness or suitability of the CUPR3 for the purposes of the User or any other representation or warranty with respect to the CUPR3. The User agrees that its obligations under this Agreement (whether in respect of payment of fees or otherwise) shall not in any way be affected by any defect in (including any latent defect in), or failure of performance by, the CUPR3 and waive all claims of whatsoever nature howsoever arising against POF. The User is deemed to have satisfied itself as to the quality and sustainability of the CUPR3 for its purposes upon its initial application for use of the CUPR3 or execution of this Agreement whichever is the earliest. |
16.3 | The User confirms that it has not relied on any condition, warranty or representation by POF, its directors, employees, servants and agents (whether express or implied and whether arising by applicable law or otherwise) in relation to the CUPR3, including without limitation conditions, warranties or representations as to the description, suitability, merchantability, satisfactory quality, fitness for purpose, value, condition, design, or operation of any kind or nature of the CUPR3 and the benefit of any such condition, warranty or representation by POF is hereby irrevocably and unconditionally waived by the User, unless any damage arising therefrom was caused by POF’s wilful misconduct. |
16.4 | The User shall defend, indemnify and hold harmless POF from and against all claims, demands, liabilities, losses, damage, costs and expenses to the extent of the User’s negligence in connection with its performance of this Agreement, including as a result of oil or waste being discharged into the water environment (as these terms are defined in the applicable Environment Laws). |
16.5 | This Clause 16 shall survive the expiry or termination of this Agreement. |
17. | ASSIGNMENT |
The User may not assign any of its rights or obligations, in part or in whole, under this Agreement without the prior written consent of POF; provided, that such consent shall not be unreasonably withheld or delayed if the User has demonstrated to the reasonable satisfaction of POF that the proposed assignee has adequate legal, financial and technical status and ability to observe and perform the obligations of the assignor under this Agreement.
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18. | CONFIDENTIAL INFORMATION |
18.1 | The following describes the procedures by which one Party (the “Disclosing Party”) may disclose Confidential Information to the other Party (the “Recipient”) under this Agreement. |
18.2 | The Disclosing Party reserves its ownership rights and, if applicable, its customers and Third Party contractors’ ownership rights, in and to Confidential Information disclosed hereunder. |
18.3 | In consideration of the disclosure by the Disclosing Party to the Recipient of the Confidential Information, the Recipient agrees that it and its officers, directors, partners, employees, Affiliates, agents, advisers, technology providers, suppliers, representatives, Lenders (including prospective Lenders) and outside auditors who have access to the Confidential Information (collectively, “Representatives”): |
(a) | shall keep the Confidential Information confidential and shall not, without the prior written consent of the Disclosing Party or as allowed by this Agreement, disclose Confidential Information to Third Parties; and |
(b) | shall not use Confidential Information other than for the purposes of (i) exercising its rights and fulfilling its obligations under this Agreement, (ii) evaluating the potential exercise of its rights under this Agreement, or (iii) the present or contemplated activities or operations of the Disclosing Party (collectively, the “Approved Uses”); provided, however, that Confidential Information may be used by a Party (including any Affiliate of a Party) in connection with the development, construction or operation of any plants, facility, machinery or equipment owned or operated by that Party or its Affiliate to the extent that such Confidential Information is free from restrictions on use imposed by any person not a Party hereto holding Intellectual Property in such Confidential Information. Moreover, the Recipient agrees to transmit the Confidential Information only to such of its Representatives who need to know the Confidential Information for the sole purpose of assisting the Recipient in the Approved Uses, who are informed of this Agreement, and who, when necessary to safeguard the Confidential Information have agreed in writing to obligations of confidentiality substantially equivalent to those contained in this Clause 19 or are otherwise subject to professional obligations of confidentiality. In any event, the Recipient shall take all reasonable measures to restrain its Representatives from prohibited or unauthorised disclosure or use of the Confidential Information. |
18.4 | If any portion of the Confidential Information is, pursuant to the advice of legal counsel, required to be disclosed by subpoena under any Applicable Law, litigation, or similar legal process, or to a governmental regulatory agency or commission of securities exchange, the Recipient shall promptly inform the Disclosing Party of the existence, terms and circumstances surrounding such request. The Recipient shall consult with the Disclosing Party on the advisability of taking legally-available steps to resist or narrow such request. The Disclosing Party may thereafter seek to obtain a protective order, and the Recipient shall reasonably cooperate with the Disclosing Party in its efforts to obtain a protective order. |
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18.5 | The provisions of this Agreement and all other information, data, technology, trade secrets and know-how relating to the business of POF, or the User or any Affiliate thereof are Confidential Information. For the sake of clarity, the existence of this Agreement is not deemed to be Confidential Information. |
18.6 | The Parties acknowledge that the Confidential Information is valuable and the other Party would suffer irreparable harm if the Confidential Information (or any part of it) were to be disclosed to a Third Party or used otherwise than in accordance with the terms of this Agreement by any person to whom it has been disclosed. |
18.7 | Without prejudice to use and disclosure restrictions contained in any other agreement, the restrictions on use and disclosure agreed between the Parties in this Clause shall cease as to all Confidential Information on the date that there is two (2) years after the termination of this Agreement. |
18.8 | As a matter of clarification, nothing contained herein shall affect either Party disclosing information to a Governmental instrumentality or other authority lawfully requiring such information to be disclosed. |
19. | FORCE MAJEURE |
19.1 | General. Subject always to the Applicable Laws including the Port Ordinance, the Port Regulations, except with respect to any obligations for the payment of money hereunder, whereby it is expressly agreed that unavailability of funds shall under no circumstances constitute a Force Majeure Event, neither the User nor POF shall be considered in default in the performance of their respective obligations under this Agreement or be responsible for any delays in the carrying out such obligations if and to the extent that such failure or delay is due to a Force Majeure Event; provided, however that the Force Majeure Event complained of directly and unavoidably affects the ability of the Party invoking this Clause 19.1 to perform its obligations under this Agreement, and such Party shall take all action which is reasonable to overcome any such delay or failure and to proceed with the performance of its obligations hereunder. |
19.2 | Notice. A party affected by a Force Majeure Event shall, promptly upon becoming aware of the existence thereof notify the other Party of the same and give reasonably full particulars thereof. Similarly, upon becoming aware of the cessation of such Force Majeure Event, the affected Party shall promptly notify the other Party of such cessation. Where feasible, the Force Majeure Event and cessation of same should be confirmed in writing by the local chamber of commerce or equivalent neutral body. |
19.3 | Discussions. If the Force Majeure Event is anticipated to continue or does continue for more than six (6) consecutive months or eight (8) months during any 12 (twelve) month period, the Parties shall meet to discuss what actions, if any, should be taken. If a Force Majeure Event is not resolved within a further three (3) months after the Parties have met pursuant to this Clause 19.3, then the Party suffering economic harm as a result of the Force Majeure Event may terminate this Agreement by written notice to the other Party. |
20. | NOTICES |
20.1 | All notices, approvals, consents, agreements, invoices and other communications (collectively “Notices”) between the Parties shall be in writing and delivered by hand or recognised courier service or sent by telefax or email. Notices delivered by hand or courier shall be deemed received on the date of delivery. Notices delivered by telefax and email shall be deemed received on the date of transmission; provided, however that telefax transmissions are confirmed by electronic answer back transmission. All communications by telefax shall promptly be followed by delivery of the original by hand or registered mail. |
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20.2 | All Notices from one Party to the other shall be send to the following addresses (unless changed by the appropriate notice): |
(a) | PORT OF FUJAIRAH |
Address:
PO Box 787
Fujairah
United Arab Emirates
Attention:
Fax: +971 9 222 8811
Email:
(b) | BROOGE PETROLEUM AND GAS INVESTMENT COMPANY FZC |
Address:
PO Box 50170
Fujairah
United Arab Emirates
Attention: CEO/Vice Chairman
Email: [*****]
21. | MISCELLANEOUS |
21.1 | Entire Agreement. This Agreement, the Schedule(s) and the Appendices hereto constitute and contain the entire agreement of the Parties at the date of execution (and supersede any and all prior negotiations, correspondence understandings and agreements between the Parties) respecting the subject matter hereof. |
21.2 | Waiver. A waiver of any term, provision or condition of, or consent granted under this Agreement shall be effective only if given in writing and signed by the waiving or consenting Party and then only in the instance and for the purpose for which it is given. No failure or delay on the part of a Party in exercising any right, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or privilege preclude any other further exercise thereof or the exercise of any other right, power or privilege. No breach of any provision of this Agreement shall be waived or discharged except with the express written consent of the Parties. The rights and remedies herein provided are cumulative with and not exclusive of any rights or remedies provided by any Applicable Law. |
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21.3 | Amendments. This Agreement may be amended only by a written instrument signed by both Parties. |
21.4 | Third Party Beneficiaries. Except as otherwise expressly stated herein, nothing in this Agreement confers any rights on any person other than the Parties and no person other than a Party to this Agreement shall be entitled to enforce the provisions of this Agreement. |
21.5 | Severability. If any provision of this Agreement or part of it is rendered invalid, illegal or unenforceable in any respect under any Applicable Law, the validity, legality and enforceability of the remaining provisions of this Agreement shall not in any way be affected or impaired thereby; and the Parties shall promptly negotiate in good faith new provisions to eliminate the invalidity, illegality or unenforceability and to restore this Agreement as near as possible to its original intent and effect. |
21.6 | Counterparts. This Agreement may be executed in any number of counterparts. All such counterparts shall constitute but one and the same Agreement. |
21.7 | No Partnership. This Agreement shall not be construed as creating an association or partnership between the Parties or as imposing any partnership obligation or liability upon either Party. No Party shall have the right, power or authority to enter into agreements or undertakings for, or act on behalf of, or as an agent or representative of, or to otherwise bind, the other Party. |
21.8 | Binding Effect. This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective successors and permitted assigns. |
IN WITNESS WHEREOF, the Parties have duly executed this Agreement on the date first above written.
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EXECUTION PAGE
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Exhibit 10.44
Certain identified information has been excluded from the exhibit because it is both not material and would likely cause competitive harm to the registrant if publicly disclosed.
Dated 01 April 2017
CONFIDENTIAL
Brooge
Petroleum and Gas Investment Company
as Owner
- and -
Flowi Facility Management Llc
as Operations Consultancy Service Provider
SERVICE AGREEMENT
Hogan Lovells |
Hogan Lovells (Middle East) LLP
19th Floor, Al Fattan Currency
Tower, Dubai International Financial Centre, PO Box 506602, Dubai,
UAE
Contents
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This Agreement is made on 01st April 2017
Between:
(1) | Brooge Petroleum and Gas Investment Company, a company incorporated in the Free Zone of Fujairah, United Arab Emirates, having registration number 13- FZC- 1117 under P.O. Box number 50170 (the “Owner”); and |
(2) | Flowi Facility Management LLC, a company incorporated in the United Arab Emirates, having registered office at Office No. 09, Floor No. 48, Aspin Commercial Tower, Sheikh Zayed Road, Dubai, P.O. Box. 128838 (“Operations Consultancy Service Provider”). |
Whereas:
(A) | The Owner is the owner of certain oil terminal storage facilities in Fujairah, United Arab Emirates, which are more particularly described in Schedule 2 (The Facilities and the Site) (the “Facilities”). |
(B) | The Owner wishes to engage the Operations Consultancy Service Provider in respect of, and the Operations Consultancy Service Provider has agreed to perform, the Services in accordance with this Agreement. |
(C) | This Agreement sets out the terms and conditions upon which Operations Consultancy Service Provider shall perform the Services. |
It is agreed:
Page 1 of 48
“Change in Control” means, in respect of any person, a change in the persons who, directly or indirectly, ultimately control that person. For the purposes of this definition, the term “control” (including the terms “controlled by” and “under common control with”) as applied to any person, means the possession, directly or indirectly of the power to direct or cause the direction of the management of that person whether through ownership of shares, voting securities or otherwise.
“Claim” means, with respect to any party, any and all suits, sanctions, legal proceedings, claims, actions, assessments, penalties, judgments or fines brought or enforced against such party.
“CDCO” means the date falling two (2) Months after the date of notice from the Owner notifying the Operations Consultancy Service Provider of the commencement date of commercial operations at the Facilities.
“Confidential Information” has the meaning given to it in Clause 20.
“Construction Defect” has the meaning given to ‘Defect’ in the EPC Contract.
“Contract Year” means a period of twelve Months (12) from the CDCO.
“Cost” means any cost or expense incurred or that it is necessary for the Operations Consultancy Service Provider to incur for performance of its obligations under this Agreement, which costs or expenses may include:
(a) | capital costs; | |
(b) | financing costs; and | |
(c) | fixed and variable costs of operation activities required hereunder; |
“Day” when not preceded by the word “Business”, means the twenty-four (24)-hour period beginning at 00:00 midnight and ending at 23:59 United Arab Emirates time.
“Defects Liability Period” has the meaning given to ‘Defects Liability Period’ in the EPC Contract, which, for the avoidance of doubt is a period of 365 days from completion of all construction works, which is extendable to a maximum of two (2) Years in accordance with the terms of the EPC Contract.
“Dispute Notice” has the meaning given to it in Clause 21.1. “Emergency” means an imminent or serious threat:
(a) | to the safety of persons; | |
(b) | to the environment (including, land, air and sea); | |
(c) | to the security of the Facilities; or | |
(d) | of material damage to the Facilities (or any part thereof). |
“End-User” means any end-user of the Facilities that enters into or has entered into an End-User Agreement with the Owner.
“End-User Agreement” means an executed Proposed End-User Agreement,
“Environmental Law” means a Law, whether arising by statute or common law, relating to the environment including a Law relating to environmental assessment, environmental heritage, water, water catchments, pollution of sea, sea beds, sea coast, beaches, air, soil, groundwater or water, noise, soil, chemicals, pesticides, hazardous substances, the ozone layer, waste, dangerous goods, building regulation, occupation of buildings, public health, occupational health and safety, environmental hazard, any aspect of the protection of the environment, or the enforcement or administration of any of those Laws (whether that Law arises under statute or the common law or pursuant to any permit, license, approval, notice, decree, order or directive of any Governmental Authority or otherwise).
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“EPC Contract” means the contract made between the Owner and the EPC Contractor for the engineering, procurement, construction, pre-commissioning and commissioning of the Facilities including remedying any defects.
“EPC Contractor” means Audex PTE.
“Excess Cost” has the meaning set forth in Clause 3.15.
“Expiry Date” means the date falling on the expiry of the Initial Term or following the expiry of the Initial Term, the date falling on the expiry of any Renewal Terms (as the case may be).
“Facilities” has the meaning given to it in the recitals to this Agreement.
“Force Majeure” has the meaning given to it in Clause 19.1.
“Force Majeure Notice” has the meaning given to it in Clause 19.2.
“Force Majeure Termination Notice” has the meaning given to it in Clause 15.1.
“Future Expansion Facilities” means the future expansion of the Facilities, which may be developed by the Owner.
“Good Industry Practice” means using standards, practices, methods and procedures conforming to the Law and exercising that degree of skill and care, diligence, prudence and foresight which would reasonably and ordinarily be expected from a skilled and experienced person engaged in a similar type of undertaking, including the provision of underground and aboveground storage and terminalling services, under the same or similar circumstances. With respect to the Facilities, “Good Industry Practice” includes taking reasonable steps to ensure that:
(a) | adequate materials, resources and supplies, including energy, are available to meet the Facilities’ needs under normal conditions and reasonably anticipated abnormal conditions; | |
(b) | sufficient and duly licensed, as required by Law, operating personnel are available and are adequately experienced and trained to operate the Facilities properly, efficiently and taking into account manufacturer’s guidelines and specifications and are capable of responding to reasonably anticipated abnormal conditions; | |
(c) | preventative, routine and non-routine maintenance, repairs and calibration performed on a basis that ensures reliable long term and safe operation and taking into account manufacturers’ recommendations, and are performed by knowledgeable, trained and experienced personnel who are duly licensed as required by Law utilising proper equipment, tools and procedures; | |
(d) | appropriate monitoring and testing is done to ascertain to ensure equipment is functioning as designed and to provide assurance that equipment will function properly under both normal and reasonably anticipated abnormal conditions; and |
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(e) | equipment is operated in a manner safe to workers, the general public, the environment, plant and equipment and with regard to manufacturers’ defined limitations such as temperature, moisture and chemical content. |
“Government” means the Government of the United Arab Emirates.
“Governmental Authority” means the Government or any ministry, department or political subdivision thereof, and any person exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, or any person or entity exercising delegated authority of one of those bodies, or any other governmental entity, instrumentality, agency, authority, corporation, committee or commission under the direct or indirect control of any of the same.
“Hazardous Material” means any chemicals, materials, substances or items in any form, whether solid, liquid, gaseous, semisolid, or any combination thereof, whether waste materials, raw materials, chemicals, finished products, by-products, or any other materials or articles, which are listed or regarded as hazardous, toxic, prohibited or dangerous under the Environmental Laws.
“Health and Safety Laws” means any health, safety or environmental legislation (or any legislation regulating health and safety or the environment) which is in force in the United Arab Emirates from time to time.
“Indirect Losses” means any consequential or indirect loss, cost, expense or damage, including loss of actual or anticipated profits, cost of capital, lost opportunities (including opportunities to enter into or complete arrangements with third parties), loss of goodwill, loss of or inability to use equipment, a failure to realise anticipated savings or loss of reputation, howsoever caused (including by negligence) increased operating costs or any other special, punitive or incidental damages.
“Initial Term” means the period commencing on the CDCO and ending on the Day falling one (1) Day before the first (1st) anniversary of the CDCO.
“Insolvency Event” means the happening of any of these events with respect to a party:
(a) | the passing by that party of a resolution for, or that party being under, bankruptcy, judicial management, insolvency, winding up, liquidation, or other similar proceeding; | |
(b) | the appointment of a trustee, judicial manager liquidator, custodian, or similar person in a proceeding referred to in paragraph (a) of this definition which appointment has not been set aside or stayed within thirty (30) Days; | |
(c) | the making by a court having jurisdiction of an order winding up or otherwise confirming the bankruptcy or insolvency of that party, which order has not been set aside or stayed within thirty (30) Days; | |
(d) | a receiver, receiver and manager, official manager, trustee, administrator, controller or similar official is appointed over any of the assets of the assets that party for a period exceeding six (6) Months; | |
(e) | except to reconstruct or amalgamate while solvent, that party enters into, or resolves to enter into, a scheme of arrangement, deed of company arrangement or composition with, or assignment for the benefit of, all or any class of its creditors, or it proposes a reorganisation, moratorium or other administration involving any of them; | |
(f) | that party is unable to pay its debts consistently when they are due or states that it is insolvent; or |
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(g) | that party suspends payment of its debts generally. |
“Intellectual Property Rights” means:
(a) | patents, trademarks, service marks, rights in designs, trade names, copyrights and topography rights, in each case whether registered or not; | |
(b) | applications for registration of any of them; | |
(c) | rights under licenses and consents in relation to any of them; | |
(d) | all forms of protection of a similar nature or having, equivalent or similar effect to any of them which may subsist anywhere in the world; and | |
(e) | Confidential Information, |
in each case whether existing or arising at statute, at common law or in equity.
“Key Performance Indicators” means the standards (as set out in Annex A of Schedule 1 (Scope of Services)) in accordance with which the Operations Consultancy Service Provider shall provide the Services, as amended from time to time in accordance with the terms of this Agreement.
“Law” means any decree, resolution, law, statute, act, ordinance, rule, directive (to the extent having the force of law in the United Arab Emirates), order, treaty, code or regulation (including any of the foregoing relating to health or safety matters or any Environmental Law) or any interpretation of the foregoing, as enacted, issued or promulgated by any Governmental Authority, including amendments, modifications, extensions, replacements or re-enactments thereof, and includes also Authorisations and other licenses, permits, approvals and agreements, and any injunction or final non-appealable judgment directly applicable to the relevant party, of any Governmental Authority having jurisdiction over the matter in question.
“Lien” means any mortgage, pledge, lien, security interest, option agreement, claim, charge or encumbrance of any kind.
“Loss” means, any loss, liability, damage, cost, charge or reasonable expenses that a party pays or suffers or incurs or is liable to pay, pursuant to a Claim, including:
(a) | all interest and costs awards payable to third parties pursuant to Claims; and | |
(b) | all reasonable legal and other reasonable out of pocket expenses incurred in connection with defending any Claim or action, whether or not resulting in any liability, and all amounts paid in settlement of any Claim or action that would be recoverable hereunder consistent with the restrictions on recovery, but excluding Indirect Losses. |
“Measures” refers to the measures for each Key Performance Indicator as set out in the column headed “Measures” in Annex A of Schedule 1 (Scope of Services).
“Month” means a calendar month.
“New Agreement” means a new agreement to be entered into between the Owner and the New Operations Consultancy Service Provider for the provision of the Services by the New Operations Consultancy Service Provider.
“New Operations Consultancy Service Provider” means the person who has entered or who will enter into the New Agreement with the Owner.
“Non-Default Termination Notice” has the meaning given to it in Clause 15.2.
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“Non-Affected Party” has the meaning given to it in Clause 19.1.
“Non Construction Defect” has the meaning given to it in Clause 3.18(g).
“Operation & Control Philosophy” means the documents forming Schedule 3 to this Agreement, describing the operations and control philosophy of the Facility.
“Operating Procedures” means the administration, safety and risk management, emergency, operation and maintenance procedures governing the full operation of the Facilities.
“Operational Budget” means the yearly budget referred to in Clause 3.7 to be submitted by the Operations Consultancy Service Provider to the Owner for the Owner’s review and approval.
“Operational Budget Information” has the meaning given to it in Clause 3.7.
“Operations Consultancy Service Provider” has the meaning given to it in the parties’ clause to this Agreement.
“Operations Consultancy Service Provider’s Cure Period” has the meaning given to it in Clause 14.1.
“Operations Consultancy Service Provider Events of Default” has the meaning given to it in Clause 14.1.
“Owner” has the meaning given to it in the parties’ clause to this Agreement.
“Owner Events of Default” has the meaning given to it in Clause 14.2.
“Owner Insurances” has the meaning given to it in Clause 11.1.
“Owner Related Party” means any of the Owner’s agents, consultants, contractors (including any Owner Vendor) and sub-contractors of any tier and its or their directors, officers and employees but excluding the Operations Consultancy Service Provider and statutory undertakers and
“Owner Related Parties” shall be construed accordingly.
“Owner’s Remedial Works Contractor” has the meaning given to it in Clause 3.18(d)(ii).
“Performance Points” means the points (as set out in Annex A of Schedule 1 (Scope of Services)) allocated for the achievement or failure to achieve any Key Performance Indicator.
“Personnel Turnover Requirements” has the meaning given to it in Clause 24.2(a).
“Policies” means the policies, directions or guidelines as may be published by the Owner governing the Facilities and as amended from time to time.
“Proposed End-User Agreement” refers to any end-user agreement between the Owner and an End-User in respect of the Facilities, in substantially the same form contained in Schedule 3 (Form of End-User Agreement) for the provision of storage facilities and related services by the Owner to the End-User.
Proprietary Information” of a person means information rightfully in the possession of such person, including an document, idea, policy, procedure, method, process, materials or other tangible or intangible thing, which information derives economic value from not being generally known to and not being readily ascertainable by proper means by another person who can obtain economic value from its disclosure and use, and which is the subject of reasonable efforts to maintain its secrecy.
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“Reimbursable Costs” has the meaning given to it in Clause 3.7A.
“Related Dispute” has the meaning given to it in Clause 22.2.
“Renewal Agreement Date” has the meaning given to it in Clause 15.3.
“Renewal Term” means a period of five (5) Years unless earlier terminated in accordance with the terms of this Agreement.
“Required Action” has the meaning given to it in Clause 10.1.
“Review Date” means the first (1st) Day of each Contract Year.
“Rules” has the meaning given to it in Clause 21.2(a).
“Schedule of Facilities Maintenance” refers to the maintenance programme for the Facilities as set out in Schedule 8 (Schedule of Facilities Maintenance) as per OEM recommendations and any specific requirements provided by the EPC Contractor.
“Services” means the services to manage recruitment, support, consultation, supervision, taking care, custody and control of, maintaining and repairing and the operating of the Facilities to be provided, managed and / or procured by the Operations Consultancy Service Provider for the Owner under this Agreement (and shall include the matters described in Schedule 1 (Scope of Services)) as subsequently amended or adjusted in accordance with this Agreement.
“Signing Date” means the date on which this Agreement has been executed by both parties.
“Site” means those certain parcels of land on which the Facility will be built, as set out / described in Schedule 2 (The Facilities and the Site).
“Spare Parts Inventory” has the meaning given to it in Schedule 1 (Scope of Services).
“Step-Change in Technology” means a change in the technology associated with the management, operation or maintenance of the Facilities in any significant technological improvements which results in significant reductions in fixed and variable management, operation and / or maintenance costs, manpower costs and / or fuel cost to the Operations Consultancy Service Provider.
“Sub-Contracts” means the contracts entered into between the Operations Consultancy Service Provider and Sub-Contractors.
“Sub-Contractor” means any third party or any other person engaged by the Operations Consultancy Service Provider from time to time as may be permitted by this Agreement to procure the performance of the Services (or any of them).
“Targets” refers to the targets for each Key Performance Indicator as set out in the column headed “Targets” in Annex A of Schedule 1 (Scope of Services).
“Term” means the Initial Term and any Renewal Terms.
“Term Fee” means the fixed fee set out in Schedule 6 (Fee Schedule)), being payment for the Services performed during the Term.
“Termination Date” means the date of early termination of this Agreement in accordance with its terms.
“Vendor Equipment and Machinery Works” has the meaning given to it in Clause 3.7A.
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“Year” means the twelve (12) Month period from and including a day to (but not including) the day bearing the same number in the same month of the following year.
1.2 | Interpretation |
This Agreement shall be interpreted according to the following provisions, unless expressly provided otherwise or unless the context requires a different meaning:
(a) | The headings and marginal notes and references to them in this Agreement shall be deemed not to be part of this Agreement and shall not be taken into consideration in the interpretation of this Agreement. | |
(b) | The Schedules to this Agreement are an integral part of this Agreement and a reference to this Agreement includes a reference to the Schedules. | |
(c) | Words importing persons shall, where the context so requires or admits, include individuals, firms, partnerships, trusts, corporations, governments, governmental bodies, authorities, agencies, unincorporated bodies of persons or associations and any organisations having legal capacity. | |
(d) | Where the context so requires words importing the singular only also include the plural and vice versa and words importing the masculine shall be construed as including the feminine or the neuter or vice versa. | |
(e) | The language of this Agreement is English. All correspondence, notices, drawings, data, test reports, certificates, specifications and information shall be in English. All operating and maintenance instructions, name plates, identification labels, instructions and notices to the public and staff and all other written, printed or electronically readable matter required in accordance with, or for purposes envisaged by, this Agreement shall be in English. | |
(f) | References to any Agreement or document include (subject to all relevant approvals and any other provisions of this Agreement concerning amendments to agreements or documents) a reference to that Agreement or document as amended, supplemented, substituted, novated or assigned. | |
(g) | References to any Law are to be construed as references to that Law as from time to time amended or to any Law from time to time replacing, extending, consolidating or amending it, whether passed by the same or another Governmental Authority with legal power to do so. | |
(h) | References to a public organisation (other than the Owner) shall be deemed to include a reference to any successor to such public organisation or any organisation or entity which has taken over either or both the functions and responsibilities of such public organisation. References to other persons (other than the Owner) shall include their successors and assignees. | |
(i) | The words in this Agreement shall bear their natural meaning. The parties have had the opportunity to take legal advice on this Agreement and no term shall, therefore, be construed contra proferentem. | |
(j) | Reference to the “parties” means the parties to this Agreement and references to a “party” mean one of the parties to this Agreement. | |
(k) | The words “including” and “includes”, and any variations of these word, will be read as if followed by the words “without limitation”. |
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(l) | All of the Operations Consultancy Service Provider’s obligations, duties and responsibilities shall be construed as separate obligations, duties and responsibilities owed to the Owner and to be performed at the Operations Consultancy Service Provider’s own cost and expense. |
(m) | A covenant or agreement on the part of two or more persons binds them jointly and severally. |
(n) | A reference to time is to local time in the United Arab Emirates. |
(o) | A reference to currency is a reference to United Arab Emirates Dirhams (AED) and all amounts payable under this Agreement shall be paid in the United Arab Emirates in United Arab Emirates Dirhams. |
(p) | All periods of time are based on, and computed according to, the Gregorian calendar. |
(q) | In the event of any inconsistency between any capitalised word, term, phrase or abbreviation in Clause 1.1 and any capitalised word, term, phrase or abbreviation contained in any Schedule or any attachment to any Schedule, the meaning contained in Clause 1.1 takes precedence over the meaning in the Schedule or attachment unless the context of this Agreement otherwise requires. |
1.3 | Ambiguities and Inconsistencies |
(a) | The following descending order of precedence applies in the event of any ambiguity, discrepancy or inconsistency between any of the provisions of this Agreement or any other document or standard expressly incorporated into this Agreement: |
(i) | this Agreement (excluding the Schedules); and |
(ii) | Schedules 1 to 7 of this Agreement. |
(b) | If a party discovers any ambiguity, discrepancy or inconsistency of this Agreement or any other document or standard expressly incorporated into this Agreement: |
(i) | the party which makes the discovery shall promptly notify the other party of this in writing; and |
(ii) | the Owner will direct the Operations Consultancy Service Provider as to the interpretation to be followed by the Operations Consultancy Service Provider in performing the Operations Consultancy Service Provider’s obligations under this Agreement, without prejudice to either party’s right to refer the content of that interpretation, or the meaning of the ambiguity, discrepancy or inconsistency for determination in accordance with clause 21. |
(c) | The Operations Consultancy Service Provider in not entitled to any additional costs by reason of the Owner’s direction under Clause 1.3(b). |
2. | Relationship of the Parties |
2.1 | Relationship of the Parties |
(a) | The Operations Consultancy Service Provider has been engaged and retained by the Owner, pursuant to this Agreement as an independent contractor to manage, operate and maintain the Facilities on behalf of the Owner during the Term. The Owner has delegated to the Operations Consultancy Service Provider the overall day-to-day responsibility of operating, maintaining and repairing the Facilities for and on behalf of the Owner during the Term, as more specifically described in this Agreement. |
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(b) | Subject to, and in accordance with, the provisions of this Agreement, the Operations Consultancy Service Provider shall have the right and the obligation to perform its duties under this Agreement at its own cost and risk without recourse to the Owner. |
(c) | Unless expressly provided otherwise in this Agreement, the Operations Consultancy Service Provider shall have no authority or power to bind the Owner or to contract in the name of or create a liability against the Owner in any way or for any purpose. The Operations Consultancy Service Provider undertakes that it will not in any correspondence or dealings with any person (including any End-User) relating directly or indirectly to the Services, claim or act in a manner indicating that it has the right to bind the Owner in any way or for any purpose, unless previously expressly authorised by the Owner in writing to do so. The Operations Consultancy Service Provider shall not make or permit to be made any promise, commitment or representation whatsoever, whether verbally or in writing or otherwise, on behalf of the Owner, unless previously expressly authorised by the Owner in writing to do so. |
2.2 | Entire Agreement |
This Agreement constitutes the entire agreement, and contains all of the undertakings and agreements of whatsoever kind and nature existing between the parties with respect to the subject matter hereof, and supersedes all prior written or oral agreements, commitments, representations, communications, negotiations, undertakings, understandings and business term sheets in relation to the performance of the Services and the other subject matters of this Agreement. Neither party will be bound by or deemed to have made in connection with this Agreement, any representations, warranties, commitments, undertakings or understandings, except those contained in this Agreement.
2.3 | Costs and Expenses |
Each party shall bear its own costs and expenses relating directly or indirectly to the preparation, execution and delivery of this Agreement and documents to be provided under this Agreement.
3. | Responsibilities of the Operations Consultancy Service Provider |
3.1 | Scope of Services |
The Operations Consultancy Service Provider shall perform the Services as specified in Schedule 1 (Scope of Services) for the duration of the Term.
3.2 | Standards for Performance of Services |
Subject to, and in accordance with, the provisions of this Agreement, the Operations Consultancy Service Provider shall at its own cost be solely responsible for procuring that the Services are at all times performed:
(a) | in good faith and will exercise reasonable skill, care and diligence in the performance of its obligations under this Agreement; |
(b) | in so far as not in conflict with an express obligation of the Operations Consultancy Service Provider under this Agreement, or where in relation to a matter there is no express obligation or standard imposed on the Operations Consultancy Service Provider under this Agreement, in accordance with Good Industry Practice; |
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(c) | in compliance with all Law (including Environmental Laws) and the terms of this Agreement; |
(d) | in a manner so as not to cause or contribute to any violation by the Owner under any Law; |
(e) | in a manner such that third party warranties (including any warranties provided by the EPC Contractor) in respect of the Facilities are not vitiated or voided; and |
(f) | in accordance with the Operating Procedures. |
3.3 | Authorisations |
(a) | The Operations Consultancy Service Provider shall provide the list of permits, NOCs and Approvals required for the operation of the Terminal from all relevant Local Authorities in Fujairah in a timely manner in a way which will allow the Owner to obtain the aforementioned in due time, and shall provide all the required support, assistance and coordination in a timely manner to the Owner to obtain, implement, maintain and renew all Authorisations as necessary and in sufficient time for it to perform the Services in accordance with this Agreement and shall comply with the requirements of any Law, with the lawful requirements of any Governmental Authority and with all Authorisations as may be required to enable it to perform its obligations under this Agreement. All costs, fees and taxes (if any) which are incurred in connection with any Authorisation obtained under this Clause 3.3 shall be borne by the Owner. |
(b) | The Operations Consultancy Service Provider shall, at the Owner’s request, promptly provide the Owner with a certified copy of all Authorisations referred to in Clause 3.3(a). |
(c) | Without limiting any other provision in this Agreement, if any Authorisation obtained in accordance with Clause 3.3(a) is revoked, withdrawn or expires (without having been renewed), the Operations Consultancy Service Provider shall immediately: |
(i) | inform the Owner in writing of that revocation, withdrawal or expiry, and the impact of that revocation, withdrawal or expiry on the Operations Consultancy Service Provider’s ability to perform the Services; and |
(ii) | provide all required support assistance and coordination to the Owner, in order to regain or renew that Authorisation. |
(d) | Any notice given by the Operations consultancy Service Provider under this Clause 3.3 shall not affect the Operations Consultancy Service Provider’s obligations under this Agreement. |
3.4 | Governmental Licences and Permits |
The Operations Consultancy Service Provider shall review applicable Laws having regard to the Services and:
(a) | assist the Owner in securing and complying with any Authorisations to be submitted by the Owner in relation to the management, operation and maintenance of the Facilities; and |
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(b) | secure and comply with any Authorisations to be submitted by the Owner in relation to the management, operation and maintenance of the Facilities. |
3.5 | Personnel Standards |
(a) | The Operations Consultancy Service Provider shall provide, employ directly and be fully responsible for all operating staff (except Owner employed personnel) as are required to perform the Services pursuant to this Agreement, including Schedule 7 (List of Personnel to Be Mobilised by the Operations Consultancy Service Provider). |
(b) | The Operations Consultancy Service Provider shall procure that: |
(i) | there shall at all times be a sufficient number of staff (including all relevant grades of supervisory staff) engaged in the provision of the Services with the requisite level of skill and experience (to avoid doubt, this obligation shall include ensuring that there is sufficient staff to cover periods of holiday, sickness, other absence; and |
(ii) | all staff receive such training and supervision as is necessary to ensure the proper performance of this Agreement and compliance with all Health and Safety Laws, except for those trainings that are expressly under the Owner’s scope. |
(c) | Where the Owner reasonably considers that the number of staff engaged in the provision of the Services is insufficient, it may, by issuing a request in writing, require the Operations Consultancy Service Provider to increase its number of staff accordingly subject to additional fees as agreed with the Operations Consultancy Service Provider, except to the extent that the need for additional staff is required for the performance of the Operations Consultancy Service Provider’s Services under the contract |
(d) | The working hours, rates of compensation and all other matters relating to the employment of all individuals employed by the Operations Consultancy Service Provider for the performance of the Services shall be determined solely by the Operations Consultancy Service Provider. |
(e) | The Operations Consultancy Service Provider shall retain sole authority, control and responsibility with respect to its employment policy in connection with the performance of its obligations hereunder. |
3.6 | Operation Records and Reports -- Technical |
(a) | The Operations Consultancy Service Provider shall: |
(i) | prepare, maintain and keep separate, up-to-date records relevant to the performance of its obligations under this Agreement; |
(ii) | maintain records relevant to the performance of its obligations under this Agreement in accordance with generally accepted accounting principles applicable in the United Arab Emirates, Good Industry Practice and all relevant Laws; and |
(iii) | maintain records (both hard copy and soft copy) required for regulatory agencies with jurisdiction over the Owner and / or the Operations Consultancy Service Provider. |
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(b) | The Operations Consultancy Service Provider shall prepare and maintain: |
(i) | daily operating logs, records and reports documenting the management, operation and maintenance of the Facilities. Such operating data shall include, without limitation, information known to the Operations Consultancy Service Provider in relation to the Facilities, actual operating problems occurring during the Day and details of any other significant events related to the management, operation and maintenance of the Facilities; and |
(ii) | records reasonably required by the Owner to verify the performance of the Services by the Operations Consultancy Service Provider in accordance with the provisions of this Agreement (including relevant particulars of any aspects of the Operations Consultancy Service Provider’s performance which fail to meet the requirements of this Agreement as well as particulars of any failure by the Operations Consultancy Service Provider to achieve the Key Performance Indicators set out in Annex A of Schedule 1 (Scope of Services)). |
(c) | The Operations Consultancy Service Provider shall provide to the Owner, on a monthly basis no later than the seventh (7th) Day of each Month, beginning in the second (2nd) Month following the CDCO, a consolidated report addressing, for the previous Month and the Contract Year to date: |
(i) | the matters set forth in Clause 3.6(b); |
(ii) | the existence and status of any disputes; |
(iii) | a description of any Facilities defects, including a description of steps taken and to be taken in relation to the same; |
(iv) | a description of any accident or other occurrence at the Site that results in injury to persons or damage to property or environment; and |
(v) | any other matters and details that the Owner may require from time to time. |
(d) | The Operations Consultancy Service Provider shall provide to the Owner, on an annual basis, no later than: |
(i) | three (3) Months following the end of each Contract Year, the technical reports referred to in Clause 3.6(a)(ii); |
(ii) | fourteen (14) Days following the end of each Contract Year, a consolidated report summarising the prior monthly reports in respect of the previous Contract Year, as well as any other matters and details that the Owner may require. |
(e) | The Owner (or any person nominated by the Owner) may, at all reasonable times, conduct audits as to the Operations Consultancy Service Provider, including audits as to metering, Claims and reimbursements. |
(f) | The Operations Consultancy Service Provider will make available its personnel to the Owner, as may be reasonably requested by the Owner, to assist in explaining the records, data and other information being audited pursuant to Clause 3.6(e). |
(g) | The Owner shall have the right to examine and / or make copies of the records and data referred to above at any time upon reasonable notice. |
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(h) | With reference to all this Clause 3.6, the Operations Consultancy Service Provider’s financial records, books and statements shall not be shared with any third parties unless required by the Owner upon the request from a governmental authority. The Owner shall in that case provide a written request verifying the purpose to which the records are needed. |
3.7 | Operational Budget |
(a) | No later than six (6) Months after the Signing Date, the Operations Consultancy Service Provider shall prepare and submit to the Owner for approval the Operational Budget for the first two (2) Contract Years in a form approved by the Owner and in accordance with this Clause 3.7. |
(b) | No later than six (6) Months prior to the commencement of: |
(i) | the second (2nd) Contract Year; and |
(ii) | each subsequent Contract Year, |
the Operator shall prepare and submit to the Owner for approval the Operational Budget for the next succeeding Contract Year in a form approved by the Owner and in accordance with this Clause 3.7.
(c) | Each Operational Budget shall: |
(i) | be prepared by the Operations Consultancy Service Provider in accordance with Good Industry Practice, having regard to the operating requirements of the Facilities; |
(ii) | highlight details of any revision or changes which the Operations Consultancy Service Provider proposes to be made to the Operational Budget for the immediately preceding Contract Year; |
(iii) | highlight details of the proposed Term Fee to be paid by the Owner for the next succeeding Contract Year and |
(iv) | contain information regarding the operating costs to be incurred: (I) in performing the Services under this Agreement for the following Contract Year; and (II) in accordance with Good Industry Practice, having regard to the operating requirements of the Facilities, including but not limited to the following information (the “Operational Budget Information”) |
(1) | Term Fees; |
(2) | costs of the Owner’s procurement of insurances, as per the costs provided by the Owner; |
(3) | estimated Costs applicable to annual maintenance contracts; |
(4) | estimated Costs for the supply of Spare Parts Inventory; |
(5) | estimated Costs for the procurement and supply of electricity, potable water, nitrogen, diesel and all other utilities as required; and |
(6) | contingency Costs to cover any other maintenance activities. |
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(d) | The Operational Budget submitted pursuant to Clause 3.7(a) or 3.7(b) (as the case may be) shall be accompanied by working papers and supporting information which clearly show the basis of the information and data set out in the Operational Budget Information. In addition, the Operations Consultancy Service Provider shall properly answer any question posed by the Owner regarding any item in the Operational Budget Information to which answers are required from the Operations Consultancy Service Provider to enable proper interpretation by the Owner of the Operational Budget Information as soon as reasonably practicable and in any event within five (5) Business Days of receipt of such question posed by the Owner. |
(e) | The parties acknowledge and agree that: |
(i) | the Owner shall be entitled, at any time after the receipt of the Operational Budget submitted pursuant to Clause 3.7(a) or 3.7(b) (as the case may be), to raise objections or make comments in relation to any item (other than the Operations Consultancy Service Provider’s Term Fee) in the Operational Budget Information for the Operational Budget for the next succeeding Contract Year and the Operations Consultancy Service Provider shall be required to comply with or implement any amendments required by the Owner in its comments; |
(ii) | the Operations Consultancy Service Provider may, if it disputes any such comment or objection made by the Owner under Clause 3.7(d)(i) above, refer the matter for determination in accordance with Clause 21 provided always that notwithstanding any dispute made by the Operations Consultancy Service Provider under this Clause 3.7(d)(ii), the Owner has the discretion to nevertheless require that the Operations Consultancy Service Provider, for the purposes of the Operational Budget for the next succeeding Contract Year, comply with or implement both the undisputed and disputed parts of any such Operational Budget pending determination of the dispute conducted pursuant to this Clause 3.7(d)(ii); and |
(iii) | if the determination of such dispute shows that the Owner is: |
(1) | entitled to raise objections or make comments under Clause 3.7(e)(i), the Operational Budget for the next succeeding Contract Year shall be the Operational Budget submitted by the Operations Consultancy Service Provider pursuant to Clause 3.7(a) or 3.7(b) (as the case may be) which: |
a. | takes into account the Owner’s comments; and |
b. | complies with or implements any amendments required by the Owner in its comments; |
(2) | not entitled to raise objections or make comments under Clause 3.7(e)(i), the Owner shall withdraw its objections or comments which is the subject to the dispute and the Operational Budget submitted by the Operations Consultancy Service Provider Pursuant to Clause 3.7(a) or 3.7(b) (as the case may be) shall be the Operational Budget for the next succeeding Contract Year; or |
(3) | entitled to raise only part (and not all) of the objections or make only part (and not all) of the comments under Clause 3.7(e)(i), the Operations Consultancy Service Provider shall follow the procedure described in Clause 3.7(d)(iii)(1) with respect to such parts of the Owner’s objections or comments which the Owner is entitled to raise or make (as the case may be) and the Owner shall, pursuant to Clause 3.7(d)(iii)(2), withdraw such parts of its objections or comments which it is not entitled to raise or make (as the case may be). |
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(f) | In the event that Owner does not, within sixty (60) Business Days after receiving the Operational Budget submitted pursuant to Clauses 3.7(a) or 3.7(b) (as the case may be), object or have any comments on the Operational Budget in question, then any such Operational Budget shall be the relevant Operational Budget for the next succeeding Contract Year. |
3.7A | Reimbursable Costs |
(a) | The Operations Consultancy Service Provider shall be responsible for the operation and management of the Vendor Equipment and Machinery. including the following: |
(i) | the procurement and supply of all Vendor Equipment and Machinery (including the inventory for such Vendor Equipment and Machinery); |
(ii) | managing the inventory for the Vendor Equipment and Machinery; |
(iii) | the maintenance of all Vendor Equipment and Machinery unless any such maintenance of the Vendor Equipment and Machinery is carried out by a relevant Owner Vendor; and |
(iv) | ensuring that any repair, calibration, replacement and / or maintenance (as the case may be) of the Vendor Equipment and Machinery as necessitated by fair wear and tear shall be carried out by a relevant Owner Vendor, |
Note: AED 2,000,000.00 shall be the limit to which the Operator shall handle Reimbursable Costs per year. Owner shall reimburse the Operator for the same, based on the invoices or supporting documents submitted by the Operator.
(b) | All costs referred to in Clause 3.7A(a) shall receive the prior written approval of the Owner before they are incurred by the Operations Consultancy Service Provider, except for urgent items, in respect of which the Owner shall be duly notified of such expense and transaction. |
(c) | The Operations Consultancy Service Provider shall, as part of the Operational Budget prepared in accordance with Clause 3.7, include details of the budgeted costs of the: |
(i) | Vendor Equipment and Machinery (including the inventory for such Vendor Equipment and Machinery); |
(ii) | the repair, replacement and / or maintenance (as the case may be) of any Vendor Equipment and Machinery carried out by a relevant Owner Vendor; |
(iii) | the calibration of any Vendor Equipment and Machinery carried out by a relevant Owner Vendor outside of the United Arab Emirates; |
as may be required by the Operations Consultancy Service Provider in the provision of the Services (“Reimbursable Costs”) provided that, for the avoidance of doubt, any such Reimbursable Costs shall not include the cost of carrying out any Vendor Equipment and Machinery Works.
(d) | The Owner shall be responsible for the procurement and supply of electricity, potable water, nitrogen, diesel and all utilities as may be required by the Operations Consultancy Service Provider in the provision of the Services and all related costs shall be handled by the Owner directly. |
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(e) | Subject to Clause 3.7A a, all Reimbursable Costs incurred by the Operations Consultancy Service Provider shall be payable by the Owner. |
(f) | The Operations Consultancy Service Provider shall not be entitled to Reimbursable Costs to the extent such costs are not supported by invoices and other information as may reasonably be required by the Owner to verify the Reimbursable Costs claimed. |
3.8 | Sub-Contracting |
(a) | The Operations Consultancy Service Provider may procure the performance of specific parts, but not the whole, of the Services from Sub-Contractors of sound financial standing and suitable technical ability and competence subject to the prior written approval of the Owner and provided that such appointment shall not relieve the Operations Consultancy Service Provider of any of its obligations under this Agreement, including the responsibility for ensuring that the Services meet the requirements of this Agreement. The Operations Consultancy Service Provider shall remain primarily and directly liable for the Operations Consultancy Service Provider’s obligations under this Agreement. |
(b) | The Operations Consultancy Service Provider shall not terminate or agree to the termination of the engagement and / or employment of (or the replacement of) any Sub-Contractor without the prior written approval of the Owner which shall not be unreasonably withheld. |
3.9 | Emergency Action |
In case of an Emergency, the Operations Consultancy Service Provider shall promptly and concurrently:
(a) | notify the Owner; and |
(b) | take any action required to prevent damage, injury or loss of the Facilities or to persons at or near the Site. |
3.10 | Supply of Parts and Facilities Inventory |
(a) | Other than as expressly set forth in Clause 3.7A(c), the Operations Consultancy Service Provider shall be responsible for the procurement and supply of all materials, equipment, supplies (including chemicals), consumables and other items necessary for the due performance of the Services on a reimbursable basis in accordance to Clause 3.7A. |
(b) | The Operations Consultancy Service Provider shall ensure that the Services are performed: |
(i) | using only new materials, equipment, supplies, consumables and spare parts (unless the Owner agrees otherwise in writing); and |
(ii) | using suitable materials, equipment, supplies, consumables and spare parts of good and merchantable quality. |
(c) | The Operations Consultancy Service Provider may withdraw and use any of the tools, spare parts, components and materials, but shall forthwith thereafter replace tools on Reimbursable Basis as per the clause 3.7A. |
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(d) | Spare parts, components, consumables and materials shall be procured and replaced by the Owner upon the request from the Operations Consultancy Service Provider. The Operations Consultancy Service Provider shall bear all out-of-pocket costs and expenses associated with the procurement and supply of all materials, equipment, supplies, consumables and other items required to be supplied by the Operations Consultancy Service Provider and for purposes of performing its obligations under this Agreement. |
(e) | Title to all materials, equipment, supplies, consumables and other items purchased or obtained by the Operations Consultancy Service Provider during the performance of the Services shall pass to and vest in the Owner. |
(f) | The Operations Consultancy Service Provider warrants good title to all materials, equipment, supplies, consumables and other items supplied by the Operations Consultancy Service Provider that become part of the Facilities. The Operations Consultancy Service Provider further warrants that title to and ownership of the materials, equipment, supplies, consumables and other items shall pass to and vest in the Owner as described in Clause 3.10(e) free and clear of all Liens, Claims, charges, security interests, encumbrances and rights of other persons. |
3.11 | Documents and Data |
(a) | All materials and documents (and any revisions, updates and amendments to them) prepared or developed by the Operations Consultancy Service Provider or its employees, representatives or contractors in connection with the Facilities or the performance of the Services in accordance with this Agreement, including all manuals, data, designs, drawings, plans, specifications, reports and accounts, shall become the property of the Owner when prepared. All such materials and documents (and any revisions, updates and amendments to them), together with any materials and documents furnished to the Operations Consultancy Service Provider or to its contractors by the Owner, shall be delivered to the Owner upon the expiry or earlier termination of this Agreement. |
(b) | The Owner’s approval of materials and documents submitted by the Operations Consultancy Service Provider shall not relieve the Operations Consultancy Service Provider of its responsibility to perform its obligations under this Agreement. |
(c) | A third party review and certification, of the documents may be arranged by the Operations Consultancy Service Provider, if requested by the Owner, and the cost for which shall be borne by the Owner. |
3.12 | No Action |
The Operations Consultancy Service Provider shall not, without first receiving the written approval of the Owner, undertake any of the following actions:
(a) | incur any financial indebtedness or create or grant any encumbrance with respect to any of the assets or properties comprising the Facilities; |
(b) | sell, lease, pledge, mortgage, encumber, convey, make any licence, transfer or dispose of the Facilities or any part thereof, or any property or assets of the Owner; |
(c) | create or cause any Lien with respect to any the assets or properties comprising the Facilities; |
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(d) | bind the Owner as a surety or grant guarantees or incur similar liabilities on behalf of any third parties (including any End-User); |
(e) | settle, compromise, assign, pledge, transfer, release or consent to the compromise, assignment, pledge, transfer or release of, any claim, suit, debt, demand or judgment against or due by, the Owner or the Operations Consultancy Service Provider arising from or in connection with the Services, or submit any such claim, dispute or controversy to arbitration or judicial process, or stipulate in respect thereof to a judgment, or consent to the same; |
(f) | engage in any transaction on behalf of the Owner or any other Owner Related Party unless otherwise expressly provided in this Agreement; or |
(g) | dissolve, close, strike and/or cancel its commercial or business license. |
3.13 | Notices, Access and Monitoring Rights |
(a) | The Operations Consultancy Service Provider shall: |
(i) | notify the Owner, promptly upon becoming aware thereof, of the occurrence of any act or condition materially affecting the Operations Consultancy Service Provider’s ability to perform its obligations under this Agreement; and |
(ii) | if so required by the Owner, take all necessary measures so as to minimise the impact of any such act or condition until such time as the Operations Consultancy Service Provider notifies the Owner that any such act or condition has ceased or no longer affects the Operations Consultancy Service Provider’s ability to perform its obligations under this Agreement. |
(b) | Without prejudice to Clause 7.2, the Operations Consultancy Service Provider shall, from the CDCO, provide access at all times to such parts of the Facilities and the Site so as to allow: |
(i) | the Owner, the Owner’s Related Parties, any End-User or potential End-User and the EPC Contractor (as the case may be) during normal business hours to monitor the Operations Consultancy Service Provider’s performance in order to determine whether the Facilities are being operated and maintained in accordance with the terms of this Agreement; or |
(ii) | the Owner Vendors to perform the repair, replacement, maintenance and / or calibration works in relation to the Vendor Equipment and Machinery. |
(c) | Nothing in this Clause 3.13 shall limit or restrict the Owner’s right of access: |
(i) | at any time in the case of an Emergency to such parts of the Facilities and / or the Site; or |
(ii) | over the Site and / or to the Facilities as the Owner may require in order for it to carry out any work necessary to comply with the Owner’s obligations: |
(1) | under this Agreement; or |
(2) | as owner of the Facilities. |
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3.14 | Hazardous Materials |
(a) | The Operations Consultancy Service Provider shall not bring in, keep or maintain any Hazardous Materials in the Facilities without the prior written consent of the Owner and except: |
(i) | where stored in containers and in quantities normally associated with the management, operation and maintenance of an underground storage facility such as the Facilities; |
(ii) | as normally and customarily used or required to be used in connection with the management operation and maintenance of an underground storage facility such as the Facilities; or |
(iii) | for routine maintenance or cleaning. |
(b) | In all such instances where the Operations Consultancy Service Provider is permitted to keep or maintain any Hazardous Materials in the Facilities pursuant to this Clause 3.14, each Hazardous Material shall be handled, stored, treated, used or disposed of in compliance with all applicable Laws and in accordance with Good Industry Practice. |
(c) | The Operations Consultancy Service Provider shall comply with its obligations under this Clause 3.14 in accordance with all Environmental Laws and the terms and conditions of all Authorisations applicable thereto and shall use all practicable and reasonable means to prevent any environmental Claims arising or any circumstances arising likely to result in any environmental Claims. |
(d) | The Operations Consultancy Service Provider shall notify the Owner immediately upon becoming aware of the same, if there arises any Claim under any Environmental Law which is current or, to the Operations Consultancy Service Provider’s knowledge, pending or threatened against the Operations Consultancy Service Provider or the Owner, and that will have an adverse effect on the ability of the Operations Consultancy Service Provider to perform its obligations under this Agreement. |
(e) | The Operations Consultancy Service Provider shall, to the best of its knowledge and belief (having made all reasonable enquiries), immediately upon becoming aware of the same, notify the Owner of any act, omission, event or circumstance which could form the basis of any Claim against it under any Environmental Law and that will have an adverse effect on the ability of the Operations Consultancy Service Provider to perform its obligations under this Agreement |
3.15 | Cost of Performance in Excess of Fee |
In the event that the actual Cost of performing the Services under this Agreement exceeds the amount of the Term Fee payable in Clause 5 (such excess cost, the “Excess Cost”), then the Operations Consultancy Service Provider shall:
(a) | be solely responsible to fund any such Excess Cost incurred; |
(b) | other than its rights to claim adjustments to the Term Fee as expressly set forth in this Agreement, have no Claims against the Owner for any Excess Cost (and waives irrevocably any such Claim); and |
(c) | not be relieved of any of its obligations hereunder as a result of the existence of Excess Cost. |
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3.16 | Not used |
3.17 | End-User Agreements |
(a) | The Owner shall provide the details of any Proposed End-User Agreements which it intends to enter into to the Operations Consultancy Service Provider to review in advance. Within seven (7) days of receiving the Proposed End-User Agreement, the Operations Consultancy Service Provider shall review the same and provide their confirmation. In the event of the Proposed End-User Agreement materially not being in line with the Terminal’s Operations & Control Philosophy form set out in Schedule 3, the Operations Consultancy Service Provider shall highlight the same to the Owner. In the event of any obligations therein demands Additional Services, such shall be considered subject to the agreement with the Owner. |
(b) | The Operations Consultancy Service Provider shall be responsible for managing and administering the interfaces between the End-Users and the Owner and the Operations Consultancy Service Provider shall, from the Signing Date, perform and assume as part of its obligations under this Agreement the Owner’s obligations under the End-User Agreements and the Owners’ risk and liabilities under the End-User Agreements as if, the same were expressly referred to herein as obligations, risks and liabilities of the Operations Consultancy Service Provider. |
(c) | The Operations Consultancy Service Provider acknowledges that it is (and the Operations Consultancy Service Provider shall be deemed to be) fully aware of the terms and conditions of the End-User Agreements, including the obligations and liabilities of the Owner under them and shall not be entitled to make any Claim against the Owner of any nature whatsoever in connection with this Clause 3.17. The Operations Consultancy Service Provider acknowledges that such obligations and liabilities are (and such obligations and liabilities are deemed to be) within the contemplation of the Operations Consultancy Service Provider and that if the Operations Consultancy Service Provider is in breach of this Agreement, such breach is likely to result in among other things, a liability of the Owner under the End-User Agreements. |
(d) | The Operations Consultancy Service Provider shall perform its obligations under this Agreement so that no act, omission, neglect or default on its part shall: |
(i) | constitute, cause or contribute to any breach by the Owner of any of its obligations under any of the End-User Agreements or give rise to any liability of the Owner to any of the End-Users; or |
(ii) | lead to any diminution or loss of any rights, entitlements or other benefits of the Owner or any of the End-User Agreements. |
(e) | In the event that: |
(i) | any End-User makes any Claim against the Owner under an End-User Agreement (whether pursuant to an indemnity or otherwise) and the; Owner states that any such Claim arises directly or indirectly out of an act or omission on the part of the Operations Consultancy Service Provider or is otherwise the responsibility of the Operations Consultancy Service Provider, the Operations Consultancy Service Provider acknowledges and agrees that for purposes of the settlement or resolution of any such Claim, the Owner shall be entitled, by notice to the Operations Consultancy Service Provider, to require that the Operations Consultancy Service Provider be joined as a party to any dispute between the Owner and any such End-User (as applicable); and |
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(ii) | the Owner is liable to make a payment to such an End-User as a result of the Claim (including any Claim for any loss suffered by such End User) and the grounds for the Claim are attributable to a breach by the Operations Consultancy Service Provider of the terms of this Agreement. |
(f) | The Owner shall use reasonable endeavours to consult with the Operations Consultancy Service Provider when negotiating the terms of a Proposed End User Agreement. |
3.18 | Condition of Site and Facilities |
(a) | Except as expressly provided in this Clause 3.17, on and CDCO, the condition of the Facilities shall be the sole responsibility of the Operations Consultancy Service Provider. Accordingly (without prejudice to any other obligation of the Operations Consultancy Service Provider under this Agreement), the Operations Consultancy Service Provider shall be deemed to have, prior to the commencement of CDCO, taken such steps as it may consider appropriate to verify that as at the commencement of CDCO, the Facilities (or such part thereof) are in a good, sound, clean and staunch condition. |
(b) | Except as expressly provided in this Clause 3.17(f)3.17, the Operations Consultancy Service Provider shall not be entitled to any Claim, or other relief hereunder in relation to the content, design, method of manufacture, erection or commissioning of, or source of, the Facilities or any part thereof, as at the commencement of CDCO (excepting events and circumstances that give rise to an Owner right to bring warranty claims against the EPC Contractor under the EPC Contract and that impact materially on the performance of the Services). |
(c) | Prior to the expiry of the Defects Liability Period, the Operations Consultancy Service Provider and the Owner shall jointly undertake an inspection to identify any Construction Defects. |
(d) | The Operations Consultancy Service Provider shall promptly notify the Owner of all defects discovered in the Facilities or any part thereof during the Term. |
(e) | If a notice is received under Clause 3.17(e), the Owner shall determine whether the defect is a Construction Defect and notify the Operations Consultancy Service Provider accordingly. For the avoidance of doubt, the onus of proving that the defect is a Construction Defect shall be on the Operations Consultancy Service Provider. |
(f) | If the Owner determines under Clause 3.17(e) that a defect is a Construction Defect, to the extent that the existence of the Construction Defect has a material adverse effect on the performance of the Services under the Agreement, the Owner shall carry out such works as may be needed to remedy the relevant Construction Defect, including, at the option of the Owner: |
(i) | issuing the Owner’s instruction in relation to an Additional Service for the Operations Consultancy Service Provider to remedy the relevant Construction Defect in accordance with the provisions of Clause 18.2. ; |
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(ii) | using its own resources, contractors, agents or Owner Related Party (“Owner’s Remedial Works Contractor”) to carry out the remedial works in respect of the Construction Defect, including, for the avoidance of doubt, the option of the Owner to engage the EPC Contractor to carry out such remedial works during the Defects Liability Period, in which case the Operations Consultancy Service Provider shall: |
(1) | provide unrestricted access and all reasonable assistance to the Owner, the Owner’s Remedial Works Contractor and / or the EPC Contractor (as the case may be) to the Site and / or the Facilities for the performance of the remedial works; |
(2) | use all reasonable endeavours to ensure that it does not hinder or impede the remedial works carried out by the Owner, the Owner’s Remedial Works Contractor and / or the EPC Contractor (as the case may be); and |
(3) | to the extent that the carrying out of such remedial works directly causes the Operations Consultancy Service Provider to be unable to perform any part of the Services, be entitled to relief from its obligation to perform such part of the Services under this Agreement. |
(g) | If the Owner determines under Clause 3.17(e) that a defect is not a Construction Defect (“Non-Construction Defect”), the Operations Consultancy Service Provider shall promptly carry out such works as may be needed to remedy the relevant Non-Construction Defect within a reasonable period taking into account the nature of the works. For the avoidance of doubt, the cost of any such remedial works, shall be handled in accordance to Clause 11.1 (b) |
(h) | Nothing contained in this Clause 3.17 shall restrict the ability of the parties to refer any matter set out in this Clause 3.17 for determination in accordance with Clause 19, including, for the avoidance of doubt, the ability of the Operations Consultancy Service Provider to refer the issue of whether a Construction Defect has occurred for determination in which case, the Operations Consultancy Service Provider acknowledges and agrees that the onus shall be on the Operations Consultancy Service Provider to prove that the defect so occurred is a Construction Defect. |
3.19 | General Operations Consultancy Service Provider Covenants |
The Operations Consultancy Service Provider undertakes that during the Term, the Operations Consultancy Service Provider shall inform the Owner, promptly upon the Operations Consultancy Service Provider becoming aware of:
(a) | any pending or threatened, action, suit, investigation, arbitration or other proceeding that could impair the ability of the Operations Consultancy Service Provider to perform the Services under this Agreement; |
(b) | writs, judgments, injunctions, decrees or similar orders of any Governmental Authority outstanding against the Operations Consultancy Service Provider which would adversely affect its occupancy, use, operation or maintenance of the Facilities; |
(c) | any notice of any violation or potential violation of any Law received by the Operations Consultancy Service Provider pertaining to or affecting or that would adversely affect its occupancy, use and operation of the Facilities; |
(d) | any notice of any adverse Claim by any person in respect of the ownership by the Facilities or any interest in the Facilities; or |
(e) | any circumstance that results or will result in the Operations Consultancy Service Provider being unable to perform the Service in accordance with the terms of this Agreement (with a view that the parties may then discuss the appropriate measures which may be taken to minimise or prevent such circumstance). |
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4. | General Responsibilities Of The Owner |
4.1 | Information |
The Owner shall furnish or, where applicable arrange for others to supply to the Operations Consultancy Service Provider:
(a) | Not Used |
(b) | any and all directions, notices and other communications which the Owner may from time to time receive from any Governmental Authority which are relevant to the performance of the Services or which relate to any Authorisations. |
The Operations Consultancy Service Provider shall fulfil the obligations arising from any information, directions, notices and other communications to be furnished by the Owner under this Clause 4.1.
Without prejudice to Clauses 3.2 and 3.3, in the event and only to the extent that such information, directions, notices and other communications, provided by the Owner to the Operations Consultancy Service Provider after the Signing Date, impose on the Operations Consultancy Service Provider any new obligations or modify any existing obligations of the Operations Consultancy Service Provider under this Agreement and provided that:
(c) | the additional or modified obligations: |
(i) | are due to reasons beyond the reasonable control of the Operations Consultancy Service Provider; and |
(ii) | were not reasonably foreseeable at the Signing Date by an experienced operator performing services similar to the Services; |
(d) | such additional or modified obligations have directly caused a material increase in the actual Cost of and time for performing the Services; and |
(e) | the Operations Consultancy Service Provider uses its best endeavours to mitigate such increase in the actual Cost of or time for performing the Services, |
the Parties shall review the terms and conditions of this Agreement expeditiously and in good faith to agree on the scope of the Additional Services (if any) to be provided by the Operations Consultancy Service Provider.
4.2 | Access to Site and Facilities |
On and from the CDCO (or such later time as the Owner may, in its discretion, notify the Operations Consultancy Service Provider), the Owner shall afford to the Operations Consultancy Service Provider non-exclusive access to the Site and the Facilities free of charge. Such access and possession shall be afforded on a fully revocable licence basis.
4.3 | Owner Taxes |
The Owner shall be responsible for the payment of corporation taxes levied on the Owner itself.
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5. | Not Used |
6. | Payment |
6.1 | Invoices for Payment |
(a) | Amounts properly due and payable under this Agreement to the Operations Consultancy Service Provider shall be paid within 14 days from the date of Operations Consultancy Service Provider’s invoice. |
(b) | The Owner shall not withhold payment of any fee properly due to the Operator without giving the Operator a notice of his intention to withhold payment, with reasons, no later than ten (10) days prior to the date on which the fee payment becomes due. If such notice of an intention to withhold payment is not given to the Operator, then the Operator shall have the right to obtain the payment. |
6.2 | Manner of Payment |
Unless otherwise agreed to by the parties, all payments under this Agreement shall be made in United Arab Emirates Dirhams by electronic transfer of funds for value on the day in question to the bank account of the recipient (located in the United Arab Emirates) specified in the relevant invoice, quoting the invoice number against which payment is made.
6.3 | Set-Off |
No provision of this Agreement shall operate to exclude or restrict any right available to the Owner to make set-off against, withholding from or abatement against any sums due from the Owner to the Operator under this Agreement to the extent recoverable under this Agreement. Withholding of payment by the Owner shall subject to the condition specified under Clause 6.1 (b).
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7. | Key Performance Indicators |
7.1 | General Obligations |
(a) | Without prejudice to Clause 3.2, Annex A of Schedule 1 (Scope of Services) sets out a description of the standards required for performance of the Services by the Operations Consultancy Service Provider on and from the commencement of the second (2nd) Contract Year. |
(b) | On and from the second (2nd) Contract Year until the Expiry Date, in addition to the standards for performance of the Services set out in Clause 3.2 and the other requirements set out in this Agreement, the Operations Consultancy Service Provider shall provide the Services in such a manner that ensures that the Key Performance Indicators are achieved. |
7.2 | Owner – Technical Audit and Monitoring |
Notwithstanding Clause 3.12, upon completion of the first (1st) Year of Operations, the Owner may (acting reasonably) carry out technical audits of the standards of performance of the Services by the Operations Consultancy Service Provider at regular intervals and may undertake its own periodic performance monitoring and spot checks in order to determine the Key Performance Indicators which shall be achieved by the Operations Consultancy Service Provider in the provision of the Services on and from the second (2nd) Contract Year until the Expiry Date. The Operations Consultancy Service Provider shall assist the Owner in carrying out such technical audits, spot checks and monitoring, and where requested by the Owner, the Operations Consultancy Service Provider shall procure that any relevant Sub-Contractor also provides such assistance to the Owner. The Operations Consultancy Service Provider shall co-operate and shall procure that any relevant Sub-Contractor co-operates with the Owner including providing the Owner with all the technical information and documentation which it reasonably requires in connection with its right under this Clause 7.2.
7.3 | Benchmarking of Key Performance Indicators |
(a) | Upon completion of the first (1st) Year from the date of commencement of Operations, the Owner shall undertake a benchmarking exercise to determine the Key Performance Indicators to be achieved by the Operations Consultancy Service Provider in the provision of the Services and the Performance Points allocated for the achievement/failure to achieve each Key Performance Indicator (“Benchmarking Exercise”). The Operations Consultancy Service Provider shall assist the Owner in the Benchmarking Exercise, including providing relevant information in relation to the operation of similar facilities by the Operations Consultancy Service Provider. |
(b) | Thereafter, the Owner shall again undertake a Benchmarking Exercise, at reasonable intervals to be agreed with the Operations Consultancy Service Provider (or if no agreement can be reached, the Owner shall be entitled to undertake a Benchmarking Exercise at three (3) yearly intervals throughout the Term). The operations Consultancy Service Provider shall assist the Owner in the Benchmarking Exercise |
(c) | The purpose of the Benchmarking Exercise shall be to determine the level of Key Performance Indicators to be imposed on the Operations Consultancy Service Provider in the performance of the Services under this Agreement and the Performance Points allocated for the achievement/failure to achieve each Key Performance Indicator. |
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(d) | The Benchmarking Exercise shall be carried out by comparing the standards of performances, specifications and scope of the Services carried out by the Operations Consultancy Service Provider with the best practices adopted by financially reputable and sound operators performing similar terminalling and storage services, including underground and above-ground terminalling and storage services. |
(e) | For the avoidance of doubt, the Owner in its sole discretion shall determine the results of the Benchmarking Exercise. |
(f) | The Owner shall promptly make the results of the Benchmarking Exercise available to the Operations Consultancy Service Provider along with any consequent adjustments (if any) to Schedule 1 (Scope of Services) (in particular, the Measures, Targets and/or Performance Points (as set out in Annex A of Schedule 1 (Scope of Services)) required to reflect the Key Performance Indicators to be imposed on the Operations Consultancy Service Provider in the performance of the Services. |
7.4 | Failure to achieve the key performance indicators |
(a) | Within five (5) Business Days of receipt of notice from the Owner that the Operations Consultancy Service Provider has failed to achieve a Key Performance Indicator within any Contract Year, the Operations Consultancy Service Provider shall prepare a plan which details the remedial action that the Operations Consultancy Service Provider will take to ensure that there is not a further failure to achieve the relevant Key Performance Indicator. |
(b) | Within fourteen (14) Business Days of receipt of notice from the Owner that the Operations Consultancy Service Provider has failed to achieve the Key Performance Indicator as referred to in Clause 7.4(a), the Operations Consultancy Service Provider shall have undertaken such remedial action as is necessary to ensure that the Key Performance Indicator is not breached again. |
8. | Option to Review and Option to Extend |
8.1 | No later than three (3) Months prior to the end of the second (2nd) Contract Year, the Owner may: |
(a) | meet with the Operations Consultancy Service Provider to review; and |
(b) | upon agreement by the parties, amend, |
the Agreement in order to take into account changes to market conditions that significantly affect the parties’ rights and obligations under the Agreement, to the extent that the effect on those rights and obligations cannot, in the opinion of the Owner, be dealt with by the Additional Services procedure set out in Clause 18.2.
8.2 | If, at any time during the Term, the Owner decides to proceed with the further development of the Facilities, prior to the commercial operation of the Facilities, the Owner may (but shall not be obliged to do so) grant the Operations Consultancy Service Provider the option from the Operations Consultancy Service Provider to provide the operation services in respect of the expanded Facilities, upon substantially the same terms and conditions as contained in this Agreement and at a fee to be agreed between the Owner and the Operations Consultancy Service Provider. For the avoidance of doubt, nothing in this Clause 8.2 amounts to an obligation on the part of the Owner to proceed with the further development of the Facilities. |
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9. | Representations, Warranties and Covenants |
9.1 | As at the Signing Date, the Operations Consultancy Service Provider represents and warrants to the Owner (and shall promptly notify the Owner in writing if any of the representations and warranties given by it ceases to be true in any material respect) that: |
(a) | Power and Authority |
(i) | The Operations Consultancy Service Provider is duly organised, validly existing and in good standing under the Laws of the United Arab Emirates and has the right, power and authority to enter into this Agreement and to perform its obligations hereunder. |
(ii) | The execution of, delivery of and performance under this Agreement by the Operations Consultancy Service Provider have been duly authorised by all necessary corporate action of the Operations Consultancy Service Provider, and this Agreement constitutes the valid, binding and enforceable obligation of the Operations Consultancy Service Provider. |
(iii) | Every Authorisation of any Governmental Authority or third party required with respect to the Operations Consultancy Service Provider in connection with its execution and delivery of, and performance of its obligations under, this Agreement has been obtained, other than those that are not required at the time this representation is made or deemed to be repeated. |
(b) | No Conflict |
The execution and delivery of this Agreement by the Operations Consultancy Service Provider, and the performance by the Operations Consultancy Service Provider of its obligations under this Agreement do not and will not in any material respect violate, conflict with or result in a breach of any decree, memorandum and/or articles of incorporation, charter, by-law or Law, to which the Operations Consultancy Service Provider is a party or by which the Operations Consultancy Service Provider or any of its properties are bound, such that the Operations Consultancy Service Provider’s ability to perform the Services would be materially impaired.
(c) | No Litigation |
There is no suit, action or proceeding now pending or (to the best of the Operations Consultancy Service Provider’s knowledge) threatened against the Operations Consultancy Service Provider before any court or administrative body or tribunal that could reasonably be expected to affect the ability of the Operations Consultancy Service Provider to perform its obligations under this Agreement.
(d) | Skills |
The Operations Consultancy Service Provider, its employees, agents and independent contractors and the Sub-Contractors at all times are duly licensed at Law (where required) and shall be skilled, qualified and experienced to exercise all due care and diligence in the performance of its obligations under this Agreement.
(e) | No reliance |
(i) | The Operations Consultancy Service Provider has relied solely on its own investigations, enquiries and calculations in respect of: |
(1) | the Owner’s requirements for this Agreement; and |
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(2) | the accuracy of any information provided by the Owner or the Owner’s other contractors. |
(ii) | In entering into this Agreement, the Operations Consultancy Service Provider acknowledges and agrees that the Owner has not made any representation, given any advice or given any warranty or undertaking of any kind in respect of any matter relevant to the Operations Consultancy Service Provider’s decision to enter into this Agreement. |
(f) | Laws and Business Practices |
The Operations Consultancy Service Provider has knowledge of all of the Laws and business practices that must be followed in performing the Services and the Services will be in conformity with such requirements and practices and in compliance with all Laws and applicable Authorisations.
(g) | Financial Solvency |
The Operations Consultancy Service Provider is financially solvent, able to pay its debts as they mature, and possessed of sufficient working capital to complete its obligations under this Agreement.
(h) | Operations Consultancy Service Provider’s Abilities |
The Operations Consultancy Service Provider is able to furnish the stocks, tools, materials, supplies, equipment, labour and Services needed for the operation of the Facilities, and is competent to perform the Services.
(i) | EPC Contract and other Contracts with the Owner’s Related Parties |
The Operations Consultancy Service Provider is fully familiar with the terms and conditions of the EPC Contract and the contracts between the Owner and the Owner’s Related Parties in relation to the Facilities, specifically with respect to the technical requirements set forth therein, and the process for transferring the Facilities from the control of the EPC Contractor or the relevant Owner Related Party (as the case may be) to the Owner’s control, and there are no terms and conditions contained in such contract that will hinder or obstruct the Operations Consultancy Service Provider’s ability to perform its obligations under this Agreement. The Operations Consultancy Service Provider shall be deemed to assume control of the Facilities on and from such time as control of the Facilities is transferred from EPC Contractor or the relevant Owner Related Party (as the case may be) to the Owner. However, all liabilities of the EPC Contract such as the Patent Liability and Latent Liability shall survive and exist, irrespective of the engagement of the Operations Consultancy Service Provider.
(j) | Operations Consultancy Service Provider’s Intellectual Property |
The Operations Consultancy Service Provider owns, has obtained licences to use, or will own or will obtain licences to use, at the relevant time, all Intellectual Property Rights and Proprietary Information necessary to perform the Services and to carry on its business as presently conducted and presently planned to be conducted and that the performance of the Services by Operations Consultancy Service Provider under this Agreement will not infringe or conflict with any other person’s Intellectual Property Rights. The Operations Consultancy Service Provider further has the right to use all Intellectual Property Rights and Proprietary Information first discovered or developed by the Operations Consultancy Service Provider during the course of performing its obligations under this Agreement.
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(k) | Site and Conditions |
The Operations Consultancy Service Provider has ascertained and fully understood, and assumes all the risks associated with each of the following:
(i) | the nature and location of the Site; |
(ii) | the character and accessibility of the Site and its surrounding areas, all ground, geotechnical, soil and subsurface conditions and structures (including artefacts) in, above or under the Site; and |
(iii) | the availability of lay-down areas for equipment and tools, the availability of facilities and utilities, the location and character of existing or adjacent work or structures and the conditions of any roads in the vicinity of the Site. |
9.2 | Continuing Representations and Warranties |
(a) | The representations and warranties in Clause 9.1 are deemed to be repeated by the Operations Consultancy Service Provider on the commencement of each Contract Year until the expiry or earlier termination of this Agreement with reference to the facts and circumstances existing at that time. |
(b) | The Operations Consultancy Service Provider shall promptly notify the Owner in writing if any of the warranties or representations given by it in Clause 9.1 ceases to be true in any material aspect. |
10. | Owner’s Rights |
10.1 | Site Security |
(a) | The Owner shall have the right to refuse admittance to, or order the removal from, the Facilities, of any person employed by (or acting on behalf of) the Operations Consultancy Service Provider whose presence, in the Owner’s opinion, is not a fit and proper person to be on the Facilities. |
(b) | Any action taken under Clause 10.1(a) shall forthwith be confirmed in writing by the Owner to the Operations Consultancy Service Provider, and to avoid doubt, shall not relieve the Operations Consultancy Service Provider of any of its obligations under this Agreement. |
(C) | The decision of the Owner as to whether any person is to be refused admission shall be final and conclusive. |
11. | Insurances |
11.1 | Owner Insurance |
(a) | The Owner shall, at its own cost, procure that the insurances, details of which are set out Schedule 4 (Insurance Requirements) (the “Owner Insurances”), are taken out prior to the commencement of the Initial Term, or as otherwise specified in Schedule 4 (Insurance Requirements), and are main for the periods specified in Schedule 4 (Insurance Requirements). |
(b) | The Operations Consultancy Service Provider shall assist in obtaining insurance quotations, specifying the scope of coverage and limit of insurance in addition to required renewals as may be needed from time to time |
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(c) | The Owner shall ensure that the Owner Insurances procured shall cover all potential / operational / third party / other risks and losses adequately; however the scope of the aforementioned coverage will be provided and advised to the Owner by the Operations Consultancy Service Provider and under its obligations. The Operations Consultancy Service Provider shall provide adequate and timely support. |
(d) | The Owner shall maintain all Insurances at all times. |
12. | Indemnification |
12.1 | The Operations Consultancy Service Provider shall indemnify, defend and hold harmless the Owner and Owner’s Related Parties including its Shareholders, Board of Directors, Management and Staff from and against any and all Claims made against and Loss suffered by them, as follows: |
(a) | arising from loss of or damage to real or personal property of any third party (including any End-User) or death of or injury to any third party (including any End-User) that arises out of or is in any manner connected with the performance of the Services or this Agreement; |
(b) | under every applicable Environmental Law arising out of the condition of the Site or the Operations Consultancy Service Provider’s operation of the Facilities (including the discharge, release, storage, treatment, generation, pollutants or other toxic or hazardous substances from the Facilities, the contamination of the soil, air, surface water or groundwater at or around the Site or any pollution, abatement, replacement, removal or other decontamination or monitoring obligations) except to the extent where such Claim or Loss arises out of the condition of the Site or Facilities (or part thereof) existing as at the CDCO; |
(c) | arising from the Operations Consultancy Service Provider’s non-compliance with any Authorisation or any notice or direction of a Governmental Authority; |
(d) | under any Law arising out of the Operations Consultancy Service Provider’s management, operation, and maintenance of the Facilities; |
(e) | arising from the breach of any third party’s Intellectual Property Rights (where provided by or on behalf of the Operations Consultancy Service Provider); |
(f) | for any physical loss of or damage to the Facilities or any assets or property of the Owner or any other of the Owner’s Related Party arising by reason of any act or omission of the Operations Consultancy Service Provider; |
(g) | in the event that any End-User asserts or exercises any right against the Owner under or in connection with the End-User Agreement in regard to any matter in respect of which the Owner is entitled to assert a right against the Operations Consultancy Service Provider under or in connection with this Agreement; |
(h) | arising out of the Operations Consultancy Service Provider bring any action against third parties (including the End-Users); and |
(i) | for any demurrage Claims. |
except to the extent that the Loss or Claim is attributable to the gross negligence or willful misconduct of, or breach of the Agreement by, the Owner or any of the Owner’s Related Party.
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13. | Limitations On Liability |
(a) | Neither party shall be liable to the other party for any Indirect Losses. |
(b) | The limitation in Clauses 13(a) does not apply in respect of any gross negligence or willful breach of this Agreement on the part of the Operations Consultancy Service Provider. |
(c) | The limitation in Clause 13(a) does not apply in respect of any Claim or Loss suffered by the Owner or any of the Owner’s Related Party in accordance with Clause 12.1(b). |
(d) | The parties agree that the waivers and disclaimers of liability, indemnities, releases from liability, and limitations on liability expressed in this Agreement shall survive termination or expiry of this Agreement, and shall apply at all times, whether in contract, equity, tort or otherwise, regardless of the fault, negligence (in whole or in part), strict liability, breach of contract or breach of warranty of the party indemnified, released or whose liabilities are limited, and shall extend to the partners, principals, directors, officers and employees, agents and related or affiliated entities of such party, and their partners, principals, directors, officers, and employees. |
14. | Events Of Default And Default Termination |
14.1 | Operations Consultancy Service Provider Events of Default |
(a) | Each and any one of the following events shall be an Operations Consultancy Service Provider event of default (“Operations Consultancy Service Provider Event of Default”): |
(i) | the Operations Consultancy Service Provider breaches any Law which has an adverse and material effect on its ability to perform its obligations under this Agreement; |
(ii) | the Operations Consultancy Service Provider ceasing to provide all or a substantial part of the Services to the Owner in accordance with this Agreement; |
(iii) | the Operations Consultancy Service Provider or any person employed by it or acting on its behalf: |
(1) | has offered or given or agreed to give to any person, any gift or consideration of any kind as an inducement or reward for doing or forbearing to do or for having done or forborne to do any action in relation to the obtaining or execution of this Agreement, or for showing or forbearing to show favour or disfavour to any person in relation to this Agreement; or |
(1) | shall have committed any offence under the legislation governing bribery and anti-corruption which is applicable in the United Arab Emirates; |
(iv) | the Operations Consultancy Service Provider uses the Facilities for a the Operations Consultancy Service Provider breaches Clause 25.1(a); A (purpose not permitted under this Agreement; |
(v) | the Operations Consultancy Service Provider breaches Clause 25.1(a); |
(vi) | the Operations Consultancy Service Provider materially breaches or contravenes any provision of this Agreement; |
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(viii) | the Operations Consultancy Service Provider commits a breach of its obligations under this Agreement which results in the criminal investigation, prosecution and conviction of the Operations Consultancy Service Provider or the Owner under all applicable Health and Safety Laws; |
(ix) | the Operations Consultancy Service Provider commits a breach of its obligations under this Agreement which results in, constitutes, causes or contributes to a breach by the Owner of any of its obligations under any of the End-User Agreements or give rise to any liability of the Owner to any of the End-Users; or |
(x) | the Operations Consultancy Service Provider suffers an Insolvency Event. |
(b) | The Operations Consultancy Service Provider shall notify the Owner of the occurrence, and details, of any Operations Consultancy Service Provider Event of Default and of any event or circumstance which is likely, with the passage of time or otherwise, to constitute or give rise to an Operations Consultancy Service Provider Event of Default, in either case promptly on the Operations Consultancy Service Provider becoming aware of its occurrence. |
(c) | On the occurrence of an Operations Consultancy Service Provider Event of Default, or within a reasonable time after the Operations Consultancy Service Provider becomes aware of the same, and while the same is subsisting, the Owner may: |
(i) | in the case of Operations Consultancy Service Provider Events of Default referred to in Clauses 14.1(a)(iii), 14.1(a)(iv), 14.1(a)(v), 14.1(a)(vi) and 14.1(a)(x), terminate this Agreement with immediate effect and in its entirety by notice in writing to the Operations Consultancy Service Provider; and |
(ii) | in all other cases, serve notice of default on the Operations Consultancy Service Provider requiring the Operations Consultancy Service Provider to remedy the Operations Consultancy Service Provider Event of Default referred to in such notice of default (if the same is continuing) within thirty (30) Business Days of such notice of default (“Operations Consultancy Service Provider’s Cure Period”). In the event that any such Operations Consultancy Service Provider Event of Default is not remedied before the expiry of the Operations Consultancy Service Provider’s Cure Period, the Owner may terminate this Agreement with immediate effect and in its entirety by written notice to the Operations Consultancy Service Provider. |
14.2 | Owner Events of Default |
(a) | Each and any one of the following events shall be an Owner event of default (“Owner Event of Default”): |
(i) | the Owner breaches any Law which has an adverse and material effect on its ability to perform its obligations under this Agreement |
(ii) | Not used; |
(iii) | the Owner materially breaches or contravenes any provision of this Agreement; |
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(iv) | a breach of the Owner’s obligation to take all relevant Owner Insurances provided that such breach was not caused by the Operations Consultancy Service Provider’s breach of its obligation to provide the Owner with the needed support and scope of insurance type and coverage in a timely manner; |
(v) | the failure by the Owner to make any payment under this Agreement forty five (45) Calendar Days after it has become due and payable; or |
(vi) | the Owner suffers an Insolvency Event; |
(b) | The Owner shall notify the Operations Consultancy Service Provider of the occurrence, and details, of any Owner Event of Default and of any event or circumstance which is likely, with the passage of time or otherwise, to constitute or give rise to an Owner Event of Default, in either case promptly on the Owner becoming aware of its occurrence. |
(c) | On the occurrence of an Owner Event of Default, or within a reasonable time after the Operations Consultancy Service Provider becomes aware of the same, and while the same is still subsisting, the Operations Consultancy Service Provider may serve notice on the Owner of the occurrence (and specifying details) of such Owner Event of Default. If the relevant matter or circumstance has not been rectified or remedied by the Owner (or otherwise) within thirty (30) Calendar Days of such notice, the Operations Consultancy Service Provider may serve a further notice to the Owner terminating this Agreement with immediate effect. |
(d) | On the occurrence of an Owner Event of Default, or within a reasonable time after the Owner becomes aware of the same, and while the same is subsisting, the Operations Consultancy Service Provider may: |
(i) | in the case of Owner Events of Default referred to in Clause 14.2(vi), terminate this Agreement with immediate effect and in its entirety by notice in writing to the Owner; and |
(ii) | in all other cases, serve notice of default on the Owner requiring the Owner to remedy the Owner Event of Default referred to in such notice of default (if the same is continuing) within thirty (30) Business Days of such notice of default (“Owner’s Cure Period”). In the event that any such Owner Event of Default is not remedied before the expiry of the Owner’s Cure Period, the Operations Consultancy Service Provider may terminate this Agreement with immediate effect and in its entirety by written notice to the Owner. |
(e) | The Operations Consultancy Service Provider shall not exercise or, purport to exercise any right to terminate this Agreement (or accept any repudiation of this Agreement) except as expressly set out in this Agreement. |
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15. | Non Default Termination And Extension |
15.1 | Force Majeure |
Either the Owner or the Operations Consultancy Service Provider may terminate this Agreement by notice (“Force Majeure Termination Notice”) where an event of Force Majeure prevents the performance by the Affected Party of any of the Affected Party’s obligations under this Agreement for a continuous period of nine (9) Months provided always that:
(a) | the effect of the relevant event of Force Majeure continues to prevent either party from performing any material obligation under this Agreement; and |
(b) | this Agreement shall terminate on the date falling thirty (30) Business Days after the receipt of the Force Majeure Termination Notice by either the Owner or the Operations Consultancy Service Provider. |
Terminal, staff (at a cost of AED 500,000 “Five Hundred Thousand United Arab Dirhams”), manuals, systems, records and any related assets to be handed over to the Owner on an immediate affect.
15.2 | Non-Default Termination by the Owner |
At any time during the Term, the Owner shall be entitled to terminate this Agreement:
(a) | by written notice to the Operations Consultancy Service Provider (“Non-Default Termination Notice”) in the event of the occurrence of one or more of the following events: |
(i) | the Facilities become unfit in any way to be used as a storage facility for storage of hydrocarbon product due to any cause beyond the control of the Owner or the Operations Consultancy Service Provider; or |
(ii) | the Facilities cease to be approved by the relevant Governmental Authority as a storage facility for the storage of hydrocarbon product; and |
(b) | by written notice to the Operations Consultancy Service Provider if the Service Provider’s performance was unsatisfactory to the Owner, |
and the Agreement shall terminate on the date falling forty five (45) Business Days after serving the Non-Default Termination Notice to the Operations Consultancy Service Provider.
15.3 | Expiry and Extension |
(a) | Upon the expiry of the Initial Term, this Agreement shall be renewed for a period of the Renewal Term provided that prior to the extension of the Initial Term, or any Renewal Term (as the case may be): |
(i) | the Owner has given notice to the Operations Consultancy Service Provider, at least three (03) Months prior to the expiry of the Initial Term, or any Renewal Term (as the case may be) that the Agreement will be renewed; |
(ii) | there shall be no existing breach of any of the Operations Consultancy Service Provider’s obligations required to be performed under this Agreement; and |
(iii) | the parties shall: |
(1) | commence discussions on the terms for renews (including the revised Term Fee payable) at two (2) months prior to relevant prevailing Expiry Date; and |
(2) | agree to the terms for renewal at least two (02) months prior to the relevant prevailing Expiry Date (“Renewal Agreement Date”). The failure of the parties to agree to the terms for renewal by the. Renewal Agreement Date shall entitle, but not oblige the Owner to appoint the New Operations Consultancy Service Provider to perform the Services. |
In the event if the Owner decides to terminate the Contract upon completion of 2 years, then the Owner shall notify the Operations Consultancy Service Provider of their intention, at least 2 months prior to the expiry of the Contract.
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16. | Effect Of Termination |
16.1 | Operations Consultancy Service Provider Event of Default |
a. | The Operations Consultancy Service Provider shall take responsibility due to such an event, such that the Owner’s Losses are minimised, and the Terminal shall be brought back to operable condition, without putting any additional Cost on the Owner, subject to Clause 11.1. |
b. | Terminal, Staff, Manuals, Systems, Records and any related assets to be handed over to the Owner on an immediate effect without putting any additional cost on the Owner. |
16.2 | Owner Event of Default Non Default Termination by the Owner |
Where termination of this Agreement occurs:
(a) | following an Owner Event of Default / Non-default Termination by the Owner |
the Owner shall be liable to pay to the Operations Consultancy Service Provider, in addition to any Term Fee otherwise owing to the Operations Consultancy Service Provider at the Termination Date, the actual, reasonable and proper costs to the Operations Consultancy Service Provider of demobilisation from the Site and termination of the Sub-Contracts entered into by the Operations Consultancy Service Provider for performance of the Services provided always that the Operations Consultancy Service Provider shall take reasonable steps to mitigate such costs (and without in any way limiting the foregoing, the Facilities, all staff (at a cost of AED 500,000 “Five Hundred Thousand United Arab Dirhams”), manuals, systems, records and any related assets shall be immediately handed over to the Owner).
16.3 | Continued Operation Option |
Notwithstanding any termination of this Agreement or expiry of the Term, the Owner shall have the right:
(a) | on the termination or expiry of this Agreement, and for a reasonable period both before and after any such event; or |
(b) | in the event of any failure of the parties to agree to the terms for renewal by the Renewal Agreement Date under Clause 15.4 prior to the relevant prevailing Expiry Date, |
to require that the Operations Consultancy Service Provider at reasonable cost (as agreed with the Operations Consultancy Service Provider) (where applicable as the case may be) to the Owner:
(c) | takes any and all steps as the Owner shall reasonably deem necessary so as to ensure the continued operation of the Facilities; and |
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(d) | co-operates fully with the Owner, the New Operations Consultancy Service Provider or any successor providing to the Owner services in the nature of any of the Services or any part of the Services in order to achieve a smooth transfer of the manner in which the Owner obtains services in the nature of the Services and to avoid or mitigate in so far as reasonably practicable any inconvenience or any risk to the health and safety of the Owner, any Owner Related Party, any New Operations Consultancy Service Provider, any End-User. For the purposes of this Clause 0, the meaning of the term “co-operate” shall include: |
(i) | liaising with the Owner and / or the New Operations Consultancy Service Provider, and providing reasonable assistance and advice concerning the Services and their transfer to the Owner or to such New Operations Consultancy Service Provider; and |
(ii) | allowing any New Operations Consultancy Service Provider access (at reasonable times and on reasonable notice) to the Site and Facilities but not so as to interfere with or impede the provision of the Services by the Operations Consultancy Service Provider. |
16.4 | Operations Consultancy Service Provider Duties on Expiry or Termination of the Agreement |
(a) | In the event of the earlier termination of the Agreement for any reason whatsoever, or the expiry of the Term: |
(i) | the Operations Consultancy Service Provider shall forthwith remove all its equipment and tools (if required by the Owner, though if required the Owner may retain the Operations Consultancy Service Provider’s personnel at the price agreed by both Parties) from the Facilities and give the Owner vacant possession of the Facilities; |
(ii) | if the Owner so elects, the Operations Consultancy Service Provider shall procure that any relevant Sub-Contract shall be novated or assigned to the Owner, or if required by the Owner, the New Operations Consultancy Service Provider. In the event the parties fail to agree to the terms for renewal by the Renewal Agreement Date under Clause 15.4, the Operations Consultancy Service Provider shall, if the Owner so elects, procure that any relevant Sub-Contract shall be novated or assigned to the New Operations Consultancy Service Provider prior to the relevant prevailing Expiry Date; |
(iii) | the Operations Consultancy Service Provider shall procure that the benefit of all manufacturer’s warranties used or made available by the Operations Consultancy Service Provider under this Agreement and included in the Facilities are assigned, or otherwise transferred, to the Owner and / or New Operations Consultancy Service Provid applicable) with full title guarantee; |
(iv) | the Operations Consultancy Service Provider shall deliver the documents and information it is required to provide in a with Clause 3.6 except where such documents are required by Law to be retained by the Operations Consultancy Service Provider or Sub-Contractors (in which case complete copies shall be deliver Owner); |
(v) | the Operations Consultancy Service Provider shall leave the Facilities in good and safe working order, such that the Facilities may continue to be operated in accordance with Good Industry Practice. The Owner may perform any inspections, tests or expert appraisals it considers necessary with a view to check that the Facilities are in good and safe working order; |
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(vi) | the Operations Consultancy Service Provider shall yield up the Site in a clean (free from rubbish and waste) and good state of repair with normal wear and tear excepted. |
(vii) | all outstanding unpaid invoices rendered by the Operations Consultancy Service Provider shall become payable by the Owner from the Termination Date and all costs, expenses and fees in respect of Services rendered prior to termination but for which an invoice has not been submitted shall be payable upon submission of the invoice. |
(b) | The costs incurred by the Operations Consultancy Service Provider in carrying out its obligations under Clause 16.4 shall be borne by the Operations Consultancy Service Provider. |
(c) | Notwithstanding Clause 16.4(a) above, where the termination of the Agreement occurs pursuant to Clause 15.2(a), the Owner shall appoint Third Parties to: |
(i) | properly carry out, within the time stipulated by the Owner, all works necessary to decontaminate the Site and/or the Facilities; and |
(ii) | reinstate and yield up the Site in a state and condition as may be required by the Owner or any Governmental Authority. |
(d) | The costs of the Third Parties in carrying out the works mentioned under Clause 16.4(c) shall be borne by the Owner. The Operations Consultancy Service Provider may support the Owner to liaise with appropriate Third Parties. |
16.5 | Continuing Obligations |
(a) | The expiry of the Term or termination of the Agreement shall not affect: |
(i) | any accrued rights, obligations and liabilities of either party (and shall be without prejudice to any right conferred by Law on a party to recover damages or seek any other remedy in respect of any liability of the other party in connection with: |
(1) | any breach committed by; or |
(2) | event of default which occurred in relation to, such party); or |
(ii) | the continuance in force of any provision of this Agreement which is not expressed to be contingent upon the continuance of the Term. |
(b) | Notwithstanding Clause 16.5(a), the parties expressly acknowledge that Clauses 14 and 15 set out their exclusive rights to terminate the Agreement, and their exclusive rights, obligations, Claims and liabilities resulting frony termination. Any rights to terminate this Agreement, whether arising at Law or in equity, are hereby waived irrevocably by both parties. |
17. | Handback Requirements |
The provisions of Schedule 8 (Handback) shall apply on expiry of this Agreemnet
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18. | Changes |
18.1 | Step-Changes in Technology |
(a) | This Clause 18.1 applies if, as a result of a Step-Change in Technology, a significant reduction in operation and maintenance cost at the Facilities occurs. |
(b) | If at any time during the Term, a Step-Change in Technology to which this Clause 18.1 applies occurs, the Operations Consultancy Service Provider must notify the Owner of that fact. If any time during the Term, the Owner considers that a Step-Change in Technology has occurred, it may notify the Operations Consultancy Service Provider of that fact. |
18.2 | Additional Services |
(a) | The Owner may, at its discretion, instruct the Operations Consultancy Service Provider to undertake additional works at the Facilities (an “Additional Services”) and no Additional Services instructed by the Owner shall vitiate this Agreement. |
(b) | The Operations Consultancy Service Provider shall, within twenty-one (21) Days of receiving the Owner’s instruction for the Additional Services under Clause 18.2(a), respond to the Owner with a written notice stating: |
(i) | the steps the Operations Consultancy Service Provider proposes to take to implement the Additional Services giving such level of detail as is reasonable and appropriate in all the circumstances; |
(ii) | any additional payment, which the Operations Consultancy Service Provider considers should be made under this Agreement in respect of implementing the Additional Services; |
(iii) | any Authorisation which must be obtained or amended for the Additional Services to be implemented; and |
(iv) | such amendments to the provisions of this Agreement which are necessary as a consequence of the Additional Services, the objective of such amendments being to ensure that (save for the obligation of the Owner to make payment in respect of the Additional Services or any other adverse consequence for the Owner arising from the Additional Services itself) the parties are in no better and no worse position than they would have been in if such Additional Services had not been implemented. |
(c) | If the parties agree upon the matters stated in the Operations Consultancy Service Provider’s notice as aforesaid (including any agreed modifications thereto) then the Additional Services shall be implemented by the Operations Consultancy Service Provider on that basis and the Owner shall make such payments. Following such agreement, the Operations Consultancy Service Provider shall not be entitled to any further or other payments in respect of implementing that Additional Services. |
(d) | If the parties fail to agree upon the matters stated in the Operations Consultancy Service Provider’s notice given, in respect of an Owner Variation, under Clause 18.2(b) the Owner may nevertheless instruct the Operations Consultancy Service Provider to proceed with implementing that Owner Variation. The Operations Consultancy Service Provider shall forthwith comply with such instruction and the matters not agreed may be referred to Clause 22.1. |
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19. | Force Majeure |
19.1 | For the purposes of this Agreement. “Force Majeure” means any such event or circumstance not within the reasonable control, directly or indirectly, of the party affected by it (“Affected Party”), resulting in or causing a total or significant failure of the Affected Party in the fulfilment of any of its obligations under this Agreement (other than payment of money), including but not limited to any of the following events or circumstances: |
(a) | acts of war (whether declared or not), invasion or act of foreign enemy, in each case occurring within the United Arab Emirates; |
(b) | acts of rebellion, riot, civil commotion, strikes of a political nature, sabotage of a political nature in each case occurring within the United Arab Emirates; |
(c) | nuclear contamination (unless the Operations Consultancy Service Provider is the source of such nuclear contamination); |
(d) | lightning, earthquake, tsunami, unusual flood, storm, cyclone, typhoon, tornado or other natural calamity or act of God; |
(e) | epidemic or plague; |
(f) | strikes, works to rule or go-slows (other than by employees of the party claiming the same as a Force Majeure or of any shareholders of such party, or by employees of any direct or indirect Affiliate, parent or subsidiary of any shareholder of such party); or |
(g) | accidents, fire or explosions (except if such accidents, fire or explosions are caused by the fault or negligence of the party claiming this as Force Majeure), provided and only to the extent that the: |
(i) | event, despite the exercise of reasonable diligence, cannot be or could not have been prevented, avoided or removed by the Affected Party; |
(ii) | Affected Party took, or has taken, all reasonable precautions, due care and reasonable alternative measures in order to avoid the effect of such event on the Affected Party’s ability to perform its obligations under this Agreement and to mitigate the consequences of that event; |
(iii) | event is or was not the direct or indirect result of the breach by the Affected Party of any of its obligations under this Agreement; and |
(iv) | Affected Party has given the non-affected party (“Non-Affected Party”) notice in accordance with Clause 19.2. |
19.2 | An Affected Party must notify the Non-Affected Party in writing (“Force Majeure Notice”) of: |
(a) | the date of commencement of the Force Majeure; |
(b) | the nature and expected duration of the Force Majeure; |
(c) | the anticipated effect of the Force Majeure on the performance of the obligations by the Affected Party; and |
(d) | the actions to be taken in order to comply with requirements of this Clause 18. |
19.3 | The Force Majeure Notice must be sent by the Affected Party not later than fourteen (14) Business Days after the date on which the Affected Party first had knowledge of the effect of the Force Majeure, failing which, the Affected Party is not entitled to rely on this Clause 18. |
Page 40 of 48
19.4 | The Affected Party must: |
(a) | make all reasonable efforts to prevent and reduce to a minimum and mitigate the effect of any delay occasioned by any Force Majeure and to have recourse to alternate sources of services, equipment and materials and construction equipment; and |
(b) | use its best efforts to ensure resumption of normal performance of this Agreement after the cessation of any Force Majeure as promptly as possible and otherwise perform its obligations in accordance with this Agreement. |
19.5 | Within fourteen (14) Business Days following the cessation of any Force Majeure, the Affected Party must submit to the Non-Affected Party reasonable proof of the nature of the delay and its effect upon the performance of the obligations of the Affected Party under this Agreement. |
19.6 | With respect to the Operations Consultancy Service Provider only, Force Majeure may be invoked only with respect to the part of the Facilities affected by the event and not with respect to any part of the Facilities not so affected. |
19.7 | Subject always to the provisions of Clause 19.4, the Affected Party shall be excused from performance and shall not be construed to be in default in respect of any obligation under this Agreement for so long as, and to the extent that, the failure to perform such obligation is due to Force Majeure. The Affected Party must continue to perform all of its obligations under this Agreement which is not affected by the Force Majeure. |
19.8 | The following events do not constitute Force Majeure (for purposes of this Agreement): |
(a) | any order of a Governmental Authority issued for health or safety reasons by reason of any act or omission of the Operations Consultancy Service Provider requiring any act on the part of the Operations Consultancy Service Provider which limits the ability of the Operations Consultancy Service Provider to perform its obligations under this Agreement; |
(b) | any failure by a party to reach agreement with any third party (including any End-User); |
(c) | lack of funds for any reason or inability to use available funds due to any reason; |
(d) | failure of either party to make any payment of money in accordance with its obligations under this Agreement; |
(e) | late delivery of equipment, machinery, plant or materials caused by acts or omissions on the part of the Operations Consultancy Service Provider, its suppliers or Sub-Contractors; |
(f) | late performance by the Operations Consultancy Service Provider Operations Consultancy Service Provider’s failure to engage qualified Sub-Contractors or suppliers, or to hire an adequate number of personnel or labour; |
(g) | mechanical or electrical breakdown or failure of equipment, machinery or plant owned or operated by either party due to the manner in which such equipment, machinery or plant has been operated or maintained; |
Page 41 of 48
(h) | failure of either party to perform any of its obligations under this Agreement in accordance with the requirements hereof which contributed to the occurrence of Force Majeure; and |
(i) | delays resulting from reasonably foreseeable unfavourable weather, reasonably foreseeable unsuitable ground or sea conditions or other similar reasonably foreseeable adverse conditions. |
19.9 | The Owner shall be relieved from its payment obligation under Clause 5 to the extent the Services have not been performed by the Operations Consultancy Service Provider due to Force Majeure. |
20. | Intellectual Property Rights |
20.1 | The Operations Consultancy Service Provider owns or is licensed to use all Intellectual Property Rights and Proprietary Information: |
(a) | owned by or (if not owned by the Operations Consultancy Service Provider) licensed to the Operations Consultancy Service Provider; and / or |
(b) | first discovered or developed by the Operations Consultancy Service Provider during the course of performing its obligations under this Agreement. |
20.2 | The Operations Consultancy Service Provider grants to the Owner, a global, royalty-free, non-transferable, permanent, irrevocable, non-exclusive licence (including the right to grant royalty-free sub licences) to use the Intellectual Property Rights and the Proprietary Information referred to in Clause 20.1 in connection with the management, operation, and maintenance of the Facilities. This licence shall survive the termination of this Agreement for an unlimited period of time. |
21. | Confidentiality |
Each party shall hold, and shall ensure that its shareholders and Affiliates hold, in strict confidence from any other person (other than any such Affiliate) all documents and information concerning the other party or any of its Affiliates furnished to it or its advisors, consultants, subcontractors or agents by the other party in connection with this Agreement or the transactions contemplated hereby (“Confidential Information”), unless:
(a) | It is required by Law to communicate the Confidential Information to that third party, who is authorised by Law to receive it; |
(b) | the Confidential Information is required to be disclosed in the case of any judicial or administrative process or by the rules of a stock exchange (including in connection with obtaining from Governmental Authorities the necessary approvals of this Agreement and the transactions contemplated hereby) or by other requirements of any applicable Law; |
(c) | the Confidential Information is required to be disclosed in or pursuant to the offering statement provided to potential investors in the Owner; or |
(d) | the Confidential Information is required to be disclosed in an action or proceeding brought by either party in pursuit of its rights or in the exercise of its remedies hereunder. |
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22. | Dispute Resolution |
22.1 | Negotiation |
(a) | The parties shall attempt to resolve any dispute, controversy, or claim arising under, out of or relating to this Agreement and any subsequent amendments of this Agreement, including, without limitation, its formation, validity, binding effect, interpretation, performance, breach or termination, as well as non-contractual claims, by negotiation between representatives who have authority to settle the dispute. |
(b) | The negotiation phase described in Clause 22.1(a) above shall be initiated by either party giving the other written notice of the dispute (“Dispute Notice”). The Dispute Notice shall provide a short summary of the nature of the dispute and the name and position of the representative(s) who will represent that party in the negotiations. Within ten (10) Business Days of receipt of the Dispute Notice, the receiving party shall provide a short written summary of that party’s response to the claim and the name and position of the representative who will represent that party in the negotiations. |
(c) | Within twenty (20) Business Days of receipt of the Dispute Notice, the representatives of both parties shall meet at a mutually acceptable time and place to attempt to resolve the dispute. |
(d) | The negotiations shall be treated as without prejudice. |
22.2 | Arbitration |
(a) | If, and to the extent that, any such dispute, controversy or claim has not been settled pursuant to the mediation (referred to in Clause 21.1) within thirty-five (35) Business Days of the commencement of the mediation, such dispute, controversy or claim shall be referred to and finally resolved by arbitration under the DIFC-LCIA Arbitration Centre Rules (the “Rules”) which (save as modified by this Clause 21) are deemed to be incorporated by reference into this Clause 19. Capitalised terms used in this Clause 21 and not otherwise defined in this Agreement have the meanings given to them in the Rules. |
(b) | The seat, or legal place, of arbitration shall be the Dubai International Financial Centre, Dubai, United Arab Emirates. |
(c) | The number of arbitrators shall be three (3). The claimant(s) shall nominate one arbitrator and the respondent(s) shall nominate one arbitrator, in each case in accordance with the Rules. The third arbitrator, who will act as chairperson of the arbitral tribunal, shall be nominated jointly by the two co-arbitrators, provided that if the third arbitrator has not been so nominated within thirty (30) Business Days of the time-limit for service of the response, the third arbitrator shall be appointed by the LCIA Court. |
(d) | The language to be used in the arbitral proceedings shall be English. An award made by the arbitral tribunal shall be final and binding on the parties and may be entered and enforced in any court having jurisdiction. |
(e) | To the extent that the Operations Consultancy Service Provider may in any jurisdiction in which proceedings may be taken for the enforcement of this Agreement, claim for itself or its assets immunity from suit, enforcement or judgments or awards or other legal process under the laws of any relevant jurisdiction, the Operations Consultancy Service Provider hereby irrevocably agrees not to claim and hereby irrevocably waives such immunity and consents in respect of any legal action or proceedings arising out of or in connection with this Agreement, to irrevocably waive and not to claim any immunity (or any defence based on immunity or sovereign status) from all forms of execution, enforcement or attachment against it or any of its property whatsoever. |
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(f) | Without prejudice to Clause 3.16, if any dispute referred to in Clause 22.2(a) above raises an issue, or arises out of a subject matter which in the Owner’s opinion, is similar, or relates in any way either to an issue raised in, or to the subject-matter of, any dispute (a “Related Dispute”), between: |
(i) | the Owner and any other person with whom the Owner contracts; or |
(ii) | the Owner and any End-User, |
the parties hereto agree that any such Related Dispute may at the Owner’s option be referred to the arbitrator appointed pursuant to Clause 22.2(a) above, that the proceedings, including any hearings, may (at the Owner’s option) be conducted concurrently or consolidated.
(g) | If any Related Dispute has already been referred to arbitration pursuant to a provision substantially similar to Clause 22.2(a), the parties agree that any dispute referred to in Clause 22.2(a) may (at the Owner’s option) be referred to the arbitrator(s) appointed to determine any such Related Dispute and that the proceedings, including any hearings, may (at the Owner’s option) be conducted concurrently or consolidated. |
22.3 | Despite the provisions of this Clause 21, both parties must (subject to what may otherwise be provided for in this Agreement) continue performing their obligations under this Agreement during the duration of any dispute. |
23. | Statutory Functions |
Nothing contained in or implied by this Agreement has the effect of constraining the Owner or placing any fetter on its statutory rights, duties, powers and functions, including those contained or referred to in any Law.
24. | Consultation |
24.1 | In relation to: |
(a) | any provision in any Proposed End-User Agreement concerning consultation or liaison or agreement with, or the consent or permission of any End-User or any third party, (including any matters subject to the dispute resolution procedure set out in such Proposed End-User Agreement); or |
(b) | any proposal to amend any relevant Proposed End-User Agreement; |
which has or may have an adverse monetary effect or other material effect on the carrying out of the Services or the obligations or liabilities of the Operations Consultancy Service Provider, the Owner shall consult with the Operations Consultancy Service Provider as to such matter and allow the Operations Consultancy Service Provider to make representation to the Owner and the Owner shall use reasonable endeavours to consider and if appropriate relay such representations to the End-User or such third party.
Page 44 of 48
25. | General |
25.1 | Assignment and Transfer |
(a) | The Operations Consultancy Service Provider may not sell, assign or otherwise transfer its rights or obligations under or pursuant to this Agreement without the prior written consent of the Owner. |
(b) | The Owner may in its discretion, effect any restructuring, reorganisation or divestment of its assets at any time, including where that restructuring, reorganisation or divestment results in the sale, assignment or transfer by the Owner of its interest under this Agreement. |
25.2 | Change in Control |
(a) | The Operations Consultancy Service Provider shall not allow any Change in Control of the Operations Consultancy Service Provider until two (2) Years after the CDCO without the Owner’s prior consent, such consent not to be unreasonably withheld, provided that the Operations Consultancy Service Provider has: |
(i) | provided sufficient notice (and in any event not less than twenty (20) Business Days) of the proposed Change in Control; |
(ii) | demonstrated to the Owner’s reasonable satisfaction that the proposed Change in Control will not adversely affect the performance of the Services including ensuring there will be no significant turnover in the personnel performing the Services (the “Personnel Turnover Requirements”); and |
(iii) | given all relevant information to the Owner. |
The Owner may request the Operations Consultancy Service Provider to, and the Operations Consultancy Service Provider shall provide to the Owner, within ten (10) Business Days following receipt of such request, any additional information which the Owner considers necessary for its evaluation of the proposed Change in Control.
(b) | From the third (3rd) anniversary of the CDCO, the Operations Consultancy Service Provider may permit a Change in Control without the consent of the Owner provided that the Operations Consultancy Service Provider has complied with the Personnel Turnover Requirements. |
(c) | Subject always to the Operations Consultancy Service Provider obtaining the Owner’s consent prior to any Change in Control of the Operations Consultancy Service Provider under Clause 24.2(a), the Operations Consultancy Service Provider shall notify the Owner of details of the Change in Control of the Operations Consultancy Service Provider as soon as practicable, and, in any event, within five (5) Business Days of any such change. |
25.3 | No Partnership |
This Agreement shall not be interpreted or construed to create an association, joint venture, or partnership between the parties or to impose any partnership obligation or liability upon either party. Except as expressly provided in this Agreement, neither party shall have any right, power, or authority to enter into any agreement or undertaking for, to act on behalf of, to act as or be an agent or representative of, or to otherwise bind, the other party.
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25.4 | Further Assurances |
The parties shall at all times do all such further acts and execute and deliver such further deeds and documents as shall be reasonably required in order to perform and carry out the provisions of this Agreement.
25.5 | Amendments |
No modification or amendment of any provision of this Agreement shall be valid unless it is evidenced in writing and signed by both parties.
25.6 | Waiver |
Any term or condition of this Agreement may be waived by agreement at any time by the party that is entitled to the benefit thereof, but no such waiver shall be effective unless set forth in a written instrument duly executed by both parties. The failure or delay of either party to require performance by the other party of any provision of this Agreement shall not affect its right to require performance of such provision unless and until such performance has been waived by such party in writing in accordance with the terms hereof. No waiver by either party of any term or condition of this Agreement, in anyone or more instances, shall be deemed to be or construed as a waiver of the same or any other term or condition of this Agreement on any future occasion.
25.7 | Notices |
(a) | Any notice or other communication from one party to the other party which is required or permitted to be made under the provisions of this Agreement shall be: |
(i) | made in the English language; |
(ii) | made in writing; |
(iii) | delivered personally (by hand delivery), sent by facsimile, registered mail or electronic mail. Any notice given by facsimile shall be confirmed by sending a copy of the same by personal delivery or by registered mail, but the failure to so confirm shall not void or invalidate the original notice if it is in fact received by the party to which it is addressed; and |
(iv) | marked for the attention of the person(s) designated below or to such other person(s) as the other party shall by notice require. |
(b) | Any notice or other communication made by one party to the other party in accordance with the foregoing provisions of this Clause 25.7 shall be deemed to be received by the other party (if delivered by hand or sent by pre-paid registered mail), on the Day on which it is left at that party’s address, or (if sent by facsimile transmission or electronic mail) immediately. |
(c) | A facsimile transmission is regarded as legible unless the addressee telephones and informs the sender that it is not legible within forty-eight (48) hours after transmission is received or regarded as received in accordance with this Clause 25.7. |
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(d) | The addresses for service of the parties and their respective facsimile numbers and electronic mail address shall be: |
If to the Owner, to:
Brooge Petroleum and Gas Investment Company
P.O. Box: 50170, Fujairah
United Arab Emirates
If to the Operations Consultancy Service Provider, to:
Flowi Terminals Management
P.O. Box: 128838, Dubai
United Arab Emirates
(e) | Either party from time to time may change its address, facsimile number or other information for the purpose of notices to such party by giving notice specify such change to the other party. |
25.8 | Invalidity |
The parties hereby agree to use good faith efforts to discuss any provisions of this Agreement determined to be invalid or unenforceable with a view toward effecting the purposes of this Agreement, and the validity or enforceability of the remaining provisions of this Agreement shall not be affected thereby.
25.9 | Counterparts |
The parties may execute this Agreement in counterparts, which shall, in the aggregate, when signed by both parties constitute one and the same instrument; and, thereafter, each counterpart shall be deemed an original instrument as against any party who has signed it.
25.10 | Third Party Rights |
No person who is not a party to this Agreement shall have the right to enforce any term of this Agreement.
25.11 | Governing Law |
This Agreement and any arbitration or legal action commenced under the terms of this Agreement shall be governed by the federal laws of the United Arab Emirates and the laws of the Emirate of Fujairah.
Page 47 of 48
IN WITNESS WHEREOF, the parties have executed this Agreement through their duly authorised officers as of the date set forth in the preamble to this Agreement.
Signed by | ||
Mr. Housam S. El Emri | ) | /s/ Housam S. El Emri |
CEO/Vice Chairman | ) | |
for and on behalf of | ) | |
Brooge Petroleum and Gas | ) | |
Investment Company | ) | |
In the presence of [ ] | ||
Name: | ||
Address: | ||
Signed by Mr. Mohammad Shahin | ) | /s/ Mohammad Shahin |
Managing Director | ) | |
for and on behalf of | ) | |
) | ||
In the presence of [ ] | ||
Name: | ||
Address: |
Page 48 of 48
Exhibit 10.45
Certain identified information has been excluded from the exhibit because it is both not material and would likely cause competitive harm to the registrant if publicly disclosed.
Date: | 09/04//2017 |
Ref: | CAD/013/17 |
PRIVATE & CONFIDENTIAL
M/s. Brooge Petroleum and Gas Investment Company FZC
P.O.Box. No. 50170, Fujairah,
United Arab Emirates.
Dear Sirs,
Sub: FACILITY OFFER LETTER
We, National Bank of Abu Dhabi, PJSC-Islamic Banking Divison (“ISD-NBAD”), refer to your request and our recent discussions and are pleased to offer you the Islamic banking facilities detailed in Schedule (A) attached hereto (the “Fecility”) subject to the terms hereinafter and the terms of the documentation to be concluded between you and ISD-NBAD in relation to the Facility.
This new Facility is in addition to your existing facility with us as per below:
Facility Type |
Approved Limit
(AED) |
Principal Outstanding
(AED) |
||
Contracts for work & forward lease | 310,718,000.00 | 308.696.216.92 |
The existing facility as mentioned above will remain as per the existing terms & conditions unless further stated in this Facility Offer Letter.
Yours faithfully,
National Bank of Abu Dhabi, PJSC-Islamic Banking Division
Date: | Date: |
Page 1 of 6
Date: | 09/04//2017 |
Ref: | CAD/013/17 |
We agree and accept the terms of this Facility Offer Letter (the “Offer”) including the attached schedules and agree to be by its terms and conditions.
Signature: |
|
M/s Brooge Petroleum and Gas Investment Company FZC
Date: |
|
Page 2 of 6
Date: | 09/04//2017 |
Ref: | CAD/013/17 |
SCHEDULE “A”
Facility |
Limit
(AED) |
Pricing | Purpose/Tenor/Payment Source | |||
Contract for Works & Forward Lease | 40,800,000 |
3M EIBOR+3.5%
per annum Minimum 5.5% per annum |
Purpose: To part finance construction of new administration building, Fujairah, United Arab Emirates through forward lease contract.
Repayment: In maximum 20 quarterly installments starting after 6 months grace period.
Payment Source: Operating cash flow / business income of the shareholders / other sources. |
|||
Total | 40,800,000 | (UAE Dirham Forty Million Eight Hundred Thousand only) |
Securities:
1. | Assignment of lease contract with off-takers in favor of ISD-NBAD. |
2. | Step in right over leased land in favor of NBAD to be provided. |
3. |
4. | Assignment of Contractor’s “All Risk Insurance policy” to ISD-NBAD as first beneficiary during construction and maintenance periods. |
5. | Assignment of Fire Insurance Policy of the Property (upon completion of construction) in favor of ISD-NBAD as first beneficiary. |
6. | Performance guarantee in favor of ISD-NBAD to be issued in a text and by a bank that is acceptable to ISD-NBAD equivalent to 10% of Istisna contract amount. The performance guarantee should be lodged with ISD-NBAD prior to any disbursement. |
Page 3 of 6
Date: | 09/04//2017 |
Ref: | CAD/013/17 |
7. | Advance payment guarantee (APG) in favor of ISD-NBAD to be issued in text and by a bank that is acceptable to ISD-NBAD and to be lodged with ISD-NBAD prior to any disbursement. |
8. | Retention guarantee (RG) in favor of ISD-NBAD to be issued in text and by a bank that are acceptable to ISD-NBAD prior to any disbursement. |
9. | Assignment of rental income generated from the financed property in favor ISD-NBAD. |
10. | All the contractor bonds to be assigned to the bank. |
Support:
1. | Direct Debit Authority. |
2. | Undertaking to cover the default or shortfall, if any, in finance payment arrangement from your other sources of income. |
3. | Project cash flow statement. |
Conditions:
1. | Non-refundable study and documentation fees of UAE Dirham 408,000.00 is payable upon signing this offer letter. |
2. | Signed construction contract with Audex Fujairah LL FZE to be provided. |
3. | Debt equity ratio to be kept at 85:15 and customer contribution of 15% should be paid upfront. |
4. | DSRA amount should be increased to cover the instalment of the new facility. |
5. | Disbursement will take place in tranches in line with project completion and subject certification of the project manager/technical advisor. |
6. | Audited financials of for last 3 years should be provided prior to disbursement. |
7. | Latest valuation of the financed property to be provided maximum by 24/02/2018. |
8. | Early settlement charge at 1.0% of the total outstanding to be paid, in case of early settlement of the facility. |
Page 4 of 6
Date: | 09/04//2017 |
Ref: | CAD/013/17 |
9. | The release of surplus funds from rental collection account will be subject to servicing the installment amount and within Bank’s discretion. |
10. | To accept the terms of this Offer, please sign and return a copy hereof within 14 days from the date first written above otherwise this Offer will lapse. |
11. | Without prejudice to the above paragraph and where the terms of this Offer are accepted by you in the manner stated above, this Offer shall not be binding on ISD-NBAD unless documentation and formalities are completed and executed to the entire satisfaction of ISD-NBAD on/or before 09/07/2017. |
12. | This Offer is part of the documentation to be executed in respect of the Facility. |
13. | ISD-NBAD may revoke this offer letter at its sole discretion if, an event occurs or series of events occur which might have in the opinion of ISD-NBAD adverse effect on your financial condition or where market conditions change, thus creating in Our sole opinion an adverse effect on our ability to offer the Facility to you on the terms of this Offer. |
14. | You hereby commit yourself and undertake, in the event of any delay by way of procrastination in the payment of any Rental Payment (advance or normal) or any other amount due to ISD-NBAD on its due date, to donate to charity an amount to be added by ISD-NBAD to any next Rental Payment and calculated for the delay period on the basis of 2.0% p.a. of the overdue amount. Any delay in payment from your side shall be deemed as procrastination unless proven otherwise. The said amount shall be dispensed of for charitable purpose under the supervision of the Fatwa and Sharia’ Supervisory Board of National Bank of Abu Dhabi-Islamic Banking Division. ISD-NBAD shall not retain such amount nor account for it in its profits. |
Page 5 of 6
Date: | 09/04//2017 |
Ref: | CAD/013/17 |
15 | Without prejudice to and in addition to any term or condition in any finance document which you may sign with the ISD-NBAD in respect of the Facility, ISD-NBAD shall have the right to cancel the Facility any time without liability on its part if: |
a. | You fail to provide any document or information required by ISD-NBAD in form and substance to the satisfaction of ISD-NBAD and within the period of time specified by it. |
b. | You fail to comply with any term or condition, condition precedent, security or any other matter required from your pursuant to this offer or pursuant to any document, contract or correspondence between you and ISD-NBAD. |
c. | You do not utilize the Facility within a period of 90 days from the date of this Offer regardless of any other document or contract signed between you and ISD-NBAD in relation to the Facility, OR if the first draw down / utilization under the Facility did not occur for any reason attributed to you within the dates / timelines as specified or required in the Facility approval or as notified to you by ISD-NBAD from time to time. |
d. | Any other event occurs which, in the reasonable opinion of ISD-NBAD would jeopardize the the interests of ISD-NBAD or which may possibly result in a default by you under the Facility. |
Exhibit 10.46
Addendum to Forward Lease
This Addendum is made on 26th day of April 2017 by and between;
1- National Bank of Abu Dhabi P.J.S.C. “Islamic Banking Division” P.O. Box 4 Abu Dhabi, United Arab Emirates (the “Lessor”); and
2- Brooge Pertolum and Gas Investment Company FZC, incorprated under the law of Fujirah Free Zone, P.O. Box. No 50170 Fujirah, United Arab Emirates (the “Lessee”)
Each a “Party” and collectively hereinafter the “Parties”.
The Parties entered into a Master Forward Lease Agreement on 29-06-2015 (the “Master Forward Lease Agreement”).
Capitalized terms used herein shall have the same meanings ascribed to them under the Master Forward Lease Agreement.
The Parties wish to enter into this Addendum to amend and Suplement some terms of the Forward Lease
The Parties agreed to amend the following in the Forward Lease;
1. | The Commencment date shall be 30.06.2015 |
2. | The fixed rental payment dates shall be paid as follows: |
Rental Payment Dates | Fixed Rental Payments |
30/9/2017 | AED 8,875,000 |
30/12/2017 | AED 8,875,000 |
30/3/2018 | AED 8,875,000 |
30/6/2018 | AED 8,875,000 |
30/9/2018 | AED 8,875,000 |
30/12/2018 | AED 8,875,000 |
1
2
30/6/2023 | AED 8,875,000 |
30/9/2023 | AED 8,875,000 |
30/12/2023 | AED 8,875,000 |
30/3/2024 | AED 8,875,000 |
30/6/2024 | AED 8,875,000 |
30/9/2024 | AED 8,875,000 |
30/12/2024 | AED 8,875,000 |
30/3/2025 | AED 8,875,000 |
30/6/2025 | AED 8,875,000 |
30/9/2025 | AED 8,875,000 |
30/12/2025 | AED 8,875,000 |
30/3/2026 | AED 8,875,000 |
30/6/2026 . | AED 8,875,000 |
30/9/2026 | AED 8,875,000 |
30/12/2026 | AED 8,875,000 |
30/3/2027 | AED 8,875,000 |
30/6/2027 | AED 8,875,000 |
3
30/9/2027 | AED 8,875,000 |
30/12/2027 | AED 8,875,000 |
30/3/2028 | AED 8,875,000 |
30/6/2028 | AED 8,875,000 |
30/9/2028 | AED 8,875,000 |
30/12/2028 | AED 8,875,000 |
30/3/2029 | AED 8,875,000 |
30/6/2029 | AED 12,198,842.66 |
3. | Except the above amendments, all terms and conditions of the Forward Lease and the Master Forward Lease Agreement remain unchanged. |
Signatures:
For and on behalf of the Lessor
Authorised Signature: | /s/ Ali Al Jarian | /s/ Ayman Ragheb Taher Nasser |
Name:
Title:
Authorised Signature: |
|
Name:
Title:
For and on behalf of the Lessee
Authorised Signature: |
|
Name:
Title:
4
Exhibit 10.47
Exhibit 10.48
|
|
EMPLOYMENT AGREEMENT
BETWEEN
BROOGE PETROLEUM AND GAS INVESTMENT COMPANY FZC
AND
NICOLAAS PAARDENKOOPER
DATE 21ST MAY 2017
Abu Dhabi, UAE
P.O.Box 29939
Tel +971
2 633 3116
Fax +971 2 633 3955
www.bpgic.com | E-mail: info@bpgic.com |
|
|
THIS EMPLOYMENT AGREEMENT (“Agreement”) is made on May 21st 2017
This document describes the terms and conditions of the employment contract between Brooge Petroleum and Gas Investment Company FZC, organized and existing under the laws and regulations applicable in the Fujairah Free Zone, United Arab Emirates, P.O. Box 50170 Fujairah, UAE (the “Company”) and Mr. Nicolaas Paardenkooper, a Dutch National, holding a Dutch passport, (the “Employee”) and sets out the particulars of employment with the Company.
Position:
The Employee will work in the position of Terminal Manager and will comply with the job description of Terminal Manager and its associated roles and responsibilities attached at (Schedule A).
Responsibilities:
The Employee will report to the C.E.O or representative thereof. The Company manpower organogram will provide details on the positions and roles reporting to the position of the Terminal Manager.
Work Place:
The Company is situated in Fujairah - UAE. The Employee may be transferred to any other branch/location within UAE as per the work needs subject to a timely notification submitted to the Employee. The Employee may be delegated on behalf of the Company to different locations and countries if necessary, however subject to prior mutual agreement.
Working days:
Sunday to Thursday from 08.30 till 17.30
Date of commencement:
From June 19th 2017
Renumeration:
The Employee will receive a total monthly gross salary of Eighty Thousand Dirhams only (AED 80,000) payable at every 2nd day of the month. The gross salary will be reviewed annually, with the tendency for increment, based on UAE official inflation corrections and the Employee’s performance. The aforementioned salary includes the basic salary and other allowances (accommodation allowance, transportation and car allowance, personal allowance, schooling allowance and telephone and communication allowance) as per the following:
Abu Dhabi, UAE
P.O.Box 29939
Tel +971
2 633 3116
Fax +971 2 633 3955
www.bpgic.com | E-mail: info@bpgic.com |
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a- Basic Salary:
The basic salary included in the above mentioned gross salary is Forty Thousand Dirhams only (AED 40,000).
b- Other Allowances:
The remainder of the gross salary of Forty Thousand Dirhams (AED 40,000) shall be distributed by the Employee for all other allowances as per the Employee’s personal preference.
Bonus:
The Employee will receive an annual bonus of 30% (288,000 AED) of the annual total salary of 960,000 AED based on employee performance. (. Bonus will be paid out annually. as on the completion of 12 months from the Date of Commencement.
Additional renumerations:
a. Leaves:
The Employee is entitled to an annual leave of 30 payable working days and the official UAE national holidays. Sick leaves and other sorts of leaves will be processed as per Company HR manual which will be developed in the cause of 2017.
b. Travel tickets:
The calculation for Travel ticket budget (for Employee, spouse) is based on round trip business—class to home country operated by an A rated airline operator. The total amount of AED 38,000 will be added and paid with the monthly gross salary in even amounts divided over 12 months, each year of the duration of the contract. The total annual amount will be reviewed yearly, with the tendency for increment, based on UAE official inflation corrections. The travel budget can be spend for travelling, as discussed between both parties, at the preference of the Employee.
c. Medical Insurance:
The Company will provide medical insurance as per UAE Laws for the Employee, his spouse and two children. The insurance cards will be issued through Orient Insurance or any insurance company ranked at the same level as Orient Insurance. The insurance network plan shall be Next Care
d. IT/ Telecommunications:
The Company will provide the Employee, and maintain access for the Employee, to necessary IT and telecommunications equipment/ services in line with the position requirements.
Abu Dhabi, UAE
P.O.Box 29939
Tel +971
2 633 3116
Fax +971 2 633 3955
www.bpgic.com | E-mail: info@bpgic.com |
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e. Relocation:
In case relocation to a different country is required on Company’s request, the Company will pay for the necessary costs associated with the relocation of the Employee’s necessary personal belongings.
f. Miscellaneous:
As mutually discussed between both parties the salary and associated benefits, with the tendency for increment, will be reviewed one year after the commencement date of the contract.
In case the Company decided to have other terminals and offered the position of managing the additional terminal to the Employee and obtained his consent; both parties have expressed their intention that the job title will be revised to General Manager with associated benefits.
In the highly unlikely event that the UAE government will implement income taxes, applicable to the Employee, during the duration of the contract period both parties will discuss the financial effect and the compensation, if any, to be subject to the Company’s approval .
Termination of Service:
Either Party hereto may terminate this Agreement with providing a notice period of 60 days.
Return of Company Property
Upon the termination/expiration of your employment, for any reason whatsoever, the Employee will immediately deliver up to the Company all correspondence, documents, papers, memoranda, notes, records (including any contained in magnetic media or other forms of computer storage), videos, tapes ,and/or any other property of the Company which may be in your possession or under your control. The Employee will not allow the same to be used by any other party whatsoever, and will return the property to the Company without making or retaining any copies of it.
Abu Dhabi, UAE
P.O.Box 29939
Tel +971
2 633 3116
Fax +971 2 633 3955
www.bpgic.com | E-mail: info@bpgic.com |
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Confidentiality:
The Employee shall, during the continuance of his employment and at all times thereafter and/or after the end of the employment term, keep with absolute secrecy and shall not reveal, disclose or publish outside the Company to any person, firm or organization, unless nominated by the Company, or otherwise utilize any information of a confidential nature. This includes without limitation trade secrets, know-how, inventions, designs, processes, formulae, notations, improvements, financial information and lists of clients concerning the affairs or business or products of the Company or of any Group Company or of any of their predecessors in business or of any of their suppliers, agents, distributors or customers of which you may now or hereafter know or learn while in the Company’s employment, and shall not use for your own purposes other than those of the Company or of any Group Company any such confidential information.
Best Interests of the Company
a. | At all times during the continuance of this Agreement the Employee shall use his best endeavors to promote and protect the interests of the Company (and any sister Company) and shall faithfully and diligently perform such duties and exercise such powers as may from time to time be assigned to or vested in the Employee and shall not do anything that is or could be harmful to the Company or any sister Company. |
b. | the Employee is required to devote his full time, attention and abilities to his job duties during working hours, and to act in the best interest of the Company. The Employee will not be in any way directly engaged or be concerned in any other business or undertaking without the written consent of the Board. |
Business Interests
During the employment with the Company, and/or at any time during the period of 6 months following any termination notice; the Employee shall not directly or indirectly:
a. | engage or be concerned or interested in any business which competes with the business of the Company or any sister Company in which the Employee was involved during his employment; or |
b. | engage in competition with the Company or any sister Company |
Abu Dhabi, UAE
P.O.Box 29939
Tel +971
2 633 3116
Fax +971 2 633 3955
www.bpgic.com | E-mail: info@bpgic.com |
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During the employment with the Company, and at any time after the end of the employment term, with a maximum of two (2) years, the Employee shall not directly or indirectly:
c. | Solicit away from the Company or any sister Company or deal with any of its or their clients with whom the Employee had contact in the course of his employment; or |
d. | Engage or solicit the employment or engagement of any employee employed by the Company in any capacity at the date of the Employee termination who at any time during the term of his employment reported directly or indirectly to the Employee or with whom he had regular contact in the course of their employment. |
e. | If any of the restrictions or obligations contained in this Clause are held not to be valid on the basis that they exceed what is reasonable for the protection of the goodwill or interest of the Company and any sister Company but would be valid if part of the wording were deleted then such restriction or obligation shall apply with such deletions as may be necessary to make such restriction or obligation enforceable. |
Intellectual Property
a. | To the extent permitted by law, all rights in patents, copyright, design rights, trade marks, confidential information and know-how which arise by virtue of your activities during the Employee’s employment shall solely belong to the Company. |
b. | The Employee shall, at the request and expense of the Company, execute such documents and do such things as may be required to vest such rights in the Company or to provide evidence of such vesting, as the case may be. |
Employment Term
The term of the contract shall be five renewable years subject to the consent of both parties.
The mutual aim for both parties is to renew the contract, at same or better conditions for the employee, for another five years upon completion of the first five years.
Abu Dhabi, UAE
P.O.Box 29939
Tel +971
2 633 3116
Fax +971 2 633 3955
www.bpgic.com | E-mail: info@bpgic.com |
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Governing Law
This employment contract is governed by the laws of the Emirate of Fujairah
The Employee agrees to work in compliance with the job description of Terminal Manager and/ or responsibilities as may be assigned to the Employee by the Company from time to time.
For and on behalf of/ Brooge Petroleum and Gas Investment Company FZC (BPGIC)
Name: Housam S
Position: C.E.O/ Vice Chairman
Date: May 21st 2017
Signature: | /s/ Housam S |
On behalf of the employee
Name: Nicolaas Paardenkooper
Date: May 21st 2017
Signature: | /s/ Nicolaas Paardenkooper |
Abu Dhabi, UAE
P.O.Box 29939
Tel +971
2 633 3116
Fax +971 2 633 3955
www.bpgic.com | E-mail: info@bpgic.com |
Exhibit 10.49
EMPLOYMENT AGREEMENT ANNEXURE
BETWEEN
BROOGE PETROLEUM AND GAS INVESTMENT COMPANY FZC
AND
NICOLAAS PAARDENKOOPER
DATE 08-JAN- 2018
Fujairah, UAE | |
P.O.Box 50170 | |
Tel +971 2 633 3149 | |
Fax +971 2 633 3152 | |
www.bpgic.com | E-mail: info@bpgic.com |
PAGE 1 OF 2
THIS EMPLOYMENT AGREEMENT AMENDMENT (“ANNEXURE”) is made on 8th Jan 2018
This document describes the amendments to the terms and conditions of the employment contract dated 21-May-2017 between Brooge Petroleum and Gas Investment Company FZC, organized and existing under the laws and regulations applicable in the Fujairah Free Zone, United Arab Emirates, P.O. Box 50170 Fujairah, UAE (the “Company”) and Mr. Nicolaas Paardenkooper, a Dutch National, holding a Dutch passport, bearing No. BL5SRDoF53 (the “Employee”) and sets out the particulars of employment with the Company.
Position:
The Employee will work in the position of General Manager and will comply with the job description of General Manager and its associated roles and responsibilities.
Responsibilities:
The Employee will report to the Board of Directors. The Company manpower organogram will provide details on the positions and roles reporting to the position of the General Manager and/ or responsibilities as may be assigned to the Employee by the Company from time to time.
All remaining terms and conditions under the Employment Contract dated 21st May 2017 shall remain in effect with no changes unless mutually approved and signed by the Company and the Employee.
For and on behalf of/ Brooge Petroleum and Gas Investment Company FZC (BPGIC)
Signature: |
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Name: | Nicolaas Paardenkooper | |
Date: | Jan 8th 2018 | |
Signature: |
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Fujairah, UAE | |
P.O.Box 50170 | |
Tel +971 2 633 3149 | |
Fax +971 2 633 3152 | |
www.bpgic.com | E-mail: info@bpgic.com |
PAGE 2 OF 2
Exhibit 10.50
Certain identified information has been excluded from the exhibit because it is both not material and would likely cause competitive harm to the registrant if publicly disclosed.
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Date: | 04/06/2018 |
Ref: | CAD/009/18 |
PRIVATE & CONIFTDENTIAL
M/s. Brooge Petroleum and Gas Investment Company FZC
P.O. Box. ND. 50170, Fujairah,
United Arab Emirates.
Dear Sirs,
Sub: FACILITY OFFER LETTER
We, First Abu Dhabi Bank, PISC-Islamic Banking Division (“FAB-ISD”), refer to your request and our recent discussions and are pleased to offer you the Islamic banking facilities detailed in Schedule (A) attached hereto (the “Facility”) subject to the terms hereinafter and the terms of the documentation to be concluded between you and FAB-ISD in relation to the Facility.
This new Facility is in addition to your existing facilities with us per below:
Facility Type | Approved Limit (AED) | Principal Outstanding (AED) | ||||||
Contracts for work & forward. leave | 310,718,000.00 | 310,718,000.00 | ||||||
Contracts for work & forward lease | 40,800,000.00 | 39,600,000.00 |
The existing facilities as mentioned above will remain as per the existing terms & conditions unless further stated in this Facility Offer Letter.
Yours faithfully
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First Abu Dhabi Bank, PJSC-Islamic Banking Division
Date: | 18/6/2018 | Date: | 18/6/2018 |
We agree and accept the terms of this Facility Offer Letter (the “Offer”) including the attached schedules and agree to be bound by its terms and conditions.
Signature: |
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M/s. Brooge Petroleum and Gas Investment Company FZC
Date: | 18/6/2018 |
Page 1 of 6
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Date: | 04/06/2018 |
Ref: | CAD/009/18 |
SCHEDULE “A”
Facility |
Limit
(AED) |
Pricing | Purpose / Tenor / Payment Source | |||
LME Murabaha (One-off) {New} | 13,000,000 | 1M EBOR+2.0% per annum |
Purpose: To settle the accrued profit on existing facilities.
Repayment: In maximum. 15 monthly installments commencing immediately after 1 month from the date of disbursement.
Payment Source: Operating cash flow / business income of the shareholders / other sources. |
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Total | 13,000,000 | [UAE Dirham Thirteen Million only] |
Securities:
1. |
2. | Assignment over the shares and accounts held with FAB-ISD, to be continue. |
3. | Irrevocable assignment in FAB-ISD favor over the rental income generated from the administration building financed by the FAB-ISD. |
4. | All the relevant securities and/or credit support pertaining mortgage over the financed assets in favour of FAB-ISD, covering the aforementioned “Contracts for work & forward lease” facilities of AED 310.718 Million and AED 40.8 Million, shall continue and remain unchanged, and the same shall also be treated as securities and/or credit support for the above mentioned LME Murabaha facility limit of AED 13.0 Million, |
Support:
1. | Direct Debit Authority from the Customer |
2. | Undertaking to cover the default or shortfall, if any, in finance payment arrangement from your other sources of income. |
Conditions:
1. | No outlay of funds to be permitted to the Customer for such facility. |
2 | Upon the completion of the construction of the over the constructed facilities (i.e. oil tanks and office/administration building located at Plot No. 130, Fujairah, U.A.E.), relevant Commercial Mortgage/ Account Pledge and Assignment over the Assets to be obtained in favour of the FAB-ISD. The Bank’s Legal to review and confirm necessary steps to ensure mortgage/lease assignment favouring the Bank in line with FOIZ laws. |
3. | The Customer hereby, irrevocably & unconditionally undertakes: |
Page 2 of 6
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Date: | 04/06/2018 |
Ref: | CAD/009/18 |
a. | to cover any shortfall, if any, in finance repayment arrangement/cost overrun from other company sources; |
b. | to refresh PricewaterhouseCoopers (PWC) financial feasibility report and its acceptability to the FAB-ISD; and, |
c. | to provide the FAB-ISD with the independent insurance advisory report for the entire project. |
d. | to provide the FAB-ISD with the monthly reports on the assets/project financed by the FAB-ISD reflecting the actual cash inflows and operating expenses. |
4. | Early settlement charge at 1.0% of the total outstanding to be paid, in case of early settlement of the facility, |
5. | The release of surplus funds from rental collection account will be subject to servicing the installment amount and within Bank’s discretion. |
6. | To accept the terms of this Offer, please sign and return a copy hereof within 14 days from the date first written above otherwise this Offer will lapse. |
7. | Without prejudice to the above paragraph and where the terms of this Offer are accepted by you in the manner stated above, this Offer shall not be binding on FAB-ISD unless documentation and formalities are completed and executed to the entire satisfaction of FAB-ISD on/or before 10/08/2018. |
8. | This Offer is part of the documentation to be executed in respect of the Facility. |
9. | FAB-ISD may revoke this offer letter at its sole discretion if, an event occurs or series of events occur which might have in the opinion of FAB-ISD adverse effect on your financial condition or where market conditions change, thus creating in Our sole opinion an adverse effect on our ability to offer the Facility to you on the terms of this Offer. |
10. | You hereby commit yourself and undertake, in the event of any delay by way of procrastination in the payment of any instalment (advance or normal) or any other amount due to FAB-ISD on its due date, to donate to charity an amount to be added by FAB-ISD to any next instalment and calculated for the delay period on the basis of 10.0% p.a. of the overdue amount. Any delay in payment from your side shall be deemed as procrastination unless proven otherwise. The said amount shall be dispensed of for charitable purposes under the supervision of the Fatwa and Sharia’ Supervisory Board of First Abu Dhabi Bank-Islamic Banking Division, FAB-ISD shall not retain such amount nor account for it in its profits. |
11. | Without prejudice to and in addition to any term or condition in any finance document which you may sign with the FAB-ISD in respect of the Facility, FAB-ISD shall hive the right to cancel the Facility at any time without liability on its part if: |
a. | You fail to provide any document or information required by FAB-ISD in form and substance to the satisfaction of FAB-ISD and within the period of time specified by it. |
b. | You fail to comply with any terms or condition, condition precedent, security or any other matter required from your pursuant to this Offer or pursuant to any document, contract or correspondence between you and FAB-ISD. |
c. | You do not utilize the Facility within a period of 90 days from the date of this Offer regardless of any other document or contract signed between you and FAB-1SD in relation to the Facility, OR if the first draw down / utilization under the Facility did riot occur for any reason attributed to you within the dates / timelines as specified or required in the Facility approval or as notified to you by FAB-ISD from time to time. |
d. | Any other event occurs which, in the reasonable opinion of FAB-ISD would jeopardize the interests of FAB-ISD or which may possibly result in a default by you under the Facility. |
Page 3 of 6
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Date: | 04/06/2018 |
Ref: | CAD/009/18 |
Following Changes in your existing facilities (2 contracts (or work and forward lease facilities) has been approved:
I. | For the “Contract for Works and Forward Late of AED310.718M”: |
a. | Pricing: |
Existing pricing (i.e. 3M EBOR + 3.5% p.a. minimum 5.5% pm.) has been changed to “3M EBOR + 3.0% p.a.”.
b. | Repayment: |
Considering to delay in completion, repayment schedules are deferred (i.e. starting from June 2018 and final maturity March 2030).
c. | Securities and Support: |
1. | Irrevocable assignment in FAB-ISD favor over the rental income generated from the administration building financed by the FAB-ISD, |
2. | Debt Service Reserve Account (DSRA) in the name of the Customer to maintained with the FAB-ISD, in connection with the above-mentioned facility limit of AED 310.718 Million Such DSRA to be funded prior to the First Installment Due Date (i.e. latest by 30th June, 2018) of the facility of an amount equal to one (1) quarterly installment of the facility limit. |
d. | Additional Terms & Citations: |
1. | Collection Account 1, to which all terminal cash flows, will be credited through a transfer by the Customer, will be charged only in favor of the FAB-ISD. |
2. | Minimum Debt Service Cover Ratio (DSCR) of 150% is required at all the times, if DSCR reaches to 120% or less, it must be triggered as an event of default. |
3. | Debt Service Reserve Account (DSRA) in the name of the Customer to maintained with the FAB-ISD, in connection with the above-mentioned facility limit of AED 310.718 Million. Such DSRA to be funded prior to the First Installment Due Date (i.e. latest by 30th June, 2018) of the facility of an amount equal to one (1) quarterly installment of the facility limit. |
4. | Cash sweep to the extent of 50% of the excess cash to service the debt in inverse order of maturity. However, in case the company get listed on any stock exchange, this condition will be waived subject to increase in the DSRA from 1 quarterly installment to 2 quarterly installments. |
Page 4 of 6
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Date: | 04/06/2018 |
Ref: | CAD/009/18 |
5. | Upon the completion of the construction of the over the constructed facilities (i.e. oil tanks and office/administration building located at Plot No. 130, Fujairah, U.A.E.), relevant Commercial Mortgage/ Account Pledge and Assignment over the Assets to be obtained in favor of the FAB-ISD. The FAB-ISD’s Legal to review and confirm necessary steps to ensure mortgage/lease assignment favoring the FAB-ISD in line with FOIZ laws. |
6. | The Customer hereby, irrevocably & unconditionally undertakes; |
a. | to cover any shortfall, if any, in finance repayment arrangement/cost overrun from other company sources; |
b. | to refresh PricewaterhouseCoopers (PWC) financial feasibility report and its acceptability to the FAB-ISD: and, |
c. | to provide the FAB-ISD with the independent insurance advisory report for the entire project. |
II. | For the “Contract for Works and Forward Lease of AED40.8M”: |
a. | Pricing: |
Existing pricing (i.e. 3M EBOR + 3.5% p.a. minimum 5.5% p.a.) has been changed to “3M EBOR + 3.0% p.a.”
b. | Repayment: |
Considering, to delay in completion, repayment schedules are deferred (i.e. starting from June 2018 and final maturity March 2023).
c. | Securities/Support: |
1. | Debt Service Reserve Account (DSRA) in the name of the Customer to maintained with the FAB-ISD, in connection with the above-mentioned facility limit of AED 40.8 Million. Such DSRA to be funded prior to the First Installment Due Date (i.e. latest by 30th June, 2018) of the facility of an amount equal to at least one (1) quarterly installment of the facility limit. |
d. | Additional Terms & Conditions: |
1. | Collection Account 1, to which all terminal cash flows, will be credited through a transfer by the Customer, will be charged only in favor of the FAB-ISD. |
2. | Minimum Debt Service Cover Ratio (DSCR) of 150% is required at all the times, if DSCR reaches to 120% or less, it must be triggered as an event of default. |
3. | Construction cost will be turnkey/fixed cost and independent engineering consultant (technical advisor) to review the project design and construction agreement and ensure completion risk is mitigated with no escalation clause and minimum risk of cost overrun. |
4. | Debt Service Reserve Account (DSRA) in the name of the Customer to maintained with the FAB-ISD, in connection with the above-mentioned facility limit of AED 40.8 Million. Such DSRA to be funded prior to the First Installment Due Date (i.e. latest by 30th June, 2018) of the facility of an amount equal to at least one (1) quarterly installments of the facility limit. |
Page 5 of 6
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Date: | 04/06/2018 |
Ref: | CAD/009/18 |
5. | Cash sweep to the extent of 50% of the excess cash to service the debt in inverse order of maturity. However, in case the company get listed on any stock exchange, this condition will be waived subject to increase in the DSRA from 1 quarterly installment to 2 quarterly installments. |
6. | Upon the completion of the construction of the over the constructed facilities (i.e. oil tanks and office/administration building located at Plot No. 130, Fujairah, U.A.E.), relevant Commercial Mortgage/ Account Pledge and Assignment over the Assets to be obtained in favor of the FAB-ISD. The FAB-ISD’s Legal to review and confirm necessary steps to ensure mortgage/ lease assignment favoring the FAB-ISD in line with FOIZ Laws. |
7. | The Customer hereby, irrevocably & unconditionally undertakes; |
a. | to cover any shortfall, if any, in finance repayment arrangement/cost overrun from other company sources; |
b. | to refresh PricewaterhouseCoopers (PWC) financial feasibility report and its acceptability to the FAB-ISD; and, |
c. | to provide the FAB-ISD with the independent insurance advisory report for the entire project. |
First Abu Dhabi Bank, PJSC - Islamic Banking Division
Signature: |
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Signature: |
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Date: | 18/06/2018 | Date: | 18/06/2018 | ||
M/s. Brooge Petroleum and Gas Investment Company FZC | |||||
Signature: |
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Date: | 18/06/2018 |
Page 6 of 6
Exhibit 10.51
In the Name of Allah, The Beneficent, The Merciful!
MURABAHA AGREEMENT
FOR THE SALE AND PURCHASE OF COMMODITIES
Effective as of the latest of the dates on the signature page, THIS AGREEMENT is made BETWEEN:
(1) | First Abu Dhabi Bank PJSC, P.O. Box 6316 Abu Dhabi, United Arab Emirates (the “Seller”); and |
(2) | M/s Brooge Petroleum and gas Investment Company FZC , P.O. Box: 50170, Fujairah, United Arab Emirates Emirates (the “Purchaser”). |
IT IS HEREBY AGREED as follows:
1. | Introduction |
The Purchaser wishes to avail itself of a single Murabaha contract arrangement to be made available to it by the Seller subject to and upon the terms herein contained, whereby the Seller will, at the request of the Purchaser, purchase commodities from suppliers on immediate delivery and immediate payment terms and will sell such commodities to the Purchaser on immediate delivery and deferred payment terms for specific period in compliance with the principles and rules of Murabaha as defined by the Sharia’ Fatwa and Supervisory Board of the Seller.
2. | Interpretation |
2.1 | In this Agreement and in the Schedules the following terms and expression shall have the meanings assigned to them herein unless the context requires otherwise. |
“Acceleration Event”: any event so designated in Clause 7.1 and any event which, with the giving of notice or passage of time or the satisfaction of any other applicable condition, may become such an event.
“Acceptance Notice”: a notice to be sent to the Seller by the Purchaser accepting an offer to conclude Murabaha Contract substantially in the form set out in the Second Schedule or in such other form as the Purchaser and the Seller shall agree.
“Business Day”: a day on which:
(a) | the Seller and the Purchaser are open for business; and |
(b) | banks are open for domestic and foreign exchange business and operations of the type contemplated herein. |
“Commodities”: Islamically acceptable commodities comprised or intended to be comprised in Murabaha Contract.
“Cost Price”: in relation to any Commodities means all sums payable for the purchase of such Commodities from the Supplier and includes any Value Added Tax or Sales Tax or other similar tax where applicable plus any costs incurred by the Seller.
“Deferral Period”: in relation to Murabaha Contract means the period set out in the Third Schedule which shall be calculated by reference to the number of days from (and including) the Settlement Date to (but excluding) the Deferred Payment Date of Murabaha Contract.
“Deferred Payment Date(s)”: in relation to Murabaha Contract means the date(s) for payment of the Deferred Price pursuant to Murabaha Contract which date(s) shall be specified in the Offer Notice relating to Murabaha Contract.
“Deferred Price”: in relation to Murabaha Contract means the sums payable thereunder to the Seller by the Purchaser for the Commodities on the Deferred Payment Date and for the avoidance of doubt means the aggregate of the Cost Price and the Murabaha Profit.
“Finance Documents”: this Agreement, the Murabaha Contracts made pursuant to this Agreement and any other document designated as such by the Seller and the Purchaser.
“Guarantee(s)”: the guarantee(s) specified in the Third Schedule (if any) and any renewals or replacements thereof guaranteeing the Purchaser’s payment obligations under the Finance Documents.
“Guarantor(s)”: the obligor(s) under the Guarantee(s).
“Murabaha Contract”: a single (one-off) contract made pursuant to Clause 4 of this Agreement by the exchange of an Offer Notice and an Acceptance Notice between the Seller and the Purchaser for the sale of Commodities, which have been purchased by the Seller from the Supplier, to the Purchaser at the Deferred Price.
Brooge Petroleum and gas Investment Company FZC |
“Murabaha Profit”: the Deferred Price less the Cost Price as set out in the Offer Notice and determined in accordance with the Third Schedule.
“Offer Notice”: a notice to be sent by the Seller to the Purchaser offering to conclude Murabaha Contract substantially in the form set out in the Second Schedule or in such other form as the Purchaser and the Seller shall agree.
“Offer to Sell to Third Party Purchaser”: an offer to sell to the Third Party Purchaser the commodities sold pursuant to Murabaha Contract, substantially in the form set out in the Sixth Schedule or in such other form as the Purchaser and Seller may agree.
“Order to Purchase”: a notice to be sent by the Purchaser to the Seller indicating a wish and a promise to purchase Commodities substantially in the form set out in the First Schedule or in such other form as the Purchaser and the Seller shall agrees
“Securities” the agreements, deeds or other documents specified in the Third Schedule executed in favour of the Seller or delivered to the Seller for the purpose of securing all or any of the Purchaser’s obligations under the Finance Documents.
“Settlement Date”: the due date for payment of the Cost Price by the Seller to the Supplier in respect of any Commodities.
“Supplier”: the original seller of the Commodities which are the subject of Murabaha Contract.
“Third Party Purchaser”: the third party purchaser of Commodities from the Purchaser, as identified in the Offer to Sell to Third Party Purchaser.
2.2 | References to Clauses and Schedules are references to clauses of and schedules to this Agreement. |
2.3 | The Schedules to this Agreement form an integral part hereof |
3. | Conditions of Arrangement |
3.1 | The Seller shall not be obliged to issue any Offer Notice to the Purchaser and the Seller’s willingness to enter into Murabaha Contract is subject to absolute discretion of the Seller. |
3.2 | The proposed Cost Price of the Commodities in relation to Murabaha Contract shall he not less than the minimum amount set out (if any) in the Third Schedule. |
3.3 | Murabaha Contract shall be on such terms that the last Deferred Payment Date applicable thereto shall fall on the date of expiry of the period commencing on the Settlement Date and extending over the period set out in the Third Schedule as the Deferral Period. |
3.4 | The Purchaser may not submit any Order to Purchase after the expiry of the availability period for first utilisation if such an availability period is specified in the Third Schedule. |
3.5 | The Murabaha Profit shall he determined on the basis set out in the Third Schedule. |
3.6 | The Purchaser undertakes to provide the Seller with the Securities. |
3.7 | The Seller shall not be bound to perform any obligation expressed to be assumed by it hereunder until the Seller shall have received in form and substance satisfactory to the Seller each of the documents specified in the Fourth Schedule (if any). |
3.8 | The conditions inserted in the Fourth Schedule (if any) are for the benefit of the Seller and the Seller may waive or defer the delivery of any such documents by the Purchaser and the Purchaser shall not be entitled to claim that it is not bound by the terms of this Agreement because of any such waiver or deferment. |
3.9 | The Purchaser undertakes to deliver to the Seller the financial statements required in the Fourth Schedule (if any) at the times and in the manner set out in that schedule. |
4. | Implementation and Performance of Murabaha Contact |
4.1 | The Purchaser shall send the Seller an Order to Purchase to be received by the Seller not later than close of business in Abu Dhabi on the third Business Day before the proposed Settlement Date. |
4.2 | Subject to Clause 3.1, the Seller shall purchase the Commodities from the Supplier in accordance with the terms of the Order to Purchase and shall take delivery of the Commodities physically or constructively. The Seller shall then determine the Murabaha Profit and send the Purchaser an Offer Notice. |
Brooge Petroleum and gas Investment Company FZC | 2 |
4.3 | Either party may initiate the Murabaha transaction by notifying the other by telephone or any other media of its desire to enter into such transaction in which case the Purchaser shall not have to send an Order to Purchase and shall, if it so wills, promise the Seller to immediately purchase the Commodities from the Seller (on such terns as may be agreed) once the Commodities have been acquired by the Seller. |
4.4 | If the Purchaser has received from the Seller an Offer Notice, then the Purchaser shall immediately purchase the commodities from the Seller by sending the Seller an Acceptance Notice. |
4.5 | As soon as the Seller has received the Acceptance Notice, Murabaha Contract upon the terms of the Offer Notice and the Acceptance Notice and incorporating the terms and conditions set out herein shall thereby be created. |
4.6 | In the event of the Purchaser’s failure to purchase the Commodities pursuant to Murabaha Contract, the Purchaser shall compensate the Seller in respect of all actual costs, claims and expenses of whatsoever nature suffered or incurred by the Seller as a result of such failure including the difference between the Cost Price and the sale price of the Commodities to a third party. |
4.7 | The Purchaser hereby unconditionally and irrevocably undertakes to pay on the Deferred Payment Date the Deferred Price to the account of the Seller specified in the Offer Notice, or to such other account as the Seller may from time to time notify in writing to the Purchaser. |
4.8 | The Seller does not wish to enter into Murabaha Contract to which any Value Added Tax, Sales Tax or other similar tax is applicable and the Purchaser will not propose such transactions. In any event, if any such tax is applicable to Murabaha Contract, it shall be included in the Cost Price. |
4.9 | The Seller hereby notifies the Purchaser that in accordance with the Seller’s internal rules and procedures all telephone calls made by or to the Purchaser concerning any proposed Murabaha Contract may be tape recorded by the Seller. Accordingly, the Purchaser (a) consents to the recording of the telephone conversations of trading, marketing and/or other personnel of the Purchaser and its officers, employees, agents and affiliates in connection with this Agreement or Murabaha Contract, (b) agrees to obtain any necessary consent of and give notice of such recording to its personnel and (c) agrees that recordings may be submitted in evidence in any proceedings relating to this Agreement or Murabaha Contract. The Purchaser hereby authorises the Seller to accept, rely and act upon telephone instructions received front the Purchaser or its authorised representatives. The Purchaser acknowledges full awareness of the risks associated with communications via telephone and the Seller shall have no liabilities for accepting, relying or acting upon such communication. The Purchaser agrees to indemnify the Seller against all losses, claims and costs incurred by the Seller as result of accepting, relying or acting upon such communication. |
5. | Terms Applicable to Purchase and Sale of Commodities |
5.1 | The Commodities comprised in Murabaha Contract shall be sold by the Seller to the Purchaser upon the like terms as to shipment and delivery and otherwise as are applicable to the sale thereof by the Supplier to the Seller. |
5.2 | The Seller shall not be deemed to give to the Purchaser any warranty or representation whatsoever relating to the Commodities whether arising by implication, by law or otherwise and without prejudice to the generality of the foregoing any such warranty or representation is hereby expressly excluded to the extent permitted by law and sanctioned by the Sharia’. |
5.3 | The Seller shall, upon written request from the Purchaser, supply the Purchaser with copies of warrants or holding certificates for the Commodities bearing specific numbers thereof. |
5.4 | Following the conclusion of Murabaha Contract, the Purchaser shall be entitled (but not obligated) to appoint the Seller as the Purchaser’s messenger (without any liability on the Seller) to send to Third Party Purchaser the Offer to Sell to Third Party Purchaser for sale of the Commodities on the same day to Third Party Purchaser at no less than the Cost Price for immediate delivery and payment on that Settlement Date. The responsibility of the Seller in this respect shall only be that of a messenger and the Seller shall have no authority or liability to enforce or to guarantee the Third Party Purchaser’s payment of the sale price to the Purchaser. The execution of any transactions in accordance with this sub-clause shall not constitute any obligation on any party to execute any future transaction in the same manner regardless of how often such execution might have reoccurred. |
5.5 | The Purchaser hereby authorises the Seller to perform all the acts necessary to implement the duties provided for in the preceding sub-clause. |
5.6 | The Seller shall not be entitled to a fee or other remuneration in connection with its appointment as messenger under this Agreement. |
5.7 | The Seller may purchase the Commodities from Suppliers within transactions related to several transactions for a group of the Seller’s clients including the Purchaser. |
5.8 | The Seller may at any time set-off its obligation to pay amounts due to the Purchaser against the Purchaser’s obligation to pay amounts due to the Seller. The Seller agrees to provide to the Purchaser details of any such set-off. |
Brooge Petroleum and gas Investment Company FZC | 3 |
6. | Representations and warranties |
The Purchaser hereby represents and warrants and at all times during the term of this Agreement shall be deemed to represent and warrant to the Seller that
(a) | the Purchaser has full power and authority to enter into each of the Finance Documents and that the execution of each of the Finance Documents has been duly authorised by all necessary corporate action; |
(b) | to the best of the Purchaser’s knowledge, information and belief all information given to the Seller by the Purchaser in connection with any of the Finance Documents is true; |
(c) | there are no governmental or administrative licenses or consents required on the part of the Purchaser to permit the entering into and due performance of each of the Finance Documents in accordance with their terms and that any filing or registration requirements on the part of the Purchaser have been complied with; |
(d) | the obligations on the part of the Purchaser arising under each of the Finance Documents shall constitute valid, binding and enforceable obligations of the Purchaser; |
(e) | neither the entering into nor the performance of any of the Finance Documents shall constitute or give rise to any breach of or default under any agreement by which the Purchaser is bound; |
(f) | under the laws of the country of incorporation of the Purchaser in force at the date hereof the claims of the Seller against the Purchaser under each of the Finance Documents will rank at least pari passu with the claims of all its other unsecured creditors in respect of its other present and future unsecured obligations; |
(g) | the execution of the Finance Documents by the Purchaser constitutes and the Purchaser’s exercise of its rights and performance of its obligations thereunder will constitute private and commercial acts done and performed for private and commercial purposes; |
(h) | the Purchaser is not entitled to claim immunity from suit, execution, attachment or other legal process in any country. |
7. | Acceleration Events |
7.1 | If any of the following events shall occur and be continuing: |
(a) | any representation made by the Purchaser in or in connection with any Finance Document proves to have been incorrect or inaccurate when made or deemed to be made or at any time during the continuation of this Agreement; |
(b) | the Purchaser fails to pay any sum due under any Finance Document at the time, in the currency and in the manner specified herein or therein; |
(c) | the Purchaser defaults in the due performance of any other obligation under any of the Finance Documents; |
(d) | there is a material and adverse change in the financial condition of the Purchaser or the Guarantor(s) which gives reasonable grounds in the opinion of the Seller to believe that he Purchaser or the Guarantor(s) may not (or may be unable to) perform its/their obligations under any Finance Document or Guarantee or (as the case may be); |
(e) | the Purchaser is or becomes insolvent or makes a general assignment for the benefit of or a composition with its creditors or is declared bankrupt by a court of law or any steps are taken for its dissolution or winding-up (except for the purpose of reconstruction or amalgamation, where the Seller has been satisfied as to the transfer or otherwise of the Purchaser’s obligations under the Finance Documents) or for the appointment of a receiver, trustee or similar officer of the Purchaser or all or any of its assets; |
(f) | If the trade license of the Purchaser is not renewed on any renewal due date, is withdrawn, cancelled or assigned to another party; |
(g) | at any time it is unlawful for the Seller to make, fund or allow to remain outstanding any amount owing to the Seller under any Finance Document; or |
(h) | any other event reasonably deemed by the Seller to be a sufficient reason that the Purchaser may not discharge any of its obligations under any Finance Document then, and in any such case, the Seller shall be entitled by written notice to the Purchaser: |
(1) | to declare that the Purchaser shall no longer be entitled to submit any Order to Purchase; |
Brooge Petroleum and gas Investment Company FZC | 4 |
(2) | to declare in respect of any Offer Notice that such Offer Notice is void (in which event the Purchaser may not issue an Acceptance Notice related to such Offer Notice); and |
(3) | to require the Purchaser to make immediate payment to the Seller of the Deferred Price in respect of Murabaha Contract then subsisting. |
7.2 | The Purchaser shall promptly notify the Seller of any Acceleration Event. |
8. | Costs and Payment |
8.1 | The Purchaser shall compensate the Seller in respect of all actual claims, costs and expenses suffered or incurred by the Seller as a consequence of the Purchaser’s failure to comply with any of the terms and conditions of the Finance Documents. |
8.2 | The Purchaser shall pay all reasonable legal fees, out-of-pocket expenses and other costs of the Seller in connection with the enforcement by action or otherwise of any of the Finance Documents, or the recovery of any sum due hereunder or thereunder to the extent that such enforcement or action was caused by the Purchaser being in breach of such Finance Document. |
8.3 | The Purchaser shall pay all stamp, registration or other taxes (if any) to which any Finance Document is or at any time may be subject and shall indemnify the Seller against any liability now or hereafter imposed upon the Seller to make to any applicable authority payment of any Value Added Tax, Sales Tax or other tax in relation to the transactions carried out under any Finance Document. |
8.4 | If the Purchaser (by way of procrastination) fails to pay any amount due under any Finance Document at the time, in the currency, and in the manner specified herein or therein, then the Purchaser hereby undertakes to donate to charity an amount at the rate of 10% per annum of the overdue amount which shall be handed over to the Seller to be donated on the Purchaser’s behalf to such charitable foundations or scientific or medical institutions or for any other charitable cause as the Seller may select under the supervision of its Sharia’ Fatwa and Supervisory Board after deducting all actual claims, costs and expenses suffered or incurred by the Seller as a consequence of the Purchaser’s failure to comply with any of the terms and conditions of any of the Finance Documents. Any delay in payment shall be deemed procrastination unless proven otherwise. |
8.5 | All payments to be made by the Purchaser to the Seller pursuant to any Finance Document shall be made without any counterclaim or other deductions and in immediately available mid transferable funds for good value on the due date to the account specified in the Acceptance Notice or to such account at such bank as the Seller shall from time to time notify the Purchaser. |
8.6 | All payments shall be made by the Purchaser to the Seller without deduction for and free from any present or future taxes, levies, imposts, duties, charges, fees, deductions, withholdings, restrictions or conditions of any nature imposed, levied, collected or assessed by any taxing authority. |
8.7 | If any payment due from the Purchaser falls on a day which is not a Business Day, the payment shall be made on the next succeeding Business Day save where the next succeeding Business Day falls in the next calendar month in which event the payment shall be due and be made on the immediately preceding Business Day. |
8.8 | The Purchaser hereby authorises the Seller to apply any credit balance in any currency to which the Purchaser is entitled on any account of the Purchaser with the Seller or any of its branches or subsidiaries in satisfaction of any sum due and payable from the Purchaser hereunder or under Murabaha Contract; for this purpose the Seller is authorised to purchase with the monies standing to the credit of any such account such other currencies as may be necessary to effect such application. The Seller shall not be obliged to exercise any right given to it by this Clause. |
9. | Law and Jurisdiction |
9.1 | This Agreement and every other Finance Documents made hereunder and the construction, performance and validity hereof and thereof shall be governed in all respects in accordance with the laws of the United Arab Emirates save to the extent these conflict with the rules and principles of the Islamic Sharia’, when the latter shall prevail. The parties hereto agree to be bound by the exclusive determination of the Sharia’ Fatwa and Supervisory Board of the Seller (the “Board”) as to whether any such conflict exists, and if it does the appropriate provision of the Islamic Sharia’ to be applied. The parties agree that the court(s) shall apply the applicable provision of the Islamic Sharia’ so determined by the Board. |
9.2 | The parties hereto recognise and agree that the principle of the payment of interest is repugnant to the Sharia’ and accordingly, to the extent that any legal system would (but for the provisions of this Clause) impose (whether by contract or by statute) any obligation to pay interest, the parties hereto hereby irrevocably and unconditionally expressly waive and reject any entitlement to recover interest from each other. |
9.3 | The parties hereto submit to the jurisdiction of the courts of the United Arab Emirates for the purpose of any proceedings arising out of or in connection with any of the Finance Documents. |
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9.4 | To the extent that the Purchaser may in any jurisdiction claim for itself or its assets immunity from suit, execution, attachment (whether in aid of execution, before judgment or otherwise) or other legal process and to the extent that in any such jurisdiction there may be attributed to itself or its assets such immunity (whether or not claimed) the Purchaser hereby irrevocably agrees not to claim and hereby irrevocably waives such immunity in respect of its obligations under this Agreement and all other Finance Documents. |
9.5 | The Purchaser agrees that the process by which any suit, action or proceeding in the United Arab Emirates which may arise out of or in connection with any Finance Document is begun may be served on the Purchaser by being delivered at the address specified for such in the Fourth Schedule (if any). Nothing contained herein shall affect the right to serve process in any other manner permitted by law. |
10. | General Provisions |
10.1 | Entire Agreement |
This Agreement constitutes the entire agreement between the parties. Each party confirms that it has not relied upon any representation not recorded in this document inducing it enter into this Agreement.
10.2 | Severability |
If any of the provisions of this Agreement is judged to be illegal or unenforceable, the continuation in full force and effect of the remainder of them will not be prejudiced unless rite substantive purpose of this Agreement is then frustrated, in which case either party may terminate this Agreement forthwith on written notice.
10.3 | Waiver |
No forbearance or delay by either party in enforcing its respective rights will prejudice or restrict the rights of that party, and no waiver of any such rights or of any breach of any contractual terns will be deemed to be a waiver of any other right or of any later breach.
10.4 | Assignment |
The Seller may assign or transfer all or any of its rights and/or obligations under this Agreement. The Purchase shall not transfer any of its rights or obligations under this Agreement without the prior written consent of the Seller (such consent not be unreasonably withheld).
10.5 | Amendments |
This Agreement may be amended with the prior written consent of both parties.
10.6 | Notices |
10.6.1 | Any notices or other documents to be given, served or sent hereunder or in connection herewith shall be in accordance with the Fifth Schedule and shall be deemed to have been served when received. |
10.6.2 | Any notice received on a day which is not a Business Day for the addressee shall be deemed to have been given at its opening on the next succeeding Business Day. |
10.6.3 | The Purchaser hereby agrees to indemnify and hold the Seller harmless against all liabilities, costs, claims, losses, damages or expenses which the Seller may suffer or incur as a result of acting upon any instructions received by fax under the signature of the Purchaser or a purportedly authorised officer or representative of the Purchaser. |
10.7 | Counterparts |
This Agreement may be entered into in the form of two counterparts, each executed by one of the parties, and, provided both the parties shall so execute this Agreement, each of the executed counterparts, when duly exchanged or delivered, shall be deemed to be an original but, taken together, they shall constitute one instrument.
10.8 | Termination |
No expiry or termination of this Agreement (as the case may be) shall affect the rights and obligations of either party hereunder in relation to Murabaha Contract if then subsisting.
AS WITNESS the hands of the duly authorised representatives of the parties hereto
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Exhibit 10.52
First Abu Dhabi Bank
21st June 2018
To: M/s. Brooge Petroleum and Gas Investment Company FZC (BPGIC)
Subject: Phase 1 Facility of total AED 351,518,000.00 extended to finance Construction of 14 nos. clean oil and green fuel storage tanks with total capacity of 398,600 m3 and Office Building within the storage terminal premises (“Office Building”).
In reference to your outstanding subject facility, please note that as per recent approvals, the following condition was deleted/ waived and is no longer required to be perfected:
“Pledge over the Customer’s ownerships shares in favor of FAB-ISD”
Yours sincerely, | |
First Abu Dhabi Bank | |
/s/ Khalid Durra | |
Khalid Durra | |
MD, Head of Corporate Banking Abu Dhabi |
Exhibit 10.53
|
|
Ref. No A-132/B-18
Date: 01st July 2018
To : Flowi Facility Management
P O Box 128838
Dubai
United Arab Emirates
Subject: Renewal of Service Agreement dated 01st April 2017
Dear Sirs,
With reference to Clause 15.3 of the Service Agreement between Brooge Petroleum and Gas Investment Company FZC and Flowi Facility Management LLC dated 01st April 2017 and letter ref: A-097/B17 dated 24-August-17, we are pleased to advice you that aforementioned service agreement is hereby renewed for a further year upto 01st September 2019 .
Thank you and Kind Regards,
Yours Faithfully,
/s/ Nicolaas Paardenkooper |
For and on behalf of Brooge Petroleum and Gas Investment Company FZC
Nicolaas Paardenkooper
General Manager
Abu Dhabi, UAE | |
Tel + 971 2 633 3149 | |
Fax + 971 2 633 3152 | |
www.bpgic.com | E-mail: info@bpgic.com |
Exhibit 10.54
BPGIC TANK TERMINAL PHASE II-FUJAIRAH
CONTRACT FOR THE PROVISION
OF PROJECT MANAGEMENT
CONSULTANCY (PMC) SERVICES AGREEMENT
Prepared for
Brooge Petroleum And Gas Investment Company FZC (BPGIC)
MUCOG Ref. | 182901-PMO-CONT-001 Rev. 0 |
26 July 2018 |
MUC Oil & Gas Engineering Consultancy P.O. Box 67647, Sharjah, UAE Tel: +971 6 550 6555 Fax: +971 6 550 6953 |
www.mucog.com
front@mucog.com |
0 | 26 July 2018 | Issue for Client Review | N/A | 27 | IB | MS | MS | |||||||
Revision | Date | Description | Pages Affected | Total Pages | Prepared | Checked | Approved |
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Services - PMC | 2/23 |
TABLE OF CONTENTS
I. | REVISION HISTORY | 2 |
1. | AGREEMENT | 4 |
2. | CONDITIONS OF CLIENT / CONSULTANT MODEL SERVICES AGREEMENT (GENERAL CONDITIONS) | 6 |
3. | OBLIGATIONS OF THE CLIENT | 12 |
4. | OBLIGATIONS OF THE CONSULTANT | 13 |
5. | SCOPE OF SERVICE | 15 |
6. | COMMENCEMENT AND COMPLETION | 16 |
7. | VARIATION | 16 |
8. | TERMINATION | 17 |
9. | REMUNERATION AND PAYMENT | 18 |
10. | THE CONSULTANT’S PERFORMANCE | 19 |
11. | ADDITIONAL SERVICES | 20 |
12. | LIABILITY, INDEMNITY, COMPENSATION AND INSURANCE | 20 |
13. | DISPUTE AND ARBITRATION | 21 |
APPENDIX 1 - Scope of Services | 23 | |
APPENDIX 2 - Personnel, Equipment, Facilities and Services of Others to Be Provided By the Client | 24 | |
APPENDIX 3 - Remuneration, Payment and Commencement | 25 | |
APPENDIX 4 - Time Schedule | 26 |
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This Consulting Agreement (the “Agreement”) is entered into on [Date 03-09-2018] by and between:
a) | Brooge Petroleum & Gas Investment Company FZC (BPGIC) of P.O. Box 50170, Fujairah, United Arab Emirates (Hereinafter referred as the “Client” which expression shall include its successors in title and assigns) of the one part; and |
b) | MUC Oil and Gas Engineering Consultancy LLC of P.O. Box 4986, Fujairah (Hereinafter referred as “the Consultant”) of the other part. |
1. | AGREEMENT |
1.1 | The Client desires to undertake the Project and wishes to appoint and has accepted a proposal by the Consultant for the performance of such Services, and Consultant is willing to accept such appointment and provide the Services, and such Additional Services as the Client may require, upon the terms and conditions contained in this Agreement. |
Now, therefore, in consideration of the mutual covenants and promises contained herein, the parties hereto agree as follows:
1.1.1. | In this Agreement word and expressions shall have the same meanings as are respectively assigned to them. |
1.1.2. | The understanding reached by the Parties for the execution of the PMC Services as discussed vide Contract Ref: 152902-PMO-CONT-001 Rev.1 Dated 8th Nov. 2015; is hereby referred. Therein the cost and the fees for the provisions of the PMC services were mutually agreed to be discussed thereafter. This Contract seeks to formalise the scopes of PMC Services and the associated fees for the BPGIC Phase II Project. |
1.1.3. | The Following documents shall be deemed to form and be read and construed as part of the Agreement. Any inconsistency or discrepancy between these documents shall be resolved in the following order of priority: |
(a) | The Conditions of Client/Consultant Model Services Agreement (General Conditions) |
(b) | Proposal by the Consultant reference 1829AA-BD-PRP-001 Rev. 0 dated 26 –July– 2018 |
(c) | The Appendices, namely: |
i. | Appendix 1- Scope of Services. |
ii. | Appendix 2- Equipment, Facilities and Services of Others to be provided by the Client or Others. |
iii. | Appendix 3- Remuneration and Payment |
iv. | Appendix 4- Time Schedule for the Services |
1.1.4. | In consideration of the payments to be made by the Client to the Consultant under this Agreement, the Consultant hereby agrees with the Client to perform the Services in conformity with the provisions of the Agreement. |
1.1.5. | The Client hereby agrees to pay the Consultant in consideration of the performance of the Services such amount as may become payable under the provisions of the Agreement at times and in the manner prescribed by the Agreement. |
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1.1.6. | Both parties acknowledge that they have read this Agreement, understand it, and agree to be bound by its terms and further agree that it is the entire agreement between the parties hereto superseding all prior agreements, written or oral, relating to the subject matter hereof. No modification or waiver of any provision shall be binding unless in writing signed by the Party against whom such modification or waiver is sought to be enforced. |
1.1.7. | Any additions, amendments and variations to this Agreement shall be binding only if in writing and signed by the duly authorized representatives of the Client and the Consultant. This Agreement supersedes any previous agreements or arrangements between the parties in respect of the Services and any Additional Services (whether oral or written) and represents the entire understanding between the parties in relation thereto. |
1.1.8. | This Agreement embodies the entire contract between Client and Consultant with respect to Services. Parties shall not be bound by or be liable for any statement, representation, promise, inducement or understanding of any kind or nature not set forth herein. No changes, amendments or modifications of the terms or conditions of this Agreement shall be valid unless reduced to writing and signed by both Parties. |
1.1.9. | This Agreement shall come into force on the Effective Date; which shall be when this Agreement is signed by both Parties. |
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed the day and year below in accordance with the Laws of United Arab Emirates.
AUTHORISED SIGNATURE(S) OF CLIENT | AUTHORISED SIGNATURE(S) OF CONSULTANT | |||
Name: | N.L. Paardenkocper | Name: | Mohammad Shaan | |
Position: | CEO | Position: | M.D. | |
Signature | /s/ N.L. Paardenkocper | Signature | /s/ Mohammad Shaan | |
Date: | 03 September 2018 | Date: | 03 September 2018 | |
In the presence of: | In the presence of: | |||
Name | Anita Derrick Coutenho | Name | Bamebopa Ibrahim | |
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2. | CONDITIONS OF CLIENT / CONSULTANT MODEL SERVICES AGREEMENT (GENERAL CONDITIONS) |
2.1. | Definitions: The following words and expressions shall have the meaning assigned to them except where the context otherwise requires: |
2.1.1. | “Additional Services” means the additional services defined in Clause 11; |
2.1.2. | “Agreed Compensation” means sums as defined in Appendix 3 [Remuneration and Payment] which are payable under the Agreement. |
2.1.3. | “Agreement” means the Conditions of the Client/Consultant Model Services Agreement (General Conditions) together with Appendix 1 [Scope of Services], Appendix 2 [Personnel, Equipment, Facilities and Services of Others to be Provided by the Client], Appendix 3 [Remuneration and Payment], Appendix 4 [Time Schedule for Services], and letter of offer and acceptance. |
2.1.4. | “Claim” means any claim, litigation, arbitration, dispute, proceeding, cause of action, demand or suit (including by way of contribution or indemnity); |
2.1.5. | “Client/Employer” means Brooge Petroleum And Gas Investment Company FZC, (BPGIC), Fujairah, UAE |
2.1.6. | “Confidential Information” means all information in whatsoever form (oral, written, electronic or visual) relating to the Project ; containing or consisting of material of a technical, operational, administrative, economic, planning, business or financial nature or in the nature of intellectual property rights which include without limitation business records, telecommunication, designs, the infrastructure and equipment, software, products, costs and prices, sources, research, personnel records, training and instruction manuals, presentations, company records, and regulatory approvals. |
2.1.7. | “Consultant” means MUC Oil and Gas Engineering Consultancy LLC; employed by the Client to provide the Services and legal successors to the Consultant and permitted assignees. Project Management Consultant (PMC) has the same meaning as Consultant. |
2.1.8 | “Contractor” means any and all persons, firms, companies or partnerships (including their subcontractors), other than the Consultant, contracted by Client to carry out works or services related to the Project. |
2.1.9. | “Country to which the Project relates is United Arab Emirates (UAE) |
2.1.10. | “Day” means the period between anyone midnight and the next in the United Arab Emirates according to the Gregorian calendar; |
2.1.11. | “Effective Date” means the date first above written in Agreement Preamble on which the Agreement comes into force and the Parties’ obligations in respect thereof commence. |
2.1.12. | “EPC” means detailed engineering, procurement, construction and commissioning works and services that are to be performed by the EPC Contractor for the Project. |
2.1.13. | “EPC Contractor” means any and all persons, firms, companies or partnerships (including their subcontractors) contracted by Client to carry out EPC works or services related to the Project. |
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2.1.14. | “EPC Master Programme” means the master programme for the EPC works performed by the EPC Contractor for the Project, prepared by the EPC Contractor, as updated and amended from time to time in accordance with the EPC Contract. |
2.1.15. | “Party and Parties” means the Client and the Consultant and ‘third party’ means any other person or entity as the context requires; |
2.1.16. | “Personnel” means persons hired by the Consultant or by any sub consultant as employees and assigned to the performance of the Services or any part thereof. |
2.1.17. | “Project” means the development of BPGIC Terminal Phase II at Fujairah in United Arab Emirates (UAE) for the Client; for which Services are desired. |
2.1.18. | “Services” means the services defined in Appendix 1 [Scope of Services] to be performed by the Consultant in accordance with the Agreement which comprise Normal Services and Additional Services. |
2.1.19. | “Works” means the permanent works (if any) to be executed (including the goods and equipment to be supplied to the Client) for the achievement of the Project. |
2.1.20. | “Site” means the place where the Works are to be executed, including storage and working areas, and to which plant and materials are to be delivered, and any other places as may be specified in the Contract as forming part of the Site. |
2.1.21. | “Third Party” means any person or entity other than the Client and the Consultant. |
2.1.22. | “FIDIC” means the Federation Internationale des Ingenieurs-Conseils, the international federation of consulting engineers. |
2.1.23. | “Time for Completion”: The Time for Completion shall be as per the EPC Time Schedule for the Project. |
2.1.24. | “Variation” means any and all changes in or relative to the Services mutually agreed by the Parties in accordance with the provisions of this Agreement. |
2.1.25. | “Written” or “in-writing” means hand-written, type-written, printed or electronically made, and resulting in a permanent un-editable record. |
2.2. | Interpretations |
2.2.1. | The clause titles or headings appearing in this Agreement are for reference only and shall not affect its construction or interpretation. |
2.2.2. | The singular includes the plural and vice versa where the context requires. |
2.2.3. | The documents forming this Agreement are to be taken as mutually explanatory of one another. If there is a conflict between these documents, the last to be agreed shall prevail, unless otherwise specified in the Agreement. |
2.2.4. | Words indicating one gender include all genders. |
2.2.5. | Provisions including the word “agree”, “agreed” or “agreement” require the agreement to be recorded in writing, and signed by both Parties. |
2.2.6. | References to persons shall include individuals, bodies’ corporate, unincorporated associations, partnerships and any organization or entity having legal capacity |
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2.2.7. | References to any statute or statutory provision or order or regulation made there under shall include that statute, provision, order or regulation as amended, modified, re-enacted or replaced from time to time whether before or after the date hereof |
2.2.8. | References in this Agreement to a “Law” or “Laws” shall be construed as a reference to the same as it or they may from time to time be amended, modified or re-enacted force. |
2.2.9. | In all cases where consent is required to be given by any Party, it shall be construed to mean consent in writing.” |
2.2.10. | Words importing persons shall include firms, companies and corporations and vice versa. |
2.2.11. | Any reference to a clause, sub clause or schedule shall mean a clause, sub clause or schedule of this Agreement. |
2.2.12. | The words “including” and “includes”, and any variants of those words, will be read as if followed by the words “without limitation”. |
2.3. | Communications and Notice |
2.3.1. | All notices to be given by either party to the other hereunder shall be given in writing and shall be served by personally delivering the same by hand to the office or address of that party specified above or to such other address as the party to be served shall have previously notified to the other for this purpose or by sending the same by recorded delivery post to such address. |
2.3.2. | Notices to be served under the Agreement shall be in non-electronic written forms and will take effect from receipt at the addresses stated in this Agreement. Delivery can be by hand or by registered letter. All communications among all the Project Parties including the third parties, sub-contractor, shall be governed as per the Project Coordination and Communication Procedure, to be developed by the PMC subject to the approval of the Client. The Procedure shall outline the basic requirements to be adhered to during exchange of Project correspondence between Client, & Consultant and EPC Contractor. |
2.3.3. | All matters discussed verbally or on telephone shall be formalized in writing within two (2) working days by the Party making the comments. The Consultant shall prepare minutes of meetings of all the meetings with the Client, for the Client’s approval, unless the Client agrees otherwise. |
2.3.4. | A notice given under this Clause 2.3 is effective when actually received. |
2.3.5. | The language for all notices or other communications under this Agreement shall be English. If there are versions or parts of this Agreement which are written in more than one language, the English version shall prevail. |
2.3.6. | Addresses for Notice shall be as mentioned below |
Client’s address:
Brooge Petroleum and Gas Investment Company FZC
P.O. Box: 50170, Fujairah
United Arab Emirates
Tel: +971 2 6333 116
Fax: +971 2 6333 490
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Consultant’s address:
MUC Oil & Gas Engineering Consultancy
P.O. Box: 4986, Fujairah
United Arab Emirates
Tel.: +971 9 228 1319
Fax: +971 9 228 1348
2.4. | Law and Languages |
2.4.1. | The language or languages of this Agreement and the ruling language of this Agreement shall be English. |
2.4.2. | This Agreement shall be governed by and construed in accordance with the laws of United Arab Emirates and of the Emirate of Abu Dhabi, United Arab Emirates |
2.5. | Change in Legislation |
2.5.1. | If after the date of the Agreement the cost or duration of the Services is altered as a result of changes in or additions to the laws or regulations in the Country in which the Services are required by the Client to be performed the agreed remuneration and time for completion shall be adjusted accordingly. |
2.6. | Assignment |
2.6.1. | The Consultant shall not assign the benefits, other than money, from the Agreement without the written consent of the Client. |
2.6.2. | The Consultant shall not initiate or terminate any sub-contract for performance of all or part of the services without the written consent of the Client. |
2.6.3. | Neither the Client nor the Consultant shall assign obligations under the Agreement without the written consent of the other Party. |
2.7. | Intellectual Property Rights |
2.7.1. | The Consultant retains the copyright of all the documents, deliverables, analysis, designs, drawings and reports (“Deliverables”) prepared by him and all revisions thereof and additions thereto. |
2.7.2. | The Client shall only be entitled to use such Deliverables only in their original form or photocopy them such only for the Work and the purpose for which they are intended at no cost, and where such use is permitted by the Consultant, the Client hereby agrees not to modify and that the copyrights of such documents shall be maintained and at all-time vested with the Consultant. The Consultant hereby grants to the Client’s assignees and successors in title an irrevocable right to use the Deliverables or copy them only for the Work and the purpose for which they are intended at no cost. |
2.8. | Publication |
2.8.1. | The Consultant, either alone or jointly with others, can publish material relating to the Services. Publication shall be subject to approval of the Client if it is within two years of completion or termination of the Services |
2.8.2. | All the services, information, deliverables including drawings, reports, discussions, calculations, etc. under this Agreement shall be treated strictly confidential by the Consultant, and shall not be disclosed to any Third Party without the written consent of the Client. |
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2.9. | Conflict of Interest / Corruption and Fraud |
2.9.1. | Client acknowledges that Consultant provides similar services for a broad range of other companies/clients and agrees that Consultant shall be free to work for other companies/clients in matters that do not involve the use of any Proprietary Information or Confidential Information that has been disclosed by Client under the terms of this Agreement or do not directly relate to the specific Services provided by Consultant to Client under this Agreement. |
2.9.2. | Each Party shall use all efforts to prevent a conflict of interest situation from arising. Such efforts shall include, but not be limited to, establishing precautions to prevent its employees, agents, or representatives from making, receiving, providing or offering gifts, entertainment, payments, loans or other considerations for the purpose of influencing individuals to act contrary to the best interests of the other Party. |
2.9.3. | In the performance of obligations under this Agreement, the Consultant and his agents and employees shall comply with all applicable laws, rules, regulations and orders of any applicable jurisdiction within UAE. The Consultant hereby represents, warrants and covenants that he will neither receive nor offer, pay or promise to pay either directly or indirectly, anything of value to a “public official” (as defined below)in connection with any business opportunities which are the subject of this Agreement. Furthermore, the Consultant shall notify the Client immediately in writing with full particulars in the event that the Consultant receives a request from any public official requesting illicit payments. |
2.9.4. | A public official is: |
(a) | any official or employee of any government agency or government-owned or controlled enterprise; |
(b) | any person performing a public function; |
(c) | any official or employee of a public international organization, such as The World Bank; |
(d) | any candidate for political office; or |
(e) | any political party or an official of political party. |
2.10. | Force Majeure |
2.10.1. | For the purposes of this Contract, “Force Majeure” means an event which is beyond the reasonable control of a Party and which makes a Party’s performance of its obligations under the Contract impossible or so impractical as to be considered impossible under the circumstances, and includes, but is not limited to, war, riots, civil disorder, earthquake, fire, explosion, storm, flood or other adverse weather conditions, strikes, lockouts or other industrial actions. |
2.10.2. | Neither party shall be responsible for any delay or failure in performance, except obligations to make payments hereunder for work previously performed, to the extent that such delay or failure was caused by a force majeure event including an Act of God, war, civil disturbance, governmental action, labour dispute unrelated to the party claiming the force majeure event, or denial of access to the site or any other event beyond the reasonable control of the claiming party subjected to having both the parties mutually approve and treat such event as a Force Majeure as it occurs. |
2.10.3. | Force Majeure shall not include (i) any event which is caused by the negligence or intentional action of a Party or such Party’s Sub Consultant or agents or employees, nor (ii) any event which a diligent Party could reasonably have been expected to both (A) take into account at the time of the conclusion of this Contract and (B) avoid or overcome in the carrying out of its obligations hereunder. |
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2.10.4. | Force Majeure shall not include insufficiency of funds or failure to make any payment required hereunder. |
2.10.5. | The failure of a Party to fulfil any of its obligations under the Contract shall not be considered to be a breach of, or default under this Contract insofar as such inability arises from an event of Force Majeure, provided that the Party affected by such an event; (a) has taken all reasonable precautions, due care and reasonable alternative measures in order to carry out the terms and conditions of this Contract; and (b) has informed the other Party in writing not later than fifteen (15) days following the occurrence of such an event. |
2.10.6. | Performance under this Agreement shall resume promptly once the cause of delay or failure ceases and an equitable adjustment shall be made to the price and/or schedule of the Services pursuant to the provisions set out in Article 7. |
Any period within which a Party shall, pursuant to this Contract, complete any action or task, shall be extended for a period equal to the time during which such Party was unable to perform such action as a result of Force Majeure.
2.11. | Changes to the Services |
2.11.1. | Client may direct changes within the general Scope of Services. Upon notification of such direction, Consultant shall prepare an estimate of the additional cost and time required, if any, to perform the change. Upon mutual written agreement, Consultant shall perform the change and an equitable adjustment shall be made to the price and/or time schedule as appropriate. These paragraphs shall be subject to the provisions set out in Article 7. |
2.12. | Proprietary Information and Confidentiality |
2.12.1. | Proprietary information (“Proprietary Information”) developed or disclosed by either party under this Agreement shall include Confidential Information or shall be clearly labelled and identified as Proprietary Information by the disclosing party at the time of disclosure. Oral communications pertaining to the Services shall be presumed to be Proprietary Information unless otherwise indicated by the disclosing party. |
2.12.2. | Each party shall handle Proprietary Information received from the other party in the same manner as the receiving party handles its own Proprietary Information. Disclosure of Proprietary Information shall be restricted to those individuals who need access to such Proprietary Information as needed to ensure proper performance of the Services. |
2.12.3. | Neither party shall be liable for disclosure or use of Proprietary Information which: (1) was known by the receiving party at the time of the disclosure due to circumstances or events unrelated to this Agreement; (2) is generally available to the public without breach of this Agreement; (3) is disclosed with the prior written approval of the disclosing party; or (4) is required to be released by law or court order. |
2.12.4. | Client shall not disclose the Deliverables relating to the Services to a third party without the prior written authorization of Consultant, except to bankers and financers provided that such disclosure is necessary for the Project and shall be governed by the Non-Disclosure Agreement signed between the Parties. Where applicable law requires immediate disclosure by Consultant, Consultant shall make its best efforts to give prior notice to Client. At Client’s request and expense, Consultant will assist Client in making such disclosures as may be required by law. |
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2.12.5. | Each party shall return all Proprietary Information relating to this Agreement to the disclosing party upon request of the disclosing party or upon termination of this Agreement, whichever occurs first. Each party shall have the right to retain a copy of the Proprietary Information for the internal records and subject to the restrictions set forth in this section. This section shall survive termination of this Agreement. |
2.13. | Relation between the Parties |
2.13.1. | Nothing contained herein shall be construed as establishing a relation of master and servant or of principal and agent as between the Client and the Consultant. The Consultant, subject to this Contract, has complete charge of Personnel and Sub Consultant, if any, performing the Services and shall be fully responsible for the Services performed by them or on their behalf hereunder. |
2.13,2. | Nothing in this Agreement shall be construed as creating any privity of contract between the Consultant and the Client. |
2.13.3. | The Consultant shall be an independent contractor with respect to the Services and any Additional Services to be performed under this Agreement. Neither the Consultant nor its employees shall be deemed to be the servants or employees of the Client. |
3. | OBLIGATIONS OF THE CLIENT |
3.1. | Information: In order not to delay the Consultant in the performance of the Services, the Client shall within a reasonable time give to the Consultant free of cost all information and other design which may pertain to the Services which the Client is able to obtain. |
3.2. | To the extent reasonably possible, Consultant shall bring to Client’s attention any obvious error or inadequacy in the data or information provided by the Client, the Consultant shall exercise all due diligence and verification needed to check the information provided and supplied by the Client or on behalf of the Client. However, the Consultant shall not be responsible or liable for any errors, incongruences or inadequacies in such information supplied or provided by the Client or any of its appointed contractors including the EPC Contractor, its sub-contractor, suppliers, vendors, licensor and information relating to the site conditions both surface and subsurface, feedstock composition” |
3.3. | Client may assist Consultant to co-ordinate with other parties at Site; however, it is the Consultant’s obligation to coordinate with the relevant parties. Client shall provide in a timely fashion such information to Consultant as is reasonably necessary for the performance of the Services. |
3.4. | The Client shall supply or where applicable arrange for others to supply to the Consultant without charge and in such reasonable time so as not to prevent, delay or disrupt the performance of the Services and any Additional Services all data, information and records relating to the Project which are in its possession or under its control and which are reasonably requested from time to time by the Consultant (but without prejudice to the Consultant’s obligation to obtain directly from the Contractor all such data, information and records as the Contractor may possess and as the Consultant may be properly required) and may give the Consultant such assistance as the Consultant may be reasonably required in connection with the performance of the Services and Additional Services, if any. |
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3.5. | The Client shall issue to officials, agents and representatives of the concerned organizations, all such instructions as may be necessary or appropriate for prompt and effective implementation of the Services, provided such instruction is in compliance with clause 3.3. However, all such instructions shall be prepared by the Client upon the Consultant’s request. |
3.6. | The Client shall use its best efforts to assist the Consultant to obtain permits which may be required for right-of-way, entry upon the lands and properties for the purposes of this Contract. |
3.7. | Decisions: On all matters properly referred to him in writing by the Consultant the Client shall give his decision in writing within a reasonable time so as not to delay the Services |
3.8. | Equipment and Facilities: The Client shall make available, free of cost, to the Consultant for the purpose of the Services the equipment and facilities described in Appendix 2 (Personnel, Equipment, Facilities, and Services of Others to be provided by the Client). |
3.9. | Services of Others: The Client shall at his cost arrange for the provision of services from others as described in Appendix 2 [Personnel, Equipment, Facilities and Services of Others to be provided by the Client], and the Consultant shall cooperate with the suppliers of such services but shall not be responsible for them or their performance. |
3.10. | Client’s Representative: The Client shall designate an official or individual to be his representative for the administration of the Agreement. |
3.11. | Payment of Services: the Client shall pay the Consultant for the Services in accordance with clause 9 of this Agreement. |
4. | OBLIGATIONS OF THE CONSULTANT |
4.1. | Scope of Services: The Consultant shall perform the Services relating to the Project. The scope of the services is stated in Appendix 1 (Scope of Services). |
4.2. | Normal Services: are those which are described in Appendix 1, and which the Consultant is obliged to perform under this Agreement. |
4.3. | Additional Services: are those which are not Normal, but are performed by the Consultant pursuant to Clause 11 of this Agreement. |
4.4. | Duty of Care and Exercise of Authority: |
4.4.1. | The Consultant shall exercise responsible skill, care and diligence in the performance of his obligations under this Agreement. |
4.4.2. | Where the Services include the exercise of powers or performance of duties authorized or required by the terms of a contract between the Client and any third party, the Consultant may; |
(a) | have due regard to the third party contract provided that the details of such powers and duties are acceptable to him and agreed in writing where they are not described in Appendix 1 [Scope of Services]; |
(b) | if authorized to certify, determine or exercise discretion to do so fairly between the Client and third party not as an arbitrator but as an independent professional exercising his judgment with reasonable skill, care and diligence; and |
(c) | if so authorized vary the obligations of any third party, subject to obtaining the prior approval of the Client to any variation which can have an important effect on costs or quality or time (except in any emergency when the Consultant shall inform the Client as soon as practicable). |
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4.5. | The Consultant shall perform the Services and carry out their obligations with all due diligence, efficiency, and economy, in accordance with generally accepted professional techniques and practices, and shall observe sound management practices, and employ appropriate advanced technology and safe methods. The Consultant shall always act, in respect of any matter relating to this Contract or to the Services, as faithful advisers to the Client, and shall at all times support and safeguard the Client’s legitimate interests in any dealings with other parties. |
4.6. | The Consultant shall review and approve all and any invoice issued by the EPC Contractor which is generated with respect to the Project, and provide such approvals to the Client and the Financing Party upon receiving written instruction from the Client. |
4.7. | The Consultant shall perform the Services in accordance with the Applicable Law and shall take all practicable steps to ensure that any Sub Consultant (if any), as well as the Personnel of the Consultant and any Sub Consultant, comply with the Applicable Law. |
4.8. | The Consultant warrants to the Client that it has exercised and will continue to exercise in the performance of the Services and the Additional Services, (if any), all the reasonable skill, care and diligence to be expected of a properly qualified and competent professional experienced in carrying out services for a project of a similar size, scope and complexity to the Project. |
4.9. | Without prejudice to the generality of clause 4.8, the Consultant shall: |
4.9.1. | keep the Client fully and properly informed on all aspects of the Project for which the Consultant is responsible and provide the Client with such information and comments as it may from time to time be required from the Consultant with regard to the Project promptly and in good time so as not to delay or disrupt the progress of the Project or to cause the Client to be in breach of any of its obligations under any of the Third Party Agreements; |
4.9.2. | use all reasonable endeavours to cause the Works to be completed within the Time for Completion; |
4.9.3. | Consultant shall at all times perform Services with due diligence and use all reasonable endeavours to ensure that the EPC Contractor and other third parties comply with their obligations under their respective contracts with Client, which the Consultant is required to manage. |
4.9.4. | Consultant shall independently perform Services and manage the EPC phase of the Project in accordance with the terms and conditions of this Agreement in a diligent and prudent business like consultant working in the sole interest of the Client and the Project. Consultant shall nevertheless be required to obtain prior Client’s approval on all critical issues as listed under the clause. For the avoidance of doubt, the above shall include but not be limited to all legal, financial and commercial matters that require exercise by Client of financial or other delegation of authority, including but not limited to the following: Contractual Notices, vendor / sub-contractor, award recommendations for purchase orders, concessions requests / design deviations, changes to terms / conditions, variations, completion / acceptance certificates, settlement of claims, variations and disputes, waiver of liquidated damages, termination / cancellation, completion and acceptance, etc. |
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4.9.5. | Consultant shall be responsible for bringing to Client’s attention all such issues requiring Client’s input in a timely manner. Consultant shall also promptly notify Client of any circumstances that may delay or adversely affect the Services. |
4.9.6. | Consultant shall be responsible for reviewing / approving EPC Contractor’s documents / deliverables in accordance with the requirements of the EPC Contract. Consultant shall take into consideration Client comments on any such document. |
4.9.7. | Perform the Services and any Additional Services in such manner and at such time so that no act, omission or default of the Consultant shall cause the Client to be in breach of any applicable Laws or to be in breach of any of the Third Party Agreements or of the Construction Contracts; |
4.9.8. | give to the Client such assistance as it may be reasonably required in assessing any claims made by or against the Contractor or any other party engaged in connection with the Works or any of the other parties to the Third Party Agreements during the Construction stage of the Project; |
4.10. | The Consultant warrants and represents that: |
(a) | it is validly existing under the Laws of its jurisdiction; |
(b) | it has the legal capacity to undertake the Services in the United Arab Emirates and the Emirate of Fujairah and at all times comply with applicable Laws; |
(c) | it has the power to enter into and perform, and has taken all necessary action to authorize the entry into, and performance of, this Agreement; and |
(d) | It is in compliance in all material respects with all applicable Laws. |
4.11. | Anything supplied by or paid for by the Client for the use of the Consultant shall be the property of the Client and where practicable shall be so marked. The Consultant shall not use the Client’s property for any purpose other than for the performance of the Services. The Consultant is not entitled to exclusive use of the Client’s property. The Consultant shall maintain the Client’s property with care, and shall return such property to the Client when so requested by the Client. |
4.12. | Representatives: For the administration of the agreement the Consultant shall designate an official or individual to be his representative. |
4.13. | Changes in personnel: If it is necessary to replace any of the personnel provided by the Consultant due to unsatisfactory performance, the Consultant shall arrange for replacement by the person of comparable competence as soon as reasonably possible. |
4.14. | The cost of such replacement shall be borne by the Consultant except where the replacement is requested by the Client and in such case, the Client shall bear the cost of replacement unless it is agreed the replacement is due to misconduct or inability to perform satisfactorily. |
5. | SCOPE OF SERVICE |
5.1. | The Consultant shall provide the Services set forth, or incorporated by reference, in Appendix 1-, attached hereto and incorporated herein by reference (“Services”), in accordance with the terms set forth therein. |
5.2. | The Consultant shall carry out the Services in accordance with the law and in accordance with the best engineering practices. |
5.3. | The Consultant shall satisfy itself as to the nature and scope of the work required by the Services and shall ensure that it has sufficient personnel at all times throughout the duration of this Contract who possess the appropriate skills and are sufficiently experienced, efficient and qualified to perform the tasks required of them. The Consultant shall be liable for any act, omission, negligence, error, or lack of skill, care or diligence by the Consultant or its personnel in the performance of the Services or in respect of any liability imposed under law or under this Contract. |
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5.4. | Notwithstanding the terms set in clause 5.3, the Consultant shall not be responsible for the performance of the EPC Contractor, subcontractors, or any other 3rd Party working on the Project. The Consultant shall not be liable for any act, omission, negligence, error, or lack of skill, care or diligence by the EPC Contractor, subcontractors, or any other 3rd Party working on the Project. However, the Consultant shall promptly bring to the notice of the Client with regards to the performance, any act of omissions, errors, negligence or lack of skill on the part of the Contractor, and any of its sub-contractor, vendors, suppliers, etc.” |
5.5. | The Consultant’s personnel shall attend all meetings as may be mutually agreed between the Parties and specified in the Project Communication and Coordination Procedure to be prepared by the Consultant upon the commencement of this Project. The Consultant shall be represented at these meetings by personnel with suitable authority, experience and qualifications, who can make direct and reasonable contributions to such meetings. |
6. | COMMENCEMENT AND COMPLETION |
6.1. | The Agreement is effective from the date of receipt by the Consultant of the Client’s letter of acceptance of the Consultant’s proposal or the date of the latest signature necessary to complete the formal Agreement, if any, whichever is the later. |
6.2. | The Services shall be commenced on the Commencement Date as specified in Appendix 3. |
6.3. | In these circumstances: (a) if certain Services have to be suspended, the time for their completion shall be extended until the circumstances no longer apply plus a reasonable period not exceeding 42 days for resumption of them; and (b) if the speed of performing certain Services has to be reduced, the time for their completion shall be extended as may be made necessary by the circumstances. |
6.4. | The Services shall lapse till the completion of the Works/Project, as per the EPC Contract Time for Completion (as may be mutually agreed between the Employer and the EPC Contractor). |
7. | VARIATION |
7.1. | The Consultant shall not be required to commence the varied Services until such time as the Client has given his written approval of the fees associated with the varied Services. At any time, either party may give the other party a variation notice requesting a variation. |
7.2. | If the variation notice is given by the Client, the notice shall include details of the proposed variation. Within 7 days after receipt of the notice and before the Consultant carries out the variation, the Consultant shall give the Client a notice (together with full supporting details) setting out: |
(a) | any objection the Consultant has to the proposed variation; |
(b) | a detailed breakdown of any adjustment to this Contract that would be necessary in order to enable the Consultant to perform its obligations under this Contract; |
(c) | the steps the Consultant proposes to take to implement the proposed variation; and |
(d) | a detailed breakdown of any increase or decrease in the Contract fees and Project price as a result of the proposed variation. |
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7.3. | If the variation notice is given by the Consultant, the notice shall (together with full supporting details) set out: |
(a) | details of the proposed variation; and |
(b) | all of the matters referred to in Article 7.2(b) to 7.2(d) inclusive. |
7.4. | Within 14 days after receipt of a Variation Notice from the Consultant, the Client shall give the Consultant a notice setting out any objection the Client has to the proposed variation. |
7.5. | Within 14 days after the time period referred to in either Article 7.2 or 7.4 as relevant, the parties shall attempt to reach agreement on whether to proceed with the proposed variation and the terms and conditions of that Variation. If the parties have not reached agreement within that period, the Client shall make the determination, acting reasonably. With respect to any increase or decrease in the Contract fees as a result of the proposed variation, the Client’s determination shall be made on the basis of the rates and prices referred to in Appendix 3 (including any schedule of rates). If there are no such applicable rates and prices, then a fair and reasonable valuation of the Variation shall be made by the Client. This valuation will include an amount comprising profit and overheads (including project and head office). |
7.6. | Promptly after the Parties have agreed, or the Client has determined and the Consultant has accepted such determination, a variation in accordance with Article 7.5, the Client shall give the Consultant a contract addendum setting out the details of the agreed or determined variation. Within 7 days after receiving the contract addendum, the Consultant shall return to the Client a copy of that contract addendum signed on behalf of the Consultant. |
7.7. | In the case of variation due to the extension of the duration of the Project Management Consultancy service, the amount to be paid by the Client shall be as specified in Appendix 3 —Remuneration, Payment and Commencement. |
7.8. | The Consultant is not entitled to any payment (pursuant to this Contract or otherwise at law) in relation to any variation of the Services unless that variation has been agreed or determined in accordance with this Article 7. |
7.9. | No Variation issued in accordance with this Contract will vitiate or invalidate this Contract. |
8. | TERMINATION |
8.1. | By the Client: |
8.1.1. | The Client may terminate this Contract, by not less than Sixty (60) days written notice of termination (“Effective Date of Termination”) to the Consultant, to be given after the occurrence of any of the events specified in paragraphs (a) through (d) of this Sub-Clause 8.1.1 |
(a) | if the Consultant do not remedy a failure in the performance of their obligations under the Contract, within thirty (30) days after being notified or within any further period as the Client may have subsequently approved in writing; | |
(b) | if the Consultant become insolvent or bankrupt or enter into any agreements with their creditors for relief of debt or take advantage of any law for the benefit of debtors or go into liquidation or receivership whether compulsory or voluntary; | |
(c) | if the Consultant fails to comply with any final decision reached as a result of arbitration proceedings; | |
(d) | if it is shown that the Consultant is in breach of Clause 2.9 and notwithstanding any penalties or other sanctions to which the Consultant may be subject under the laws of UAE, the Client will be entitled to terminate the Agreement in accordance this Clause 8.1.1 and the Consultant shall be deemed to have breached Clause 4. |
8.1.2. | Notwithstanding any penalties that may be enforced against the Consultant under the laws of UAE; the Consultant will be deemed to be in breach of Clause 4, and the Client will be entitled to terminate the Agreement with proper reason, and in accordance with Clause 8.1.1 for the followings: |
(a) | In case of misrepresentation of facts during selection or execution of agreement including the use of collusive practices by the Consultant intended to influence the selection process or the execution of a contract. | |
(b) | If the Consultant offering, giving, receiving or soliciting anything of value with a view to influence the behavior or action of anyone, whether a public official or otherwise, directly or indirectly during the selection process or service period of the Agreement. |
8.1.3. | The Client may terminate this Contract, or any part thereof, at any time for its convenience in case of the project suspension or cessation by giving at least 60 days’ notice of termination Following such termination as specified in Clause 8.1, the Client shall pay to the Consultant such sums as are due to the Consultant for its performance of its obligations under this Contract up to and including the Effective Date of Termination. In the case of Project suspension, the Consultant retains the exclusive right to continue providing its services once the Project is recommenced. |
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8.1.4. | “If the Consultant has provided the Client with notices for force majeure events which in total a period exceeding 2 months, the Client may terminate the Contract by giving at least 7 days’ notice period after the force majeure event lasting more than 2 months, or within one week of a force majeure event that is deemed in the opinion of the Parties to have a long term devastation outcome which has the potential to stall the Project” |
8.2. | By the Consultant: |
8.2.1. | The Consultant may terminate this Contract, by not less than Sixty (60) days written notice to the Client, such notice to be given after the occurrence of any of the events specified in paragraphs (a) through (c) of this Sub-Clause 8.2.1: |
(a) | if the Client fails to pay any monies due to the Consultant pursuant to this Contract and not subject to dispute within thirty (30) days after receiving written notice from the Consultant that such payment is overdue; | |
(b) | if the Client is in material breach of its obligations pursuant to this Contract and has not remedied the same within thirty (30) days (or such longer period as the Consultant may have subsequently approved in writing) following the receipt by the Client of the Consultant’ notice specifying such breach; | |
(c) | if the Client fails to comply with any final decision reached as a result of arbitration proceedings. |
8.3. | Cessation of Services |
8.3.1. | Upon receipt of notice of termination under clause 8, the Consultant shall take all necessary steps to bring the Services to a close in a prompt and orderly manner and shall make every reasonable effort to keep expenditures for this purpose to a minimum. |
8.3.2. | Termination of the Agreement shall not prejudice or affect the accrued rights of Parties or claims and liabilities of the Parties. |
8.3.3. | After termination of the Agreement, the provisions of Clause 12 shall remain in force. |
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8.4. | Payment upon Termination |
8.4.1. | Upon termination of this Contract pursuant to clause 8.1 or 8.2, the Client shall make the following payments to the Consultant: |
(a) | Remuneration and reimbursable direct costs expenditure pursuant to Clause 9 for Services satisfactorily performed prior to the effective date of termination. Effective date of termination for purposes of this Sub-Clause means the date when the prescribed notice period would expire. |
9. | REMUNERATION AND PAYMENT |
9.1. | Remuneration and Payment |
9.1.1. | The remuneration payable to the Consultant in respect of the Services shall consist of a fixed fee to be paid in accordance with Appendix 3. The Fee is inclusive of all expenses, disbursements, wages of the Consultant’s personnel (as per the employment policy of the Consultant’s organization), overheads expenditure relating to Consultant Operations and all fees required to be paid by the Consultant in connection with the performance of the Services. |
9.1.2. | Where the Client has required the Consultant to appoint selected consultant as the Consultant’s sub consultant or any other third parties, fees owed to those sub-consultants or third party shall be paid by the Client in addition to the Consultant’s own fees. |
9.1.3. | Any third party services such as soil investigation, Independent certifier, material testing, and host of other services not enlisted in the Appendix 1; shall be borne by the Client pursuant to the provision of this sub-clause 9.1.3. The Consultant shall not be responsible nor bear any liability for the performance nor the timely completion of any third party activities, and in such event that the delay of third party services affect the completion of the Project. |
9.1.4. | In the event the Services are impeded or delayed by the Client or the project suspended, the Fees payable to the Consultant shall be paid while the delay lasts; provided the Consultant has complied with its obligations under the Contract. |
9.1.5. | The Client shall pay the Consultant for Normal Services in accordance with Consultant the Conditions and with the details stated in Appendix 3 [Remuneration and Payment], and shall pay for Additional Services at rates and prices which are given in or based on those in Appendix 3 [Remuneration and Payment] so far as they are applicable but otherwise as are agreed in accordance with Clause7.2. |
9.1.6. | Unless otherwise agreed in writing the Client shall pay the Consultant in respect of any Additional Services: |
(a) | The extra time spent by the Consultant’s personnel in the performance of the Services; and | |
(b) | The net cost of all other extra expense incurred by the Consultant, provided the Client has provided prior approval on such expenses. |
9.1.7. | The currencies applicable to the Agreement are those stated in Appendix 3 [Remuneration and Payment]. |
9.1.8. | If any item or part of an item in an invoice submitted by the Consultant is contested by the Client, the Client shall give a notice of his intention to withhold payment with reasons and shall not delay payment on the remainder of the invoice, provided the Consultant has provided the Client with an invoice setting out the uncontested amounts |
9.2. | Time for Payment |
9.2.1. | Amounts due to the Consultant shall be paid within 30 days of the Consultant’s invoice. The invoice shall include the reference number for this Contract, the invoice number, the period or Services covered by the invoice, the project name and the Contract reference. |
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9.2.2. | The Client shall not withhold payment of any fee properly due to the Consultant without giving the Consultant a notice of his intention to withhold payment, with reasons, no later than fourteen (14) days prior to the date on which the fee payment becomes due. If no such notice of an intention to withhold payment is given then the Consultant shall have an enforceable contractual right to such payment. |
10. | THE CONSULTANT’S PERFORMANCE |
10.1. | The Services. The Consultant: |
(a) | shall promptly provide to the Client the notices, documents and other information requested by the Client as may be relevant to the Consultant’s scope of work under this Agreement, to properly perform its obligations under any Project agreement; |
(b) | shall monitor the compliance with occupational, environmental protection, health and safety by all personnel and contractors (including the main contractor) on the Site against the applicable environmental and safety regulations of the relevant authorities. In addition, the Consultant shall provide reports to the Client regarding compliance and non-compliance with the same; |
(c) | shall immediately advise the Client of any variance from the performance schedule, the EPC Master Programme, or the Project budget; and |
(d) | may notify the Client forthwith if the Consultant has reasonable grounds to believe that the design provided by the Client’s contractors engaged on the Project (including the EPC Contractor) is not expected to be within the Project budget. |
10.2. | Interface and Co-ordination. The Consultant shall: |
(a) | be responsible for the co-ordination of and interface between the Client’s consultants and contractors employed or otherwise engaged in respect of the Project (including the EPC Contractor); and the Client shall ensure adequate authority are vested with the Consultant to ensure such coordination and all parties shall be duly notified of such authority. |
(b) | ensure that the EPC Contractor engaged on the Project comply with the requirements of the EPC Contract with the Client and promptly inform the Client of any and all instances where the EPC Contractor is or may be in breach of its obligations under the EPC Contract with the Client; |
(c) | attend meetings requested by the Client, take minutes of those meetings and ensure such minutes are circulated for comment. |
10.3. | Authority. Unless otherwise stated in this Contract, the Consultant does not have the authority, without the Client’s approval, to: |
(a) | make or agree, on behalf of the Client, any amendment to a Project agreement, or relieve any third parties of their duties, obligations or responsibilities under separate contractual arrangements with the Client; |
(b) | make, agree to or authorise any variation of the form, quality, quantity or extent of the works or services being performed by third parties under separate contractual arrangements with the Client; |
(c) | approve any claim (whether for an extension of time or otherwise) requested by third parties or otherwise under separate contractual arrangements with the Client; |
(d) | enter into any contractual or other commitment on behalf of the Client; |
(e) | act on any instructions received from a third party; |
(f) | approve any variation or amendment to any programme requested by a third party or under separate contractual arrangements with the Client; or |
(g) | order tests to be carried out or witnessed at any place other than within the United Arab Emirates. |
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10.4. | Standard of Performance. The Consultant shall ensure that the Services are performed in accordance with and that the Project documents and agreements comply with: |
(a) | the Time for Completion; |
(b) | the Project budget; and |
(c) | this Contract. |
10.5. | Environment, Health and Safety Plan. The Client may, upon reasonable notice to the Consultant, request evidence from the Consultant of the EPC Contractor’s compliance with the Environment, Health and Safety Plan and its respective environmental, health and safety and quality assurance plans. The Consultant shall request and provide to the Client such evidence within the time requested by the Client. |
11. | ADDITIONAL SERVICES |
11.1 | Additional Services means: (a) Services as approved by the Client outside the Scope of Services described in Appendix 1; (b) Services to be performed during the period extended, beyond the original schedule time for completion of the Services; (c) any re-doing of any part of the Services as a result of Client’s instructions. Additional Services shall constitute a variation as defined in Article 7. |
11.2. | If, in the opinion of the Client, it is necessary to perform Additional Services during the currency of the Contract for the purpose of the Project, the Consultant, with the prior written authorization of the Client, shall carry out such Additional Services and the Consultant shall submit proposal for such Additional Services for Client’s Approval prior to the performance of such Additional Services in accordance with Article 7. |
11.3. | The Consultant shall not be entitled to receive any payment for the performance of Additional Services unless it has complied with this Article 7 prior to the commencement of any such Additional Services. |
12. | LIABILITY, INDEMNITY, COMPENSATION AND INSURANCE |
12.1. | Liability of the Consultant: The Consultant shall only be liable to pay compensation to the Client arising out of or connection with the agreement if a breach of Clause 4 is established against him. |
12.2. | Liability of the Client: The Client shall be liable to the Consultant if a breach of his duty to the Consultant is established against the Client. |
12.3. | Compensation: If it is considered either party is liable to the other compensation shall be payable only on the following terms: |
(a) | Such compensation shall be limited to the amount of reasonably foreseeable loss and damage suffered as a result of such breach but not otherwise. |
(b) | In any event the amount of such compensation shall be limited to the amount specified in Clause 12.5 |
(c) | If either party is considered to be liable jointly with third parties to the other, the proportion of compensation payable by that party shall be limited to that proportion of liability which is attributable to his breach. |
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12.4. | Duration of Liability: Notwithstanding anything else in this Agreement or any legal requirement of the UAE, neither the Client nor the Consultant shall be considered liable for any loss or damage resulting from any occurrence unless a claim is formally made on him during the duration of this Agreement and up until a period of 6 months after the date of commissioning or the date of the taking-over certificate, whichever is earlier. |
12.5. | Limit of Compensation: |
12.5.1. | “The Consultant shall be liable to the Client, if a breach of its obligations to the Client is established against the Consultant. The total liability of the Consultant on any & all claims, whether in contract, tort (including negligence) or otherwise arising out of or connected with or resulting from the furnishing of service, shall be exclusively claimed against the Consultant’s Professional Indemnity insurance.” |
12.5.2. | The Consultant will be liable to maintain a valid and applicable Professional Indemnity Insurance against his liability which may arise during the Project in relation to the Consultant’s Obligations under this Agreement. |
12.5.3. | The maximum amount of compensation payable by either party to the other in respect of liability under clause 12.1 is limited to the sum of USD 2,000,000 (Two Million United States Dollars) which represents the total sum of the Consultant’s Professional Indemnity Insurance. This limit is without prejudice to any agreed compensation imposed by this Agreement. |
12.5.4. | Each party agrees to waive all claims against the other in so far as the aggregate of compensation which might otherwise be payable exceeds the maximum amount payable. |
12.6. | Indemnity: So far as the law governing this agreement permits, the Client shall indemnify the Consultant against the adverse effects of all claims including claims by third parties which arise out of or in connection with the Agreement including any made after the expiry of the period of liability referred to in Clause 12.4, except insofar as they are covered by the insurance arranged under the terms of Clause 12.5. |
12.6.1. | Notwithstanding its obligations under this Agreement or otherwise at law or any other jurisdiction, the Consultant shall maintain professional indemnity insurance with insurers acceptable to the Client to cover any liability the Consultant owes to the Client relating to performance of the Services under this Agreement throughout its duration and the duration of liability under Clause 12.4. |
12.7. | The Consultant shall maintain Professional Indemnity insurance throughout the duration of this Agreement and for 6 months thereafter. |
13. | DISPUTE AND ARBITRATION |
13.1. | The parties agree to seek to resolve any dispute or difference of any kind whatsoever arising between them under or in relation to the Contract or the subject matter thereof amicably before referring any such dispute or difference to the Management Committee or arbitration in accordance with the following provisions of this clause 13. |
13.2. | If in the opinion of either party it is not possible to settle a dispute or difference through mutual consultation that party shall first refer the dispute or difference in writing to a committee comprising one senior manager of each of the parties or such replacement persons as may be nominated from time to time who shall not be involved in the day to day running and/or management of the Contract (the “Management Committee”) with a copy of the notice of referral to the other party. The Management Committee shall convene at a mutually agreed venue within seven (7) days of the notice of referral to consider the information available and shall provide an opinion within twenty one (21) days of the notice of referral, provided that the parties may agree to longer periods for convening the Management Committee and for it to provide an opinion. |
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13.3. | If, within such twenty-one (21) day or longer period as aforesaid, a unanimous decision is reached by the Management Committee resolving the dispute or difference, such decision shall be final and binding on the parties. |
13.4. | If the parties fail to resolve any dispute or difference amicably or via the Management Committee in accordance with Clause 1Error! Reference source not found.3.3 (including where the Management Committee does not reach an unanimous decision or is not properly convened in accordance with Clause 13.2), the dispute or difference shall (on the basis that a party wishes to pursue the dispute or difference) be referred to final determination by arbitration in accordance with clause 13.5 to 13.6. |
13.5. | The arbitration shall be conducted according to the Rules of the Abu Dhabi Commercial Conciliation and Arbitration Center (the “Rules”). The seat of arbitration shall be Abu Dhabi or any other mutually agreeable location. The language of the arbitration shall be English. In case of conflict between the Rules and the provisions of this clause, the provisions hereof shall prevail. The arbitral tribunal shall consist of a sole arbitrator the identity of whom the parties shall agree to. If the parties fail to agree to the identity of an arbitrator within a period of twenty (20) days after notice of the arbitration, then such arbitrator shall be nominated and appointed in accordance with the Rules. |
13.6. | Notwithstanding any reference to dispute resolution hereunder, the parties shall continue to perform their respective obligations under the Contract unless the Parties otherwise agree. |
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Exhibit 10.55
Certain identified information has been excluded from the exhibit because it is both not material and would likely cause competitive harm to the registrant if publicly disclosed.
DATED THE 3 September 2018
BETWEEN
BROOGE PETROLEUM AND GAS INVESTMENT COMPANY FZC
(the “Employer”)
AND
AUDEX FUJAIRAH LL FZE
(the “Contractor”)
THE CONTRACT AGREEMENT
This Contract Agreement is made in the Year 2018 on the Date 3 September 2018
BETWEEN
(1) | Brooge Petroleum and Gas Investment Company FZC, Registration No. 13-FZC-1117, a free zone company existing in Fujairah and having its principal place at P.O. Box 50170, Fujairah, U.A.E (the -Employer”); and |
(2) | Audex Fujairah LL FZE, Registration No. 07-FZE-651, a company established in Fujairah Free Zone, United Arab Emirates (UAE) and having its registered address at P.O. Box 5461, Fujairah UAE (The “Contractor”) and principal place of business at Block C, Fujairah Free Zone - 1, P.O. Box 5461, Fujairah UAE. |
each a “Party” and collectively the “Parties”
WHEREAS
The Employer desires that the works (as defined at Clause 2 (Contract Documents) of this Contract Agreement as stated below) hereinafter referred to as (the “Works”), the design and construction execution and completion of the Works and remedying any defects therein in conformity with the provisions of the Contract of 8 Nos. of new oil storage tanks and related facilities at Fujairah Oil Industry Zone, United Arab Emirates (the “Project”) shall be undertaken by the Contractor and the Contractor has agreed to undertake the Works in accordance with the terms of the Contract (as defined in the General and Particular Conditions of Contract).
NOW IT IS AGREED as follows:
1.. | DEFINITIONS |
In this Contract Agreement, words and expressions shall have the same meanings as are assigned to them in the General Conditions of Contract and Particular Conditions unless the context otherwise requires.
2. | CONTRACT DOCUMENTS |
The documents forming the Contract are to be taken as mutually explanatory of one another and deemed to form and be construed as part of the Contract. For the purposes of interpretation, and unless otherwise agreed by the parties in writing, the priority of the documents shall be in accordance with the following sequence:
(a) | this Contract Agreement; |
(b) | the Particular Conditions of Contract (the” Particular Conditions”) annexed hereto at Schedule 1. Any Addendum to this Contract to be mutually agreed in writing and signed by both the Employer and the Contractor; |
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(c) | Employer’s Requirements covering the Scope of Works, as annexed hereto at Schedule 2 comprising the following: |
(i) | BPGIC Fujairah Terminal — Employer’s Requirement Document No. MUCOG-152903- ER-001 Rev 2 dated 07 February 2017 prepared by MUC Oil & Gas Engineering Consultancy (“MUCOG”); |
(ii) | Approved Vendor List Doc. No. MUCOG-142901-VL-001, Dated 25-02-2015 and Audex Proposed List in Phase 1 Contract; |
(iii) | Soil Investigation Report (Report No SD16000057 Rev.01, Dated 25th December 2016). |
(d) | The FIDIC Conditions of Contract for EPC/Turnkey Projects, First Edition, 1999 (“General Conditions”); |
(e) | the Contractor’s Proposal as per annexed hereto at Schedule 3. |
(f) | Baseline Programme annexed hereto at Schedule 4 (to be issued by the Contractor in 4 weeks after the Commencement Date) |
(g) | Bond Format annexed hereto at Schedule 5, including: |
1) | Part 1: Format of Performance Bond | |
2) | Part 2: Format of Advance Payment Bond | |
3) | Part 3: Format of Retention Bond | |
4) | Part 4: Format of Warranty Bond; |
(h) | Technical and Commercial Qualification List annexed hereto at Schedule 6 |
3. | CONTRACT PRICE |
3.1 | In consideration of the payments to be made by the Employer to the Contractor as hereinafter mentioned; the Contractor hereby covenants with the Employer to design execute and complete the Works and remedy any defects therein in conformity with the provisions of the Contract. The purpose, scope, design and/or other technical criteria for the Works to be undertaken by the Contractor pursuant to this Contract are set out in the documents referred to in Clause 2(c) above (the “Scope of Works”), which, for the avoidance of doubt, shall be deemed to be a document entitled “Employer’s Requirements” defined at the General Conditions. |
3.2 | The Employer hereby covenants to pay the Contractor, in consideration of the design execution and completion of the Works and the remedying of any defects, the Contract Price of . |
, hereinafter referred to as (the “Contract Price”).
3.3 | With reference to sub clause 14.1 of the General Conditions; the Contract Price shall be on a lump sum basis subject to such adjustments as allowed under the Contract. |
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3.4 | The Contract Price shall be paid in United States Dollars (“USD”). |
3.5 | Notwithstanding any clause to the contrary in the Contract, all amounts required to be paid by the Employer to the Contractor under the Contract shall be paid to such account or accounts opened under the Contractor’s name at such bank or banks as the Contractor may, in its sole discretion designate from time to time. |
4. | COMMENCEMENT DATE |
The commencement date is 10th September 2018.
5. | PARTIES’ REPRESENTATIVES |
5.1 | The Employer’s Representative shall be or such other person as may be appointed in accordance with the provisions of the Sub-Clause 3.1 of the General Conditions. |
5.2 | The Contractor’s Representative shall be , or such other person as may be appointed in accordance with the provisions of the Sub-Clause 4.3 of the General Conditions. |
6. | ASSIGNMENT, NOVATION OR TRANSFER |
Save that the Employer may assign, novate or transfer the Contract or any rights or benefits arising under the Contract to First Abu Dhabi Bank for the financing of the Project without the prior written approval of the Contractor provided prior written notice is given to the Contractor, the Parties are not entitled to assign, novate or transfer this Contract or any rights or benefits arising under this Contract without the prior written approval of the other party, whose approval shall not be unreasonable withheld.
7. | CONFIDENTIALITY |
7.1 | Each of the Employer and the Contractor undertakes hereto to keep the contents of this Contract and any information obtained relating to this Contract confidential. Such information includes but not limited to each party’s business, documents, data, clients, Project details, affairs or any information obtained directly or indirectly (“Confidential Information”) whether prior to, during or after the termination and/or the expiration of this Contract. |
7.2 | This Confidentiality clause and disclosure restrictions shall not apply to the following instances: |
a) | If the information is already public through no fault of such party to this Contract; |
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b) | Disclosure by a party to its affiliates, staff, subcontractors, agents, representatives, advisors and/or any person engaged by that party for the purposes of the execution of this Contract, provided that all such persons are legally bound by this confidentiality clause; |
c) | Disclosure required by applicable law, court order, or relevant governmental or regulatory authority (including but not limited to the Singapore Stock Exchange, London Stock Exchange) in UAE, UK or Singapore, or for the purposes of Arbitration; |
d) | Disclosure by the Employer to a lender or other assignee or transferee of any rights and obligations of a lender or for the purposes of any Lender’s requirements or security, and/ or any potential equity investors provided that all such receiving parties are legally bound by this confidentiality clause. |
8. | GOVERNING LAW |
The validity and construction of the Contract shall be governed by and be construed in accordance with the laws of the DIFC (Dubai International Financial Centre) of the United Arab Emirates.
9. | RIGHTS OF THIRD PARTIES |
Nothing in this Contract shall confer or purport to confer on any third party any benefit or the right to enforce any term of this Contract.
10. | INSURANCE |
The Contractor shall effect and maintain insurance in accordance with Clause 18 of the General Conditions, and as amended and supplemented by the Particular Conditions of this Contract.
11. | PROFESSIONAL INDEMNITY |
The Contractor shall provide the Employer with a Professional Indemnity for the design covering 60 months commencing at the date of the Taking-Over Certificate.
12. | CONTRACTOR’S PROJECT MANAGEMENT |
Contractor shall seek the Employer’s approval for its nominated Project Manager, and the Employer shall have the right to request the Contractor to change the Project Manager to a more qualified individual in case of any underperformance noted during his management period.
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In witness whereof the parties hereto have caused this Contract Agreement to be executed the day and year first before written in accordance with their respective laws of their respective countries and delivered this Contract Agreement on the date above written.
For and on behalf of Brooge Petroleum and Gas
Investment Company FZC
(Company Stamp) | N. L. Paardenkooper | /s/ N. L. Paardenkooper | |
Signed By: | Name (In Block) | ||
CEO | Signature | ||
Designation |
In the presence of Witness | ANITa CoUtinho | ||
Name (In Block) | |||
/s/ Anita Coutinho | |||
Passport No: | Signature | ||
Address | |||
For and on behalf of Audex Fujairah LL FZE
(Company Stamp) | Robert Dompeling | /s/ Robert Dompeling | |
Signed By: | Name (In Block) | ||
Director | Signature | ||
Designation |
In the presence of Witness | Tan TECk SENG | ||
Name (In Block) | |||
/s/ Tan Teck Seng | |||
Signature | |||
Address | |||
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Exhibit 10.56
EXECUTION VERSION
|
Master Istisna’ Agreement
Dated | 15 October 2018 |
Brooge Petroleum and Gas Investment Company FZC
(The Seller)
First Abu Dhabi Bank PJSC
(The Investment Agent)
Dentons & Co Level 4, Trade Centre – West Tower Abu Dhabi Mall PO Box 47656 Abu Dhabi United Arab Emirates |
|
Contents |
Contents (i)
Master Istisna’ Agreement
Dated | 15 October 2018 |
Between |
(1) | Brooge Petroleum and Gas Investment Company FZC, a free zone company incorporated under the laws of Fujairah Free Zone, Fujairah, UAE with registration number 13-FZC-1117 and whose principal place of business is at P.O. Box 50170, Fujairah, UAE (the Seller); and |
(2) | First Abu Dhabi Bank PJSC whose principal office is at FAB Building, Khalifa Business Park, Al Qurm District, P.O. Box 6316, Abu Dhabi, UAE acting in its capacity as Investment Agent for and on behalf of the Participants (the Investment Agent). |
Recitals |
A | In accordance with the Common Terms Agreement, the Participants have, amongst other things, appointed the Investment Agent as their agent under and in connection with the Finance Documents, including this Master Istisna’ Agreement (the Agreement). |
B | Under the Istisna’ Facility, the Investment Agent will buy the Istisna’ Asset from the Seller in accordance with the terms of this Agreement. |
C | The Seller has independently reviewed the Finance Documents for the purpose of ensuring their compliance with Shari’ah, and is satisfied that they do so comply. |
It is agreed:
1 | Definitions and interpretation |
1.1 | Definitions |
1.1.1 | Unless the context otherwise requires or unless otherwise defined in this Agreement, words and expressions defined in the Common Terms Agreement (directly or indirectly) shall have the same meaning when used in this Agreement. |
1.1.2 | In addition, in this Agreement: |
Acceptance means a document substantially in the form set out in Part 2 of Schedule 1 (Form of Offer Letter and Acceptance) or such other form as may be mutually agreed between the Seller and the Investment Agent.
Availability Period means the period from and including the date of this Agreement and ending on the Termination Date.
Available Commitment means at any time, in relation to a Participant, the Participant’s Commitment minus:
(a) | the amount of its Participant Contribution in relation to any Istisna’ Instalments that have been paid; and |
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(b) | in relation to any proposed Istisna’ Instalment, the amount of its Participant Contribution in relation to any Istisna’ Instalments that are due to be made on or before the proposed Istisna’ Payment Date. |
Available Facility means the aggregate for the time being of each Participant’s Available Commitment.
Common Terms Agreement means the agreement made on or about the date of this Agreement between the Seller (as the Company), each Guarantor, the Investment Agent, the Arranger, the Security Agent and each Original Participant.
Construction Contract means the construction agreement entered into between the Seller and the Contractor for the construction of the Istisna’ Asset as described in Schedule A (Specifications and other matters) to the Istisna’ Agreement created by the Offer Letter and Acceptance.
Contractor means, in relation to the Istisna’ Asset, the contractor under the Construction Contract described in Schedule A (Specifications and other matters) to the Istisna’ Agreement created by the Offer Letter and Acceptance.
Final Istisna’ Instalment means the last scheduled Istisna’ Instalment which is due to be paid on the Completion Date.
Istisna’ Agreement means an Istisna’ agreement in which the Seller sells and the Investment Agent buys the Istisna’ Asset in accordance with the provisions of this Agreement.
Istisna’ Asset means the assets to be constructed under the Istisna’ Agreement in accordance with the Specifications, as described in the Istisna’ Agreement.
Istisna’ Facility means a facility in a maximum amount equal to the Total Commitments.
Istisna” Instalment Notice means a notice substantially in the form contained in Schedule 2 (Istisna’ Instalment Notice).
Istisna’ Instalments means, in relation to the Istisna’ Agreement, the instalments of the Purchase Price payable in accordance with this Agreement, the Istisna’ Agreement and the other Finance Documents.
Istisna’ Payment means the payment of an Istisna’ Instalment.
Istisna’ Payment Date means a date when an Istisna’ Payment is made or has been paid or, as the context requires, is to be made.
Offer Letter means a document substantially in the form set out in Part 1 of Schedule 1 (Form of Offer Letter and Acceptance) or such other form as may be agreed between the Parties.
Party means a party to this Agreement.
Payment Certificate means a certificate in a form and substance satisfactory to the Investment Agent (acting on the instructions of the Majority Participants acting reasonably) setting out details of the payments to be made in relation to the Istisna’ Asset, and in respect of which the relevant Transaction Request relates, which shall each be:
(a) | approved, signed and stamped as accurate by the Contractor and the Consultant; |
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(b) | approved by the Bank Technical Adviser; and |
(c) | accompanied by all applicable invoices, purchase orders and other supporting documents issued by the Contractor evidencing the payments. |
Payment Support Documents means, in relation to the Istisna’ Asset, those documents that are to accompany an Istisna’ Instalment Notice as set out in Exhibit A (Payment Support Documents) to Schedule 2 (Istisna’ Instalment Notice).
Purchase Price means, in relation to the Istisna’ Agreement, AED350,000,000.
Specifications means the specifications of the Istisna’ Asset that are contained in Schedule A to the Istisna’ Agreement created by the Offer Letter and Acceptance.
Termination Date means the sooner to occur of:
(a) | the Projected Completion Date; and |
(b) | the date falling 18 months after the date of this Agreement. |
1.2 | Interpretation |
The provisions of clauses 1.2 (Interpretation) of the Common Terms Agreement shall apply to this Agreement, mutatis mutandis, as if the same had been set out in full in this Agreement except that references to “this Agreement” in the Common Terms Agreement are to be construed as references to this Agreement.
1.3 | Third party rights |
1.3.1 | Unless expressly provided to the contrary in this Agreement a person who is not a Party has no right under the Third Parties Act to enforce or to enjoy the benefit of any term of this Agreement. |
1.3.2 | Notwithstanding any term of any Finance Document, the Parties may rescind, vary, waive, release, assign, novate or otherwise dispose of all or any of their respective rights or obligations under this Agreement without the consent of any person who is not a Party. |
1.4 | Common Terms Agreement |
This Agreement and the rights and obligations of the Parties hereunder are subject to the provisions of the Common Terms Agreement. The provisions of the Common Terms Agreement that are expressed to apply to all Finance Documents apply equally to this Agreement.
2 | Istisna’ Facility |
2.1 | Istisna’ Facility |
Subject to the terms and conditions of this Agreement and the Common Terms Agreement, the Investment Agent makes available to the Seller the Istisna’ Facility.
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2.2 |
Purpose |
2.2.1 | The Seller shall apply all amounts of the Istisna’ Facility utilised by it towards payment of the Construction Costs. |
2.2.2 | No Finance Party is bound to monitor or verify the application of any Istisna’ Instalment paid to the Seller under this Agreement. |
2.3 | Cancellation of Commitments |
The Commitments which, at that time, are unutilised shall be immediately cancelled at the end of the Availability Period.
2.4 | No reinstatement of Commitments |
No amount of the Commitments cancelled under the Finance Documents may be subsequently reinstated.
3 | Conditions precedent |
3.1 | Initial conditions precedent |
Without limiting the provisions of Clause 3.2 (Further conditions precedent), the Seller may not deliver the Offer Letter unless the Investment Agent has issued a notice that the provisions of clause 4 (Initial conditions precedent) of the Common Terms Agreement have been satisfied.
3.2 | Further conditions precedent |
The Investment Agent shall only be obliged to enter into the Istisna’ Agreement if:
(a) | the Forward Lease has been entered into; |
(b) | on the date of the Offer Letter and the Acceptance: |
(i) | no Default is continuing or would result from the entry into of the proposed Istisna’ Agreement; and |
(ii) | the Repeating Representations to be made by each Obligor are true in all material respects, |
(c) | the Purchase Price: |
(i) | is denominated in Dirhams; and |
(ii) | does not exceed the lesser of: |
(A) | the Total Commitments; and |
(B) | 57.38% of the Total Project Cost; |
(d) | the Offer Letter is issued in the Availability Period; |
(e) | the Final Istisna’ Instalment does not fall after the Termination Date; and |
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(f) | it is not illegal or unlawful for the Investment Agent to enter into the Istisna’ Agreement. |
4 | Istisna’ Agreement |
4.1 | Offer Letter |
4.1.1 | Subject to the terms and conditions of this Agreement, if the Seller wants to enter into the Istisna’ Agreement it must deliver a completed and signed Offer Letter to the Investment Agent. |
4.1.2 | The Offer Letter must be issued on a Business Day falling within the Availability Period, and no later than 10 a.m. on the day falling four Business Days prior to the proposed first Istisna’ Payment Date. |
4.1.3 | Once given, the Offer Letter shall be irrevocable. |
4.1.4 | As soon as practicable after the Investment Agent receives the Offer Letter, it shall send a copy to each Participant. |
4.2 | Acceptance |
When the Investment Agent receives affirmative confirmations from all of the Participants that they wish to proceed and that they will provide their Participant Contributions in relation to the proposed Istisna’ Agreement, it shall deliver the Acceptance to the Seller by no later than the first Istisna’ Payment Date.
5 | Conditions precedent to the making of Istisna’ Payments |
In relation to the Istisna’ Agreement:
5.1 | Conditions precedent |
The Investment Agent shall only be obliged make an Istisna’ Payment if:
(a) | the provisions of clause 4 (Initial conditions precedent) of the Common Terms Agreement have been satisfied |
(b) | the Istisna’ Instalment Notice is received no later than 10 a.m. on the day falling four Business Days prior to the proposed Istisna’ Payment Date; |
(c) | the proposed Istisna’ Payment Date is within the Availability Period; |
(d) | in relation to each Istisna’ Payment (other than the Final Istisna’ Instalment), the Investment Agent receives a certificate from the Bank Technical Adviser confirming that the Bank Technical Adviser is satisfied that the Payment Support Documents attached to the Istisna’ Instalment Notice support the request for the Istisna’ Payment; |
(e) | the Istisna’ Payment: |
(i) | is denominated in Dirhams; |
(ii) | equals or is less than the Available Facility; and |
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(iii) | is an integral multiple of AED10,000,000; |
(f) | on the Istisna’ Payment Date: |
(i) | no Default is continuing or would result from the payment of that Istisna’ Payment on that Istisna’ Payment Date; and |
(ii) | the Repeating Representations to be made by each Obligor are true in all material respects. |
5.2 | Completion of an Istisna’ Instalment Notice |
An Istisna’ Instalment Notice is irrevocable and will not be regarded as having been duly completed unless it complies with the provisions of this Agreement.
5.3 | Istisna’ Payments |
If the Investment Agent determines that the conditions precedent contained in Clause 5.1 (Conditions precedent) have been satisfied, the Investment Agent shall make the relevant Istisna’ Payment on the relevant Istisna’ Payment Date.
6 | Specific sale and purchase provisions |
Unless specifically provided to the contrary the provisions of this Clause 6 shall apply to the Istisna’ Agreement.
6.1 | General |
6.1.1 | The Seller sells the Istisna’ Asset to the Investment Agent: |
(a) | for the Purchase Price which shall be paid by the making of the Istisna’ Instalments; |
(b) | in accordance with the Specifications; and |
(c) | with completion of the Istisna’ Asset being on or before the Projected Completion Date, |
all in accordance with the provisions of this Agreement, the Istisna’ Agreement and the other Finance Documents.
6.1.2 | The Investment Agent purchases the Istisna’ Asset in accordance with the terms of this Agreement, the Istisna’ Agreement and the other Finance Documents. |
6.2 | Transfer of title and ownership |
6.2.1 | Provided that the Completion Date occurs on or before the Projected Completion Date, the Final Istisna’ Instalment shall be paid on or around the Projected Completion Date. |
6.2.2 | On payment of the Final Istisna’ Instalment: |
(a) | title, possession and risk to the Istisna’ Asset shall automatically pass and transfer from the Seller to the Investment Agent free of any Security other than for any Permitted Security; and |
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(b) | the Seller shall provide the same warranties to the Investment Agent in relation to the Istisna’ Asset as it receives under the Construction Contract, in form and substance satisfactory to the Investment Agent. |
6.3 | Right to be on the property |
On the same date as the matters described in Clause 6.2.2 occur, the Seller shall grant to the Investment Agent (at no additional cost) such legal rights that the Investment Agent requires in order to be legally on the real estate on which the Istisna’ Asset is situated.
6.4 | Further assurances |
The Seller shall, at the request of the Investment Agent and at the Seller’s expense, take whatever action is required by the Investment Agent to give effect to Clause 6.2 (Transfer of title and ownership) and Clause 6.3 (Right to be on the property).
7 | Payment obligations |
7,1 | Payment procedure for the Final Istisna’ Instalment |
In relation to the Istisna’ Agreement, with regard to the Final Istisna’ Instalment, provided that the Investment Agent receives an Istisna’ Instalment Notice that has been accompanied by the Completion Certificate on or before the Projected Completion Date, the Investment Agent shall make the Istisna’ Payment relating to the Final Istisna’ Instalment on the relevant Istisna’ Payment Date.
7.2 | Account details for payments |
The Investment Agent shall pay each Istisna’ Instalment to each person due to be paid against the Payment Support Documents and the Seller shall specify each such person and their account details in the relevant Istisna’ Instalment Notice.
8 | Events of Default and Events of Mandatory Prepayment |
8.1 | Full early payment |
On and at any time after the occurrence of an Event of Default, the Investment Agent may by notice to the Seller:
(a) | cancel all Available Commitments; |
(b) | exercise the rights and remedies set out in clause 21.17 (Consequences of an Event of Default) of the Common Terms Agreement, including those rights and remedies relating to this Agreement, the Istisna’ Agreement and any other Finance Document; and |
(c) | exercise or direct the Security Agent to exercise any or all of its rights, remedies, powers or discretions under the Finance Documents. |
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8.2 | Partial early payment |
8.2.1 | If at any time the Seller is required by clause 8 (Early payments) of the Master Forward Lease Agreement to make an early payment of the Istisna’ Facility then such early payment shall, for Shari’ah purposes, be treated as a return of the Purchase Price and such Purchase Price shall be amended accordingly by such early payment amount (but only after payment and deduction of any loss, expenses or costs incurred by the Secured Parties). In this circumstance, the Investment shall be adjusted by the Investment Agent to reflect the early payment and the revised amount(s) shall be notified by it to the Seller. |
8.2.2 | Any notice issued under Clause 8.1 (Full early payment) or 8.2 (Partial early payment) shall be effective in accordance with its terms. |
9 | Early termination by the Seller before the Istisna’ Agreement exists |
9.1 | Notice |
Provided that the Seller has not issued an Offer Letter, the Seller may give the Investment Agent not less than 30 days’ notice (or such shorter period as the Majority Participants may agree) that it no longer wishes to issue an Offer Letter.
9.2 | Effect of the notice |
Once the notice has been issued:
(a) | all Available Commitments shall be reduced to zero; and |
(b) | the Seller may not utilise any part of the Available Facility. |
9.3 | Copies |
The Investment Agent shall promptly send copies of the notice to the other Finance Parties.
9.4 | Cancellation |
Any cancellation under this Clause 8.2.2 shall reduce the Commitments of the Participants rateably under the Istisna’ Facility.
10 | Indemnity |
10.1 | Claims by way of Purchase Undertaking |
10.1.1 | Without prejudice to the indemnities contained in clause 24 (Indemnification and late payment) of the Common Terms Agreement, the Seller acknowledges that the Istisna’ Asset is being leased by the Investment Agent under the Forward Lease and that the Investment Agent is relying on the Seller to perform its obligations under this Agreement and the Istisna’ Agreement in order for it to fulfil its own obligations under the Forward Lease and accordingly the Seller undertakes to purchase the Istisna’ Asset from the Investment Agent, within three Business Days of demand, by paying to the Security Agent (for the account of each Secured Party) the Relevant Amount in the event of: |
(a) | the Completion Date not occurring on or before the relevant Projected Completion Date; |
(b) | the Istisna’ Asset not being constructed in accordance with the relevant Specifications; |
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(c) | there being any defects (including latent defects) relating to all or any part of the Istisna’ Asset including any claims based on decennial liability claims: |
(d) | any claim under any Environmental Laws, legislation, judgments, awards and decisions, including notices and orders which are breached in relation to the Istisna’ Asset or the construction of the Istisna’ Asset; |
(e) | any losses or claims arising in or through the design or construction of the Istisna’ Asset; or |
(f) | the presence or use of any hazardous substance in, upon, under or originating from the Istisna’ Asset, regardless of the reason. |
10.1.2 | In this Clause 10, the Relevant Amount shall be equal to the product of the following equation: |
where: |
Y | is the aggregate amount of Istisna Instalments that have been paid at the relevant time; |
B | is EIBOR; |
C | is the Margin (expressed as a percentage); and |
T | is the number of days in the period from the first Istisna’ Payment Date to the date of the occurrence of the relevant event(s) listed in Clause 10.1.1 above. |
10.2 | General |
Any certificate of any Finance Party as to the amount of any Losses sustained or incurred by it and which are being claimed under Clause 10.1 (Claims by way of Purchase Undertaking) shall be conclusive and binding on any Obligor except for any manifest error.
10.3 | Exclusions |
The indemnities contained in this Clause 1.0 shall not extend to any liability, loss or damage that is caused by the gross negligence or wilful misconduct of a Secured Party or that Secured Party’s officers and employees.
10.4 | Survival |
The obligations of the Seller in respect of the indemnities described in this Clause 10 shall survive the expiration or termination of this Agreement, the Istisna’ Agreement for any reason whatsoever (including any fundamental or repudiatory breach by the Seller).
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11 | Waiver of immunity from suit and enforcement |
The Seller irrevocably and unconditionally:
(a) | waives any rights of immunity which it or its assets now has or may subsequently acquire in connection with any legal proceedings against it or its assets in relation to this Agreement; and |
(b) | consents generally in respect of any such proceedings to the giving of any relief or the issue of any process in connection with those proceedings, including, without limitation, the making, enforcement or execution against any assets whatsoever (irrespective of its use or intended use) on any order or judgment which may be made or given in those proceedings. |
12 | Governing law and jurisdiction |
12.1 | Subject to Clause 12.2, this Agreement and all non-contractual obligations arising out of or connected with it shall be governed by, and construed in accordance with, English law. |
12.2 | The Parties agree that the creation and transfer of any proprietary rights of the Parties in relation to the Istisna’ Asset shall be governed by, and construed in accordance with, the laws of Fujairah and the federal laws of the UAE as applied by the UAE federal courts. |
12.3 | Subject to Clause 12.4, the Parties submit, and waive any objection, to the exclusive jurisdiction of the courts of the DIFC to settle any dispute arising out of or in connection with this Agreement (including a dispute relating to the existence, validity or termination of this Agreement or any non-contractual obligation arising out of or in connection with this Agreement) (a Dispute). The Parties agree that the courts of the DIFC are the most appropriate and convenient courts to settle Disputes and accordingly no Party will argue to the contrary. |
12.4 | The Parties agree that the UAE federal courts shall have exclusive jurisdiction to settle any dispute arising out of or in connection with the proprietary rights of the Parties in relation to the Istisna’ Asset. |
12.5 | Notwithstanding Clauses 12.1 to 12.4, the Parties agree that the Finance Parties may take proceedings relating to a Dispute in any other court with jurisdiction. To the extent allowed by law, the Finance Parties may take concurrent proceedings in any number of jurisdictions. |
13 | Shari’ah |
The Parties recognise and agree that the principle of the payment of interest is prohibited under Shari’a and accordingly, to the extent that any court or legal system would (but for the provisions of this Clause 13) impose (whether by contract or by statute) any obligation to pay interest, the Parties hereby irrevocably and unconditionally expressly waive and reject any entitlement to recover interest from each other
This Agreement is entered into by the Parties on the date stated at the beginning of this Agreement.
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Execution page of the Master Istisna’ Agreement
The Seller
Signed by |
) | |
) | ||
duly authorised for and on behalf of Brooge
Petroleum and Gas Investment Company FZC |
) ) ) |
|
The Investment Agent | ||
Signed by | ) | |
) | ||
duly authorised for and on behalf of
in its capacity as Investment Agent for
and on
|
) ) ) ) |
|
Execution page of the Master Istlsna’ Agreement
Exhibit 10.57
EXECUTION VERSION
Master Forward Lease Agreement
Dated 15 October 2018
First Abu Dhabi Bank PJSC
(as Lessor, acting as Investment Agent for and on behalf of the Participants)
Brooge Petroleum and Gas Investment Company FZC
(as Lessee)
Dentons & Co
Level 4 Trade Centre - West Tower Abu Dhabi Mall PO Box 47656 Abu Dhabi United Arab Emirates |
|
Contents
1 | Definitions and interpretation | 2 |
2 | Conditions precedent | 6 |
3 | Forward Lease limitations | 6 |
4 | Forward lease | 7 |
5 | Commencement of leasing and Lease Term | 7 |
6 | Advance Rental Payments and Rental Payments | 8 |
7 | Obligations to pay | 14 |
8 | Early payments | 15 |
9 | Warranties and other related matters | 15 |
10 | Protection of Lessor’s interests | 16 |
11 | Use of the Leased Asset | 18 |
12 | Ordinary Maintenance and Repair of the Leased Asset | 20 |
13 | Major maintenance | 20 |
14 | Insurance | 21 |
15 | Total Loss | 21 |
16 | Partial Loss | 22 |
17 | Power to remedy defaults | 23 |
18 | Lessee Events of Default | 23 |
19 | Purchase Undertaking and Sale Undertaking | 24 |
20 | Indemnities | 24 |
21 | Waiver of immunity from suit and enforcement | 25 |
22 | Governing law and jurisdiction | 26 |
23 | Shari’ah | 26 |
Schedule 1 – Specific conditions precedent in relation to the Forward Lease | 27 | |
Schedule 2 – Form of Forward Lease | 28 |
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Master Forward Lease Agreement
Dated 15 October 2018
Between
(1) | First Abu Dhabi Bank PJSC, whose principal office is at FAS Building, Khalifa Business Park, Al Qurm District, P.O. Box 6316, Abu Dhabi, UAE acting in its capacity as Investment Agent for and on behalf of the Participants (the Lessor); and |
(2) | Brooge Petroleum and Gas Investment Company FZC, incorporated under the laws of Fujairah Free Zone, Fujairah, United Arab Emirates of P.O. Box 50170, Fujairah, United Arab Emirates (the Lessee). |
Recitals
The Parties wish to enter into this master forward lease agreement (the Agreement) to set out the framework for the leasing (by way of a forward lease) to the Lessee of the Leased Asset as described in the Forward Lease.
1 | Definitions and interpretation |
1.1 | Definitions |
1.1.1 | Unless the context otherwise requires or unless expressly defined in this Agreement, words and expressions defined in the Common Terms Agreement (whether directly or indirectly) shall have the same meanings in this Agreement. |
1.1.2 | In addition, in this Agreement: |
Additional Rental Payment means, in relation to the Forward Lease, an amount equal to the aggregate of all Advance Rental Payments that the Lessor has received.
Advance Fixed Rental Payment means, in relation to the Forward Lease, the rental as described in Clause 6.1 (Advance Fixed Rental Payments) and as specified in Schedule 1 to the Forward Lease.
Advance Fixed Rental Payment Date means, in relation to the Forward Lease, each date for the payment of an Advance Fixed Rental Payment as specified in Schedule 1 to the Forward Lease.
Advance Rental Payment means, in relation to the Forward Lease, a rental payment paid or payable before the Commencement Date consisting of, as applicable, an Advance Fixed Rental Payment, Advance Variable Rental Payment, Increased Cost Amount and any Commitment Rental.
Advance Variable Rental Payment means, in relation to the Forward Lease, the rental as specified in Schedule 1 to the Forward Lease and mentioned in an Advance Variable Rental Payment Notice.
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Advance Variable Rental Payment Date means, in relation to the Forward Lease, each date for the payment of an Advance Variable Rental Payment as specified in Schedule 1 to the Forward Lease, other than as provided in Clause 6.8 (Increased Cost Amount).
Advance Variable Rental Payment Notice means, in relation to the Forward Lease, the notice substantially in the form contained in Schedule 3 (Advance Variable Rental Payment Notice).
Advance Variable Rental Period means, in relation to the Forward Lease:
(a) | with the first Advance Variable Rental Period, the period beginning on the date of the Forward Lease and ending on the first Advance Variable Rental Payment Date; and |
(b) | subsequently, each period beginning on the expiry of the previous Advance Variable Rental Period and ending on the next Advance Variable Rental Payment Date or the Commencement Date. |
Agreed Value has the meaning given to it in the Service Agency Agreement.
Base Amount means at any time, in relation to the Forward Lease, the aggregate of the Istisna’ Instalments that have actually been paid under the Istisna’ Agreement, subject to adjustment in accordance with the provisions of the Finance Documents.
Commencement Base Amount means the Base Amount as at the Commencement Date.
Commencement Date means, in relation to the Forward Lease, the same date of the Completion Date (provided that date occurs before the Projected Completion Date) under the Istisna’ Agreement which corresponds to the Leased Asset specified in the Forward Lease.
Commitment Rental means, in respect of the Forward Lease, the amount calculated in accordance with Clause 6.3 (Commitment Rental).
Common Terms Agreement means the common terms agreement dated on or about the date of this Agreement between the Lessee (as the Company), each Guarantor, the Investment Agent, the Arranger, the Security Agent, the Account Bank and the Original Participant.
First Lease Period means, in relation to the Forward Lease, the period commencing on (and including) the Commencement Date and ending on the first Rental Payment Date.
First Rental Payment Notice means, in relation to the Forward Lease, the notice substantially in the form appearing in Schedule 4 (First Rental Payment Notice).
Fixed Rental Payment means, in relation to the Forward Lease, the Rental Payments described as such in Schedule 2 to the Forward Lease.
Forward Lease means a lease substantially in the form contained in Schedule 2 (Form of Forward Lease) in relation to the Istisna’ Development.
General Rental Payment Notice means, in relation to the Forward Lease, the notice substantially in the form appearing in Schedule 5 (General Rental Payment Notice).
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Increased Cost means an actual additional or increased cost which is incurred or suffered by the relevant Finance Party to the extent that it is attributable to that Finance Party having performed its obligations under any Transaction Document, being at all times subject to Clause 6.8.4.
Increased Cost Amount means, in relation to the Forward Lease, an amount of rental equal to the amount claimed in respect of Increased Costs pursuant to Clause 6.8 (Increased Cost claims) by a Finance Party.
Insurance Policies means, in relation to the Forward Lease, the Operating Insurance Policy, the Property Insurance Policy and the Third Party Insurance Policy and Insurance Policy means any one of them.
Investment Agency Agreement means the investment agency and security agency agreement dated on or around the date of this Agreement between, amongst others, the Lessor (as Investment Agent) and the Participants in relation to, amongst other matters, the Istisna’ Facility.
Lease Period means, in relation to the Forward Lease:
(a) | the First Lease Period; and |
(b) | subsequently, each period beginning on the expiry of the previous Lease Period and ending on the next Rental Payment Date. |
Lease Term means, in relation to the Forward Lease, the term of the Forward Lease as specified in the Forward Lease.
Leased Asset means, in relation to the Forward Lease, the Istisna’ Development corresponding to the Leased Asset under that Forward Lease.
Lessee Event of Default means any of those events described in Clause 18.1 (Lessee Events of Default).
Major Maintenance means, in relation to the Forward Lease, all structural repair and major maintenance (excluding Ordinary Maintenance and Repair) without which the Leased Asset could not be reasonably and properly used by the Lessee.
Margin means 3 per cent per annum.
Ordinary Maintenance and Repair means, in relation to the Forward Lease, all repairs, replacements, acts, maintenance and upkeep works (excluding Major Maintenance) required for the general use and operation of the Leased Asset or to keep, repair, maintain and preserve the Leased Asset in good order, state and condition.
Outstanding Fixed Rental means, in relation to the Forward Lease, the Base Amount as at the Commencement Date less the aggregate of Fixed Rental Payments paid from time to time.
Ownership Taxes means, in relation to the Forward Lease, Tax imposed on the Leased Asset by reason of the ownership of the Leased Asset (whether direct or indirect).
Partial Loss has the meaning given to it in Clause 15.3.1(d) (Partial Loss).
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Party means a party to this Agreement.
Purchase Undertaking means, in relation to the Forward Lease, the purchase undertaking relating to the Leased Asset provided by the Lessee in favour of the Lessor.
Rental Payment means, in relation to the Forward Lease, a rental payment payable after the Commencement Date consisting of, as applicable, a Fixed Rental Payment, a Variable Rental Payment, any Supplementary Rental Payment and any Increased Cost Amount.
Rental Payment Date means in relation to the Forward Lease, a rental payment date described in Schedule 2 to the Forward Lease and mentioned in the First Rental Payment Notice or General Rental Payment Notice, as the case may be, other than as provided in Clause 6.8 (Increased Cost Amount).
Sale Undertaking means, in relation to the Forward Lease, the sale undertaking relating to the Forward Lease provided by the Lessor in favour of the Lessee.
Service Agency Agreement means, in relation to the Forward Lease, the service agency agreement relating to the Leased Asset specified in the associated Forward Lease and entered into by the Lessor as principal and the Service Agent
Service Agent means the Lessee in the context of a service agent under a Service Agency Agreement.
Supplementary Rental Payment means a Rental Payment as described as such in Schedule 2 to the Forward Lease.
Termination Amount has the meaning given to it in the Purchase Undertaking or Sale Undertaking, as the case may be.
Total Loss means, in relation to the Leased Asset:
(a) | the total loss or destruction of. or damage to the whole (or a substantial part) of the Leased Asset or any event or occurrence that renders the whole (or a substantial part) of the Leased Asset permanently unfit for any economic use and the repair or remedial work in respect thereof is wholly uneconomical; or |
(b) | an Expropriation Event occurs. |
Variable Rental Payment means, in relation to the Forward Lease, the rental described as such in Schedule 2 to the Forward Lease.
1.2 | Interpretation |
1.2.1 | The provisions of clauses 1.2 (Interpretation) of the Common Terms Agreement shall apply to this Agreement, mutadis mutandis, as if the same had been set out in full in this Agreement except that references to “this Agreement” in the Common Terms Agreement are to be construed as references to this Agreement. |
1.2.2 | In relation to the Forward Lease, a reference to the Leased Asset means, as the context requires, such right, title and interest in the Leased Asset as the Lessor may have. |
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1.3 | Third party rights |
1.3.1 | Unless expressly provided to the contrary in this Agreement a person who is not a Party has no right under the Third Parties Act to enforce or to enjoy the benefit of any term of this Agreement. |
1.3.2 | Notwithstanding any term of any Finance Document, the Parties may rescind, vary, waive, release, assign, novate or otherwise dispose of all or any of their respective rights or obligations under this Agreement without the consent of any person who is not a Party. |
1.4 | Common Terms Agreement |
This Agreement and the rights and obligations of the Parties hereunder are subject to the provisions of the Common Terms Agreement. The provisions of the Common Terms Agreement that are expressed to apply to all Finance Documents apply equally to this Agreement.
2 | Conditions precedent |
2.1 | Initial conditions precedent |
Without limiting the provisions of Clause 2.2 (Further conditions precedent) and Clause 3 (Forward Lease limitations), the Lessee may not enter into the Forward Lease unless the terms of clause 4 (Initial conditions precedent) of the Common Terms Agreement have been satisfied.
2.2 | Further conditions precedent |
The Lessor shall only be obliged to enter into the Forward Lease if:
(a) | on the date of entry into the Forward Lease: |
(i) | no Default is continuing or would result from the entry into of the proposed Forward Lease; and |
(ii) | the Repeating Representations to be made by each Obliger are true in all material respects: and |
(b) | the Lessor has received all of the documents and other evidence listed in Schedule 1 (Specific conditions precedent in relation to the Forward Lease) in form and substance satisfactory to the Lessor (acting on the instructions of all Participants). |
3 | Forward Lease limitations |
Without limiting the provisions of Clause 2 (Conditions precedent), the Lessor shall only be obliged to enter into the Forward Lease if:
(a) | all Advance Rental Payments and Rental Payments and other amounts payable under the Forward Lease are denominated in Dirhams; |
(b) | the Lease Term ends before the Final Maturity Date; |
(c) | it is not illegal or unlawful for the Lessor to enter into the Forward Lease; and |
(d) | entry into of the Forward Lease will not result in there being more than one Forward Lease outstanding at any time. |
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4 | Forward lease |
4.1.1 | In relation to the Forward Lease and: |
(a) | subject to the provisions of this Agreement and the Forward Lease: and |
(b) | in reliance on: |
(i) | certain representations and undertakings made by the Lessee in the Master Forward Lease Agreement and in the Forward Lease; and |
(ii) | the Lessee’s undertaking to pay the Advance Rental Payments and the Rental Payments. |
the Lessor leases (by way of a forward lease) the Leased Asset to the Lessee as from the Commencement Date for the Lease Term and the Lessee accepts such leasing arrangements.
4.1.2 | The Lessor and the Lessee agree that: |
(a) | the Forward Lease is a financing lease and not a tenancy contract; and |
(b) | the Forward Lease does not grant any in rem or immoveable property rights over the Leased Asset. |
5 | Commencement of leasing and Lease Term |
ln relation to the Forward Lease:
5.1 | Commencement of leasing and undertaking to renew |
5.1.1 | The Lease Term shall begin on the Commencement Date and end on the expiry of the Lease Term (if not terminated earlier as provided in this Agreement, the Forward Lease or in another Finance Document). |
5.1.2 | Upon receipt of an Advance Variable Rental Payment Notice, the First Rental Payment Notice or a General Rental Payment Notice, as the case may be, the Lessee irrevocably undertakes to renew the leasing arrangements described in the Master Forward Lease Agreement and the Forward Lease for each Advance Variable Rental Period or Lease Period, as the case may be, and failure to so renew shall be an event that falls within clause 21.3 (Other obligations) of the Common Terms Agreement. |
5.2 | Failure of the Leased Asset to be available for leasing on the Commencement Date |
If the Commencement Date has not occurred by the Projected Completion Date the Lessor may terminate the Forward Lease.
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5.3 | One separate agreement |
This Agreement and the Forward Lease when taken together shall create a separate agreement between the Parties for the leasing of the Leased Asset described in the Forward Lease.
5.4 | Quiet enjoyment |
Subject to:
(a) | the terms of this Agreement and the other Finance Documents; and |
(b) | the due performance by the Lessee of all its obligations under this Agreement and the other Finance Documents. |
the Lessee shall be entitled throughout the Lease Term to hold and use the Leased Asset without interference from the Lessor.
6 | Advance Rental Payments and Rental Payments |
In relation to the Forward Lease:
6.1 | Advance Fixed Rental Payments |
On each Advance Fixed Rental Payment Date, the Lessee shall pay an Advance Fixed Rental Payment.
6.2 | Advance Variable Rental Payments |
6.2.1 | On each Advance Variable Rental Payment Date, the Lessee shall pay an Advance Variable Rental Payment. |
6.2.2 | In respect of each Advance Variable Rental Period, the Lessor shall calculate the Advance Variable Rental Payment applicable to that Advance Variable Rental Period and serve an Advance Variable Rental Payment Notice on the Lessee as described in Clause 6.10 (Effect of an Advance Variable Rental Payment Notice, First Rental Payment Notice and General Rental Payment Notice). |
6.2.3 | Advance Variable Rental Payments shall be calculated in accordance with the provisions contained in Schedule 1 to the Forward Lease. |
6.3 | Commitment Rental |
6.3.1 | The Lessee shall pay Commitment Rental as calculated in accordance with this Clause 6.3. The Commitment Rental for each Advance Variable Rental Period shall be paid on the first day of the Advance Variable Rental Period as part of the Advance Variable Rental Payment and as stated in the Advance Variable Rental Payment Notice for that Advance Variable Rental Period. |
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6.3.2 | The Commitment Rental that the Lessee shall pay in accordance with Clause 6.3.1 shall, in respect of each Advance Variable Rental Period under the Forward Lease, other than the first Advance Variable Rental Period, be an amount calculated as follows: |
(a) |
Commitment
Rental =
|
where:
B | is in the case of each Advance Variable Rental Period, other than the first Advance Variable Rental Period, an amount equal to the Total Commitments as at the date of this Agreement less the aggregate of all Istisna’ Payments paid as at the first day of the immediately preceding Advance Variable Rental Period; |
M | is the Margin; |
N | is the number of days: |
(i) | in the case of the second Advance Variable Rental Period, from the date of this Agreement to the last day of that first Advance Variable Rental Period; and |
(ii) | in the case of any other Advance Variable Rental Period, from the start of the Advance Variable Rental Period immediately preceding the relevant Advance Variable Rental Period to the earlier of: |
(aa) the end of the immediately preceding Advance Variable Rental Period; and
(bb) the end of the Availability Period;
ADA | is the aggregate of all Discount Amounts determined in the relevant Advance Variable Rental Period, and Discount Amount is, in relation to each Istisna’ Payment paid during the relevant Advance Variable Rental Period immediately preceding the relevant Advance Variable Rental Period, the amount calculated in accordance with the following formula: |
Discount
Amount =
where:
P | is the amount of an Istisna’ Payment; and |
T | is, in respect of an Istisna’ Payment, the number of days from the date on which such Istisna’ Payment is paid to the earlier of: |
(aa) the end of the relevant Advance Variable Rental Period immediately preceding the relevant Advance Variable Rental Period; and
(bb) the end of the Availability Period.
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6.4 | Additional Rental Payment |
6.4.1 | The Lessor confirms that each Advance Rental Payment is being paid on account of the Rental Payment obligations of the Lessee and will be taken into account in the calculation of the Rental Payments for the First Lease Period. |
6.4.2 | The Lessor shall set off the obligation to account to the Lessee for the Advance Rental Payments (as described in Clause 6.4.1 above) against the Lessee’s obligation to pay the matured Additional Rental Payment to the Lessor. |
6.4.3 | If the obligations described in Clause 6.4.2 are in different currencies, the Lessor may convert either obligation at a market rate of exchange in its usual course of business for the purpose of the set-off. |
6.5 | First Lease Period |
6.5.1 | In relation to the Forward Lease, the Parties agree that the Commencement Base Amount is part of the Rental Payment of the first Lease Period under the Forward Lease and will be immediately due and payable on the Rental Payment Date at the end of the First Lease Period. Notwithstanding this, and without prejudice to: |
(a) | any right of any Participant under any Finance Document to end its participation under the Finance Documents, in whole or in part, at any relevant time; |
(b) | the terms of this Agreement (including without limitation Clause 15 (Total Loss)); and |
(c) | the rights of the Lessor under the Purchase Undertaking, |
the Parties agree that the Lessor shall permit the Commencement Base Amount to be paid by way of instalments by payment of the Fixed Rental Payments payable on each date specified in schedule 2 (Rental Payments) to the Forward Lease.
6.5.2 | On the Rental Payment Date at the end of the First Lease Period, the Lessee shall pay the Rental Payment as described in the First Rental Payment Notice and calculated on the following basis: |
(FR + VR +AR + ICA) - ADR
where:
FR | is the Fixed Rental Payment for the First Lease Period; |
VR | is the Variable Rental Payment for the First Lease Period; |
AR | is the Additional Rental Payment; |
ICA | is the Increased Cost Amount (if any); and |
ADR | is an amount equal to the aggregate of all Advance Rental Payments. |
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6.6 | Second and subsequent Lease Periods |
On the Rental Payment Date at the end of the second and subsequent Lease Periods, the Lessee shall pay the Rental Payment as described in the General Rental Payment Notice and calculated on the following basis:
FR + VR + SR + ICA
where:
FR is the Fixed Rental Payment for that Lease Period;
VR | is the Variable Rental Payment for that Lease Period; |
SR | is the Supplementary Rental Payment for that Lease Period (if any); and |
ICA | is the Increased Cost Amount (if any) |
6.7 | Supplementary Rental Payments |
6.7.1 | Supplementary Rental Payments shall be calculated and payable as described in Schedule 2 to the Forward Lease. |
6.7.2 | The amount of a Supplementary Rental Payment shall be advised by the Lessor as part of a General Rental Payment Notice. |
6.7.3 | There will be no Supplementary Rental Payment for the First Lease Period. |
6.8 | Increased Cost claims |
6.8.1 | Subject to Clause 6.8.4. the Lessee shall pay to the relevant Finance Party in accordance with Clause 6.2.2, Clause 6.5 (First Lease Period) or Clause 6.6 (Second and Subsequent Lease Periods), as applicable, the amount of any Increased Cost incurred by that Finance Party or any of its Affiliates as a result of: |
(a) | the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation; |
(b) | compliance with any law or regulation made after the date of this Agreement; or |
(c) | attributable to the implementation or application of or compliance with Basel III (whether such implementation, application or compliance is by a government, regulator, Finance Party or any of its Affiliates). |
6.8.2 | If a Finance Party intends to make a claim pursuant to Clause 6.8.1, it shall promptly notify the Lessee of the event giving rise to the claim and shall provide a certificate confirming in reasonable detail the basis of and the amount of its Increased Cost. |
6.8.3 | Any Increased Cost Amount to be paid by the Lessee in accordance with this Clause 6.8 shall: |
(a) | be treated as part of the Advance Rental Payment, Rental Payment or Exercise Price as applicable, for the Advance Variable Rental Period, Lease Period or Exercise Date which immediately succeeds the date of the Increased Cost claim; |
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(b) | shall be included in the relevant notice relating to that immediately succeeding period or Exercise Date, as applicable; and |
(c) | shall be paid on the first Business Day of that succeeding period or Exercise Date, as applicable. |
6.8.4 | Clause 6.8.1 shall not apply to the extent that any Increased Cost is: |
(a) | attributable to a tax deduction required by law to be made by the Lessee; |
(b) | compensated for by clause 6.1 (Tax gross-up) or clause 6.2 (Tax Indemnity) of the Common Terms Agreement (or would have been compensated for under clause 6.2 (Tax Indemnity) of the Common Terms Agreement but was not so compensated solely because of any exclusion under clause 6.2.2 of the Common Terms Agreement); or |
(c) | attributable to the wilful breach by the relevant Finance Party or its affiliates of any law or regulation. |
6.9 | Adjustments to the Variable Rental Payments or Advance Variable Rental Payments |
6.9.1 | Unavailability of Screen Rate |
(a) | Interpolated Screen Rate: If at or about noon on the Quotation Day for the relevant period, the Screen Rate for EIBOR for the relevant period is not available, the applicable EIBOR shall be the Interpolated Screen Rate for a period equal in length to the relevant period. |
(b) | Reference Bank Rate: If at or about noon on the Quotation Day for the relevant period no Screen Rate is available for EIBOR for: |
(i) | Dirhams; or |
(ii) | the relevant period and it is not possible to calculate the Interpolated Screen Rate. |
the applicable EIBOR shall be the Reference Bank Rate as of noon on the Quotation Day for the relevant period for a period equal in length to the relevant period.
(c) | Altemative rate: If paragraph (b) above applies but no Reference Bank Rate is available for Dirhams or the relevant period there shall be no EIBOR for that relevant period and Clause 6.9.4 (Alternative rate) shall apply to the relevant period. |
6.9.2 | Calculation of Reference Bank Rate |
(a) | Subject to paragraph (b) below, if EIBOR is to be determined on the basis of a Reference Bank Rate but a Reference Bank does not supply a quotation by noon on the Quotation Day for the relevant period, the Reference Bank Rate shall be calculated on the basis of the quotations of the remaining Reference Banks. |
(b) | If at or about noon on the Quotation Day for the relevant period none or only one of the Reference Banks supplies a quotation, there shall be no Reference Bank Rate for the relevant period. |
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6.9.3 | Market disruption |
If before noon on the Quotation Day for the relevant period the Lessor receives notification from a Finance Party or Finance Parties whose Participation (as defined in the Common Terms Agreement) exceeds 662/3%, that, due solely to external circumstances beyond the control of the relevant Finance Party or Finance Parties, the expected profit rate charged to it in connection with obtaining matching deposits in the UAE interbank market would be in excess of EIBOR for the relevant period, then Clause 6.9.4 shall apply to that relevant period.
6.9.4 | Alternative rate |
(a) | If this Clause 6.9.4 applies: |
(i) | the Lessor shall as soon as practicable notify the Lessee; and |
(ii) | EIBOR for the relevant period shall be replaced by the percentage rate per annum which is the sum of the weighted average of the profit rates notified to the Lessor by each Participant as soon as practicable and in any event within two Business Days of the first day of the relevant period, to be that which expresses as a percentage rate per annum the actual cost to the relevant Participant of funding its participation for the relevant period from whatever source it may reasonably select. |
(b) | If this Clause 6.9.4 applies and the Lessor or the Lessee so require, the Lessor and the Lessee shall enter into negotiations for a period of not more than 30 days with a view to agreeing an alternative basis for determining a replacement rate for EIBOR. |
(c) | During any period from the start of a relevant period to the date on which: |
(i) | the Lessor calculates the weighted average of the profit rates notified to it pursuant to Clause (a)(ii); or |
(ii) | if commenced as an alternative, the negotiations referred to in paragraph (b) above are concluded and a replacement rate for EIBOR agreed, |
as relevant, the EIBOR rate applicable for the purposes of Clause 6.2.2, Clause 6.5 (First Lease Period) or Clause 6.6 (Second and Subsequent Lease Periods), as applicable, shall be the rate applicable to the Rental Period which preceded the relevant period. For the avoidance of doubt, during any such period the Margin will continue to be included in the relevant calculation.
(d) | If no agreement is reached between the Lessor and the Lessee pursuant to paragraph (b) above, the Lessor and the Lessee acknowledge and agree that the Lessor may exercise its rights under the Purchase Undertaking. |
6.9.5 | Replacement of Screen Rate |
A Replacement Benchmark rate will apply in replacement of the Screen Rate in the circumstances described in clause 12.3 (Replacement of Screen Rate) of the Common Terms Agreement.
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6.10 | Advance Variable Rental Payment Notices, First Rental Payment Notice and General Rental Payment Notices |
6.10.1 | Each Advance Variable Rental Payment Notice, First Rental Payment Notice and General Rental Payment Notice constitutes the notification by the Lessor of: |
(a) | the renewal of the leasing arrangements in respect of the next Advance Variable Rental Period or Lease Period, as the case may be; and |
(b) | the Advance Variable Rental Payment or Rental Payment for the Advance Variable Rental Period or Lease Period. as the case may be. |
which is mentioned in that notice.
6.10.2 | Each such notice will be issued to the Lessee: |
(a) | in the case of the first Advance Variable Rental Payment Notice, on the date of the Forward Lease; and |
(b) | in all other cases, no later than two Business Days prior to the start of the applicable Advance Variable Rental Period or Lease Period, as the case may be. |
7 | Obligations to pay |
7.1.1 | Subject: |
(a) | in the case of a Total Loss, to the provisions of Clause 15 (Total Loss); and |
(b) | in the case of a Partial Loss, to the provisions of Clause 15.3.1(d) (Partial Loss), |
the obligation of the Lessee to:
(a) | pay Advance Rental Payments, Rental Payments, the Termination Amount and any other amounts due under the Master Forward Lease Agreement, the Forward Lease and under any other Finance Document; and |
(b) | perform its obligations under the Master Forward Lease Agreement, the Forward Lease or any other Finance Document to which it is a party, |
shall not be affected by:
(i) | any set-off, counterclaim, recoupment, defence or other right which the Lessee may have against the Lessor or any other person for any reason whatsoever; |
(ii) | any breach of any warranty, representation, covenant or undertaking contained in this Agreement; |
(iii) | any interruption or cessation in the use, operation or possession of the Lease Assets or any item of the Lease Assets by the Lessee (if that interruption, cessation in the use, operation or possession is caused by or attributable to the Lessee); |
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(iv) | the occurrence of any Default or the commencement of any insolvency, suspension of payments, management by a court, bankruptcy, reorganisation, arrangement, composition, readjustment, liquidation, dissolution or similar proceedings by or against any Group Company; or |
(v) | any other circumstance, occurrence or event whatsoever caused by or attributable to the Lessee, whether or not similar to any listed in sub-clauses (i) to (iv) above. |
7.1.2 | If payment under any Finance Document is due on a day which is not a Business Day, the due date for payment shall instead be made on the next Business Day in the same calendar month (if there is one) (and, for the avoidance of doubt, any applicable Rental Payment Date shall fall on such next Business Day) or the preceding Business Day (if there is not, or if the next Business Day is a date after the Final Maturity Date), or as the Lessor shall notify the Lessee. |
7.1.3 | The Lessee authorises the Lessor to deduct due and payable Advance Rental Payments, Rental Payments and the Termination Amount from any Account. |
8 | Early payments |
8.1 | Early payments |
The provisions of clause 25 (Early payments and cancellation) of the Common Terms Agreement shall apply.
8.2 | Adjustments of Advance Variable Rental Payments or Variable Rental Payments |
lf the leasing arrangements end in accordance with the provisions of the Finance Documents prior to the scheduled Advance Variable Rental Period or Lease Period so that an Advance Variable Rental Payment or a Variable Rental Payment is to be paid before the Advance Variable Rental Payment Date or the Rental Payment Date (as applicable):
(a) | the Advance Variable Rental Payment or a Variable Rental Payment shall be reduced and recalculated on the basis of the number of days that have actually elapsed up to the payment date; and |
(b) | the relevant Advance Variable Rental Payment Date or the Rental Payment Date shall be construed accordingly. |
9 | Warranties and other related matters |
In relation to the Forward Lease:
9.1 | Examination of the Specifications and the Leased Asset |
The Lessee represents and warrants that:
(a) | it has examined the Specifications; and |
(b) | by proceeding with the leasing arrangements on the Commencement Date, it confirms that the Leased Asset is in good condition, in satisfactory working order and suitable for the Lessee’s purposes. |
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9.2 | Disclaimer |
9.2.1 | As at the date of the Master Forward Lease Agreement, the Forward Lease and the Commencement Date, the Lessor expressly makes no representation or warranty, either expressly or implied, about: |
(a) | the design or condition of the Leased Asset; |
(b) | the durability, suitability or fitness for any particular purpose of the Leased Asset; |
(c) | the quality of the material or workmanship of the Leased Asset; |
(d) | the conformity of the Leased Asset or any part of the Leased Asset to the Specifications; |
(e) | any defects, either patent or latent, in the Leased Asset, any part of the Leased Asset or any item of the Leased Asset; or |
(f) | any other matter concerning the Leased Asset or any part of the Leased Asset. |
9.2.2 | The Lessee waives any claim, remedy, defence, right or recourse against the Lessor arising from: |
(a) | the Lessee’s possession and use of the Leased Asset or arising from the Lessee’s loss of possession or use of the Leased Asset for any reason whatsoever: or |
(b) | any direct or indirect personal injury or damage to persons or to the Leased Asset resulting from any defects. |
9.2.3 | The exculpatory provisions contained in Clause 9.2.1 and Clause 9.2.2 shall not apply if any of the matters described above has been caused by the gross negligence of the Lessor. |
9.2.4 | The Lessee acknowledges and agrees that the provisions of this Clause 9.2 are fair and reasonable in all the circumstances. |
10 | Protection of Lessor’s interests |
In relation to the Forward Lease:
10.1 | No prejudicial actions |
The Lessee shall not do or permit to be done anything which would prejudice or jeopardise the Lessor’s title, rights and interest in respect of the Leased Asset.
10.2 | Free of claims |
10.2.1 | The Lessee shall keep the Leased Asset free of all claims by other persons (including by way of confiscation, seizure, distress, execution, diligence, impounding or other legal process). |
10.2.2 | If there are any such claims, the Lessee shall arrange for their immediate release. |
10.2.3 | The Lessee shall keep the Lessor immediately informed of any event which might affect the rights of the Lessor or involve it in any legal proceedings or Losses in relation to the Leased Asset. |
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10.3 | Plates and markings |
The Lessee shall affix or cause to be affixed to the Leased Asset such plates or other markings indicating the Lessor’s interest as the Lessor may require.
10.4 | Notifications |
10.4.1 | During the Lease Term the Lessee shall promptly notify the holders of any Security over any of the Lessee’s assets that the Leased Asset is the property of the Lessor. |
10.4.2 | The Lessee shall provide satisfactory evidence of such notification and, when requested by the Lessor, a written acknowledgement from the holders of any such Security that the Leased Asset is not within the scope of any such Security. |
10.5 | Negative undertakings |
The Lessee shall not, except as created under or permitted under any Finance Document:
(a) | hold itself out as owner of the Leased Asset; |
(b) | pledge the credit of the Lessor for the repair of the Leased Asset or for any other reason; |
(c) | sell, create or allow the creation of any Security over or otherwise dispose of the Leased Asset; |
(d) | abandon the Leased Asset; or |
(e) | sell, sub-let, sub-hire, assign, transfer, loan, part with possession or dispose of all or part of its interests in the Leased Asset (or attempt to do any of the foregoing) |
without the prior written approval of the Lessor which the Lessor in its absolute discretion may refuse to give or may give on such terms and subject to such conditions as it may decide in its absolute discretion.
10.6 | Inspection rights |
The Lessor, its agents and representatives shall be entitled (but not obliged) at all reasonable times to inspect the Leased Asset (and for this purpose shall be entitled to enter on any premises on or in which the Leased Asset is reasonably believed to be situated) in order, without limitation, to:
(a) | undertake any repairs necessary to comply with the Lessor’s obligations under this Agreement and the Forward Lease; and |
(b) | inspect the Leased Asset to ensure that the Lessee has undertaken its maintenance and repair obligations under this Agreement and the Forward Lease (and to the extent applicable, the other Finance Documents) and, if the Lessee has not met such obligations, to undertake such repairs and maintenance at the Lessee’s cost. |
10.7 | Ownership of alterations |
10.7.1 | All alterations, substitutions, improvements, replacements or additions to the Leased Asset shall become the property of the Lessor free of all claims and Security. |
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10.7.2 | After the termination of the Forward Lease, the Lessor may keep the alterations, substitutions, improvements, replacements or additions made by the Lessee or the Lessor may require the Lessee to reinstate the Leased Asset to its original condition at the Lessee’s own cost and expense and/or to pay compensation if the Leased Asset is unable to be reinstated to its original condition. |
10.8 | General safeguard actions |
The Lessee shall, to the satisfaction of the Lessor (acting reasonably), do all things necessary under the laws of any relevant jurisdiction to protect and safeguard the Lessor’s right, title and interest in the Leased Asset, including the obtaining of all necessary Authorisations and, if required by the Lessor, the filing of this Agreement, the Forward Lease or any other applicable documents with any competent authority.
11 | Use of the Leased Asset |
In relation to the Forward Lease:
11.1 | Negative undertakings about the use of the Leased Asset |
11.1.1 | The Lessee shall not use or permit any of the Leased Asset to be used: |
(a) | for any purpose for which it is not expressly designed or reasonably suited; |
(b) | for any unlawful purpose; |
(c) | in a manner that may render void or voidable any of the Insurances; or |
(d) | in such a manner that it is taken outside the Project Site. |
11.1.2 | The Lessee shall not make any changes to or use the Leased Asset in any manner which would invalidate any warranty provided by the Contractor or any other person. |
11.1.3 | The Lessee shall not fix or permit the affixing of the Leased Asset to any land or building without first obtaining such waivers and consents as the Lessor may require from any person having an interest in such land or building. |
11.2 | Positive undertakings about the use of the Leased Asset |
11.2.1 | The Lessee shall use or procure the use of the Leased Asset in a skilful and proper manner and in accordance with any operating instructions issued by the Contractor and by properly qualified and licensed personnel. |
11.2.2 | The Lessee (whether in its own capacity or as the Service Agent) shall only use and maintain the Leased Asset so that the Leased Asset is safe and without risk to the health or safety of employees or other persons using the Leased Asset in accordance with the recommendations of the Contractor. |
11.2.3 | The Lessee shall ensure that all necessary Authorisations remain valid at all times during the Lease Term and the Lessee shall comply with any applicable legal obligations in relation to the use and operation of the Leased Asset and comply with all other requirements as to inspection and testing as for the time being required by law. |
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11.2.4 | The Lessee shall make available to the Lessor the records, certificates and other documents relating to the Leased Asset when the Leased Asset is returned to the Lessor or allow the Lessor (or any person nominated by the Lessor) to inspect them at reasonable times and following reasonable prior written notice. |
11.2.5 | The Lessee shall immediately pay any charges (including congestion charges), fines or other fixed penalties relating to the use and operation of Leased Asset. If the Lessee fails to do so the Lessor may pay the amount of the charge, fine or penalty for the Lessee. The Lessee will then repay that amount to the Lessor on demand plus such sum as the Lessor notifies the Lessee is required to cover the Lessor’s actual administration costs connected with the charge, fine or penalty. |
11.2.6 | The Lessee shall, if so requested by the Lessor, promptly deliver a written report in such detail as the Lessor shall reasonably require on the condition of the Leased Asset and with sufficient copies for all of the Participants. |
11.3 | General prohibition on alterations |
11.3.1 | The Lessee shall not, without the prior written approval of the Lessor, make any alterations, substitutions, improvements, replacements or additions to the Leased Asset except: |
(a) | to the extent required in the performance of its obligation to perform Ordinary Maintenance and Repair; or |
(b) | where any such alterations, substitutions, improvements, replacements or additions to the Leased Asset are necessary in the case of an emergency (when such emergency works shall be at the cost, expense and risk of the Lessee (unless they relate to Major Maintenance)). |
11.3.2 | Any such alterations, substitutions, improvements, replacements or additions undertaken by the Lessee in breach of Clause 11.3.1 shall be at the Lessee’s own risk and cost. |
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12 | Ordinary Maintenance and Repair of the Leased Asset |
In relation to the Forward Lease:
12.1 | Damage and deterioration |
As from the Commencement Date, the Lessee shall be liable to the Lessor for any damage or deterioration to the Leased Asset (apart from any Major Maintenance) which is not the result of normal wear and tear.
12.2 | Performance of Ordinary Maintenance and Repair |
As from the Commencement Date, the Lessee shall, at its own cost and expense, perform all Ordinary Maintenance and Repair including carrying out all modifications, repairs to, or replacement of, any damaged, worn or lost parts or equipment in such manner (both as regards workmanship and quality of materials) as not to diminish the value of the Leased Asset. Without prejudice to the generality of the foregoing, the Lessee shall ensure that in performing Ordinary Maintenance and Repair, the Lessee shall:
(a) | conduct regular and comprehensive inspections of the Leased Asset; |
(b) | keep the Leased Asset in good and serviceable repair and condition (fair wear and tear excepted); |
(c) | always ensure that any repair or servicing of any Leased Asset is undertaken by properly skilled and qualified persons and in accordance with the instructions or recommendations of the constructor of the Leased Asset and any legal requirements; |
(d) | ensure that accurate, complete and current records are kept of all maintenance activities on the Leased Asset and shall provide copies of such records to the Lessor upon reasonable request; |
(e) | not allow any Security to be created over any of the Leased Asset in the performance of Ordinary Maintenance and Repair save for Permitted Security; |
(f) | comply with its obligations described in Clauses 10 (Protection of Lessor’s interests) and 11 (Use of the Leased Asset); |
(g) | only install parts on the Leased Asset which have been manufactured or approved by the Contractor for use on the Leased Asset; and |
(h) | at its own expense, enter into a maintenance contract with the Contractor its accredited agent (or such other party as the Lessor may authorise) and keep it in force throughout the Lease Term. |
12.3 | Payment of Taxes |
The Lessee shall pay all Taxes relating to the use and ownership of the Leased Asset other than Ownership Taxes.
13 | Major maintenance |
In relation to the Forward Lease:
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13.1 | Lessor’s responsibility |
13.1.1 | The Lessor shall be responsible for all Major Maintenance. |
13.1.2 | The Lessee shall notify the Lessor promptly of the need to carry out any Major Maintenance to the Leased Asset and until such time the Lessor shall not be under any responsibility or obligation to perform Major Maintenance. |
13.1.3 | The Lessee agrees that the Lessor may discharge any obligations the Lessor has in relation to Major Maintenance by appointing the Lessee (in its capacity as the Service Agent) to perform those obligations. |
14 | Insurance |
14.1 | In relation to the Forward Lease the Lessee shall comply with clause 17.11 (Insurance) of the Common Terms Agreement. |
14.2 | The Lessee agrees that the Lessor may discharge any obligations the Lessor has in relation to Insurances by appointing the Lessee (in its capacity as the Service Agent) to perform those obligations. |
15 | Total Loss |
15.1 | Notification of Total Loss |
15.1.1 | The Lessee shall notify the Lessor (giving details of the destruction or damage) promptly upon becoming aware of the occurrence of a Total Loss or any other event which, with the giving of notice, the passage of time or the satisfaction of any other condition, would become a Total Loss. |
15.1.2 | Notwithstanding that the Lessee does not have the right to receive Insurance and Compensation Proceeds following a Total Loss, it shall, in the event of a Total Loss occurring: |
(a) | ensure that, in the event that it does receive any receive Insurance and Compensation Proceeds relating to the Total Loss, such proceeds are paid to the Lessor, and |
(b) | direct each relevant insurer or other party to pay all Insurance and Compensation Proceeds relating to the Total Loss directly to the Lessor, rather than the Lessee. |
15.2 | Total Loss prior to the first Rental Payment Date |
If, in respect of the Leased Asset at such time as it, or any part of it, is leased under the Forward Lease, prior to the first Rental Payment Date for the Forward Lease a Total Loss occurs:
(a) | the Forward Lease shall terminate; |
(b) | the Lessor shall be entitled to retain any Insurance and Compensation Proceeds received in respect of the Leased Asset and apply such amount in accordance with clause 5.12 (Insurance and Compensation Proceeds and Terminal Earnings) of the Common Terms Agreement; and |
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(c) | provided that the Total Loss has been caused by or is attributable to any act or failure to act by the Lessee, the Lessee shall pay to the Lessor the Agreed Value less any Insurance and Compensation Proceeds received by the Lessor in respect of the Leased Asset no later than 180 days after the occurrence of the Total Loss and the Lessor shall apply such amount in accordance with clause 5.12 (Insurance and Compensation Proceeds and Terminal Earnings) of the Common Terms Agreement. |
15.3 | Total Loss on or after the first Rental Payment Date |
15.3.1 | if, in respect of the Leased Asset at such time as it, or any part of it, is leased under the Forward Lease, a Total Loss occurs on or after the first Rental Payment Date for the Forward Lease: |
(a) | the Forward Lease shall terminate (without prejudice to payments accrued and due prior to such termination); |
(b) | the Lessor shall be entitled to retain any Insurance and Compensation Proceeds received in respect of the Leased Asset and apply such amount in accordance with clause 5.12 (Insurance and Compensation Proceeds and Terminal Earnings) of the Common Terms Agreement; |
(c) | all payments accrued and due up to the date of the Total Loss (including in respect of any Rental Payments) and any other amounts accrued or outstanding under any Finance Documents in relation to the Forward Lease will become immediately due and payable; and |
(d) | provided that the Total Loss has been caused by or is attributable to any act or failure to act by the Lessee, the Lessee shall pay to the Lessor the Agreed Value less any Insurance and Compensation Proceeds received by the Lessor in respect of the Leased Asset no later than 180 days after the occurrence of the Total Loss and the Lessor shall apply such amount in accordance with clause 5.12 (Insurance and Compensation Proceeds and Terminal Earnings) of the Common Terms Agreement. |
16 | Partial Loss |
If any loss or damage to the Leased Asset under the Forward Lease which does not amount to a Total Loss has the effect of impairing the operation of the Leased Asset or any material part thereof (such loss or damage being a Partial Loss):
(a) | subject to Clause 16(b), the Lessee shall continue to pay the relevant Rental Payments in accordance with this Agreement and the Forward Lease and the repair of the Leased Asset shall be conducted by the Lessor or the Lessee as applicable; and |
(b) | subject to the Partial Loss not having been caused by or attributable to any act or failure to act by the Lessee, if the Lessee suffers an actual loss of utilisation of the Lease Asset, the Lessee shall: |
(i) | notify the Lessor immediately (and in any case within one Business Day of becoming aware) of such loss or damage; and |
(ii) | provide the Lessor with an independent technical report setting out in a reasonable level of detail the extent of the damage and following receipt of such report the Fatwa and Shari’ah Supervisory Board shall determine in good faith whether it is equitable in all the circumstances to reduce the relevant Rental Payments to take into account such loss of utilisation. |
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17 | Power to remedy defaults |
17.1 | Failure to comply with Clause 12 (Ordinary Maintenance and Repair of the Leased Asset) |
If the Lessee fails to comply with any of the provisions of Clause 12 (Ordinary Maintenance and Repair of the Leased Asset) (and without prejudice to the right of the Lessor to treat that non-compliance as an Event of Default), the Lessor may, at the Lessee’s expense, arrange for the repairs to be carried out, but without any obligation on the Lessor to do so.
17.2 | Failure to comply with Clause 14 (Insurance) |
If the Lessee fails to comply with any of the provisions of Clause 14 (Insurance) (and without prejudice to the right of the Lessor to treat that non-compliance as an Event of Default), the Lessor may, at the Lessee’s expense, take out and then maintain the Insurance but without any obligation on the Lessor to do so.
17.3 | Failure to comply with other obligations |
If the Lessee fails to comply with any other obligations under this Agreement or the Forward Lease (and without prejudice to the right of the Lessor to treat that non-compliance as an Event of Default), the Lessor may, at the Lessee’s expense, take such action as the Lessor deems expedient or necessary in order to arrange for compliance with such provisions, but without any obligation on the Lessor to do so.
17.4 | Obligation to pay Advance Rental Payments and Rental Payments |
Notwithstanding any exercise by the Lessor of any of the powers contained in this Clause 17, Advance Rental Payments (to the extent applicable) and Rental Payments shall continue to accrue and be payable during such time.
18 | Lessee Events of Default |
In relation to the Forward Lease:
18.1 | Lessee Events of Default |
Each of the events or circumstances set out in this Clause 18.1 is a Lessee Event of Default:
(a) | a Total Loss occurs in respect of the Leased Asset; or |
(b) | the Lessee refuses to or is unable to renew the Forward Lease in accordance with the Lessee’s undertaking contained in Clause 5.1.2. |
18.2 | Termination on an Event of Default |
Without limiting the rights of the Investment Agent under clause 21.17 (Consequences of an Event of Default) of the Common Terms Agreement, if an Event of Default occurs, the Lessor (in its capacity as the Investment Agent) may exercise, amongst other matters, its right to terminate the leasing of the Leased Asset.
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19 | Purchase Undertaking and Sale Undertaking |
In relation to the Forward Lease:
19.1 | Purchase Undertaking |
19.1.1 | Without prejudice to any other rights or remedies that the Lessor (acting in any capacity) or any of the other Finance Parties may have under the Finance Documents, the Lessor is entitled to require the Lessee to purchase the Leased Asset from the Lessor in accordance with the terms of the Purchase Undertaking. |
19.1.2 | If the Lessee does not comply with its obligations under the Purchase Undertaking the Lessor may, without limiting any of its other rights and remedies, dispose of the Leased Asset and apply it towards satisfaction of the Termination Amount. |
19.2 | Sale Undertaking |
The Lessee is entitled to require the Lessor to sell the Leased Asset to the Lessee in accordance with the terms of the Sale Undertaking.
20 | Indemnities |
In relation to the Forward Lease:
20.1 | General indemnity |
20.1.1 | The Lessee shall, within three Business Days of demand, indemnify each Secured Party and each Secured Party’s officers, employees and agents against any Losses incurred by that Secured Party or any of its officers, employees and agents as a result of: |
(a) | the possession, management or operation of the Leased Asset or the leasing, sub-leasing, removal, transportation, repossession, sale or disposal of the Leased Asset by the Lessor (or any person acting as the Lessor’s agent), whether attributable to any defect in the Leased Asset or the design, manufacture, testing or use of the Leased Asset, or in relation to any product or strict liability relating to the Leased Asset; |
(b) | preserving or enforcing (or attempting to preserve or enforce) the Lessor’s rights under this Agreement and the Forward Lease (including if the Lessee impugns the title to the Leased Asset) or this Agreement or in recovering or attempting to recover possession of the Leased Asset; |
(c) | the preservation or defence of the Lessor’s title and interest in and to the Leased Asset caused by an act or failure to act by the Lessee, including keeping the Leased Asset free and clear from any and all Security; |
(d) | whether direct or indirect: |
(i) | the breach by the Lessee of any of its obligations under this Agreement, the Forward Lease or any other Finance Document; or |
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(ii) | any of the warranties and representations made in this Agreement, the Forward Lease or any other Finance Document being untrue or inaccurate in any respect whatsoever when made: |
(e) | any breach by the Lessee of any representation, warranty or covenant contained in this Agreement or the Forward Lease; |
(f) | the performance or non-performance of Ordinary Maintenance and Repair of the Leased Asset; |
(g) | the infringement or alleged infringement of intellectual property or other rights; |
(h) | any Environmental Claim arising from the use, operation or management of the Leased Asset; |
(i) | preventing or attempting to prevent the confiscation, seizure, taking in execution, requisition, impounding or forfeiture of the Leased Asset, or in securing the release of the Leased Asset; |
(j) | suing for or recovering any sum due under the Forward Lease, the Master Forward Lease Agreement or any other Finance Document: or |
(k) | the insurance proceeds payable under the Insurance policies being insufficient to cover the re-instatement of the Leased Asset if a Partial Loss occurs in circumstances described in Clause 15.3.1(d) (Partial Loss). |
20.1.2 | The indemnities contained in Clause 20.1.1 shall not extend to any liability, loss or damage caused by the gross negligence or willful misconduct of any Secured Party. |
20.2 | Special indemnity relating to exercise of rights on an Event of Default |
In the circumstances described in Clause 19.1.2, the Lessee shall indemnify and hold harmless the Lessor in respect of any shortfall between:
(a) | the Termination Amount; and |
(b) | the proceeds obtained from selling or disposing of the Leased Asset. |
21 | Waiver of immunity from suit and enforcement |
The Lessee irrevocably and unconditionally:
(a) | waives any rights of immunity which it or its assets now has or may subsequently acquire in connection with any legal proceedings against it or its assets in relation to this Agreement; and |
(b) | consents generally in respect of any such proceedings to the giving of any relief or the issue of any process in connection with those proceedings, including, without limitation, the making, enforcement or execution against any assets whatsoever (irrespective of its use or intended use) on any order or judgment which may be made or given in those proceedings. |
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22 | Governing law and jurisdiction |
22.1 | Subject to Clause 22.2, this Agreement and all non-contractual obligations arising out of or connected with it shall be governed by, and construed in accordance with, English law. |
22.2 | The Parties agree that the creation and transfer of any proprietary rights of the Parties in relation to the Leased Asset shall be governed by, and construed in accordance with, the laws of Fujairah and the federal laws of the UAE as applied by the UAE federal courts. |
22.3 | Subject to Clause 22.4, the Parties submit, and waive any objection, to the exclusive jurisdiction of the courts of the DIFC to settle any dispute arising out of or in connection with this Agreement (including a dispute relating to the existence, validity or termination of this Agreement or any non-contractual obligation arising out of or in connection with this Agreement) (a Dispute). The Parties agree that the courts of the DIFC are the most appropriate and convenient courts to settle Disputes and accordingly no Party will argue to the contrary. |
22.4 | The Parties agree that the UAE federal courts shall have exclusive jurisdiction to settle any dispute arising out of or in connection with the proprietary rights of the Parties in relation to the Leased Asset. |
22.5 | Notwithstanding Clauses 22.1 to 22.4, the Parties agree that the Lessor may take proceedings relating to a Dispute in any other court with jurisdiction. To the extent allowed by law, the Lessor may take concurrent proceedings in any number of jurisdictions. |
23 | Shari’ah |
The Parties recognise and agree that the principle of the payment of interest is prohibited under Shari’ah and accordingly, to the extent that any court or legal system would (but for the provisions of this Clause 23) impose (whether by contract or by statute) any obligation to pay interest, the Parties hereby irrevocably and unconditionally expressly waive and reject any entitlement to recover interest from each other
This Agreement has been entered into on the date stated at the beginning of this Agreement.
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Execution page of the Master Forward Lease Agreement
The Lessor |
|
|
Signed by | ) | |
) | ||
duly authorised for and on behalf of | ) | |
First Abu Dhabi Bank PJSC | ) | |
in its capacity as Investment Agent for and on | ) | |
behalf of the Participants | ) | |
The Lessee | ||
Signed by | ) | |
) | ||
duly authorised for and on behalf of Brooge | ) | |
Petroleum and Gas Investment Company | ) | |
FZC | ) |
Execution page of the Master Forward Lease Agreement
Execution page of the Master Forward Lease Agreement
The Lessor | ||
Signed by | ) | |
) | ||
duly authorised for and on behalf of | ) | |
First Abu Dhabi Bank PJSC | ) | |
in its capacity as Investment Agent for and on | ) | |
behalf of the Participants | ) | |
The Lessee |
|
|
Signed by | ) | |
) | ||
duly authorised for and on behalf of | ) | |
Brooge Petroleum and Gas Investment Company | ) | |
FZC | ) |
Execution page of the Master Forward Lease Agreement
Exhibit 10.58
EXECUTION VERSION
Certain identified information has been excluded from the exhibit because it is both not material and would likely cause competitive harm to the registrant if publicly disclosed.
Common Terms Agreement
Dated 15 October 2018
Brooge Petroleum and Gas Investment Company FZC
(as the Company)
The Guarantors listed in Schedule 2
(as Guarantors)
First Abu Dhabi Bank PJSC
(as Investment Agent)
First Abu Dhabi Bank PJSC
(as Arranger)
First Abu Dhabi Bank PJSC
(as Security Agent)
First Abu Dhabi Bank PJSC
(as Account Bank)
The Participant listed in Schedule 1
(as Original Participant)
Dentons
& Co
Level 4, Trade Centre – West Tower Abu Dhabi Mall PO Box 47656 Abu Dhabi United Arab Emirates |
|
Contents
1 | Definitions and interpretation | 1 |
2 | Finance Parties’ rights and obligations | 22 |
3 | Guarantors’ agent | 22 |
4 | Initial conditions precedent | 23 |
5 | Payment mechanics | 23 |
6 | Tax | 29 |
7 | Set-off | 30 |
8 | Sharing among the Finance Parties | 31 |
9 | Role of the Investment Agent and the Arranger | 32 |
10 | Role of the Security Agent | 43 |
11 | Conduct of business by the Secured Parties | 61 |
12 | Amendments and waivers | 61 |
13 | Guarantee | 63 |
14 | Representations and warranties | 67 |
15 | Information undertakings | 73 |
16 | Financial covenants | 77 |
17 | Positive undertakings | 77 |
18 | Negative undertakings | 83 |
19 | Independent assessment | 85 |
20 | Accounts | 85 |
21 | Events of Default | 88 |
22 | Fees | 92 |
23 | Costs and expenses | 93 |
24 | Indemnification and late payment | 94 |
25 | Early payment and cancellation | 96 |
26 | Changes | 100 |
Contents (i)
27 | “Know your customer” checks | 103 |
28 | Language and translation | 104 |
29 | Notices | 104 |
30 | Relationship with other Finance Documents | 105 |
31 | Calculations and certificates | 106 |
32 | Partial invalidity | 106 |
33 | Remedies and waivers | 106 |
34 | Counterparts | 106 |
35 | Waiver of immunity from suit and enforcement | 106 |
36 | Governing law and jurisdiction | 107 |
37 | Shari’ah | 107 |
Contents (ii)
Common Terms Agreement
Dated | 15 October 2018 |
Between
(1) | Brooge Petroleum and Gas Investment Company FZC, a free zone company incorporated under the laws of Fujairah Free Zone, Fujairah, UAE with registration number 13-FZC-1117 and whose principal place of business is at P.O. Box 50170, Fujairah, UAE (the Company); |
(2) | each company listed in Schedule 2 (as Guarantors); |
(3) | First Abu Dhabi Bank PJSC whose principal office is at FAB Building, Khalifa Business Park, Al Qurm District, P.O. Box 6316, Abu Dhabi, UAE acting in its capacity as Investment Agent for and on behalf of the Participants (the Investment Agent); |
(4) | First Abu Dhabi Bank PJSC whose principal office is at P.O. Box 40057, Abu Dhabi, UAE acting in its capacity as mandated lead arranger and bookrunner (the Arranger); |
(5) | First Abu Dhabi Bank PJSC whose principal office is at FAB Building, Khalifa Business Park, Al Qurm District, P.O. Box 6316, Abu Dhabi, UAE acting in its capacity as security agent for the Secured Parties (the Security Agent); |
(6) | First Abu Dhabi Bank PJSC whose principal office is at P.O. Box 40057, Abu Dhabi, UAE acting in its capacity as account bank (the Account Bank); and |
(7) | the Participants listed in Schedule 1 (the Original Participant). |
Recitals
A | The Participants have agreed to appoint the Investment Agent and the Security Agent on the terms of this Agreement. Accordingly this Agreement shall also be construed as an investment agency agreement. |
B | The Obligors have agreed to give certain undertakings and warranties in favour of the Finance Parties. |
C | The Finance Parties have agreed to make facilities available on the terms of the Finance Documents. |
D | The Parties wish to enter into this common terms agreement (the Agreement) to set out the framework for the provision of the facilities and entry into of the other Finance Documents. |
It is agreed:
1 | Definitions and interpretation |
1.1 | Definitions |
Unless otherwise defined in this Agreement, words and expressions defined (directly or indirectly) in any other Finance Document shall have the same meaning when used in this Agreement. The following definitions also apply to this Agreement:
ABC Laws means Anti-Bribery and Corruption Laws means all applicable anti-bribery and corruption laws and regulations including but not limited to the US Foreign and Corrupt Practices Act 1977 and the UK Bribery Act 2010.
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Acceleration means any action taken by the Investment Agent pursuant to clause 21.17 (Consequences of an Event of Default) or other similar action by any other Secured Party (and, where the context requires, Accelerate, Accelerated and any derivative of either shall be construed accordingly).
Accounts means:
(a) | the Collection Account; and |
(b) | the Facility Service Reserve Account. |
Account Security means a UAE law movables pledge agreement in respect of each Account between the Company and the Security Agent in the Agreed Form.
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.
Agreed Form means, in relation to any document, the agreed form of that document either:
(a) | as delivered to and accepted by the Investment Agent (acting on the instructions of all Participants) on or prior to the date of this Agreement or otherwise as confirmed by representatives of the Company and of the Investment Agent (acting on the instructions of all Participants) as in agreed form prior to the date of this Agreement; or |
(b) | if not so delivered or confirmed, is in form and substance reasonably acceptable to the Investment Agent (acting on the instructions of all Participants). |
Annual Accounts means the annual audited consolidated financial statements of the Company delivered or to be delivered to the Investment Agent pursuant to Clause 15.1(a).
Applicable Anti Bribery Law means any bribery, fraud, kickback or other similar anti-corruption law or regulation of any relevant country, including the Bribery Act 2010 and the US Foreign Corrupt Practices Act 1977.
Assignment Agreement has the meaning given to it in Clause 26.3.1.
Assignment of Project Documents means the UAE law movables pledge and assignment granted by the Company in favour of the Security Agent in relation to certain of the Project Documents (as defined therein) other than the Project Site Lease in the Agreed Form.
Assignment of Receivables means the UAE law movables pledge and assignment dated on or about the date of this Agreement granted by the Company in favour of the Security Agent in relation to all Terminal Revenue, including relating to the Offtake Contract in the Agreed Form.
Assignment of Insurances means the UAE law movables pledge and assignment dated on or about the date of this Agreement granted by the Company in favour of the Security Agent in relation to the Insurances in the Agreed Form.
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Authorisation means an authorisation, consent, approval, resolution, licence, exemption, filing, notarisation or registration required in connection with the Transaction Documents or the Project.
Authorised Activity has the meaning given to it in Clause 10.1 (Definitions).
Bank Technical Adviser means the engineer acting as the technical adviser solely to the Investment Agent.
Base Currency means Dirhams.
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; |
(c) | the agreements contains in “Basel III: Finalising post-crisis reforms” published by the Basel Committee on Banking Supervision in December 2017 as amended, supplemented or restated; and |
(d) | any further guidance or standards published by the Basel Committee on Banking Supervision relating to the agreements or rules referred to in paragraph (a), (b) or (c) above. |
Business Day means:
(a) | for the purposes of making AED payments or fixing EIBOR under this Agreement, a day (other than Friday or Saturday) on which banks are open for general business in Abu Dhabi; and |
(b) | for all other purposes, a day (other than Friday or Saturday) on which banks are open for general business in Abu Dhabi. |
Cash Flows Report means each report in a form acceptable to the Investment Agent (acting on the instructions of the Majority Participants), produced by the Company and signed by two authorised signatories of the Company, setting out in reasonable detail:
(a) | Terminal Revenues for the relevant Half Year Period; |
(b) | Terminal Earnings for the relevant Half Year Period; and |
(c) | any other information that a Participant may reasonably request the Company provide in relation to net inflows and outflows of cash in relation to the Project. |
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Collection Account means non-interest bearing Dirham denominated investment account with held by the Company with the Account Bank established in accordance with Clause 20 (Accounts), and any renewal or redesignation thereof.
Commitment means:
(a) | in relation to an Original Participant, the amount set opposite its name under the heading “Commitment” in Schedule 1 (The Original Participant) and the amount of any other Commitment transferred to it under this Agreement; and |
(b) | in relation to any other Participant, the amount of any Commitment transferred to it under this Agreement, |
to the extent not cancelled, reduced or transferred by it under this Agreement or any other Finance Document.
Completion Certificate means the certificate issued by the Consultant certifying that the works under the Construction Contract have been completed in accordance with the terms of the Construction Contract.
Completion Date means the date by which:
(a) | the Completion Certificate has been issued by the Consultant; and |
(b) | the Completion Date Certificate has been issued to the Investment Agent. |
Completion Date Certificate means a certificate in a form and substance satisfactory to the Investment Agent (acting on the instructions of the Majority Participants), issued by the Consultant to the Investment Agent certifying that:
(a) | the Completion Certificate has been issued; and |
(b) | there are no material actual or contingent obligations of the Company under or in connection with the Construction Contract. |
Compliance Certificate means a certificate substantially in the form set out in Schedule 6 (Form of Compliance Certificate).
Construction Contract has the meaning given to it in the Master Istisna’ Agreement.
Construction Costs means the following amounts (other than amounts due under any financing arrangements) paid or payable by the Company up to and including the Completion Date in connection with the Project:
(a) | all sums payable pursuant to the Project Documents; |
(b) | all sums payable in relation to Authorisations; |
(c) | all sums payable in relation to Insurances; and |
(d) | Taxes. |
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Consultant means such person approved by the Investment Agent (acting on the instructions of the Majority Participants) and appointed by the Company to act as the project manager of the Project.
Contractor has the meaning given to it in the Master Istisna’ Agreement.
Cost Overruns means the amount (if any) by which the actual Construction Costs exceed the Total Project Cost.
Cross Collateralised Security means Security over the Project Site Lease which secures both the Secured Liabilities and the Company’s liabilities under the financing provided bilaterally by First Abu Dhabi Bank PJSC to the Company prior to the date of this Agreement in relation to Phase 1.
Dangerous Materials means any element or substance (in any form) which is subject to regulatory control as being hazardous or dangerous or which is capable of causing harm or damage to the Environment.
Default means an Event of Default or any event or circumstance specified in Clause 21 (Events of Default) which would (with the expiry of a grace period, the giving of notice, the making of any determination under the Finance Documents or any combination of any of the foregoing) be an Event of Default.
Delegate means any delegate, agent, attorney, co-trustee, custodian or nominee appointed by the Security Agent, and includes any sub-delegate.
DIFC means the Dubai International Financial Centre, Emirate of Dubai, UAE.
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 Finance Documents (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 (of a technical or systems-related nature) to the treasury or payments operations of a Party preventing 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.
Early Payment Advance has the meaning given to it in Clause 25.7 (Effect of early payment).
EIBOR means, in relation to any relevant period:
(a) | the applicable Screen Rate as of the Specified Time for Dirhams on the relevant Quotation Day for a period equal in length to the relevant period; or |
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(b) | if such page or service ceases to be available, as otherwise determined pursuant to clause 6.9 (Adjustments to the Variable Rental Payments or Advance Variable Rental Payments) of the Master Forward Lease Agreement, |
and if, in either case, that rate is less than zero, EIBOR shall be deemed to be zero.
Environment means humans, animals, plants and all other living organisms including the ecological systems of which they form part and the following media:
(a) | air (including, without limitation. air within natural or man-made structures, whether above or below ground); |
(b) | water (including, without limitation, territorial, coastal and inland waters, water under or within land and water in drains and sewers); and |
(c) | land (including, without limitation, land under water). |
Environmental Claim means any claim, proceeding, formal notice or investigation by any person in respect of any Environmental Law.
Environmental Law means any applicable law or regulation which relates to:
(a) | the carriage of Environmentally Sensitive Material or to actual releases of Environmentally Sensitive Material; |
(b) | the conditions of the workplace; |
(c) | the generation, handling, storage, use, release or spillage of any substance which, alone or in combination with any other, is capable of causing harm to the Environment, including, without limitation, any waste; or |
(d) | the pollution or protection of the Environment. |
Environmental Permits means any permit and other Authorisation and the filing of any notification, report or assessment required under any Environmental Law for the operation of the business of the Company or in connection with the Project.
Environmentally Sensitive Material means oil, oil products and any other substance (including any chemical, gas or other hazardous or noxious substance) which is polluting, toxic or hazardous.
Event of Default means each of the events and circumstances specified as such and set out in Clause 21 (Events of Default).
Expropriation Event means:
(a) | the nationalisation, confiscation, requisition, expropriation or compulsory purchase of all or a substantial part of the Leased Asset; or |
(b) | the revocation, refusal or suspension of any Authorisation in relation to all or a substantial part of the Leased Asset. |
Facility Office means the office or offices notified by a Participant to the Investment Agent in writing on or before the date it becomes a Participant (or, following that date, by not less than five Business Days’ written notice) as the office or offices through which it will perform its obligations under this Agreement.
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Facility Service Cover Ratio means, in respect of any Relevant Period, the ratio of Terminal Earnings for that Relevant Period to the total Rental Payments falling due on each Testing Date to occur during that Relevant Period.
Facility Service Reserve Account means the non-interest bearing Dirham denominated investment account with held by the Company with the Account Bank established in accordance with Clause 20 (Accounts), and any renewal or redesignation thereof.
FATCA means:
(a) | sections 1471 to 1474 of the US Internal Revenue Code of 1986 or any associated regulations or other official guidance; |
(b) | any treaty, law, regulation or other official guidance enacted in 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 |
(c) | any agreement pursuant to the implementation of any treaty, law or regulation referred to in paragraphs (a) or (b) above with the US Internal Revenue Service, the US government or any governmental or taxation authority in any other jurisdiction. |
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.
FATCA FFI means a foreign financial institution as defined in section 1471(d)(4) of the US Internal Revenue Code of 1986 which, if any Party is not a FATCA Exempt Party, could be required to make a FATCA Deduction
Fatwa and Shari’ah Supervisory Board means the board of learned Shari’ah scholars of the Investment Agent who determine whether, in their view, the transaction contemplated in the Finance Documents is compliant with the principles of Shari’ah.
Fee Letter means each fee letter between the Company and the Investment Agent, the Security Agent or an Original Participant relating to the Finance Documents and dated on or about the date of this Agreement.
Final Maturity Date means the date occurring 120 months from the date of this Agreement.
Finance Charges means, in respect of the Company, and in respect of any Relevant Period, the aggregate amount of the accrued rental or profit, commission, fees, discounts, prepayment processing fees, premiums or charges and other finance payments in the nature of profit in respect of its Financial Indebtedness whether paid, payable or capitalised by any member of its group (calculated on a consolidated basis) in respect of that Relevant Period including:
(a) | any upfront fees or costs; |
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(b) | fees payable in connection with the issue or maintenance of any bond letter of credit, guarantee or other assurance against financial loss which constitutes Financial Indebtedness and is issued by a third party on behalf of a member of its group; |
(c) | commitment, utilisation and non-utilisation fees; |
(d) | the profit or rental (but not the capital) element of payments in respect of Finance Leases; and |
(e) | any commission, fees, discounts and other finance payments payable by (and deducting any such amounts payable to) any member of its group under any profit rate hedging arrangement, |
excluding
(f) | interest (capitalised or otherwise) in respect of any of its Subordinated Shareholder Loans, |
and in each case so that no amount shall be added (or deducted) more than once.
Finance Documents means:
(a) | this Agreement; |
(b) | the Master Forward Lease Agreement; |
(c) | the Forward Lease; |
(d) | the Master Istisna’ Agreement; |
(c) | the Istisna’ Agreement; |
(e) | the Purchase Undertaking; |
(f) | the Sale Undertaking; |
(g) | any Sale Agreement; |
(h) | the Service Agency Agreement; |
(i) | the Title Agency Agreement; |
(j) | the Offer Letter; |
(k) | the Acceptance; |
(l) | each Istisna’ Instalment Notice; |
(m) | each Advance Variable Rental Payment Notice; |
(n) | the First Rental Payment Notice; |
(o) | each General Rental Payment Notice; |
(p) | the Indemnity Undertaking; |
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(q) | each Fee Letter; |
(r) | each Transaction Security Document; and |
(s) | any other document or agreement designated as such by the Lessor and the Lessee. |
Finance Lease means any lease or hire purchase contract which would, in accordance with IFRS, be treated as a finance or capital lease.
Finance Party means each of:
(a) | the Arranger; |
(b) | each Participant; |
(c) | the Investment Agent; |
(d) | the Lessor; |
(e) | the Security Agent; and |
(f) | the Account Bank. |
Financial Indebtedness means any indebtedness (or the Shari’ah compliant equivalent) for or in respect of:
(a) | monies borrowed (including any working capital facilities); |
(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, in accordance with IFRS, be treated as a finance or capital lease; |
(e) | receivables sold or discounted (other than any receivables to the extent they are sold on a non-recourse basis); |
(f) | any amount raised under any other transaction (including any forward sale or purchase agreement) having the commercial effect of a borrowing; |
(g) | any amount raised under any Islamic financing arrangement (but excluding, for the purpose of this paragraph (g), any amount covered by paragraph (h) below); |
(h) | any derivative transaction entered into in connection with protection against or benefit from fluctuation in any rate or price (and, when calculating the value of any derivative transaction, only the marked to market value shall be taken into account); |
(i) | 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; and |
(j) | the amount of any liability in respect of any guarantee or indemnity for any of the items referred to in paragraphs (a) to (i) above. |
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Financial Year means the annual accounting period of the Company ending on 31 December in each year.
FSRA Funding Date means the date falling five Business Days prior to the first Rental Payment Date.
Global Transfer Certificate means single Transfer Certificate (or such other document as acceptable to the Parties and each New Participant at the relevant time) executed by the Existing Participant and certain New Participants and counter-signed by the Investment Agent pursuant to which the Commitments, and related rights and obligations, of:
(a) | the Existing Participant are reduced to AED100,000,000; and |
(b) | the New Participants, in aggregate, are increased to AED250,000,000. |
Group means the Company and its Subsidiaries (direct or indirect) from time-to-time.
Group Company means a member of the Group.
Offtake Contract means the offtake contract dated 27 June 2018 between the Company and .
Half Year Accounts means the semi-annual financial statements of the Company delivered or to be delivered to the Investment Agent pursuant to Clause 15.1(b).
Half Year Period means each six month period commencing on and from 1 January and 1 July in each year.
Holding Company means, in relation to a person, any other person in respect of which it is a Subsidiary.
IFRS means international accounting standards within the meaning of the IAS Regulation 1606/2002 to the extent applicable to the relevant financial statements.
Insurances means all contracts and policies of insurance taken out by or on behalf of the Company in connection with all or part of the Project, Project Site, the Phase 2 Storage Terminal and/or its assets directly relating thereto.
Insurance and Compensation Proceeds means any payment of:
(a) | insurance proceeds payable to or received by the Company in respect the Project, Project Site and/or the Phase 2 Storage Terminal; or |
(b) | compensation payable to or received by the Company in respect in respect the Project, Project Site and/or the Phase 2 Storage Terminal in respect of: |
(i) | any seizure, compulsory acquisition, expropriation, nationalisation, intervention, restriction or other action by or on behalf of any governmental, regulatory or other person in relation to all or part of the Project, Project Site and/or the Phase 2 Storage Terminal; |
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(ii) | any sum paid to or for the account of the Company in respect of the refusal, revocation, suspension, modification or imposition of conditions in respect of any Authorisation, or any other official order or notice restricting all or part of the Project including the operation of the Phase 2 Storage Terminal (or any other operations or business carried out at the Project Site); or |
(iii) | an Expropriation Event, |
which is remitted to or received by the Investment Agent (in its capacity as such) or the Security Agent for onward payment to the relevant Participants pursuant to this Agreement but excluding in each case monies received under liability policies held by the Company which are required by that Company to satisfy established liabilities of the Company to third parties which shall be used to satisfy such third party liabilities.
Investment means the aggregate of all Participant Contributions that have been paid and remain outstanding or have not otherwise been reduced from time to time under the Finance Documents.
Initial Equity Contribution means the amount of AED260,000,000 (i.e. an amount equal to 42.62 per cent of the Total Project Cost) fully contributed to the Project by the Company from it own resources prior to the date of this Agreement.
IPO Event means the listing of Listco on any stock exchange.
Leased Asset has the meaning given to it in the Master Forward Lease Agreement.
Legal Reservations means the reservations or qualifications as to matters of law of general application which are set out in the legal opinions delivered pursuant to any Finance Document.
Lessee Event of Default has the meaning given to it in the Master Forward Lease Agreement.
Listco means any Holding Company of the Company from time to time.
Majority Participants means:
(a) | if no Participant Contributions have been made, a Participant or Participants whose Commitments aggregate more than 66⅔ per cent of the Total Commitments (or, if the Total Commitments have been reduced to zero, aggregated more than 66⅔ per cent of the Total Commitments immediately before the reduction); or |
(b) | at any other time, a Participant or Participants whose Participant Contributions forming part of the Investment then outstanding aggregate more than 66⅔ per cent of the Investment. |
Master Forward Lease Agreement means the master forward lease agreement dated on or about the date of this Agreement between the Investment Agent (as the Lessor) and the Company (as the Lessee).
Master Istisna’ Agreement means the master istisna’ agreement dated on or about the date of this Agreement between the Company (as the Seller) and the Investment Agent.
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Material Adverse Effect means a material adverse effect on:
(a) | the business, operations, property or condition (financial or otherwise) of any Obligor, the Project or the Phase 2 Storage Terminal; |
(b) | the ability of an Obligor to perform its payment or other material obligations under the Finance Documents to which it is a party; or |
(c) | the validity or enforceability of any Finance Document (other than the Service Agency Agreement). |
New Participant has the meaning given to it in Clause 26.1 (Transfers by the Participants).
Obligors means:
(a) | the Company; and |
(b) | each Guarantor. |
Original Financial Statements means the Company’s audited financial statements for the Financial Year ended 31 December 2017.
Participant means:
(a) | any Original Participant; and |
(b) | any bank, financial institution, trust, fund or other entity which has become a Participant accordance with Clause O (Changes), |
which in each case has not ceased to be a Participant in accordance with the terms of this Agreement.
Participant Contribution means, in relation to a Participant, a payment to be made or made to the Investment Agent under this Agreement for application by the Investment Agent pursuant to the Finance Documents.
Participant Contribution Date means the date when a Participant Contribution is or is to be made.
Participant Contribution Request means a document substantially in the form set out in Schedule 4 (Form of Participant Contribution Request).
Participation means, in relation to a Participant, the aggregate amount of its Participant Contributions, as the same may be increased or decreased by transfers in accordance with the provisions of Clause 26.1 (Transfers by the Participants) or otherwise in accordance with the terms of the Finance Documents.
Participations to Cost means, on any date, the aggregate amount of all Participations on that date as a percentage of the aggregate of the sum of all actual Construction Costs and Project Expenses paid to that date (determined in accordance with the most recent Project Progress Report).
Participations to Value Ratio means, on any date, the ratio of all Participations on that date to the amount of the most recent Valuation supplied to the Investment Agent in accordance with Clause 17.8.1 (Valuations).
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Party means a party to this Agreement.
Percentage means in relation to a Participant, the percentage set opposite its name under the heading ‘Percentage’ in Schedule 1 (The Original Participant), as such percentage may change from time to time in order to reflect the actual percentage of its Participation in relation to the aggregate amount of all Participations.
Perfection Requirements means the making of all registrations, filings, endorsements, notarisation, stamping, notifications or other actions or steps required to be made in any jurisdiction in order to perfect Security created by a Transaction Security Document and/or in order to achieve the relevant priority for the Security created thereunder.
Permitted Security means:
(a) | any Security created under a Finance Document; |
(b) | any lien arising by operation of law pursuant to the ordinary course of a Group Company’s day-to-day trading activities and not as a result of any default or omission by any Group Company; |
(c) | in relation to any bank account permitted in accordance with the terms of this Agreement, any netting or set-off arrangement entered into by any Group Company in the ordinary course of its banking arrangements for the purpose of netting debit and credit balances of Group Companies but only so long as: |
(i) | such arrangement does not permit credit balances of Obligors to be netted or set off against debit balances of Group Companies which are not Obligors; and |
(ii) | such arrangement does not give rise to other Security over the assets of Obligors; |
(d) | any Security or Quasi-Security arising under any retention of title, hire purchase or conditional sale arrangement or arrangements having similar effect in respect of goods supplied to a Group Company in the ordinary course of its day-to-day trading activities and on the supplier’s standard or usual terms and not as a result of any default or omission by any Group Company; |
(e) | any Security or Quasi-Security arising as a consequence of any finance or capital lease where the Financial Indebtedness arising under that arrangement is permitted under the Finance Documents; |
(f) | any Security created in favour of a plaintiff or defendant in any proceedings or arbitration as security for costs and expenses where the relevant Group Company is diligently prosecuting or defending such proceedings or arbitration in good faith; |
(g) | any lien arising by operation of law in respect of Taxes which are not overdue for payment or in respect of Taxes being diligently contested in good faith by appropriate steps and in respect of which appropriate reserves have been made; or |
(h) | any Security or Quasi-Security granted with the Investment Agent’s prior written consent. |
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Phase 1 means the project known as “Phase 1” on the Project Site relating to the construction of 14 clean oil and green fuel storage tanks completed by the Company prior to the date of this Agreement.
Phase 1 Accounts means each accounts of the Company maintained with First Abu Dhabi Bank PJSC relating to Phase 1.
Phase 2 Storage Terminal means eight oil storage tanks with a total capacity of 600,000 cubic meters to be constructed at the Project Site pursuant to the Construction Contract together with any related fixtures and fittings at the Project Site.
Project means the construction, management, operation, maintenance and repair of the Phase 2 Storage Terminal on the Project Site.
Project Bond means each:
(a) | advance payment bond; |
(b) | performance guarantee; and |
(c) | warranty guarantee, |
issued in favour of the Company in connection with the Project.
Projected Completion Date means 18.5 months from 10 September 2018.
Project Documents means:
(a) | the Construction Contract; |
(b) | the Project Site Lease; |
(c) | each Project Bond; and |
(d) | any other document designated as such by the Investment Agent and the Company. |
Project Expenses means any miscellaneous costs and expenses incurred by the Company relating directly to the operation of the Phase 2 Storage Terminal.
Project Progress Report means each report in a form acceptable to the Investment Agent (acting on the instructions of the Majority Participants), produced by the Bank Technical Adviser, and certified as accurate by the Company and the Consultant, setting out in reasonable detail:
(a) | the progress of the Project to the date of such report; |
(b) | the amount of all actual Construction Costs and Project Expenses paid to date; |
(c) | the achievement of any construction milestones required to have been achieved by such date under the Construction Contract or, if any milestone has not been achieved, reasonable details of the reason for such non-achievement; and |
(d) | any other information that a Participant may reasonably request the Company provide in relation to the construction of the Project. |
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Project Site means Plot Number 130, Block B, Al Sudah, Fujairah, UAE.
Project Site Lease means the lease dated 10 March 2013 in respect of the Project Site granted in favour of the Company by Fujairah Oil Industry Zone (FOIZ).
Protected Party means any Secured Party which is or will be subject to any liability or required to make any payment for or on account of Tax in relation to a sum received or receivable (or any sum deemed for the purposes of Tax to be received or receivable) under a Finance Document.
Purchase Undertaking means the purchase undertaking granted by the Company in favour of the Investment Agent on or about the date of this Agreement.
PwC Feasibility Report means a financial feasibility report in respect of the Project produced by PwC including an up to date financial projections model prepared on the basis of prevailing market conditions and which is in a form acceptable to the Investment Agent (acting on the instructions of the Majority Participants).
Quarterly Period means each three month period commencing on and from 1 January, 1 April, 1 July and 1 October in each year.
Quasi-Security means an arrangement or transaction described in Clause 18.6.1(a) (Negative Pledge).
Quotation Day means, in relation to any relevant period for which EIBOR is to be determined, two Business Days before the first day of that relevant period.
Receiver means a receiver or receiver and manager or administrative receiver of the whole or any part of the Secured Property.
Reference Bank Quotation means any quotation supplied to a Finance Party by a Reference Bank.
Related Finance Charges means, in relation to any Relevant Period, all Finance Charges relating tot the Finance Documents falling due during that Relevant Period.
Relevant Interbank Market means the UAE interbank market in Dirhams.
Relevant Jurisdiction means, in relation to a company:
(a) | its jurisdiction of incorporation; |
(b) | any jurisdiction where it conducts business; |
(c) | any jurisdiction where any asset subject to or intended to be subject to the Transaction Security to be granted by it is situated; and |
(d) | the jurisdiction whose laws govern the perfection of any Transaction Security Document entered into by it. |
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.
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Relevant Period means each period of twelve months ending on a Testing Date falling after the date of this Agreement.
Remittance means any payment made or owing by any Obligor under any Finance Document in relation to the Investment which is remitted to or received by the Investment Agent for onward payment to the relevant Participants pursuant to this Agreement.
Repeating Representation means each of the representations set out in Clauses 14.2 (Status) to 14.6 (Validity and Admissibility in Evidence), Clause 14.12 (No Event of Default), Clause 14.15.4, Clause 14.17 (Applicable Anti Bribery Law), Clause 14.17 (Sanctions) and Clause 14.21 (Transaction Security Documents), Clause 14.23 (Ranking) to Clause 14.30 (Insurances).
Replacement Benchmark means a benchmark rate which is:
(a) | formally designated nominated or recommended as the replacement for the Screen Rate by: |
(i) | the administrator of the Screen Rate (provided that the market or economic reality that such benchmark rate measures is the same as that measured by the Screen Rate); or |
(ii) | any Relevant Nominating Body, |
and if replacements have, at the relevant time. been formally designated, nominated or recommended under both paragraphs (i) and (ii) above, the “Replacement Benchmark” will be the replacement under paragraph (ii) above;
(b) | in the opinion of the Majority Participants and the Company, generally accepted in the international or any relevant domestic syndicated finance markets as the appropriate successor to the Screen Rate; or |
(c) | in the opinion of the Majority Participants and the Company, an appropriate successor to the Screen Rate. |
Representative means any delegate, agent, manager, administrator, nominee, attorney, trustee or custodian.
Required FSRA Balance for any Relevant Period has the meaning given to it in Clause 20.4.1.
Restricted Party means a person that is:
(a) | listed on any Sanctions List; |
(b) | at least 50% owned or otherwise controlled (as such term is used and applied in the relevant Sanctions) by, or (to the knowledge of the Company) acting on behalf, or at the direction, of any persons that are listed on any Sanctions List; or |
(c) | otherwise a target of Sanctions (“target of Sanctions” signifying a person with whom a US person or other national of a Sanctions Authority would be prohibited or restricted by law from engaging in trade, business or other activities). |
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Sale Undertaking means the sale undertaking granted by the Investment Agent in favour of the Company.
Sanctions means any economic, trade or financial sanctions laws, regulations, embargoes or restrictive measures administered, enacted or enforced by a Sanctions Authority.
Sanctions Authorities means the United States of America, the United Nations, the European Union, the United Kingdom, the United Arab Emirates or the respective governmental institutions and agencies of any of the foregoing, including, without limitation the Office of Foreign Asset Control of the US Department of the Treasury (OFAC), the United States Departments of State and Commerce and Her Majesty’s Treasury.
Sanctions List means the “Specially Designated Nationals and Blocked Persons” Sectoral Sanctions Identifications and Foreign Sanctions Evaders lists maintained by OFAC, the Consolidated List of Financial Sanctions Targets (Asset Freeze Targets and the Investments Ban Lists) 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, each as amended, supplemented or substituted from time to time.
Screen Rate means in relation to EIBOR, the UAE interbank offered rate for Dirhams for the relevant period displayed on the appropriate page of the Reuters screen (or any replacement Reuter’s page which displays that rate) or, if no Reuters service is available, on the appropriate page of such other information service which publishes that rate from time to time in place of Reuters.
Screen Rate Replacement Event means, in relation to the Screen Rate:
(a) | the methodology, formula or other means of determining the Screen Rate has, in the opinion of the Majority Participants and the Company materially changed; |
(b) | the administrator of the Screen Rate or its supervisor publicly announces that such administrator is insolvent; |
(c) | information is published in any order, decree, notice, petition or filing, however described, of or filed with a court, tribunal, exchange, regulatory authority or similar administrative, regulatory or judicial body which reasonably confirms that the administrator of the Screen Rate is insolvent, provided that, in each case, at that time, there is no successor administrator to continue to provide the Screen Rate; |
(d) | the administrator of the Screen Rate publicly announces that it has ceased or will cease, to provide that Screen Rate permanently or indefinitely and, at that time, there is no successor administrator to continue to provide the Screen Rate; |
(e) | the supervisor of the administrator of the Screen Rate publicly announces that the Screen Rate has been or will be permanently or indefinitely discontinued; |
(f) | the administrator of the Screen Rate or its supervisor announces that the Screen Rate may no longer be used; or |
(g) | in the opinion of the Majority Participants and the Company, the Screen Rate is otherwise no longer appropriate for the purposes of the calculation of Variable Rental Payments or Advance Variable Rental Payments (as applicable) under the Finance Documents. |
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Secured Liabilities means all liabilities owing to the Secured Parties by any Obligor under or pursuant to the Finance Documents (including, for the avoidance of doubt, the provisions of Clause 10.37 (Parallel debt and security)) and whether present or future, actual or contingent (and whether incurred by an Obligor alone or by the Obligors jointly, and whether as principal or surety or in some other capacity).
Secured Party means each of:
(a) | each Finance Party; |
(b) | any Receiver; and |
(c) | any Delegate. |
Secured Property means all assets of the Company which from time to time are, or are expressed to be, the subject of the Transaction Security.
Security means a mortgage, charge (whether fixed or floating) or pledge, any maritime or other lien, assignment by way of security, retention of title provision, trust or flawed asset arrangement (for the purpose of, or which has the effect of, granting security), the security rights of a plaintiff under an action in rem, or other security interest securing any obligation of any person or any other agreement or arrangement in any jurisdiction having a similar effect.
Security Period means the period from the date of this Agreement up to and including the date on which the Security Agent (acting on the instructions of the Investment Agent who, in turn. is acting on the instructions of all Participants) is satisfied that all of the Secured Liabilities have been unconditionally and irrevocably paid or discharged in full and that no Secured Party has any commitment or liability, whether present or future, actual or contingent, in relation to the Finance Documents.
Service Agency Agreement means the service agency agreement dated on or about the date of this Agreement between the Service Agent and the Investment Agent in its capacity as principal.
Specified Time means 11:00 am.
Successful Syndication means the date on which a transfer is effected pursuant to the Investment Agent’s execution of a Global Transfer Certificate in accordance with Clause 26.6 (Procedure for transfer).
Share Pledge means a UAE law share pledge granted in favour of the Security Agent in respect of the entire issued share capital of the Company.
Shari’ah means the rules, principles and parameters of Islamic law as interpreted by the Fatwa and Shari’ah Supervisory Board.
Sponsors means:
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Subordinated Shareholder Loan means any loan from a Sponsor made or outstanding from the Company that is subordinated to the liabilities under the Finance Documents, either pursuant to an Agreed Form subordination agreement or otherwise on terms acceptable to the Investment Agent (acting on the instructions of the Majority Participants).
Subsidiary means, in relation to any company or corporation (the first company or corporation) at any particular time, any other company or corporation (the second company or corporation) whose affairs and policies the first company or corporation controls or has the power to control, whether by ownership of share capital, contract, or the power to appoint or remove members of the governing body of the second company or corporation.
Tax means any zakat, tax, levy, impost, duty or other charge or withholding of a similar nature.
Terminal Earnings means, in respect of any Relevant Period, Terminal Revenues in respect of that Relevant Period less Project Expenses in respect of that Relevant Period.
Terminal Revenues means all amounts (by way of revenue, rent, capital, collection, fee, storage rental revenues, revenue from value added services (including fees for blending, inter tank transfer, throughput transfer and heating services) or other amount received or receivable by or on behalf of the Company from any person in relation to, or the operation of, the Phase 2 Storage Terminal.
Testing Date means 30 June and 31 December in each year.
Third Parties Act means the Contracts (Rights of Third Parties) Act 1999.
Title Agency Agreement means the title agency agreement between the Investment Agent and the Company in relation to the title to the Leased Asset.
Total Commitments means the aggregate of the Commitments being an amount up to AED350,000,000 at the date of this Agreement.
Total Project Cost means AED610,000,000 being the aggregate amount of anticipated Construction Costs at the date of this Agreement.
Transaction Documents means:
(a) | the Finance Documents; and |
(b) | the Project Documents. |
Transaction Request means:
(a) | the Offer Letter; or |
(b) | an Istisna’ Instalment Notice. |
Transaction Security means the Security created or expressed to be created in favour of the Investment Agent and/or the Security Agent pursuant to the Transaction Security Documents.
Transaction Security Documents means:
(a) | the Account Security; |
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(b) | the Share Pledge; |
(c) | the Assignment of Project Documents; |
(d) | the Assignment of Receivables; |
(e) | the Assignment of Insurances; and |
(f) | any other document creating, or which expresses to create, Security for the Secured Liabilities. |
Transfer Certificate means a certificate substantially in the form set out in Schedule 3 (Form of Transfer Certificate) or any other form (including and assignment and assumption arrangement) agreed between the Investment Agent and the Company.
Transfer Date means, in relation to an 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 Investment Agent executes the relevant Assignment Agreement or Transfer Certificate. |
UAE means the United Arab Emirates.
Unpaid Sum means any sum due and payable but unpaid by the Company under the Finance Documents.
US Tax Obligor means a party:
(a) | which is resident for tax purposes in the US; or |
(b) | some or all of whose payments under the Finance Documents are from sources within the US for US federal income tax purposes. |
Valuation means each valuation of the Phase 2 Storage Terminal by a Valuer supplied in accordance with Clause 17.8.1 (Valuations) each addressed to the Investment Agent and each prepared on the basis of the market value, as that term is defined in the then RICS Valuations Standards, assessed on the special condition that the Project is complete as at the date of the valuation in the market conditions prevailing at that date.
Valuer means a third party surveyor acceptable to the Investment Agent.
VAT means value added tax or consumption or sales tax and any other tax of a similar nature imposed in any jurisdiction.
1.2 | Interpretation |
1.2.1 | Unless a contrary indication appears, any reference in this Agreement to: |
(a) | the Investment Agent, the Arranger, the Security Agent, any Finance Party, any Participant, any Obligor, any Party or any other person shall be construed so as to include its successors in, title, permitted assigns and permitted transferees to, or of, its rights and/or obligations under the Finance Documents; |
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(b) | assets includes present, future, actual and contingent properties, revenues and rights of every description; |
(c) | a Finance Document or any other agreement or instrument is a reference to that Finance Document or other agreement or instrument as amended, novated, supplemented, extended, restated or replaced from time to time; |
(d) | guarantee means (other than in Clause 13 (Guarantee) any guarantee, letter of credit, bond, indemnity, documentary or other credit or similar assurance against loss, or any obligation, direct or indirect, actual or contingent, to purchase or assume any indebtedness of any person or to make an investment in or loan to any person or to purchase assets of any person where, in each case, such obligation is assumed in order to maintain or assist the ability of such person to meet its indebtedness; |
(e) | debt or indebtedness includes any obligation, whether incurred as principal or as surety, for the payment or repayment of money, whether present or future, actual or contingent and whether owed jointly or severally or in any other capacity; |
(f) | a person includes any company, firm, company, corporation. government, state or agency of a state or any association, trust, joint venture, consortium, partnership or other entity (whether or not having separate legal personality); |
(g) | a regulation includes any regulation, rule, official directive, request or guideline (whether or not having the force of law) of any governmental, intergovernmental or supranational body, agency, department or of any regulatory, self-regulatory or other authority or organisation; |
(h) | any statute or statutory provision includes any statute or statutory provision which amends, extends, consolidates or replaces it, or which has been amended, extended, consolidated or replaced by it, and any orders, regulations, instruments or other subordinate legislation made under it; |
(i) | AED and Dirhams denote the lawful currency for the time being of the UAE; |
(j) | a time of day is a reference to Abu Dhabi, UAE time; |
(k) | the words include(s). including and in particular shall be construed as meaning that it is ‘without limitation’ and as being by way of illustration or emphasis only and shall not be construed as, nor shall they take effect as, limiting the generality of any preceding words; |
(l) | liabilities includes any obligation whether incurred as principal or as surety, whether or not in respect of indebtedness, whether present or future, actual or contingent and whether owed jointly or severally or in any other capacity; |
(m) | the words other and otherwise shall not be construed ejusdem generis with any preceding words where a wider construction is possible; |
(n) | a Clause or Schedule is to be construed as a reference to the relevant clause of, or schedule to, this Agreement; and |
(o) | relevant period means a relevant Rental Period or such period in respect of which the Screen Rate, EIBOR, a Reference Bank Rate or such other replacement rate for EIBOR is to be calculated under the Finance Documents. |
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1.2.2 | Section, Clause and Schedule headings are for ease of reference only. |
1.2.3 | Unless a contrary indication appears, a term used in any other Finance Document or in any notice given under or in connection with any Finance Document has the same meaning in that Finance Document or notice as in this Agreement. |
1.2.4 | A Default (other than an Event of Default) is continuing if it has not been remedied or waived in writing and or an Event of Default is continuing if it has not been waived. |
1.3 | Third party rights |
1.3.1 | Unless expressly provided to the contrary in this Agreement a person who is not a Party has no right under the Third Parties Act to enforce or to enjoy the benefit of any term of this Agreement. |
1.3.2 | Notwithstanding any term of any Finance Document, the Parties may rescind, vary, waive, release, assign, novate or otherwise dispose of all or any of their respective rights or obligations under this Agreement without the consent of any person who is not a Party. |
1.3.3 | Any Receiver or Delegate may, subject to this Clause 1.3 and the Third Parties Act, rely on any Clause of this Agreement which expressly confers rights on it. |
2 | Finance Parties’ rights and obligations |
2.1 | Several obligations |
The obligations of each Finance Party under the Finance Documents are several. Failure by a Finance Party to perform its obligations under the Finance Documents 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.
2.2 | Separate and independent rights |
The rights of each Finance Party under or in connection with the Finance Documents are separate and independent rights and any liability arising under the Finance Documents to a Finance Party from any Obligor shall be a separate and independent liability.
2.3 | Separate enforcement |
A Finance Party may, except as otherwise stated in the Finance Documents, separately enforce its rights under the Finance Documents.
3 | Guarantors’ agent |
3.1 | Appointment |
Each Guarantor (in its capacity as such) by its execution of this Agreement irrevocably appoints the Company to act on its behalf as its agent in relation to the Finance Documents and irrevocably authorises:
(a) | the Company on its behalf to supply all information concerning itself contemplated by the Finance Documents to the Secured Parties and to give all notices and instructions, to make such agreements and to effect the relevant amendments, supplements and variations capable of being given, made or effected by the Guarantors notwithstanding that they may affect a Guarantor, without further reference to or the consent of any Guarantor: and |
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(b) | the Secured Parties to give any notice, demand or other communication to any Guarantor pursuant to the Finance Documents to the Company, |
and in each case each Guarantor shall be bound as though the Guarantor itself had given the notices and instructions or executed or made the agreements or effected the amendments, supplements or variations, or received the relevant notice, demand or other communication.
3.2 | Acts binding |
Every act, omission, agreement, undertaking, settlement, waiver, amendment, supplement, variation, notice or other communication given or made by the Company or given to the Company under any Finance Document on behalf of a Guarantor or in connection with any Finance Document (whether or not known to any Guarantor) shall be binding for all purposes on all Guarantors as if each Guarantor had expressly made, given or concurred with it. In the event of any conflict between any notices or other communications of the Company and a Guarantor, those of the Company shall prevail.
4 | Initial conditions precedent |
4.1 | Initial conditions precedent |
Without limiting the provisions of clause 3 (Conditions precedent) of the Master Istisna’ Agreement, the Company may not deliver the Offer Letter unless the Investment Agent has received all of the documents and other evidence listed in Schedule 7 (Initial conditions precedent) in form and substance satisfactory to the Investment Agent (acting on the instructions of all the Participants). The Investment Agent shall notify the Company and the Participants promptly upon being so satisfied. The Investment Agent shall not be liable for any damages, costs or losses whatsoever as a result of giving any such notification.
5 | Payment mechanics |
5.1 | Receipt of a Transaction Request |
The Investment Agent shall notify the Participants of its receipt of each duly completed Transaction Request.
5.2 | Issue of Participant Contribution Request |
If a Transaction Request complies with the provisions of the Finance Documents, the Investment Agent shall issue to the Participants a Participant Contribution Request no later than 12:00 pm three Business Days before the proposed Participant Contribution Date.
5.3 | Calculation of Participant Contributions |
The Participant Contribution for a Participant shall be that Participant’s Percentage of all of the Participant Contributions specified in the relevant Participant Contribution Request.
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5.4 | Participant Contribution payment |
Before 11.00 am on the relevant Participant Contribution Date, each Participant shall pay its Participant Contribution to the Investment Agent in accordance with the relevant Participant Contribution Request and Clause 5.6 (Payments to the Investment Agent).
5.5 | Entitlement arising from payment of Participant Contributions |
5.5.1 | Subject to Clauses 5.5.2, 5.5.3 and 5.5.4, following payment of its Participant Contribution in accordance with this Clause 5, and the conclusion of the Forward Lease, a Participant shall be entitled to its Percentage of Remittances or other payments relating to the Investment that the Investment Agent receives or recovers in relation to that Participant Contribution. |
5.5.2 | To the extent that a Remittance, Insurance and Compensation Proceeds or other payment is made: |
(a) | in respect of an actual loss, cost or reduction suffered or incurred by; |
(b) | in respect of a service performed or supplied by; or |
(c) | in accordance with the Finance Documents, for the sole benefit of, |
a particular Participant or any of its Affiliates (including a payment or recovery of or on account of actual fees or incentives). all of that payment shall be paid to the Participant concerned. Where such payment is in relation to the outstanding Participation of the relevant Participant, following such payment, the remaining instalments of Fixed Rental Payments and Advance Fixed Rental Payments shall be reduced in inverse order of maturity.
5.5.3 | Where a Variable Rental Payment or Advance Variable Rental Payment amount has been calculated in accordance with clause 6.9 (Adjustments to the Variable Rental Payments or Advance Variable Rental Payments) of the Master Forward Lease Agreement, the Participants shall share any Remittance or other payment made in respect of that Variable Rental Payment or Advance Variable Rental Payment (as applicable) pro rata to their respective shares of that Variable Rental Payment or Advance Variable Rental Payment (as applicable) as determined under that clause. |
5.5.4 | Where a late payment amount has been calculated in accordance with Clause 24.6 (Late payment), such late payment amount shall: |
(a) | be payable for the account of the Participants pro rata to their respective shares, and such late payment amount shall be used by each Participant in recovery of any actual costs (not to include opportunity costs, funding costs or costs in the nature of interest) incurred by that Participant in respect of that late payment; and |
(b) | in respect of any remaining balance held by a Participant, be payable by such Participant to charity under the supervision of its own fatwa and Shari’ah supervisory board (if there is one) or the Fatwa and Shari’ah Supervisory Board (if there is not). |
5.6 | Payments to the Investment Agent |
5.6.1 | Subject to Clause 5.6.4, on each date on which a Participant is required to make a payment under a Finance Document such Participant shall make the same available to the Investment Agent (unless a contrary indication appears in a Finance Document) for value on the due date at the time and in such funds specified by the Investment Agent as being customary at the time for settlement of transactions in the relevant currency in the place of payment. |
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5.6.2 | On each date on which an Obligor is required to make a payment under a Finance Document such Obligor shall make the same available to the Investment Agent (unless a contrary indication appears in a Finance Document) for value on the due date at the time and in such funds specified by the Investment Agent as being customary at the time for settlement of transactions in the relevant currency in the place of payment. |
5.6.3 | Payments pursuant to Clause 5.6.1 and 5.6.2 shall be made to the following account: |
Bank Name | UAE Central Bank, Abu Dhabi, UAE |
Swift Code | CBAUAEAA |
Beneficiary Name | First Abu Dhabi Bank PJSC, (Syndicated Loans), Abu Dhabi, U.AE. |
Beneficiary Swift Address | |
Beneficiary Account Number | |
Reference | GMO-SLT - Brooge - AED 350M |
Facility - 2018 Agency |
or such account as advised by the Investment Agent.
5.6.4 | In respect of its Participant Contributions, each Participant shall confirm (before 11.00 am): |
(a) | two Business Days prior to the Participant Contribution Date via email, confirmation of its payment instructions: and |
(b) | on the Participant Contribution Date by authenticated SWIFT message to the Investment Agent to such SWIFT number as the Investment Agent shall have notified to the Participants for this purpose, its payment of such Participant Contributions. |
5.7 | Distributions by the Investment Agent |
Each payment received by the Investment Agent under the Finance Documents for another Party (including Remittances and Insurance and Compensation Proceeds for the Participants) shall, subject to Clause 5.9 (Distributions to an Obligor) and Clause 5.10 (Clawback if no actual receipt by the Investment Agent), be made available by the Investment Agent:
(a) | as soon as practicable after receipt to the Party entitled to receive payment in accordance with the Finance Documents (in the case of a Participant, for the account of its Facility Office): and |
(b) | to such account as that Party may notify to the Investment Agent by not less than five Business Days’ notice with a bank in the principal financial centre of the country of that currency. |
5.8 | Distributions to the Participants |
5.8.1 | The Investment Agent’s obligation to make payments to the Participants under this Agreement is conditional upon it receiving or recovering the applicable Remittance in accordance with the provisions of the Finance Documents. |
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5.8.2 | Other than in respect of any payment received by a Participant in accordance with Clause 5.5.2, each of the Participants agrees for the benefit of the Investment Agent that its entitlement to each payment made by the Investment Agent in respect of Remittances and Insurance and Compensation Proceeds which it receives ranks pari passu with the entitlements of each other Participant and that the amount to be paid to each Participant shall be that Participant’s Percentage of each such payment. |
5.8.3 | The Investment Agent may convert all or any part of the monies received by it from the currency of receipt into the currency or currencies (if different) of the payments then due to the Participants and may deduct from those monies the actual costs of such conversion. The conversion shall be at the prevailing spot market rates of exchange and in such amounts or proportions as the Investment Agent determines to be appropriate. |
5.9 | Distributions to an Obligor |
The Investment Agent may (with the consent of the Company or in accordance with Clause 6.3 (Set-off)) apply any amount received by it for an Obligor in or towards payment (on the date and in the currency and funds of receipt) of any amount due from that Obligor under the Finance Documents or in or towards purchase of any amount of any currency to be so applied.
5.10 | Clawback if no actual receipt by the Investment Agent |
5.10.1 | Where a sum is to be paid to the Investment Agent under the Finance Documents for another Party, the Investment Agent is not obliged to pay that sum to that other Party (or to enter into or perform any related exchange contract) until it has been able to establish to its satisfaction that it has actually received and is irrevocably entitled to retain that sum. |
5.10.2 | If the Investment Agent pays an amount to another Party and it proves to be the case that the Investment Agent had not actually received that amount or was not irrevocably entitled to retain such amount, then the Party to whom that amount (or the proceeds of any related exchange contract) was paid by the Investment Agent shall on demand refund the same to the Investment Agent. |
5.11 | Remittances |
5.11.1 | If the Investment Agent receives or recovers a Remittance that is insufficient to discharge all the amounts then due and payable by any Obligor under the Finance Documents, the Investment Agent shall apply that payment as follows: |
(a) | first, in or towards payment pro rata of any unpaid actual fees, costs and expenses of the Arranger, the Investment Agent, the Security Agent, the Account Bank. any Receiver and any Delegate under the Finance Documents; |
(b) | secondly, in or towards payment pro rata to the Participants of all Variable Rental Payments and Advance Variable Rental Payments due but unpaid; |
(c) | thirdly, in or towards payment pro rata to the Participants of all Fixed Rental Payments and Advance Fixed Rental Payments due but unpaid; |
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(d) | fourthly, if the amount standing to the credit of the Facility Service Reserve Account is less than the Required FSRA Balance, in payment to the Facility Service Reserve Account so that the amount standing to the credit of the Facility Service Reserve Account is increased to an amount equal to the Required FSRA Balance; and |
(e) | fifthly, in or towards payment pro rata of any other sum due but unpaid under the Finance Documents. |
5.11.2 | The Investment Agent shall, if so directed by the Majority Participants, vary the order set out in Clause 5.11.1, other than Clause 5.11.1(a). |
5.11.3 | This Clause 5.11 shall override any appropriation made by any Obligor. |
5.12 | Insurance and Compensation Proceeds and Terminal Earnings |
5.12.1 | If the Investment Agent or the Security Agent receives or recovers any Insurance and Compensation Proceeds or Terminal Earnings, the Investment Agent or the Security Agent, as is relevant shall apply such Insurance and Compensation Proceeds or Terminal Earnings in the following order: |
(a) | first, in or towards payment pro rata of any unpaid actual fees, costs and expenses of the Arranger, the Investment Agent, the Security Agent, the Account Bank, any Receiver and any Delegate under the Finance Documents: |
(b) | secondly, in or towards payment pro rata to the Participants of all Variable Rental Payments and Advance Variable Rental Payments due but unpaid; |
(c) | thirdly, in or towards payment pro rata to the Participants of Fixed Rental Payments and Advance Fixed Rental Payments due but unpaid; |
(d) | fourthly, if the amount standing to the credit of the Facility Service Reserve Account is less than the Required FSRA Balance, in payment to the Facility Service Reserve Account so that the amount standing to the credit of the Facility Service Reserve Account is increased to an amount equal to the Required FSRA Balance; |
(e) | fifthly, in or towards payment in inverse order of maturity, of the aggregate of all Fixed Rental Payments and Advance Fixed Rental Payments that remain unpaid; |
(f) | sixthly, in or towards payment pro rata of any other sum due but unpaid under the Finance Documents; and |
(g) | seventhly, provided that no Event of Default is continuing or would arise as a result of the relevant withdrawal, any surplus shall be available for withdrawal by the Company as an incentive. |
5.12.2 | The Investment Agent shall, if so directed by the Majority Participants, vary the order set out in Clause 5.12.1 other than Clause 5.12.1(a). |
5.12.3 | This Clause 5.12 shall override any appropriation made by any Obligor. |
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5.13 | No set-off by the Obligors |
All payments to be made by an Obligor under this Agreement and the other Finance Documents shall be calculated and be made without (and free and clear of any deduction for) set-off or counterclaim.
5.14 | Business Days |
Any payment under the Finance Documents which is due to be made on a day that is not a Business Day shall be made on the next Business Day in the same calendar month (if there is one) or the preceding Business Day (if there is not), and in accordance with clause 7.1.2 (Obligations to pay) of the Master Forward Lease Agreement.
5.15 | Currency of account |
5.15.1 | Subject to Clauses 5.15.2 and 5.15.3, the Base Currency is the currency of account and payment for any sum due from the Company or an Obligor under any Transaction Document. |
5.15.2 | Each payment in respect of costs, expenses or Taxes shall be made in the currency in which the costs, expenses or Taxes are incurred. |
5.15.3 | Any amount expressed to be payable in a currency other than the Base Currency shall be paid in that other currency. |
5.16 | Change of currency |
5.16.1 | Unless otherwise prohibited by law, if more than one currency or currency unit are at the same time recognised by the central bank of any country as the lawful currency of that country, then: |
(a) | any reference in the Finance Documents to, and any obligations arising under the Finance Documents in, the currency of that country shall be translated into, or paid in, the currency or currency unit of that country designated by the Investment Agent (after consultation with the Obligors); and |
(b) | any translation from one currency or currency unit to another shall be at the official spot market rate of exchange recognised by the central bank for the conversion of that currency or currency unit into the other, rounded up or down by the Investment Agent. |
5.16.2 | If a change in any currency of a country occurs, this Agreement shall, to the extent the Investment Agent (after consultation with the Obligors) specifies to be necessary, be amended to comply with any generally accepted conventions and market practice in the relevant market and otherwise to reflect the change in currency. |
5.17 | No re-utilisation |
Any amounts paid by the Investment Agent pursuant to the Finance Documents may not be re-utilised by any Obligor.
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6 | Tax |
6.1 | Tax gross-up |
6.1.1 | Payments by each Obligor under each Finance Document to which it is a party shall be made without any deduction or withholding unless such a deduction or withholding is required by applicable law or regulation. |
6.1.2 | If an Obligor is compelled by applicable law or regulation to make any deduction or withholding. the amount of the payment due from that Obligor shall be increased to an amount which (after making any deduction or withholding) leaves an amount equal to the payment which would have been due if no deduction or withholding had been required. The relevant Obligor shall deliver to the Investment Agent evidence satisfactory to the Investment Agent that the payment has been duly remitted to the relevant authority within 30 days of the making of such deduction or withholding. |
6.2 | Tax indemnity |
6.2.1 | The Company shall (within three Business Days of demand by the Investment Agent) pay to a Protected Party an amount equal to the loss, liability or cost which that Protected Party determines will be or has been (directly or indirectly) suffered for or on account of Tax by that Protected Party in respect of a Finance Document. |
6.2.2 | Clause 6.2.1 shall not apply: |
(a) | with respect to any Tax assessed on a Secured Party: |
(i) | under the law of the jurisdiction in which the Secured Party is incorporated or, if different, the jurisdiction (or jurisdictions) in which the Secured Party is treated as resident for tax purposes; or |
(ii) | under the law of the jurisdiction in which that Secured Party’s Facility Office is located in respect of amounts received or receivable in that jurisdiction, |
if 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 Secured Party; or
(b) | to the extent a loss, liability or cost is compensated for by an increased payment under Clause 6.1(Tax gross-up). |
6.2.3 | The Investment Agent shall, upon receipt of a notification from a Protected Party making, or intending to make a claim under Clause 6.2.1, promptly notify the Company of the event which will give or has given, rise to that claim. |
6.2.4 | A Protected Party shall, on receiving a payment from the Company under this Clause 6.2, notify the Investment Agent. |
6.3 | VAT |
6.3.1 | All amounts expressed to be payable under a Finance Document by any Obligor to a Protected Party which (in whole or in part) constitute the consideration for any supply for VAT purposes are deemed to be exclusive of any VAT which is chargeable on that supply, and accordingly, subject to Clause 6.3.2, if VAT is or becomes chargeable on any supply made by any Protected Party to any Party under a Finance Document and such Protected Party is required to account to the relevant tax authority for the VAT, that Party must pay to such Protected Party (in addition to and at the same time as paying any other consideration for such supply) an amount equal to the amount of the VAT (and such Protected Party must promptly provide an appropriate VAT invoice to that Party). |
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6.3.2 | If VAT is or becomes chargeable on any supply made by any Protected Party (the Supplier) to any other Protected Party (the Recipient) under a Finance Document, and any Party other than the Recipient (the Relevant Party) is required by the terms of any Finance Document to pay an amount equal to the consideration for that supply to the Supplier (rather than being required to reimburse or indemnify the Recipient in respect of that consideration): |
(a) | (where the Supplier is the person required to account to the relevant tax authority for the VAT) the Relevant Party must also pay to the Supplier (at the same time as paying that amount) an additional amount equal to the amount of the VAT. The Recipient must (where this paragraph (a) applies) promptly pay to the Relevant Party an amount equal to any credit or repayment the Recipient receives from the relevant tax authority which the Recipient reasonably determines relates to the VAT chargeable on that supply; and |
(b) | (where the Recipient is the person required to account to the relevant tax authority for the VAT) the Relevant Party must promptly, following demand from the Recipient, pay to the Recipient an amount equal to the VAT chargeable on that supply but only to the extent that the Recipient reasonably determines that it is not entitled to credit or repayment from the relevant tax authority in respect of that VAT. |
6.3.3 | Where a Finance Document requires any Party to reimburse or indemnify a Protected Party for any cost or expense, that Party shall reimburse or indemnify (as the case may be) such Protected Party for the full amount of such cost or expense, including such part thereof as represents VAT, save to the extent that such Protected Party reasonably determines that it is entitled to credit or repayment in respect of such VAT from the relevant tax authority. |
6.3.4 | Any reference in this Clause 6.3 to any Party shall, at any time when such Party is treated as a member of a group for VAT purposes, include (where appropriate and unless the context otherwise requires) a reference to the representative member of such group at such time (the term “representative member” to have the same meaning as in the Value Added Tax Act 1994). |
6.3.5 | In relation to any supply made by a Protected Party to any Party under a Finance Document, if reasonably requested by such Protected Party, that Party must promptly provide such Protected Party with details of that Party’s VAT registration and such other information as is reasonably requested in connection with such Protected Party’s VAT reporting requirements in relation to such supply. |
7 | Set-off |
A Finance Party may set off any matured obligation due from an Obligor under the Finance Documents (to the extent beneficially owned by that Finance Party) against any matured obligation owed by that Finance Party to that Obligor, regardless of the place of payment, booking branch or currency of either obligation. If the obligations are in different currencies, the Finance Party shall convert either obligation at the prevailing market spot rate of exchange in its usual course of business for the purpose of the set-off.
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8 | Sharing among the Finance Parties |
8.1 | Payments to Finance Parties |
If a Finance Party (a Recovering Finance Party) receives or recovers any amount from an Obligor or any other person other than in accordance with Clause 4 (Payment mechanics) and applies that amount to a payment due under the Finance Documents (a Recovered Amount) then:
(a) | the Recovering Finance Party shall, within three Business Days, notify details of the receipt or recovery to the Investment Agent: |
(b) | the Investment Agent shall determine whether the receipt or recovery is in excess of the amount the Recovering Finance Party would have been paid had the receipt or recovery been received or made by the Investment Agent and distributed in accordance with Clause 4 (Payment mechanics), without taking account of any Tax which would be imposed on the Investment Agent in relation to the receipt, recovery or distribution; and |
(c) | the Recovering Finance Party shall, within three Business Days of demand by the Investment Agent, pay to the Investment Agent an amount (the Sharing Payment) equal to such receipt or recovery less any amount which the Investment Agent determines may be retained by the Recovering Finance Party as its share of any payment to be made, in accordance with Clause 5.11 (Remittances), unless the Investment Agent determines that the Recovered Amount would have constituted Insurance and Compensation Proceeds or Terminal Earnings if recovered in accordance with Clause 4 (Payment mechanics), in which case the Investment Agent shall make such determination by reference to Clause 5.12 (Insurance and Compensation Proceeds and Terminal Earnings). |
8.2 | Redistribution of payments |
The Investment Agent shall treat the Sharing Payment as if it had been paid by the relevant Obligor and distribute it between the Finance Parties (other than the Recovering Finance Party) (the Sharing Finance Parties) in accordance with Clause 5.11 (Remittances) towards the obligations of that Obligor to the Sharing Finance Parties unless the Investment Agent determines that the Recovered Amount would have constituted Insurance and Compensation Proceeds or Terminal Earnings if recovered in accordance with Clause 4 (Payment mechanics), in which case the Investment Agent shall make such determination by reference to Clause 5.12 (Insurance and Compensation Proceeds and Terminal Earnings).
8.3 | Recovering Finance Party’s rights |
On a distribution by the Investment Agent under Clause 8.2 (Redistribution of payments) of a payment received by a Recovering Finance Party from an Obligor, as between the relevant Obligor and the Recovering Finance Party, an amount of the Recovered Amount equal to the Sharing Payment shall be treated as not having been paid by that Obligor but instead as if it had been paid by that Obligor directly to the Investment Agent.
8.4 | Reversal of redistribution |
If any part of the Sharing Payment received or recovered by a Recovering Finance Party becomes repayable and is repaid by that Recovering Finance Party, then:
(a) | each Sharing Finance Party shall, upon the request of the Investment Agent, pay to the Investment Agent for the account of that Recovering Finance Party an amount equal to the appropriate part of its share of the Sharing Payment (the Redistributed Amount); and |
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(b) | as between the relevant Obligor and each relevant Sharing Finance Party, an amount equal to the relevant Redistributed Amount shall be treated as not having been paid by that Obligor. |
8.5 | Exceptions |
8.5.1 | This Clause 8 shall not apply to the extent that the Recovering Finance Party would not, after making any payment pursuant to this Clause, have a valid and enforceable claim against the relevant Obligor. |
8.5.2 | A Recovering Finance Party is not obliged to share with any other Finance Party any amount which the Recovering Finance Party has received or recovered as a result of taking legal or arbitration proceedings, if: |
(a) | it notified the other Finance Party of the legal or arbitration proceedings; and |
(b) | the other Finance Party had an opportunity to participate in those legal or arbitration proceedings but did not do so as soon as reasonably practicable having received notice and did not take separate legal or arbitration proceedings. |
9 | Role of the Investment Agent and the Arranger |
9.1 | Appointment of the Investment Agent |
9.1.1 | Each Participant |
(a) | appoints the Investment Agent to act as its agent under and in connection with the Finance Documents for the payment by the Participants of a fee in an amount of AED10, (the receipt and adequacy of which the Investment Agent hereby acknowledges) and the Investment Agent accepts that appointment; |
(b) | subject to any restrictions or limitations specified in the Finance Documents, authorises and instructs the Investment Agent (whether or not by or through employees or agents) to: |
(i) | execute and deliver on behalf of each Participant, as the Investment Agent of the Participants, each Finance Document to which the Investment Agent is expressed to be a party or is otherwise required to sign; |
(ii) | pay all amounts of Purchase Price; |
(iii) | issue all notices and requests as may be required or contemplated under the Finance Documents; |
(iv) | take all other actions and make all other calculations and payments that may be necessary in connection with the entry into and performance of the Finance Documents; and |
(v) | at all times, act in a Shari’ah compliant manner; and |
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(c) | authorises the Investment Agent to exercise the rights, powers, authorities and discretions specifically given to the Investment Agent under or in connection with the Finance Documents together with any other incidental rights, powers, authorities and discretions. |
9.1.2 | For the avoidance of doubt, until such time as there is more than one Participant, First Abu Dhabi Bank PJSC (acting in any capacity) will be acting on its own behalf and not as trustee or agent for any Participant. |
9.2 | Instructions |
9.2.1 | Subject always to Clause 9.1.1(b)(v), unless a contrary indication appears in a Finance Document, the Investment Agent shall (subject to its legal obligations): |
(a) | exercise any right, power, authority or discretion vested in it as Investment Agent in accordance with any Shari’ah compliant instructions given to it by the Majority Participants (or, if so instructed by the Majority Participants, refrain from exercising any right, power, authority or discretion vested in it as Investment Agent); and |
(b) | not be liable for any act (or omission) if it acts (or refrains from taking any action) in accordance with an instruction of the Majority Participants. |
9.2.2 | Save in the case of decisions stipulated to be a matter for any other Participant or group of Participants under the relevant Finance Document and unless a contrary indication appears in a Finance Document, any Shari’ah compliant instructions given to the Investment Agent by the Majority Participants shall override any conflicting instructions given by any other Parties and will be binding on all Finance Parties save for the Security Agent. |
9.2.3 | The Investment Agent shall be entitled to request instructions, or clarification of any instruction, from the Majority Participants (or, if the relevant Finance Document stipulates the matter is a decision for any other Participant or group of Participants, from that Participant or group of Participants) as to whether, and in what manner, it should exercise or refrain from exercising any right, power, authority or discretion. The Investment Agent may refrain from acting unless and until it receives any such instructions or clarification that it has requested. |
9.2.4 | The Investment Agent may refrain from acting in accordance with any instructions of any Participant or group of Participants until it has received any indemnification and/or security that it may in its discretion require (which may be greater in extent than that contained in the Finance Documents and which may include payment in advance) for any actual cost, loss or liability which it may incur in complying with those instructions. |
9.2.5 | In the absence of instructions, the Investment Agent may act (or refrain from acting) as it considers to be in the best interest of the Participants. |
9.2.6 | The Investment Agent is not authorised to act on behalf of a Participant (without first obtaining that Participant’s consent) in any legal or arbitration proceedings relating to any Finance Document. This Clause 9.2.6 shall not apply to any legal or arbitration proceeding relating to the perfection, preservation or protection of rights under the Transaction Security Documents or enforcement of the Transaction Security or Transaction Security Documents. |
9.2.7 | Notwithstanding any provision of any Finance Document to the contrary, neither the Investment Agent nor the Arranger is obliged to expend or risk its own funds or otherwise incur any financial liability in the performance of its duties, obligations or responsibilities or the exercise of any right, power, authority or discretion if it has grounds for believing the repayment of such funds or adequate indemnity against, or security for, such risk or liability is not reasonably assured to it. |
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9.3 | Duties of the Investment Agent |
9.3.1 | Except as specifically provided in the Finance Documents or as required by applicable law, the Investment Agent has no obligations or duties of any kind to any other Party under or in connection with any Finance Document and no other obligations or duties of any kind shall be implied. |
9.3.2 | Subject to Clause 9.3.3, the Investment Agent shall promptly forward to a Party the original or a copy of any document which is delivered to the Investment Agent for that Party by any other Party. |
9.3.3 | Without prejudice to Clause 26.8 (Copy of Transfer Certificate to the Company), Clause 9.3.2 shall not apply to any Transfer Certificate. |
9.3.4 | Except where a Finance Document specifically provides otherwise, the Investment Agent is not obliged to review or check the adequacy, accuracy or completeness of any document it forwards to another Party. |
9.3.5 | If the Investment Agent receives notice from a Party referring to this Agreement, describing a Default and stating that the circumstance described is a Default, it shall promptly notify the other Finance Parties. |
9.3.6 | If the Investment Agent is aware of the non-payment of any amount payable to a Finance Party (other than the Investment Agent, the Arranger or the Security Agent) under any Finance Document it shall promptly notify the other Finance Parties. |
9.3.7 | The Investment Agent’s duties under the Finance Documents are solely mechanical and administrative in nature. |
9.4 | Role of the Arranger |
Except as specifically provided in the Finance Documents, the Arranger has no obligations of any kind to any other Party under or in connection with any Finance Document.
9.5 | No fiduciary duties |
9.5.1 | Except as specifically provided in the Finance Documents, nothing in any Finance Document constitutes the Investment Agent or the Arranger as a trustee or fiduciary of any other person. |
9.5.2 | Neither the Investment Agent nor the Arranger shall bound to account to any Participant for any sum or the profit element of any sum received by it for its own account. |
9.6 | Rights to act and to deal |
The Investment Agent and the Arranger and any associated company of either of them may:
(a) | act in an agency, trustee, fiduciary or other capacity on behalf of any other banks or financial institutions providing facilities to any Group Company or any associated company of any Group Company, as freely in all respects as if it had not been appointed to act as Investment Agent and/or trustee for the Participants under this Agreement and without regard to the effect on the Participants of acting in such capacity; and |
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(b) | subscribe for, hold, be beneficially entitled to or dispose of shares or securities, or options or other rights to and interests in shares or securities in any Group Company or any associated company of the Group (in each case, without liability to account). |
9.7 | Business with the Group |
The Investment Agent and the Arranger and any associated company of either of them may accept deposits from, provide financing to and generally engage in any kind of banking or other business with any Group Company or any associated company of the Group, without any obligation to disclose to the Participants, or to account to them for or in respect of, any such arrangement or activity.
9.8 | Rights and discretions |
9.8.1 | The Investment Agent may: |
(a) | rely on: |
(i) | any representation, communication, notice or document believed by it to be genuine, correct and appropriately authorised; |
(ii) | any statement made by any person regarding any matters which may reasonably be assumed to be within his knowledge or within his power to verify: |
(iii) | any communication, instrument or document believed by it to be genuine and correct and to have been signed or sent by the proper person or persons: and |
(iv) | any legal advice or opinions of legal advisers selected or approved by the Investment Agent; |
(b) | assume that: |
(i) | any instructions received by it from the Majority Participants, any Secured Parties or any group of Secured Parties are duly given in accordance with the terms of the Finance Documents; and |
(ii) | unless it has received notice of revocation, that those instructions have not been revoked; and |
(c) | rely on a certificate from any person: |
(i) | as to any matter of fact or circumstance which might reasonably be expected to be within the knowledge of that person; or |
(ii) | to the effect that such person approves of any particular dealing, transaction, step, action or thing, |
as sufficient evidence that that is the case and, in the case of paragraph (c)(i) above, may assume the truth and accuracy of that certificate.
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9.8.2 | The Investment Agent may assume (unless it has received notice to the contrary in its capacity as Investment Agent for the Participants) that: |
(a) | no Default has occurred (unless it has actual knowledge of a Default arising under Clause 21.1 (Non-payment)); |
(b) | any right, power, authority or discretion vested in any Party or any group of Secured Parties has not been exercised; and |
(c) | any notice or request made by the Company (other than a Request) is made on behalf of and with the consent and knowledge of all the Obligors; and |
(d) | no Transaction Security has become enforceable. |
9.8.3 | The Investment Agent may engage, pay for and rely on the advice or services of any lawyers, accountants, tax advisers, surveyors or other professional advisers or experts. |
9.8.4 | Without prejudice to the generality of Clause 9.8.3 or Clause 9.8.5, the Investment Agent may at any time engage and pay for the services of any lawyers to act as independent counsel to the Investment Agent (and so separate from any lawyers instructed by the Participants) if the Investment Agent in its reasonable opinion deems this to be necessary. |
9.8.5 | The Investment Agent may rely on the advice or services of any lawyers, accountants, tax advisers, surveyors or other professional advisers or experts (whether obtained by the Investment Agent or by any other Party) and shall not be liable for any damages, costs or losses to any person, any diminution in value or any liability whatsoever arising as a result of its so relying. |
9.8.6 | The Investment Agent may act in relation to the Finance Documents through its personnel and agents. |
9.8.7 | The Investment Agent may disclose to any other Party and to any person engaged by it or through whom it acts in accordance with this Clause 9 any information it reasonably believes it has received as Investment Agent under this Agreement. |
9.8.8 | The Investment Agent is not obliged to disclose to any Finance Party any details of the rate notified to the Investment Agent by any Participant or the identity of any such Participant for the purpose of clause 6.9 (Adjustments to the Variable Rental Payments or Advance Variable Rental Payments) of the Master Forward Lease Agreement. |
9.8.9 | Notwithstanding any other provision of any Finance Document to the contrary, neither the Investment Agent nor the Arranger is obliged to do or omit to do anything if it would or might in its reasonable opinion constitute a breach of any law or regulation or a breach of a fiduciary duty or duty of confidentiality. |
9.9 | Responsibility for documentation and customer identification |
Neither the Investment Agent nor the Arranger nor any of their respective officers, employees or agents from time to time is responsible or liable for:
(a) | the adequacy, accuracy and/or completeness of any information (whether oral or written) supplied by the Investment Agent, the Arranger, an Obligor or any other person given in or in connection with any Finance Document or the transactions contemplated in the Finance Documents or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document; |
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(b) | the legality, validity, effectiveness, adequacy or enforceability of any Finance Document or the Transaction Security or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document, or the Transaction Security; |
(c) | any determination as to whether any information provided or to be provided to any Finance Party is non-public information, the use of which may be regulated or prohibited by applicable law or regulation relating to insider dealing or otherwise; or |
(d) | any certificate, report, information or other document executed or delivered in connection with the Finance Documents. |
9.10 | No duty to monitor |
The Investment Agent shall not be bound to enquire:
(a) | whether or not any Default has occurred; |
(b) | as to the performance, default or any breach by any Party of its obligations under any Finance Document; or |
(c) | whether any other event specified in any Finance Document has occurred. |
9.11 | Exclusion of liability |
9.11.1 | Without limiting Clause 9.11.3 and subject to Clause 9.11.2 (and without prejudice to any other provision of any Finance Document excluding or limiting the liability of the Investment Agent), the Investment Agent shall not be liable for: |
(c) | any damages, costs or losses to any person, any diminution in value, or any liability whatsoever arising as a result of taking or not taking any action under or in connection with any Finance Document or the Transaction Security; |
(d) | exercising, or not exercising, any right, power, authority or discretion given to it by, or in connection with, any Finance Document, the Transaction Security or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with, any Finance Document or the Transaction Security; or |
(e) | without prejudice to the generality of Clauses 9.11.1(c) and 9.11.1(d) any damages, costs or losses to any person, any diminution in value or any liability whatsoever arising as a result of: |
(i) | any act, event or circumstance not reasonably within its control; or |
(ii) | the general risks of investment in, or the holding of assets in, any jurisdiction, |
including (in each case and without limitation) such damages, costs, losses, diminution in value or liability arising as a result of: nationalisation, expropriation or other governmental actions; any regulation, currency restriction, devaluation or fluctuation; market conditions affecting the execution or settlement of transactions or the value of assets (including any Disruption Event); breakdown, failure or malfunction of any third party transport, telecommunications, computer services or systems, natural disasters or acts of God, war, terrorism, insurrection or revolution; or strikes or industrial action.
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9.11.2 | The Investment Agent shall not be excluded from liability under Clause 9.11.1 for any damages, costs, losses, diminution in value or liability (as applicable) arising directly as a result of the Investment Agent’s gross negligence or wilful default. |
9.11.3 | No Party (other than the Investment Agent) may take any proceedings against any officer, employee or agent of the Investment Agent, in respect of any claim it might have against the Investment Agent, or in respect of any act or omission of any kind by that officer, employee or agent in relation to any Finance Document and any officer, employee or agent of the Investment Agent may rely on this Clause subject to Clause 1.3 (Third party rights) and the provisions of the Third Parties Act. |
9.11.4 | The Investment Agent shall not be liable for any delay (or any related consequences) in crediting an account with an amount required under the Finance Documents to be paid by the Investment Agent if the Investment Agent has taken all necessary steps as soon as reasonably practicable to comply with the regulations or operating procedures of any recognised clearing or settlement system used by the Investment Agent for that purpose. |
9.11.5 | Nothing in this Agreement shall oblige the Investment Agent or the Arranger to carry out: |
(a) | any “know your customer” or other checks in relation to any person; or |
(b) | any check on the extent to which any transaction contemplated by this Agreement might be unlawful for any Secured Party or for any Affiliate of any Secured Party, |
on behalf of any Secured Party and each Secured Party confirms to the Investment Agent and the other Finance Parties that it has made (and shall continue to make) its own independent investigation, assessment and satisfied its own know your customer requirements necessary in connection with its participation in this Agreement and has not relied exclusively on any information provided to it by the Investment Agent or any other Finance Party.
9.11.6 | Without prejudice to any provision of any Finance Document excluding or limiting the Investment Agent’s liability, any liability of the Investment Agent arising under or in connection with any Finance Document or the Transaction Security shall be limited to the amount of actual loss which has been finally judicially determined to have been suffered (as determined by reference to the date of default of the Investment Agent or, if later, the date on which the loss arises as a result of such default) but without reference to any special conditions or circumstances known to the Investment Agent at any time which increase the amount of that loss. In no event shall the Investment Agent be liable for any loss of profits, goodwill, reputation, business opportunity or anticipated saving, or for special, punitive, indirect or consequential damages, cost of funding or payments in the nature of interest. whether or not the Investment Agent has been advised of the possibility of such loss or damages. |
9.11.7 | Notwithstanding the provisions of Clause 4 (Payment mechanics), the Investment Agent shall not be liable to the Company or any Secured Party for the failure, or the consequences of any failure, of any cross-border payment system to effect same-day settlement to an account of the Company or any Secured Party. |
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9.12 | Participants’ indemnity to the Investment Agent |
9.12.1 | Each Participant shall (in proportion to its share of the Total Commitments or, if the Total Commitments are then zero, to its share of the Total Commitments immediately before their reduction to zero) indemnify the Investment Agent and its officers and employees, within three Business Days of demand, against any actual cost, loss or liability incurred by the Investment Agent (otherwise than by reason of the Investment Agent’s breach, fraud, gross negligence or wilful misconduct) in acting as Investment Agent under the Finance Documents (except to the extent that the Investment Agent has been reimbursed by an Obligor pursuant to a Finance Document). |
9.12.2 | Subject to Clause 9.12.3 below, the Company shall within three Business Days of demand reimburse any Participant for any payment that Participant makes to the Investment Agent pursuant to Clause 9.12.1 above. |
9.12.3 | Clause 9.12.2 above shall not apply to the extent that the indemnity payment in respect of which the Participant claims reimbursement relates to a liability of the Investment Agent to an Obligor. |
9.13 | Resignation of the Investment Agent |
9.13.1 | The Investment Agent may resign and appoint one of its Affiliates as successor by giving notice to the other Finance Parties and the Company. |
9.13.2 | Alternatively the Investment Agent may resign by giving 30 days’ notice to the other Finance Parties and the Company, in which case the Majority Participants (acting reasonably and after consultation with the Company but without the Company having a right to veto) may appoint a successor Investment Agent, |
9.13.3 | If the Majority Participants have not appointed a successor Investment Agent in accordance with Clause 9.13.2 within 20 days after notice of resignation was given, the retiring Investment Agent (after consultation with the Company but without the Company having a right to veto) may appoint a successor Investment Agent |
9.13.4 | If the Investment Agent wishes to resign because (acting reasonably) it has concluded that it is no longer appropriate for it to remain as investment agent and the Investment Agent is entitled to appoint a successor Investment Agent under Clause 9.13.3, the Investment Agent may (if it concludes (acting reasonably) that it is necessary to do so in order to persuade the proposed successor Investment Agent to become a party to this Agreement as Investment Agent) agree with the proposed successor Investment Agent’s amendments to this Clause 9 and any other term of this Agreement dealing with the rights or obligations of the Investment Agent consistent with then current market practice for the appointment and protection of corporate trustees together with any reasonable amendments to the agency fee payable under this Agreement which are consistent with the successor Investment Agent’s normal fee rates and those amendments will bind the Parties. |
9.13.5 | The retiring Investment Agent shall make available to the successor Investment Agent such documents and records and provide such assistance as the successor Investment Agent may reasonably request for the purposes of performing its functions as Investment Agent under the Finance Documents. The Company shall, within three Business Days of demand, reimburse the retiring Investment Agent for the amount of all actual costs and expenses (including legal fees) reasonably and properly incurred by it in making available such documents and records and providing such assistance. |
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9.13.6 | The Investment Agent’s resignation notice shall take effect only upon the appointment of a successor. |
9.13.7 | Upon the appointment of a successor, the retiring Investment Agent shall be discharged from any further obligation in respect of the Finance Documents but shall remain entitled to the benefit of this Clause 9 and any agency fees for the account of the retiring Agent shall cease to accrue from (and shall be payable on) that date. Any successor and each of the other Parties shall have the same rights and obligations amongst themselves as they would have had if such successor had been an original Party. |
9.13.8 | After consultation with the Company, the Majority Participants may, by notice to the Investment Agent, require it to resign in accordance with Clause 9.13.2. In this event, the Investment Agent shall resign in accordance with Clause 9.13.2. |
9.13.9 | The retiring Investment Agent shall (at the expense of the Participants) make available to the successor Investment Agent such documents and records and provide such assistance as the successor Investment Agent may reasonably request for the purposes of performing its functions as Investment Agent under the Finance Documents. |
9.13.10 | The appointment of the successor Investment Agent shall take effect on the date specified in the notice from the Majority Participants to the retiring Investment Agent As from this date, the retiring Investment Agent shall be discharged from any further obligation in respect of the Finance Documents (other than its obligations under Clause 9.13.9) but shall remain entitled to the benefit of this Clause 6 and any agency fees for the account of the retiring Investment Agent shall cease to accrue from (and shall be payable on) that date. |
9.13.11 | Any successor Investment Agent and each of the other Parties shall have the same rights and obligations amongst themselves as they would have had if such successor had been an original Party. |
9.14 | Confidentiality and disclosure |
9.14.1 | In acting as Investment Agent for the Participants under this Agreement, the Investment Agent shall be regarded as acting through its agency division which shall be treated as a separate entity from any other of its divisions or departments. |
9.14.2 | If information is received by another division or department of the Investment Agent, it may be treated as confidential to that division or department and the Investment Agent shall not be deemed to have notice of it. |
9.14.3 | Notwithstanding any other provision of any Finance Document to the contrary, neither the Investment Agent nor the Arranger is obliged to disclose to any other person: |
(a) | any Reference Bank Quotation or other funding rate notified to it in connection with the Finance Documents |
(b) | any confidential information; or |
(c) | any other information, |
if the disclosure would or might in its reasonable opinion constitute a breach of any law or a breach of a fiduciary duty.
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9.14.4 | The Company consents to the disclosure, by each of the Secured Parties to the others. of any information in a Secured Party’s possession regarding any Obligor. |
9.15 | Relationship with the Participants |
9.15.1 | The Investment Agent may treat the person shown in its records as Participant at the opening of business (in the place of the Investment Agent’s principal office as notified to the Finance Parties from time to lime) as the Participant acting through its Facility Office: |
(a) | entitled to or liable for any payment due under any Finance Document on that day; and |
(b) | entitled to receive and act upon any notice, request, document or communication or make any decision or determination under any Finance Document made or delivered on that day, |
unless it has received not less than five Business Days’ prior notice from that Participant to the contrary in accordance with the terms of this Agreement.
9.15.2 | Each Participant shall supply the Security Agent with any information that the Security Agent may reasonably specify as being necessary or desirable to enable the Security Agent to perform its functions as Security Agent. |
9.15.3 | Any Participant may by notice to the Investment Agent appoint a person to receive on its behalf all notices, communications, information and documents to be made or despatched to that Participant under the Finance Documents. Such notice shall contain the address, fax number and (where communication by electronic mail or other electronic means is permitted under Clause 29 (Notices)) electronic mail address and/or any other information required to enable the transmission of information by that means (and, in each case, the department or officer, if any, for whose attention communication is to be made) and be treated as a notification of a substitute address, fax number, electronic mail address, (or such other information), department and officer by that Participant for the purposes of Clause 29 (Notices)) and the Investment Agent shall be entitled to treat such person as the person entitled to receive all such notices, communications, information and documents as though that person were that Participant. |
9.16 | Credit and other appraisal by the Participants |
Without affecting the responsibility of any Obligor for information supplied by it or on its behalf in connection with any Finance Document, each Participant confirms to the Investment Agent and the Arranger that it has been, and will continue to be, solely responsible for making its own independent appraisal and investigation of all risks arising under or in connection with any Finance Document including:
(a) | the financial condition, status and nature of each Obligor and the Group and any surety for, or provider of Security in respect of, any Obligor’s obligations under any Finance Document; |
(b) | the legality, validity, effectiveness, adequacy or enforceability of any Finance Document and the Transaction Security and any other agreement, arrangement or document entered into. made or executed in anticipation of, under or in connection with any Finance Document or the Transaction Security; |
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(c) | whether that Participant has recourse, and the nature and extent of that recourse, against any Party or any other person or any of its respective assets under or in connection with any Finance Document, the Transaction Security, the transactions contemplated by the Finance Documents or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document or the Transaction Security; |
(d) | the adequacy, accuracy and/or completeness of any information provided by the Investment Agent, any Party or by any other person under or in connection with any Finance Document. the transactions contemplated by any Finance Document or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document; |
(e) | the right or title of any person in or to, or the value or sufficiency of, any part of the Secured Property, the priority of any of the Transaction Security or the existence of any Security affecting the Secured Property; |
(f) | the ability of any Obligor to make payments under any of the Finance Documents; and |
(g) | the Shari’ah compliance of the Finance Documents. |
9.17 | Deduction from amounts payable by the Investment Agent |
If any Party owes an amount to the Investment Agent under the Finance Documents the Investment Agent may, after giving notice to that Party, deduct an amount not exceeding that amount from any payment to that Party which the Investment Agent would otherwise be obliged to make under the Finance Documents and apply the amount deducted in or towards payment of the amount owed. For the purposes of the Finance Documents that Party shall be regarded as having received any amount so deducted. If the obligations are in different currencies, the Investment Agent shall convert either obligation at the prevailing spot market rates of exchange and in such amounts or proportions as the Investment Agent determines to be appropriate.
9.18 | Reliance and engagement letters |
Each Finance Party confirms that each of the Arranger and the Investment Agent has authority to accept on its behalf (and ratifies the acceptance on its behalf of any letters or reports already accepted by the Arranger or the Investment Agent) the terms of any reliance letter or engagement letters relating to any Finance Documents or any reports or letters provided by accountants in connection with the Finance Documents or the transactions contemplated in the Finance Documents and to bind it in respect of those reports or letters and to sign such letters on its behalf and further confirms that it accepts the terms and qualifications set out in such letters.
9.19 | No obligation |
The Investment Agent has no obligation:
(a) | to purchase any ownership interest (or any part thereof) of any Participant in the Leased Asset; |
(b) | to settle all or any part of any Participant Contribution; or |
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(c) | to support, indemnify or compensate any Participant in respect of any loss suffered by it as a consequence of any of the matters provided for in this Agreement or any other Finance Document, unless resulting from the Investment Agent’s breach, gross negligence or wilful default. |
9.20 | Custody of documents |
The Investment Agent shall:
(a) | not be obliged to hold in its own possession any Finance Document or any document referred to in a Finance Document; and |
(b) | not be liable to any person for the loss of any Finance Document or other such document, unless directly caused by its breach, fraud, gross negligence or wilful misconduct |
9.21 | Role of Reference Banks |
9.21.1 | No Reference Bank is under any obligation to provide a quotation or any other information to the Investment Agent. |
9.21.2 | No Reference Bank will be liable for any action taken by it under or in connection with any Finance Document, or for any Reference Bank Quotation, unless directly caused by its gross negligence or wilful misconduct. |
9.21.3 | No Party (other than the relevant Reference Bank) may take any proceedings against any officer, employee or agent of any Reference Bank in respect of any claim it might have against that Reference Bank or in respect of any act or omission of any kind by that officer, employee or agent in relation to any Finance Document, or to any Reference Bank Quotation. and any officer, employee or agent of each Reference Bank may rely on this Clause 9.21 subject to Clause 1.3 (Third party rights) and the provisions of the Third Parties Act. |
9.22 | Third party Reference Banks |
A Reference Bank which is not a Party may rely on Clause 9.21 (Role of Reference Banks), and Clause 9.14 (Confidentiality and disclosure) subject to Clause 1.3 (Third party rights) and the provisions of the Third Parties Act.
10 | Role of the Security Agent |
10.1 | Definitions |
For the purposes of this Clause 10:
Authorised Activity means, in the case of the Security Agent and any associated company of the Security Agent:
(a) | acting in an agency, trustee, fiduciary or other capacity on behalf of any banks or financial institutions providing facilities to any Obligor or any Group Company or any associated company of any Obligor or any Group Company, other than those provided under the Finance Documents; |
(b) | subscribing for, holding, being beneficially entitled to or disposing of shares or securities, or options or other rights to and interests in shares or securities, in any Obligor or any Group Company or any associated company of any Obligor or any Group Company; and |
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(c) | accepting deposits from, providing financing or providing financial accommodation to and generally engaging in any kind of banking or other business with any other Party. |
10.2 | Appointment of the Security Agent |
10.2.1 | Each Secured Party which is a Party appoints the Security Agent to hold the Transaction Security, the proceeds of the Transaction Security and all rights, powers, discretions and remedies vested in the Security Agent by the Finance Documents or by law, on trust for the Secured Parties, and the Security Agent accepts that appointment. |
10.2.2 | Each Secured Party which is a Party authorises the Security Agent to perform the duties, obligations and responsibilities and to exercise the rights, powers, authorities and discretions specifically given to the Security Agent under or in connection with the Finance Documents together with any other incidental rights, powers, authorities and discretions. |
10.2.3 | The Security Agent declares that it holds the Transaction Security, the proceeds of the Transaction Security and all rights, powers, discretions and remedies vested in the Security Agent by the Finance Documents or by law on trust for the Secured Parties on the terms contained in this Agreement. |
10.2.4 | Each Secured Party agrees that, in relation to any jurisdiction the courts of which would not recognise or give effect to the trusts expressed to be constituted by this Agreement, the relationship of the Secured Parties to the Security Agent, or, in the case of any trust other than that constituted under Clause 10.2.3, the relationship between any other relevant Parties, shall, in the case of each of the trusts constituted by this Agreement, be construed simply as one of principal and agent. However, to the fullest extent permissible under the laws of each and every such jurisdiction, this Agreement shall have full force and effect as between the Parties. |
10.3 | Authority to Security Agent |
Each Secured Party confirms its approval of the Transaction Security and the Transaction Security Documents, and each Secured Party (other than the Security Agent) authorises and instructs the Security Agent to:
(a) | execute and deliver the Transaction Security Documents; |
(b) | perform the duties and exercise the rights, powers, authorities, discretions and remedies given to the Security Agent under or in connection with the Finance Documents, and to exercise any other incidental rights, powers, authorities and discretions; |
(c) | give or make any Authorisations and confirmations to be given by the Security Agent on behalf of the Secured Parties under the Transaction Security Documents; and |
(a) | take such action as may be required for the purposes of registering the Transaction Security Documents on the appropriate registers including, if applicable, the Emirates Movable Collateral Registry. |
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10.4 | Enforcement through Security Agent only |
The Secured Parties shall not have any independent power to enforce, or have recourse to, any of the Transaction Security or to exercise any right, power, authority or discretion arising under the Transaction Security Documents except through the Security Agent.
10.5 | Instructions |
10.5.1 | The Security Agent shall: |
(a) | subject to Clauses 10.5.4 and 10.5.5 exercise or refrain from exercising any right, power, authority or discretion vested in it as Security Agent in accordance with any instructions given to it by the Majority Participants (or the Investment Agent on their behalf); and |
(b) | not be liable for any act (or omission) if it acts (or refrains from acting) in accordance with Clause 10.5.1(a) (or if this Agreement stipulates the matter is a decision for any other Secured Party or group of Secured Parties in accordance with instructions given to it by that Secured Party or group of Secured Parties). |
10.5.2 | The Security Agent shall be entitled to request instructions, or clarification of any instruction, from the Majority Participants (or the Investment Agent on their behalf) (or, if this Agreement stipulates the matter is a decision for any other Secured Party or group of Secured Parties, from that Secured Party or group of Secured Parties) as to whether, and in what manner, it should exercise or refrain from exercising any right, power, authority or discretion and the Security Agent may refrain from acting unless and until it receives those instructions or that clarification. |
10.5.3 | Save in the case of decisions stipulated to be a matter for any other Secured Party or group of Secured Parties under the Finance Documents and unless a contrary intention appears in a Finance Document, any instructions given to the Security Agent by the Majority Participants shall override any conflicting instructions given by any other Parties and will be binding on all Secured Parties. |
10.5.4 | Clause 10.5.1 shall not apply: |
(a) | where a contrary indication appears in a Finance Document; |
(b) | where a Finance Document requires the Security Agent to act in a specified manner or to take a specified action; or |
(c) | in respect of any provision which protects the Security Agent’s own position in its personal capacity as opposed to its role of Security Agent for the Secured Parties including, without limitation, Clauses 10.8 (No duty to account) to Clause 10.13 (Exclusion of liability), Clauses 10.16 (Confidentiality) to 10.22 (Custodians and nominees) and Clauses 10.25 (Acceptance of title) to 10.29 (Disapplication of Trustee Acts). |
10.5.5 | If giving effect to instructions given by the Investment Agent on behalf of the Majority Participants would (in the Security Agent’s opinion) have an effect equivalent to an amendment or waiver which expressly requires the consent of all the Participants under Clause 12.2 (Exceptions), the Security Agent shall not act in accordance with those instructions unless consent to it so acting is obtained from each Party (other than the Security Agent) whose consent would have been required in respect of that amendment or waiver. |
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10.5.6 | In exercising any discretion to exercise a right, power or authority under the Finance Documents where it has not received any instructions as to the exercise of that discretion the Security Agent shall do so having regard to the interests of all the Secured Parties. |
10.5.7 | The Security Agent may refrain from acting in accordance with any instructions of any Secured Party or group of Secured Parties until it has received any indemnification and/or security that it may in its discretion require (which may be greater in extent than that contained in the Finance Documents and which may include payment in advance) for any cost, loss or liability (together with any associated VAT) which it may incur in complying with those instructions. |
10.5.8 | Without prejudice to the provisions of the remainder of this Clause 10.5, in the absence of instructions, the Security Agent may, but shall not be obliged to, act (or refrain from acting) as it considers in its discretion to be appropriate. |
10.6 | Duties of the Security Agent |
10.6.1 | The Security Agent’s duties under the Finance Documents are solely mechanical and administrative in nature. |
10.6.2 | The Security Agent shall promptly: |
(a) | forward to the Investment Agent a copy of any document received by the Security Agent from any Obligor under any Finance Document; and |
(b) | forward to a Party the original or a copy of any document which is delivered to the Security Agent for that Party by any other Party. |
10.6.3 | Except where a Finance Document specifically provides otherwise, the Security Agent is not obliged to review or check the adequacy, accuracy or completeness of any document it forwards to another Party. |
10.6.4 | If the Security Agent receives notice from a Party referring to any Finance Document, describing a Default and stating that the circumstance described is a Default, it shall promptly notify the Secured Parties. |
10.6.5 | The Security Agent shall have only those duties, obligations and responsibilities expressly specified in the Finance Documents to which it is expressed to be a party (and no others shall be implied). |
10.6.6 | The Security Agent shall at all times act in a Shari’ah compliant manner. |
10.7 | No fiduciary duties to Obligors |
Nothing in any Finance Document constitutes the Security Agent as an agent, trustee or fiduciary of any Obligor.
10.8 | No duty to account |
The Security Agent shall not be bound to account to any other Secured Party for any sum or the profit element of any sum received by it for its own account.
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10.9 | Business with the Group |
10.9.1 | The Security Agent and any associated company of the Security Agent may carry on any Authorised Activity: |
(a) | as freely in all respects as if the Security Agent had not been appointed to act as trustee for the Secured Parties under this Agreement; |
(b) | without regard to the effect on any of the Parties of carrying on that Authorised Activity; and |
(c) | without liability to: |
(i) | disclose that Authorised Activity to any other Party; or |
(ii) | account to any other Party for sums or other benefits received in respect of that Authorised Activity. |
10.10 | Rights and discretions |
10.10.1 | The Security Agent may: |
(a) | rely on any representation, communication, notice or document believed by it to be genuine, correct and appropriately authorised; |
(b) | assume that: |
(i) | any instructions received by it from the Investment Agent, Majority Participants, the Secured Parties or any group of Secured Parties are duly given in accordance with the terms of the Finance Documents; |
(ii) | unless it has received actual notice of revocation, that those instructions have not been revoked; and |
(iii) | if it receives any instructions to act in relation to the Transaction Security, that all applicable conditions under the Finance Documents for so acting have been satisfied; and |
(c) | rely on a certificate from any person: |
(i) | as to any matter of fact or circumstance which might reasonably be expected to be within the knowledge of that person; or |
(ii) | to the effect that such person approves of any particular dealing, transaction, step, action or thing, |
as sufficient evidence that that is the case and, in the case of Clause 10.10.1(c) may assume the truth and accuracy of that certificate.
10.10.2 | The Security Agent shall be entitled to carry out all dealings with the Secured Parties through the Investment Agent and may give to the Investment Agent any notice or other communication required to be given by the Security Agent to the Secured Parties. |
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10.10.3 | The Security Agent may assume (unless it has received notice to the contrary in its capacity as Security Agent for the Secured Parties) that: |
(a) | no Default has occurred; |
(b) | any right, power, authority or discretion vested in any Secured Party or any group of Secured Parties has not been exercised; and |
(c) | any notice or request made by the Company is made on behalf of and with the consent and knowledge of all the Obligors. |
10.10.4 | The Security Agent may engage and pay for the advice or services of any lawyers, accountants, tax advisers, surveyors or other professional advisers or experts. |
10.10.5 | Without prejudice to the generality of Clause 10.10.4 or Clause 10.10.6, the Security Agent may at any time engage and pay for the services of any lawyers to act as independent counsel to the Security Agent (and so separate from any lawyers instructed by the Secured Parties and/or the Investment Agent) if the Security Agent in its reasonable opinion deems this to be desirable. |
10.10.6 | The Security Agent may rely on the advice or services of any lawyers, accountants, tax advisers, surveyors or other professional advisers or experts (whether obtained by the Security Agent or by any other Secured Party) and shall not be responsible or liable for any losses to any person, any diminution in value or any liability arising as a result of its so relying. |
10.10.7 | The Security Agent, any Receiver and any Delegate may act in relation to the Finance Documents and the Transaction Security through its officers, employees and agents and shall not: |
(a) | be liable for any error of judgment made by any such person; or |
(b) | be bound to supervise, or be in any way responsible for any loss incurred by reason of misconduct, omission or default on the part of any such person, |
unless such error or such loss was directly caused by the Security Agent’s, Receiver’s or Delegate’s fraud, gross negligence or wilful misconduct.
10.10.8 | Unless this Agreement expressly specifies otherwise, the Security Agent may disclose to any other Party any information it reasonably believes it has received as Security Agent under this Agreement. |
10.10.9 | Notwithstanding any other provision of any Finance Document to the contrary, the Security Agent is not obliged to do or omit to do anything if it would, or might in its reasonable opinion, constitute a breach of any law or regulation or a breach of a fiduciary duty or duty of confidentiality. |
10.10.10 | Notwithstanding any provision of any Finance Document to the contrary, the Security Agent is not obliged to expend or risk its own funds or otherwise incur any financial liability in the performance of its duties, obligations or responsibilities or the exercise of any right, power, authority or discretion if it has grounds for believing the repayment of such funds or adequate indemnity against, or security for, such risk or liability is not reasonably assured to it. |
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10.11 | Responsibility for documentation |
None of the Security Agent, any Receiver nor any Delegate is responsible or liable for:
(a) | the adequacy, accuracy or completeness of any information (whether oral or written) supplied by the Security Agent, an Obligor or any other person in or in connection with any Finance Document or the transactions contemplated in the Finance Documents or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document; |
(b) | the legality, validity, effectiveness, adequacy or enforceability of any Finance Document, the Transaction Security or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document or the Transaction Security; or |
(c) | any determination as to whether any information provided or to be provided to any Secured Party is non-public information the use of which may be regulated or prohibited by applicable law or regulation relating to insider dealing or otherwise. |
10.12 | No duty to monitor |
The Security Agent shall not be bound to enquire:
(a) | whether or not any Default has occurred; |
(b) | as to the performance, default or any breach by any Party of its obligations under any Finance Document; or |
(c) | whether any other event specified in any Finance Document has occurred. |
10.13 | Exclusion of liability |
10.13.1 | Without limiting Clause 10.13.3 and subject to Clause 10.13.2 (and without prejudice to any other provision of any Finance Document excluding or limiting the liability of the Security Agent, any Receiver or Delegate), none of the Security Agent, any Receiver nor any Delegate will be liable for: |
(a) | any damages, costs or losses to any person, any diminution in value, or any liability whatsoever arising as a result of taking or not taking any action under or in connection with any Finance Document or the Transaction Security; |
(b) | exercising or not exercising any right, power, authority or discretion given to it by, or in connection with, any Finance Document, the Transaction Security or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with, any Finance Document or the Transaction Security; |
(c) | any shortfall which arises on the enforcement or realisation of the Transaction Security; |
(d) | the loss of any Transaction Security Document, title deed or other document relating to the Transaction Security; or |
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(e) | without prejudice to the generality of Clauses 10.13.1(a) to 10.13.1(d), any damages, costs, losses, diminution in value or liability whatsoever arising as a result of: |
(i) | any act, event or circumstance not reasonably within its control; or |
(ii) | the general risks of investment in, or the holding of assets in, any jurisdiction, |
including (in each case and without limitation) such damages, costs, losses, diminution in value or liability arising as a result of: nationalisation, expropriation or other governmental actions; any regulation, currency restriction, devaluation or fluctuation; market conditions affecting the execution or settlement of transactions or the value of assets (including any Disruption Event); breakdown, failure or malfunction of any third party transport, telecommunications, computer services or systems; natural disasters or acts of God; war, terrorism, insurrection or revolution; or strikes or industrial action.
10.13.2 | The Security Agent shall not be excluded from liability under Clause 10.13.1 for any damages, costs, losses, diminution in value or liability (as applicable) arising directly as a result of the Security Agent’s fraud, gross negligence or wilful default. |
10.13.3 | No Party (other than the Security Agent, that Receiver or that Delegate (as applicable)) may take any proceedings against any officer, employee or agent of the Security Agent, a Receiver or a Delegate in respect of any claim it might have against the Security Agent, a Receiver or a Delegate or in respect of any act or omission of any kind by that officer, employee or agent in relation to any Finance Document or any Transaction Security and any officer, employee or agent of the Security Agent, a Receiver or a Delegate may rely on this Clause subject to Clause 1.3 (Third party rights) and the provisions of the Third Parties Act. |
10.13.4 | Nothing in this Agreement shall oblige the Security Agent to carry out: |
(a) | any “know your customer” or other checks in relation to any person; or |
(b) | any check on the extent to which any transaction contemplated by this Agreement might be unlawful for any other Secured Party, |
on behalf of any other Secured Party and each Secured Party confirms to the Security Agent and the other Finance Parties that it has made (and shall continue to make) its own independent investigation, assessment and satisfied its own know your customer requirements necessary in connection with its participation in this Agreement and has not relied exclusively on any information provided to it by the Security Agent or any other Finance Party.
10.13.5 | Without prejudice to any provision of any Finance Document excluding or limiting the liability of the Security Agent, any Receiver or Delegate, any liability of the Security Agent, any Receiver or Delegate arising under or in connection with any Finance Document or the Transaction Security shall be limited to the amount of actual loss which has been finally judicially determined to have been suffered (as determined by reference to the date of default of the Security Agent, Receiver or Delegate (as the case may be) or, if later, the date on which the loss arises as a result of such default) but without reference to any special conditions or circumstances known to the Security Agent, Receiver or Delegate (as the case may be) at any time which increase the amount of that loss. In no event shall the Security Agent, any Receiver or Delegate be liable for any loss of profits, goodwill, reputation, business opportunity or anticipated saving, or for special, punitive, indirect or consequential damages, whether or not the Security Agent, Receiver or Delegate (as the case may be) has been advised of the possibility of such loss or damages. |
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10.14 | Indemnity to the Security Agent |
10.14.1 | Each Secured Party shall (in the proportion to its share in the Investment (or, if the Investment is zero, immediately prior to the Investment being reduced to zero)): |
(a) | indemnify the Security Agent and every Receiver and every Delegate, within three Business Days of demand, against any actual cost, loss or liability incurred by any of them (otherwise than by reason of the relevant Security Agent’s, Receiver’s or Delegate’s gross negligence or wilful misconduct) in acting as Security Agent, Receiver or Delegate under, or exercising any authority conferred under, the Finance Documents (unless the relevant Security Agent, Receiver or Delegate has been reimbursed by an Obligor pursuant to a Finance Document); and |
(b) | indemnify the Security Agent and any Delegate and their respective officers and employees, within three Business Days of demand, against any liabilities incurred by the Security Agent or an officer or employee as a result of the Security Agent or an officer or employee distributing any monies or other assets referred to in Clause 10.31.11 or taking any action to enforce its rights under that Clause. |
10.14.2 | Subject to Clause 10.14.3, the Company shall within three Business Days of demand reimburse any Secured Party for any payment that the relevant Secured Party makes to the Security Agent pursuant to Clause 10.14.1. |
10.14.3 | Clause 10.14.2 shall not apply to the extent that the indemnity payment in respect of which the Secured Party claims reimbursement relates to a liability of the Security Agent to an Obligor. |
10.15 | Resignation of the Security Agent |
10.15.1 | The Security Agent may resign and appoint one of its Affiliates as successor by giving notice to the Secured Parties and the Company. |
10.15.2 | Alternatively the Security Agent may resign by giving 30 days’ notice to the Secured Parties and the Company, in which case the Majority Participants (acting reasonably and after consultation with the Company but without the Company having a right to veto) may appoint a successor Security Agent. |
10.15.3 | If the Majority Participants have not appointed a successor Security Agent in accordance with Clause 10.15.2 within 20 days after notice of resignation was given, the retiring Security Agent (after consultation with the Investment Agent) may appoint a successor Security Agent. |
10.15.4 | The retiring Security Agent shall make available to the successor Security Agent such documents and records and provide such assistance as the successor Security Agent may reasonably request for the purposes of performing its functions as Security Agent under the Finance Documents. The Company shall, within three Business Days of demand, reimburse the retiring Security Agent for the amount of all actual costs and expenses (including legal fees) reasonably and properly incurred by it in making available such documents and records and providing such assistance. |
10.15.5 | The Security Agent’s resignation notice shall only take effect upon: |
(a) | the appointment of a successor; and |
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(b) | the transfer of all the Transaction Security to that successor. |
10.15.6 | Every appointment of a successor Security Agent shall be by deed. |
10.15.7 | Upon the appointment of a successor, the retiring Security Agent shall be discharged from any further obligation in respect of the Finance Documents (other than its obligations under Clause 10.27 (Winding up of trust) and Clause 10.15.4) but shall remain entitled to the benefit of this Clause 10 and Clause 10.14 (Secured Parties’ indemnity to the Security Agent) (and any Security Agent fees for the account of the retiring Security Agent shall cease to accrue from (and shall be payable on) that date). Any successor and each of the other Parties shall have the same rights and obligations amongst themselves as they would have had if that successor had been an original Party. |
10.15.8 | The Majority Participants may, by notice to the Security Agent, require it to resign in accordance with Clause 10.15.2. In this event, the Security Agent shall resign in accordance with Clause 10.15.4. |
10.16 | Confidentiality and disclosure |
10.16.1 | In acting as trustee for the Secured Parties, the Security Agent shall be regarded as acting through its trustee division which shall be treated as a separate entity from any other of its divisions or departments. |
10.16.2 | If information is received by another division or department of the Security Agent, it may be treated as confidential to that division or department and the Security Agent shall not be deemed to have notice of it. |
10.16.3 | Notwithstanding any other provision of any Finance Document to the contrary, the Security Agent is not obliged to disclose to any other person: |
(a) | (i) any confidential information; or |
(b) | (ii) any other information, |
if the disclosure would, or might in its reasonable opinion, constitute a breach of any law or regulation or a breach of a fiduciary duty.
10.17 | Information from the Secured Parties |
Each Secured Party shall supply the Security Agent with any information that the Security Agent may reasonably specify as being necessary or desirable to enable the Security Agent to perform its functions as Security Agent.
10.18 | Credit appraisal by the Secured Parties |
Without affecting the responsibility of any Obligor for information supplied by it or on its behalf in connection with any Finance Document, each Secured Party confirms to the Security Agent that it has been, and will continue to be, solely responsible for making its own independent appraisal and investigation of all risks arising under or in connection with any Finance Document including but not limited to:
(a) | the financial condition, status and nature of each Group Company and any surety for, or provider of Security in respect of, any Obligor’s obligations under any Finance Document; |
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(b) | the legality, validity, effectiveness, adequacy or enforceability of any Finance Document, the Transaction Security and any other agreement. arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document or the Transaction Security; |
(c) | whether that Secured Party has recourse, and the nature and extent of that recourse, against any Party or any of its respective assets under or in connection with any Finance Document, the Transaction Security, the transactions contemplated by the Finance Documents or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document or the Transaction Security; |
(d) | the adequacy, accuracy or completeness of any information provided by the Security Agent, any Party or by any other person under or in connection with any Finance Document, the transactions contemplated by any Finance Document or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document; and |
(e) | the right or title of any person in or to, or the value or sufficiency of any part of the Secured Property, the priority of any of the Transaction Security or the existence of any Security affecting the Secured Property, |
and each Secured Party warrants to the Security Agent that it has not relied on and will not at any time rely on the Security Agent in respect of any of these matters.
10.19 | Reliance and engagement letters |
The Security Agent may obtain and rely on any certificate or report from the auditor of any Obligor and may enter into any reliance letter or engagement letter relating to that certificate or report on such terms as it may consider appropriate (including, without limitation, restrictions on the auditor’s liability and the extent to which that certificate or report may be relied on or disclosed).
10.20 | No responsibility to perfect Transaction Security |
10.20.1 | The Security Agent shall not be responsible for: |
(a) | requiring the deposit with it of any deed or document certifying, representing or constituting the title of any Obligor to any of the Secured Property; |
(b) | obtaining any licence, consent or other authority for the execution, delivery, legality, validity, enforceability or admissibility in evidence of any Finance Document or the Transaction Security; |
(c) | registering, filing or recording or otherwise protecting any of the Transaction Security (or the priority of any of the Transaction Security) under any law or regulation or to give notice to any person of the execution of any Finance Document or of the Transaction Security; |
(d) | taking, or requiring any Obligor to take, any step to perfect its title to any of the Secured Property or to render the Transaction Security effective or to secure the creation of any ancillary Security under any law or regulation; or |
(e) | requiring any further assurance in relation to any Transaction Security Document, nor have any liability in connection with a failure to do any such thing. |
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10.21 | Insurance by Security Agent |
10.21.1 | The Security Agent shall not be obliged to: |
(a) | insure any of the Secured Property; |
(b) | require any other person to maintain any insurance; or |
(c) | verify any obligation to arrange or maintain insurance contained in any Finance Document. |
and the Security Agent shall not be liable for any damages. costs or losses to any person as a result of the lack of, or inadequacy of, any such insurance.
10.21.2 | Where the Security Agent is named on any insurance policy as an insured party, it shall not be liable for any damages, costs or losses to any person as a result of its failure to notify the insurers of any material fact relating to the risk assumed by such insurers or any other information of any kind, unless the Majority Participants request it to do so in writing and the Security Agent fails to do so within 14 days after receipt of that request. |
10.22 | Custodians and nominees |
The Security Agent may appoint and pay any person to act as a custodian or nominee on any terms in relation to any asset of the trust as the Security Agent may determine, including for the purpose of depositing with a custodian this Agreement or any document relating to the trust created under this Agreement and the Security Agent shall not be responsible for any loss, liability, expense, demand, cost, claim or proceedings incurred by reason of the misconduct, omission or default on the part of any person appointed by it under this Agreement or be bound to supervise the proceedings or acts of any person.
10.23 | Delegation by the Security Agent |
10.23.1 | Each of the Security Agent, any Receiver and any Delegate may, at any time, delegate by power of attorney or otherwise to any person for any period, all or any right, power, authority or discretion vested in it in its capacity as such. |
10.23.2 | That delegation may be made upon any terms and conditions (including the power to sub- delegate) and subject to any restrictions that the Security Agent, that Receiver or that Delegate (as the case may be) may, in its discretion, think fit in the interests of the Secured Parties. |
10.23.3 | No Security Agent, Receiver or Delegate shall be bound to supervise, or be in any way responsible for any damages, costs or losses incurred by reason of any misconduct, omission or default on the part of. any such delegate or sub-delegate. |
10.24 | Additional Security Agents |
10.24.1 | The Security Agent may at any time appoint (and subsequently remove) any person to act as a separate trustee or as a co-trustee jointly with it: |
(a) | if it considers that appointment to be in the interests of the Secured Parties; or |
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(b) | for the purposes of conforming to any legal requirement, restriction or condition which the Security Agent deems to be relevant; or |
(c) | for obtaining or enforcing any judgment in any jurisdiction, |
and the Security Agent shall give prior notice to the Company and the Secured Parties of that appointment.
10.24.2 | Any person so appointed shall have the rights, powers, authorities and discretions (not exceeding those given to the Security Agent under or in connection with the Finance Documents) and the duties, obligations and responsibilities that are given or imposed by the instrument of appointment. |
10.24.3 | The remuneration that the Security Agent may pay to that person, and any costs and expenses (together with any applicable VAT) incurred by that person in performing its functions pursuant to that appointment shall, for the purposes of this Agreement, be treated as costs and expenses incurred by the Security Agent. |
10.25 | Acceptance of title |
The Security Agent shall be entitled to accept without enquiry, and shall not be obliged to investigate, any right and title that any Obligor may have to any of the Secured Property and shall not be liable for. or bound to require any Obligor to remedy, any defect in its right or title.
10.26 | Releases |
Upon a disposal of any of the Secured Property by an Obligor as permitted under the Finance Documents or otherwise pursuant to the enforcement of the Transaction Security by a Receiver or the Security Agent, the Security Agent is irrevocably authorised (at the cost of the Company and without any consent, sanction, authority or further confirmation from any other Secured Party) to release, without recourse or warranty, that property from the Transaction Security, and to execute any release of the Transaction Security or other claim over that asset and to issue any certificates of non crystallisation of floating charges that may be required or desirable.
10.27 | Winding up of trust |
If the Security Agent, with the approval of the Investment Agent, determines that:
(a) | all of the Secured Liabilities and all other obligations secured by the Transaction Security Documents have been fully and finally discharged; and |
(b) | no Secured Party is under any commitment, obligation or liability (actual or contingent) to make advances or provide other financial accommodation to any Obligor pursuant to the Finance Documents, |
then:
(i) | the trusts set out in this Agreement shall be wound up and the Security Agent shall release, without recourse or warranty, all of the Transaction Security and the rights of the Security Agent under each of the Transaction Security Documents; and |
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(ii) | any Security Agent which has resigned pursuant to Clause 10.15 (Resignation of the Security Agent) shall release, without recourse or warranty, all of its rights under each Transaction Security Document. |
10.28 | Powers supplemental to Trustee Acts |
The rights, powers, authorities and discretions given to the Security Agent under or in connection with the Finance Documents shall be supplemental to the Trustee Act 1925 and the Trustee Act 2000 and in addition to any which may be vested in the Security Agent by law or regulation or otherwise.
10.29 | Disapplication of Trustee Acts |
Section 1 of the Trustee Act 2000 shall not apply to the duties of the Security Agent in relation to the trusts constituted by this Agreement. Where there are any inconsistencies between the Trustee Act 1925 or the Trustee Act 2000 and the provisions of this Agreement, the provisions of this Agreement shall, to the extent allowed by law and regulation, prevail and, in the case of any inconsistency with the Trustee Act 2000, the provisions of this Agreement shall constitute a restriction or exclusion for the purposes of that Act.
10.30 | Enforcement of Transaction Security |
10.30.1 | Subject to the provisions of the Finance Documents and applicable law, the Security Agent shall enforce all or part of the Transaction Security if instructed to do so by the Majority Participants but not in any other circumstances. |
10.30.2 | The Company waives, to the extent permitted by applicable law, any and all rights to require the Transaction Security or any part of it to be enforced in a particular order or manner or to require the proceeds of its enforcement or any part of them to be applied in a particular order or manner. |
10.30.3 | Any enforcement of the Transaction Security shall be effected in such manner as the Security Agent determines to be appropriate having regard (subject to the requirements of applicable law) solely to the interests of the Secured Parties as a whole and, without prejudice to the provisions of Clause 10.31 (Application of proceeds), without regard to the rights and entitlements of the Secured Parties as between themselves or of any other Party. |
10.30.4 | If the Security Agent enforces the Transaction Security over any asset of any Obligor, the Security Agent will have the entire conduct of any sale of such asset. |
10.30.5 | Distributions by the Security Agent shall be made at such times as it in its absolute discretion determines, having regard to all relevant circumstances. |
10.30.6 | The Majority Participants may refrain from giving instructions in relation to the enforcement of the Transaction Security for as long as they determine to be appropriate. |
10.30.7 | No Secured Party shall be liable to any other Party for any failure or delay in: |
(a) | enforcing or giving instructions for the enforcement of the Transaction Security; or |
(b) | (subject to the requirements of applicable law) maximising the receipts or recoveries by the Security Agent (or by any other person who properly pays them over to the Security Agent) on behalf of the Secured Parties or any of them on enforcement of the Transaction Security. |
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10.30.8 | No Secured Party (other than the Security Agent) may, except with the prior written consent of the Majority Participants: |
(a) | exercise any right to enforce (or require the Security Agent to enforce) any Transaction Security; |
(b) | sue for, or institute any creditor’s process (including the exercise of any rights of distress, attachment, seizure or execution, whether before or after judgment) against any Obligor under the Transaction Security Documents or any of them; |
(c) | petition or apply for (or vote in favour of any resolution for) or initiate or support or take any steps with a view to any insolvency, liquidation, reorganisation, administration or dissolution proceedings or any voluntary arrangement or assignment for the benefit of creditors or any similar proceedings involving any Obligor; or |
(d) | apply for any order for an injunction or specific performance in respect of any Obligor in relation to the obligations secured by the Transaction Security Documents or any of them. |
10.30.9 | On a disposal of any of the Secured Property which is permitted under the Finance Documents, the Security Agent shall (at the cost of the Company): |
(a) | execute any release of the Secured Property from the Transaction Security; |
(b) | issue any certificates of non-crystallisation of floating charges that may be required; and |
(c) | take any other action that the Security Agent considers desirable. |
10.30.10 | Notwithstanding any other provision of this Agreement or any Finance Document, nothing contained in any of the Finance Documents shall oblige the Security Agent to become a mortgagee in possession or assume the obligations of any other person under the Finance Documents or take any action which could in its opinion (acting in good faith), be reasonably expected to render it liable to such person unless in each case, it has been indemnified and/or secured (whether by payment in advance or otherwise) to its satisfaction against all liabilities (including any liabilities in respect of applicable environmental or taxation legislation) which it may incur as a consequence of so acting. |
10.31 | Application of proceeds |
10.31.1 | The Security Agent may convert all or any part of the monies received by it or any Receiver from the currency of receipt into the currency or currencies (if different) of the Secured Liabilities. The conversion shall be at the prevailing spot market rates of exchange and in such amounts or proportions as the Security Agent determines to be appropriate. |
10.31.2 | Except to the extent that a Transaction Security Document otherwise requires, any monies which the Security Agent receives under or pursuant to a Transaction Security Document may be: |
(a) | invested in any Shari’ah compliant investments which the Security Agent selects and which are authorised by applicable law, provided that the Security Agent is reimbursed for the cost of its management time or other resources in doing so in the manner described in Clause 23.3 (Management time and additional remuneration); or |
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(b) | placed on deposit in a non-interest bearing account at any bank or institution (including the Security Agent) on terms that the Security Agent thinks fit. |
in each case in the name or under the control of the Security Agent.
10.31.3 | The Security Agent may: |
(a) | deposit all or any part of the monies received by it or any Receiver in one or more non-interest bearing suspense accounts in its name, to be held in such account or accounts for so long as the Security Agent determines to be appropriate; and |
(b) | set aside by way of reserve in any such account or accounts such amounts as the Security Agent determines to be appropriate to discharge assessments to Tax and to pay amounts which it considers will or may become payable in connection with the performance of its obligations. |
10.31.4 | All accounts established or utilised as contemplated by Clause 10.31.3 or otherwise shall be non-interest bearing. |
10.31.5 | After an Event of Default which is continuing, the Investment Agent, Security Agent or any Receiver shall apply monies received by it (but after setting aside such reserves as are referred to in Clause 10.31.3(b)) in the order set out in Clause 5.12 (Proceeds). |
10.31.6 | The Security Agent shall, if so directed by the Majority Participants, vary the order of application of monies pursuant to Clause 10.31.5. |
10.31.7 | Clause 10.31.5 will override: |
(a) | to the extent possible, any provision of law to the contrary; and |
(b) | any appropriation made by the Company. |
10.31.8 | In determining the amount of any payment to a Secured Party pursuant to this Clause 10.31, the Security Agent may request a certificate from each Secured Party as to: |
(a) | the amount due to, and the identity of that Secured Party; |
(b) | the currency or currencies in which it is due; |
(c) | the nature of that amount and the date or dates on which it is payable or repayable; and |
(d) | such other matters as the Security Agent may deem necessary or desirable to enable it to make a payment as at such date as the Security Agent may specify, |
and the certificate must be dated with a date specified by the Security Agent, being no earlier than 21 days before the proposed date of payment.
10.31.9 | The Security Agent may rely solely on the certificates contemplated by Clause 10.31.8 as to the amounts at any time due and payable by any Obligor to each Secured Party, but it may seek clarification from any such Secured Party if its believes any such certificate is incorrect. |
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10.31.10 | If any future or contingent liability included in the calculation of the amount due to a Secured Party finally matures, or is settled, for less than the future or contingent amount provided for in that calculation, the relevant Secured Party shall notify the Security Agent of that fact and that Secured Party shall pay to the Security Agent for distribution amongst the Secured Parties the amount which is necessary to put the Secured Parties into the position they would have been in (but taking no account of the time cost of money) had the original distribution been made on the basis of the actual as opposed to the future or contingent liability. |
10.31.11 | If the Security Agent has distributed any monies or other assets to a Secured Party: |
(a) | which the Security Agent received in consequence of holding or enforcing any Transaction Security which is subsequently set aside, avoided or held to be invalid; or |
(b) | for application in or towards settlement of any liabilities which are subsequently set aside, avoided or held to be invalid, |
then the Secured Party to whom that distribution was made shall on demand refund or retransfer the same to the Security Agent.
10.31.12 | The Secured Liabilities shall be discharged by the application of monies received by the Security Agent or any Receiver pursuant to Clause 10.31.5 to the extent only that the Secured Parties to which the Secured Liabilities are owed actually receive monies in respect of those Secured Liabilities. |
10.31.13 | If any Secured Party (acting in its capacity as such under this Agreement) receives or recovers any amount from any Obligor or any other person, that Secured Party shall hold that amount as agent for, and as soon as reasonably practicable pay it to, the Security Agent for application in accordance with this Clause 10.31. |
10.31.14 | If any Party owes an amount to the Security Agent under the Finance Documents the Security Agent may, after giving notice to that Party, deduct an amount not exceeding that amount from any payment to that Party which the Security Agent would otherwise be obliged to make under the Finance Documents and apply the amount deducted in or towards satisfaction of the amount owed. For the purposes of the Finance Documents that Party shall be regarded as having received any amount so deducted. |
10.32 | Investment of proceeds |
Prior to the application of the proceeds of the Transaction Security in accordance with Clause 10.31 (Application of proceeds) the Security Agent may, at its discretion, hold all or part of those proceeds in one or more non-interest bearing suspense or impersonal accounts in the name of the Security Agent with any financial institution (including itself) and for so long as the Security Agent thinks fit pending the application from time to time of those monies at the Security Agent’s discretion in accordance with the provisions of Clause 10.31 (Application of proceeds).
10.33 | Currency conversion |
10.33.1 | For the purpose of, or pending the discharge of, any of the Secured Liabilities the Security Agent may convert any monies received or recovered by the Security Agent from one currency to another, at the spot rate at which the Security Agent is able to purchase the currency in which the Secured Liabilities are due with the amount received. |
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10.33.2 | The obligations of any Obligor to pay in the due currency shall only be satisfied to the extent of the amount of the due currency purchased after deducting the costs of conversion. |
10.34 | Permitted deductions |
The Security Agent shall be entitled in its discretion (a) to set aside by way of reserve amounts required to meet and (b) to make and pay, any deductions and withholdings (on account of Taxes or otherwise) which it is or may be required by any law or regulation to make from any distribution or payment made by it under this Agreement, and to pay all Taxes which may be assessed against it in respect of any of the Secured Property, or as a consequence of performing its duties or exercising its rights, powers, authorities and discretions, or by virtue of its capacity as Security Agent under any of the Finance Documents or otherwise (other than in connection with its remuneration for performing its duties under this Agreement).
10.35 | Good discharge |
10.35.1 | Any distribution or payment to be made in respect of the Secured Liabilities by the Security Agent may be made to the Investment Agent on behalf of the Secured Parties and any distribution or payment made in that way shall be a good discharge, to the extent of that payment or distribution, by the Security Agent. |
10.35.2 | The Security Agent is under no obligation to make payment to the Investment Agent in the same currency as that in which any Unpaid Sum is denominated. |
10.36 | Amounts received by Obligors |
If any of the Obligors receives or recovers any amount which, under the terms of any of the Finance Documents, should have been paid to the Security Agent, that Obligor will hold the amount received or recovered on trust for the Security Agent and the Company shall procure such amount is promptly paid to the Security Agent for application in accordance with the terms of this Agreement.
10.37 | Parallel debt and security |
10.37.1 | Notwithstanding any other provision of this Agreement, the Company hereby irrevocably and unconditionally undertakes to pay to the Security Agent, as creditor in its own right and not as representative of the other Secured Parties, sums equal to and in the currency of each amount payable by the Company to each of the Secured Parties under each of the Finance Documents as and when that amount falls due for payment under the relevant Finance Document or would have fallen due but for any discharge resulting from failure of another Secured Party to take appropriate steps, in insolvency proceedings affecting the Company, to preserve its entitlement to be paid that amount. |
10.37.2 | The Security Agent shall have its own independent right to demand payment of the amounts payable by the Company under this Clause 10.37 irrespective of any discharge of the Company’s obligation to pay those amounts to the other Secured Parties resulting from failure by them to take appropriate steps, in insolvency proceedings affecting the Company, to preserve their entitlement to be paid those amounts. |
10.37.3 | Any amount due and payable by the Company to the Security Agent under this Clause 10.37 shall be decreased to the extent that the other Secured Parties have received (and are able to retain) payment in full of the corresponding amount under the other provisions of the Finance Documents and any amount due and payable by the Company to the other Secured Parties under those provisions shall be decreased to the extent that the Security Agent has received (and is able to retain) payment in full of the corresponding amount under this Clause 10.37. |
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10.38 | Fatwa and Shari’ah Supervisory Board |
In relation to any amount that is or would be payable by the Company solely as a result of Clause 10.37 (Parallel debt and security):
(a) | the Investment Agent shall promptly notify the Fatwa and Shari’ah Supervisory Board if it becomes aware of any of the occurrence of any of the circumstances specified in Clause 10.37 (Parallel debt and security); and |
(b) | if the Fatwa and Shari’ah Supervisory Board gives notice to the Investment Agent that such amount does not, in the opinion of the Fatwa and Shari’ah Supervisory Board, represent actual and due compensation the Company shall not be liable to make payment of the amount specified in such notice. |
11 | Conduct of business by the Secured Parties |
No provision of any Finance Document will:
(a) | interfere with the right of any Secured Party to arrange its affairs (tax or otherwise) in whatever manner it thinks fit; |
(b) | oblige any Secured Party to investigate or claim any credit, relief, remission or payment available to it or the extent, order and manner of any claim: or |
(c) | oblige any Secured Party to disclose any information relating to its affairs (tax or otherwise) or any computations in respect of Tax. |
12 | Amendments and waivers |
12.1 | Required consents |
12.1.1 | Subject to Clause 12.2 (Exceptions), any term of the Finance Documents may be amended or waived only with the written consent of the Investment Agent and the Company. |
12.1.2 | The Investment Agent may effect, on behalf of any Finance Party, any amendment or waiver permitted by this Clause 12.1. |
12.1.3 | The Investment Agent may engage, pay for and rely on the services of lawyers in determining the consent level required for and effecting any amendment, waiver or consent under this Agreement. |
12.1.4 | Each Guarantor agrees to any amendment or waiver permitted by this Clause 12 which is agreed to by the Company. This includes any amendment or waiver which would, but for this Clause 12.1.4, require the consent of that Guarantor. |
12.2 | Exceptions |
12.2.1 | An amendment or waiver that has the effect of changing or which relates to: |
(a) | the definition of Majority Participants in Clause 1.1 (Definitions); |
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(b) | Clauses 2.1 (Finance Parties’ rights and obligations), 5.11 (Remittances) 5.12 (Insurance and Compensation Proceeds and Terminal Earnings), 8 (Sharing among the Finance Parties), 10.30 (Enforcement of Transaction Security}, 26.10 (Assignments and transfer by Obligors) or this Clause 12; |
(c) | an extension of the Availability Period; |
(d) | an increase in or an extension of any Commitment or the Total Commitments or any requirement that a cancellation of Commitments reduces the Commitments rateably under any Finance Document; |
(e) | an extension to the date of payment of any amount under any Finance Documents; |
(f) | a reduction in the amount of any payment payable under any Finance Documents; |
(g) | a change in the currency of any payment under any Finance Documents; |
(h) | other than as permitted by the provisions of any Finance Document, the nature or scope of: |
(i) | the Secured Property; |
(ii) | the manner in which the proceeds of enforcement of the Transaction Security are distributed; or |
(iii) | the guarantee granted under Clause 13 (Guarantee); |
(i) | the release or partial release of any guarantee granted under Clause 13 (Guarantee) or any Transaction Security, in each case unless permitted under this Agreement or any other Finance Document or relating to a sale or disposal of an asset which is the subject of the Transaction Security where such sale or disposal is expressly permitted under this Agreement or any other Finance Document; or |
(j) | any provision which expressly requires the consent of all the Participants, shall not be made without the prior consent of all the Participants |
12.2.2 | An amendment or waiver which relates to, or would otherwise affect, the rights or obligations of the Arranger, the Investment Agent the Security Agent or a Reference Bank (each in its capacity as such) may not be effected without the consent of the Arranger, the Investment Agent, the Security Agent, or, as the case may be, that Reference Bank. |
12.3 | Replacement of Screen Rate |
Subject to Clause 12.2.2, if a Screen Rate Replacement Event has occurred, any amendment or waiver which relates to:
(a) | providing for the use of a Replacement Benchmark; and |
(b) | any of the following: |
(i) | aligning any provision of any Finance Document to the use of that Replacement Benchmark; |
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(ii) | enabling that Replacement Benchmark to be used for the calculation of Variable Rental Payments or Advance Variable Rental Payments under the Finance Documents (including, without limitation, any consequential changes required to enable that Replacement Benchmark to be used for the purposes of each Finance Document); |
(iii) | implementing market conventions applicable to that Replacement Benchmark; and/or |
(iv) | providing for appropriate fallback (and market disruption) provisions for that Replacement Benchmark, |
may be made with the consent of the Majority Participants and the Company.
12.4 | Future amendments relating to Successful Syndication |
The Parties acknowledge that, in order to achieve a Successful Syndication:
(a) | the Finance Documents may require amendments; and |
(b) | in accordance with Clause 12.1.1, any term of the Finance Documents may only be amended or waived with the written consent of the Investment Agent (acting for itself and on the instructions of the Majority Participants or all the Participants, as applicable) and the Company. |
13 | Guarantee |
13.1 | Guarantee and indemnity |
Each Guarantor irrevocably and unconditionally jointly and severally:
(a) | guarantees to each Secured Party punctual performance by each Obligor of the Secured Liabilities: |
(b) | undertakes with each Secured Party that whenever another Obligor does not pay any amount when expressed to be due under or in connection with the Finance Documents, that Guarantor shall immediately pay that amount as if it were the principal debtor; and |
(c) | agrees with each Secured Party that if any obligation guaranteed by it is or becomes unenforceable, invalid or illegal. it will, as an independent and primary obligation, indemnify that Secured Party immediately on demand against any actual cost, loss or liability (not to include any opportunity cost or cost of funds) it incurs as a result of an Obligor not paying any amount which would, but for such unenforceability, invalidity or illegality, have been payable by it under any Finance Document on the date when it would have been due. Any references in this Agreement to a “guarantee” or a “Guarantor” and any provisions of this Agreement relating to a guarantee but not to a primary obligation shall be ignored for the purpose of interpreting the nature of each Guarantor’s obligations under this paragraph (c). The amount payable by a Guarantor under this indemnity will not exceed the amount it would have had to pay under this Clause 13 if the amount claimed had been recoverable on the basis of a guarantee. |
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13.1.2 | Each Guarantor confirms that the transactions on the part of that Guarantor which are contemplated in the guarantee granted pursuant to this Clause 13: |
(a) | represent transactions of a private and purely commercial nature by the Guarantor, done and performed for private and commercial purposes; and |
(b) | are not, in any case, public or governmental acts. |
13.2 | Continuing guarantee |
This guarantee is a continuing guarantee and will extend to the ultimate balance of sums payable by the Obligors to the Secured Parties under the Finance Documents. regardless of any intermediate payment or discharge in whole or in part.
13.3 | Reinstatement |
If any discharge, release, accounting or arrangement (whether in respect of the obligations of any Obligor or any Security for those obligations or otherwise) is made by a Secured Party in whole or in part on the basis of any payment, security, recovery or other disposition which is avoided or must be restored in insolvency, liquidation, administration or otherwise, without limitation, then the liability of each Guarantor under this Clause 13 shall continue or be reinstated as if the discharge, release, accounting or arrangement had not occurred.
13.4 | Waiver of defences |
The obligations of each Guarantor under this Clause 13 will not be affected by an act, omission, matter or thing which, but for this Clause 13, would reduce, release or prejudice any of its obligations under this Clause 13 (whether or not known to it or any Secured Party) including:
(a) | any time, waiver or consent granted to, or composition with, any Obligor or other person; |
(b) | the release of any other Obligor or any other person under the terms of any composition or arrangement with any creditor of any person; |
(c) | the taking, variation, compromise, exchange, renewal, enforcement or release of, or refusal or neglect to perfect, take up or enforce, any rights against, or Security over assets of, any Obligor or other person or any non-presentation or non-observance of any formality or other requirement in respect of any instrument or any failure to realise the full value of any Security; |
(d) | any incapacity or lack of power, authority or legal personality of or dissolution or change in the members, name or status of any Obligor or any other person; |
(e) | any amendment, novation, supplement, extension (however fundamental and whether or not more onerous), or replacement, assignment, avoidance or termination of any Finance Document or any other document or Security including any change in the purpose of, any extension of or any increase in any facility or the addition of any new facility under any Finance Document or other document or Security; |
(f) | any unenforceability, illegality or invalidity of any obligation of, or any Security created by, any person under any Finance Document or any other document; or |
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(g) | any insolvency, liquidation, administration or similar procedure. |
13.5 | Fatwa and Shari’ah Supervisory Board |
In relation to any amount that is or would be payable by a Guarantor solely as a result of Clause 13.4 (Waiver of Defences):
(a) | the Investment Agent shall promptly notify the Fatwa and Shari’ah Supervisory Board if it becomes aware of any of the occurrence of any of the circumstances specified in Clause 13.4 (Waiver of Defences); and |
(b) | if the Fatwa and Shari’ah Supervisory Board gives notice to the Security Agent that such amount does not, in the opinion of the Fatwa and Shari’ah Supervisory Board, represent actual and due compensation the relevant Guarantor shall not be liable to make payment of the amount specified in such notice. |
13.6 | Waiver of statutory provisions |
Without prejudicing or affecting the commercial nature of the obligations of each Guarantor under this Clause 13, to the extent that a court should hold that Articles 1080, 1089, 1092, 1101 and 1105 of UAE Federal Law No. 5 of 1985 (as amended) (together, the Articles), or any of them, may be applicable to the obligations of any Guarantor under this Clause 13, each Guarantor expressly agrees that the provisions of the Articles shall not apply to its obligations under this Clause 13 and that the Secured Parties shall not be obliged to make any demand within any time period prescribed by the Articles.
13.7 | Immediate recourse |
Each Guarantor waives any right it may have of first requiring any Secured Party (or any trustee or agent on behalf of any Secured Party) to proceed against or enforce any other rights or Security or claim payment from any person before claiming from that Guarantor under this Clause 13. This waiver applies irrespective of any law or any provision of a Finance Document to the contrary.
13.8 | Appropriations |
During the Security Period, each Secured Party may:
(a) | refrain from applying or enforcing any other monies, Security or rights held or received by it (or any trustee or agent on its behalf) in respect of amounts which may be or become payable by the Obligors to the Secured Parties under or in connection with the Finance Documents, or apply and enforce them in such manner and order as it sees fit (whether against those amounts or otherwise) and no Guarantor shall be entitled to the benefit of them; and |
(b) | hold in a non-interest bearing suspense account any monies received from any Guarantor or on account of any Guarantor’s liability under this Clause 13 or any Obligor’s liability under the Finance Documents. |
13.9 | Deferral of Guarantor’s rights |
During the Security Period, and unless the Security Agent otherwise directs, no Guarantor will exercise any rights which it may have by reason of performance by it of its obligations under any Finance Document or by reason of any amount being payable, or liability arising, under this Clause 13 to:
(a) | receive or claim payment from or be indemnified by an Obligor; |
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(b) | claim any contribution from any other guarantor of, or provider of any Security in respect of, any Obligor’s obligations under the Finance Documents; |
(c) | take the benefit (in whole or in part and whether by way of subrogation or otherwise) of any rights of any Secured Party under any Finance Document or of any guarantee or Security taken pursuant to, or in connection with, the Finance Documents by any Secured Party; |
(d) | bring legal or other proceedings for an order requiring any Obligor to make any payment, or perform any obligation, in respect of which any Guarantor has given a guarantee, undertaking or indemnity under Clause 13.1 (Guarantee and Indemnity); |
(e) | exercise any right of set-off against any Obligor; and/or |
(f) | claim or prove as a creditor of any Obligor in competition with any Secured Party. |
13.10 | Release of Guarantor’s right of contribution |
If any Guarantor (a Retiring Guarantor) ceases to be a Guarantor in accordance with the terms of the Finance Documents then on the date such Retiring Guarantor ceases to be a Guarantor:
(a) | that Retiring Guarantor is released by each other Guarantor from any liability (whether past, present or future and whether actual or contingent) to make a contribution to any other Guarantor arising by reason of the performance by any other Guarantor of its obligations under the Finance Documents; and |
(b) | each other Guarantor waives any rights it may have by reason of the performance of its obligations under the Finance Documents to take the benefit (in whole or in part and whether by way of subrogation or otherwise) of any rights of the Secured Parties under any Finance Document or of any other security taken pursuant to, or in connection with, any Finance Document where such rights or security are granted by or in relation to the assets of the Retiring Guarantor. |
13.11 | Additional Security |
This guarantee is in addition to, is not in any way prejudiced by, and shall not merge with, any other guarantee or Security now or in the future held by any Secured Party.
13.12 | No Security from Obligors |
During the Security Period, no Guarantor shall take, or retain, any Security from any Obligor or other person in connection with any of that Guarantor’s liabilities under this guarantee.
13.13 | New accounts |
If this guarantee ceases to be continuing for any reason, any Secured Party may open a new account or accounts with the Company and, if it does not do so, it shall nevertheless be treated as if it had done so at the time this guarantee ceased to be continuing (whether by determination, calling in, demand or otherwise), and as from that time all payments made by any Guarantor to that Secured Party:
(a) | shall be credited or be treated as having been credited to the new account; and |
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(b) | shall not operate to reduce the Secured Liabilities at that time. |
13.14 | Consideration |
Each Guarantor has entered into the guarantee under this Clause 13 in consideration of the relevant Finance Parties entering into Shari’ah compliant banking facilities with the Company. The Company is an Affiliate of each Guarantor.
14 | Representations and warranties |
14.1 | Representations and warranties |
14.1.1 | Each Obligor makes the representations and warranties set out in this Clause 14 (other than those set out in Clause 14.26 (Repetition)) to the Finance Parties on the date of this Agreement. |
14.1.2 | Each Finance Party has entered into the Finance Documents to which it is party, or to which they will respectively become a party upon execution thereof, in reliance on the representations and warranties set out in this Clause 14. |
14.2 | Status |
14.2.1 | It is a company or corporation, duly incorporated and validly existing under the law of its jurisdiction of incorporation. |
14.2.2 | It has the power to sue and be sued in its own name and to own its assets and carry on its business as that business is being and will be conducted. |
14.2.3 | It is not a FATCA FFI or a US Tax Obligor. |
14.3 | Binding obligations |
Subject to the Legal Reservations and, in the case of the Transaction Security Documents, the applicable Perfection Requirements:
(a) | the obligations expressed to be assumed by it in each Transaction Document to which it is a party are legal, valid, binding and enforceable obligations; and |
(b) | without limiting the generality of Clause 14.3(a), each Transaction Security Document to which it is a party creates the Security which that Transaction Security Document purports to create and those Security are valid and effective. |
14.4 | Non-conflict with other obligations |
The entry into and performance by it of, and the transactions contemplated by, the Transaction Documents to which it is a party and the granting of the Transaction Security do not and will not conflict with:
(a) | subject to the Legal Reservations, any law or regulation applicable to it; |
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(b) | its constitutional documents; or |
(c) | any agreement or instrument binding upon it to the extent such conflict has, or would be reasonably likely to have, a Material Adverse Effect. |
14.5 | Power and authority |
14.5.1 | It has the power to enter into, perform and deliver, and has taken all necessary action to authorise its entry into, performance and delivery of, the Transaction Documents to which it is a party and the transactions contemplated by those Transaction Documents. |
14.5.2 | No limit on its powers will be exceeded as a result of the financing, grant of security or giving of guarantees or indemnities contemplated by the Transaction Documents to which it is a party. |
14.6 | Validity and admissibility in evidence |
All Authorisations required:
(a) | to enable it lawfully to enter into, exercise its rights and comply with its obligations in the Transaction Documents to which it is a party; |
(b) | subject to the Legal Reservations, to make the Transaction Documents to which it is a party admissible in evidence in each Relevant Jurisdiction; and |
(c) | to enable it to carry on its business, trade and ordinary activities, |
have been obtained or effected and are in full force and effect if failure to obtain or effect those Authorisations has or is reasonably likely to have a Material Adverse Effect.
14.7 | Jurisdiction and governing law |
14.7.1 | Subject to the Legal Reservations, the choice of governing law of the Transaction Documents to which it is a party will be recognised and enforced in its Relevant Jurisdictions. |
14.7.2 | Subject to the Legal Reservations, any judgment obtained in relation to a Transaction Document to which it is a party in the jurisdiction of the governing law of that Transaction Document will be recognised and enforced in its Relevant Jurisdictions. |
14.8 | Insolvency |
It has not taken any action nor (to the best of its knowledge and belief (having made due and careful enquiry)) have any steps been taken or legal proceedings been started or threatened against it for its winding-up, dissolution or re-organisation, for the enforcement of any Security over its assets or for the appointment of a liquidator, supervisor, receiver, administrator, administrative receiver, compulsory manager, trustee or other similar officer of it or in respect of any of its assets.
14.9 | Deduction of Tax |
It is not required to make any deduction for or on account of Tax from any payment it may make under any Finance Document to a Finance Party.
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14.10 | No filing or stamp Taxes |
Subject to the Legal Reservation and the Perfection Requirements, under the laws of the Relevant Jurisdictions, it is not necessary that any Transaction Document be filed, recorded or enrolled with any court or other authority in that jurisdiction or that any stamp, registration or similar Tax be paid on or in relation to any Transaction Document or the transactions contemplated by any Transaction Document.
14.11 | Compliance with Tax laws |
It has complied in all material respects with all Tax laws in all jurisdictions in which it is subject to Tax and has paid all Taxes due and payable by it and no claims are being asserted against it in respect of Taxes except in relation to Tax liabilities arising in the ordinary course of its day-to-day trading activities or claims contested in good faith and in respect of which adequate provision has been made and disclosed in the latest financial statements or other information delivered to the Investment Agent under this Agreement.
14.12 | No Event of Default |
14.12.1 | No Event of Default and, on the date of this Agreement, no Default is continuing or is reasonably likely to result from the entry into of an Istisna’ Agreement, or the entry into, the performance of, or any transaction contemplated by, any Transaction Document. |
14.12.2 | No other event or circumstance is outstanding which constitutes a default under any other agreement or instrument which is binding on it or any of its Subsidiaries or to which its (or any of its Subsidiaries’) assets are subject which are reasonably likely to have a Material Adverse Effect. |
14.13 | Environmental Laws |
14.13.1 | It is in compliance with Clause 17.4 (Environmental compliance) and (to the best of its knowledge and belief (having made due and careful enquiry)) no circumstances have occurred which would prevent such compliance in a manner or to an extent which has or is reasonably likely to have a Material Adverse Effect. |
14.13.2 | No Environmental Claim has been commenced or (to the best of its knowledge and belief (having made due and careful enquiry)) is threatened (in writing) against it where that claim has or is reasonably likely, if determined against it, to have a Material Adverse Effect. |
14.14 | No misleading information |
14.14.1 | All written information provided by it or on its behalf to the Investment Agent in relation to it, the Project or otherwise, was true, complete and accurate in all material respects as at the date it was provided or as at the date (if any) at which it is stated. |
14.14.2 | Any financial projection or forecast provided to the Investment Agent by it or on its behalf has been prepared on the basis of recent historical information and on the basis of reasonable assumptions and arrived at after careful consideration. |
14.14.3 | Nothing has occurred and no written information has been given or withheld that results in the information being untrue or misleading in any material respect. |
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14.15 | Financial statements |
14.15.1 | The Original Financial Statements were prepared in accordance with IFRS consistently applied. |
14.15.2 | The Original Financial Statements fairly represent the Company’s consolidated financial condition and operations during the relevant Financial Year. |
14.15.3 | Unless disclosed in writing to the Investment Agent, there has been no material adverse change in its business, condition (financial or otherwise), operations, assets, performance or prospects (or the business, condition (financial or otherwise), operations, assets, performance or prospects of the Group) since the date of the Original Financial Statements. |
14.15.4 | The most recent financial statements delivered pursuant to Clause 15.1 (Financial Statements): |
(a) | have been prepared in accordance with IFRS as applied to the Original Financial Statements; and |
(b) | give a true and fair view of (if audited) or fairly present (if unaudited) its financial condition as at the end of, and results of for, the period to which they relate. |
14.16 | Shari’ah compliance |
It confirms that it does not have any objection, nor will it raise any objections, as to matters of Shari’ah compliance in respect of or otherwise in relation to any of the provisions of the Finance Documents or any matter related hereto.
14.17 | Applicable Anti Bribery Law |
14.17.1 | Neither it nor any Group Company, nor to the best of their knowledge, any director, officer, employee, or anyone acting on behalf of any Obligor or any other Group Company, has engaged in any activity which would breach the ABC Laws. |
14.17.2 | No actions or investigations by any governmental or regulatory agency are ongoing or threatened against any Obligor or any other Group Company, their directors, officers or employees or anyone acting on their behalf in relation to a breach of the ABC Laws. |
14.17.3 | Each Obligor has instituted, maintains and enforces, policies and procedures designed to ensure compliance by that Obligor with the ABC Laws. |
14.18 | Sanctions |
Neither it nor any other Group Company, nor any directors, officers or employees of it or any other Group Company nor (to the best of its knowledge and belief (having made due and careful enquiry)) any person acting on any of their behalf;
(a) | is a Restricted Party or is engaging in or has engaged in any transaction or conduct that could result in it becoming a Restricted Party; |
(b) | is or ever has been subject to any claim, proceeding, formal notice or investigation with respect to Sanctions; |
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(c) | is engaging or has engaged in any transaction that evades or avoids, or has the purpose of evading or avoiding, or breaches or attempts to breach, directly or indirectly, any Sanctions applicable to it; or |
(d) | has engaged or is engaging, directly or indirectly. in any trade, business or other activities with or for the benefit of any Restricted Party. |
14.19 | Pari passu ranking |
Its payment obligations under the Finance Documents rank at least pari passu with the claims of all its other unsecured and unsubordinated creditors, except for obligations mandatorily preferred by law applying to companies generally.
14.20 | No proceedings pending or threatened |
No litigation, arbitration or administrative proceedings of or before any court, arbitral body or agency which if adversely determined, would be reasonably likely to have a Material Adverse Effect have been started or (to the best of its knowledge and belief (having made due and careful enquiry)) threatened (in writing) against it or any of its Subsidiaries, nor is there subsisting any unsatisfied judgment or award given against any of them by any court, arbitrator or other body which would be reasonably likely to have a Material Adverse Effect.
14.21 | Transaction Security Documents |
Subject to the Legal Reservations and the Perfection Requirements, each Transaction Security Document to which it is a party creates the Security which that Transaction Security Document purports to create and those Security are valid and effective.
14.22 | Security |
No Security exist over all or any of the present or future assets of an Obligor other than as permitted by the Finance Documents.
14.23 | Ranking |
Subject to the Legal Reservations and the Perfection Requirements. the Transaction Security has or will have the ranking in priority it is expressed to have in the Transaction Security Documents and it is not subject to any prior ranking or pari passu ranking Security except for obligations mandatorily preferred by law applying to companies generally.
14.24 | Immunity |
It will not be entitled to claim immunity from suit, execution, attachment or other legal process in any Relevant Jurisdiction.
14.25 | Commercial transactions |
The transactions on the part of each Guarantor which are contemplated in the guarantee granted pursuant to Clause 13 (Guarantee):
(a) | represent transactions of a private and purely commercial nature by the Guarantor, done and performed for private and commercial purposes; and |
(b) | are not, in any case, public or governmental acts. |
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14.26 | Good title to assets |
It has good, valid and marketable title to and all appropriate Authorisations to use the assets necessary to carry out its business and the Project, free from Security (other than any Transaction Security), restrictions and onerous covenants.
14.27 | Legal and beneficial ownership |
It is the sole legal and beneficial owner of the respective assets over which it purports to grant Security.
14.28 | Transaction Documents |
14.28.1 | The copies of the Project Documents it has supplied to the Investment Agent are true and complete copies of those documents at the date so supplied to the Investment Agent. |
14.28.2 | It is not a party to any material agreement in relation to the Project other than as permitted by this Agreement. |
14.28.3 | It has not incurred any material liabilities in relation to the Project other than pursuant to the Transaction Documents to which it is a party. |
14.28.4 | It is not a party to, and is not aware of, any agreement between any of the parties to any Transaction Document which amends, supplements or affects any Transaction Document. |
14.29 | Project Site |
14.29.1 | The Company leases the Project Site as lessee under the Project Site Lease. |
14.29.2 | The Company has the benefit of all easements and other rights which are necessary to carry out the Project and for the business and operation of the Project at the Project Site, in each case free from any material restriction (including any restriction that may otherwise prevent, delay or hinder the implementation of the Project or the business or operation of the Project). |
14.30 | Insurances |
All insurances which are currently required to be maintained or effected pursuant to the Transaction Documents are in full force and effect and it is, to the best of its knowledge and belief, not aware of any occurrence or any event or circumstance, nor has there been any omission by it to disclose a fact, which would entitle any insurer to avoid or otherwise reduce its liability under any policy relating to such insurances.
14.31 | Repetition |
The Repeating Representations are deemed to be made by each Obligor by reference to the facts and circumstances then existing on the date of:
(a) | each Transaction Request; |
(b) | each Istisna’ Payment Date; |
(c) | the first day of each Advance Variable Rental Period; |
(d) | the first day of each Lease Period; |
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(e) | each Acceptance; |
(f) | each Advance Rental Payment Date; and |
(g) | each Rental Payment Date. |
15 | Information undertakings |
The undertakings in this Clause 15 remain in force from the date of this Agreement up to the end of the Security Period.
15.1 | Financial statements |
The Company shall supply to the Investment Agent:
(a) | as soon as reasonably practicable, but in any event within 120 days after the end of each Financial Year, the Annual Accounts for that Financial Year; and |
(b) | as soon as reasonably practicable, but in any event within 90 days after the end of the first half of each Financial Year, the Half Year Accounts for that half-year; and |
(c) | all such other financial information as the Investment Agent from time to time may reasonably require. |
15.2 | Compliance Certificate |
15.2.1 | The Company shall supply to the Investment Agent electronically, with each set of financial statements delivered pursuant to Clause 15.1 (Financial Statements), a Compliance Certificate setting out (in reasonable detail) computations as to compliance with Clause 16 (Financial Covenants) as at the date as at which those financial statements were drawn up. |
15.2.2 | The Company shall procure that each Compliance Certificate is signed by two authorised signatories of the Company. |
15.3 | Requirements as to financial statements |
15.3.1 | Each set of financial statements delivered pursuant to Clause 15.1 (Financial Statements) shall be certified by two authorised signatories the Company as fairly representing the Company’s financial condition as at the date as at which those financial statements were drawn up. |
15.3.2 | Each set of financial statements delivered pursuant to Clause 15.1 (Financial Statements) shall be prepared using IFRS accounting practices and financial reference periods consistent with those applied in the preparation of the Original Financial Statements unless, in relation to any set of financial statements, the Company notifies the Investment Agent that there has been a change in IFRS, the accounting practices or reference periods and its auditors deliver to the Investment Agent: |
(a) | a description of any change necessary for those financial statements to reflect IFRS, accounting practices and reference periods upon which the Original Financial Statements were prepared; and |
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(b) | sufficient information to enable the Investment Agent to make an accurate comparison between the financial position indicated in those financial statements and the Original Financial Statements. |
15.3.3 | Any reference in this Agreement to any financial statements shall be construed as a reference to those financial statements as adjusted to reflect the basis upon which the Original Financial Statements were prepared. |
15.4 | Year end |
The Company shall not change its Financial Year end from 31 December.
15.5 | Project Progress Report |
15.5.1 | The Company shall provide such documentation, detail and explanation as the Bank Technical Adviser may reasonably request in order for the Bank Technical Adviser to be able to issue a Project Progress Report in respect of each Quarterly Period ending on or before the Completion Date. |
15.5.2 | The Company shall ensure that each Project Progress Report is delivered as soon as practicable, but in any event within 30 days of the commencement of the relevant Quarterly Period. |
15.6 | Cash Flows Report |
15.6.1 | The Company shall provide an Cash Flows Report in respect of each Half Year Period ending on or after the Completion Date. |
15.6.2 | The Company shall ensure that each Cash Flows Report is delivered as soon as practicable, but in any event within 30 days of the end of the relevant Half Year Period. |
15.7 | Environmental Claims |
The Company shall promptly upon becoming aware of the same, inform the Investment Agent in writing of:
(a) | any Environmental Claim against any Obligor which is current, pending or threatened (in writing); and |
(b) | any facts or circumstances which are reasonably likely to result in any Environmental Claim being commenced or threatened (in writing) against any Obligor (in writing), |
where the claim if determined against the relevant Obligor, has or is reasonably likely to have a Material Adverse Effect.
15.8 | Information: miscellaneous |
The Company shall supply to the Investment Agent electronically:
(a) | all documents dispatched by an Obligor to its creditors generally at the same time as they are dispatched if the contents of such document has or is reasonably likely to have a Material Adverse Effect ; |
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(b) | promptly upon becoming aware of them, the details of any litigation, arbitration or administrative proceedings which are current, threatened (in writing) or pending against an Obligor, and which, if adversely determined, have or are reasonably likely to have a Material Adverse Effect; |
(c) | promptly, such further information regarding the financial condition, business and operations of any Obligor as the Investment Agent may reasonably request (such request to include the reasons for it being made); |
(d) | as soon as reasonably practicable, such information as the Investment Agent may reasonably require about the Secured Property and compliance of any Obligor with the terms of any Transaction Security Document to which it is party. |
15.9 | Notification of Default |
15.9.1 | The Company shall notify the Investment Agent of any Default (and the steps, if any, being taken to remedy it) promptly upon becoming aware of its occurrence. |
15.9.2 | Promptly upon a request by the Investment Agent, the Company shall supply to the Investment Agent a certificate signed by two of its authorised signatories certifying that no Default is continuing (or if a Default is continuing, specifying the event and the steps, if any, being taken to remedy it). |
15.10 | “Know your customer” checks |
If the Investment Agent or any Finance Party (or, in the case of Clause 27.1(c), any prospective Finance Party) is obliged by:
(a) | the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation made after the date of this Agreement; |
(b) | any change in the status of an Obligor after the date of this Agreement; or |
(c) | a proposed assignment or transfer by a Finance Party of any of its rights and obligations under a Finance Document to a party that is not a Finance Party before such assignment or transfer, |
to comply with “know your customer” or similar identification procedures in circumstances where the necessary information is not already available to it, the Company shall promptly upon the request of the Investment Agent supply, or procure from the relevant Obligor the supply of, such documentation and other evidence as is reasonably requested by the Investment Agent (for itself or on behalf of the relevant Finance Party or prospective new Finance Party) in order for such Finance Party or, in the case of the event described in Clause 27.1(c), any prospective new Finance Party to carry out and be satisfied it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the Finance Documents.
15.11 | Use of websites |
15.11.1 | The Company may satisfy its obligation under this Agreement to deliver any information in relation to those Participants (the Website Participants) who accept this method of communication by posting this information onto an electronic website designated by the Company and the Investment Agent (the Designated Website) if: |
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(a) | the Investment Agent expressly agrees (after consultation with each of the Participants) that it will accept communication of the information by this method; |
(b) | both the Company and Investment Agent are aware of the address of and any relevant password specifications for the Designated Website; and |
(c) | the information is in a format previously agreed between the Company and the Investment Agent. |
15.11.2 | If any Participant (a Paper Form Participant) does not agree to the delivery of information electronically then the Investment Agent shall notify the Company accordingly and the Company shall supply the information to the Investment Agent (in sufficient copies for each Paper Form Participant) in paper form. In any event the Company shall supply the Investment Agent with at least one copy in paper form of any information required to be provided by it. |
15.11.3 | The Investment Agent shall supply each Website Participant with the address of and any relevant password specifications for the Designated Website following designation of that website by the Company and the Investment Agent. |
15.11.4 | The Company shall promptly upon becoming aware of its occurrence notify the Investment Agent if: |
(a) | the Designated Website cannot be accessed due to technical failure; |
(b) | the password specifications for the Designated Website change; |
(c) | any new information which is required to be provided under this Agreement is posted onto the Designated Website; |
(d) | any existing information which has been provided under this Agreement and posted onto the Designated Website is amended; or |
(e) | the Company becomes aware that the Designated Website or any information posted onto the Designated Website is or has been infected by any electronic virus or similar software. |
15.11.5 | If the Company notifies the Investment Agent under Clause 15.11.4(a) or Clause 15.11.4(e) all information to be provided by the Company under this Agreement after the date of that notice shall be supplied in paper form unless and until the Investment Agent and each Website Participant is satisfied that the circumstances giving rise to the notification are no longer continuing. |
15.11.6 | Any Website Participant may request, through the Investment Agent, one paper copy of any information required to be provided under this Agreement which is posted onto the Designated Website. The Company shall comply with any such request within ten Business Days. |
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16 | Financial covenants |
The undertakings in this Clause 16 remain in force from the date of this Agreement up to the end of the Security Period.
16.1 | Financial covenants |
The Company undertakes that:
16.1.1 | Facility Service Cover Ratio |
Subject to Clause 16.2 (First Testing Date), the Facility Service Cover Ratio in respect of each Relevant Period ending on each Testing Date after the date of this Agreement shall not be less than 1.25:1.
16.1.2 | Participations to Value Ratio |
At all times the Participations to Value Ratio shall not be greater than 1.50:1.
16.2 | First Testing Date |
In relation to the financial covenant set out in Clauses 16.1.1 (Facility Service Cover Ratio), testing shall commence on the first Testing Date which occurs on or after six months after the end of the Availability Period (the First Testing Date) and shall be calculated by reference to the latest Compliance Certificate delivered to the Investment Agent pursuant to Clause 15.2 (Compliance Certificate).
17 | Positive undertakings |
The undertakings in this Clause 17 remain in force from the date of this Agreement up to the end of the Security Period.
17.1 | Authorisations |
Each Obligor shall promptly:
(a) | obtain, comply with and do all that is necessary to maintain in full force and effect: and |
(b) | upon the reasonable request of the Investment Agent supply certified copies to the Investment Agent of, |
any Authorisation required under any law or regulation of a Relevant Jurisdiction to:
(i) | enable it to perform its obligations under the Finance Documents to which it is a party; |
(ii) | subject to the Legal Reservations (and, in the case of the Transaction Security Documents, the Perfection Requirements), ensure the legality, validity, enforceability or admissibility in evidence of any such Finance Document; |
(iii) | carry on its business; and |
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(iv) | operate the Leased Asset. |
17.2 | Compliance with Laws |
Each Obligor shall comply in all respects with all laws to which it may be subject, if failure so to comply would materially impair its ability to perform its payment obligations under the Finance Documents to which it is a party.
17.3 | Taxes |
Each Obligor shall pay and discharge all Taxes and governmental charges payable by or assessed upon it before the date on which the same become overdue unless, and only to the extent that, such Taxes and charges shall be contested in good faith by appropriate proceedings, pending determination of which payment may lawfully be withheld provided that adequate reserves shall be set aside with respect to any such Taxes or charges so contested.
17.4 | Environmental compliance |
17.4.1 | Each Obligor shall: |
(a) | comply in all material respects with all Environmental Laws applicable to it; |
(b) | obtain, maintain and ensure compliance with all requisite Environmental Permits; and |
(c) | implement procedures to monitor compliance with and to prevent liability under any Environmental Law, where failure to do so has or is reasonably likely to have a Material Adverse Effect. |
17.4.2 | Each Obligor shall ensure that all Dangerous Materials treated, used, or kept and stored in, upon or under the Project Site are held and kept in the manner and standard of a prudent trader carrying on the same business as it. |
17.5 | Further assurance |
Each Obligor shall at its own expense promptly do or procure the doing of all such acts or execute or procure the execution of all such documents (including assignments, transfers, mortgages, charges, notices and instructions) as the Investment Agent may reasonably specify (and in such form as the Investment Agent may reasonably require in favour of the Investment Agent or its nominee(s)):
(a) | to ensure that the Finance Parties obtain all the rights and benefits intended to be conferred on them under the Finance Documents; |
(b) | to perfect the Security created or intended to be created under or evidenced by the Transaction Security Documents (which may include the execution of a mortgage, charge, assignment or other Security over all or any of the assets which are, or are intended to be, the subject of the Transaction Security) or for the exercise of any rights, powers and remedies of the Investment Agent provided by or pursuant to the Finance Documents or by law; and/or |
(c) | to facilitate the realisation of the assets which are, or are intended to be, the subject of the Transaction Security. |
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17.6 | Applicable Anti Bribery Law |
17.6.1 | No Obligor shall (and the Company shall procure that no other Group Company shall) directly or indirectly use the proceeds of any transactions contemplated in the Finance Documents for any purposes which would breach any Applicable Anti Bribery Law. |
17.6.2 | Each Obligor shall: |
(a) | conduct its businesses in compliance with any Applicable Anti Bribery Law which applies to it in each jurisdiction in which it operates; and |
(b) | maintain policies and procedures designated to promote and achieve compliance with any Applicable Anti Bribery Law which applies to it in each jurisdiction in which it operates. |
17.7 | Application of FATCA |
No Obligor shall become a FATCA FFI or a US Tax Obligor.
17.8 | Sanctions |
17.8.1 | No Obligor shall permit or authorise any other person to, directly or indirectly, use, lend, make payments of, contribute or otherwise make available, all or any part of the disbursement or other transaction contemplated by any Finance Document to fund any trade, business or other activities: |
(a) | relating to, involving or for the benefit of any Restricted Party; and/or |
(b) | in any other manner that would reasonably be expected to result in an Obligor or any Finance Party being in breach of any Sanctions (if and to the extent applicable to either of them) or becoming a Restricted Party; |
17.8.2 | Each Obligor undertakes to the Bank that it shall not repay any amount under the Finance Documents with any amount received, directly or indirectly, from any Restricted Person or the subject of any Sanctions. |
17.8.3 | Each Obligor shall promptly upon becoming aware of them, provide to the Investment Agent the details of any claim, proceeding, formal notice or investigation with respect to Sanctions relating to any Obligor or any Group Company or any of officer or director of any Obligor or any Group Company. |
17.9 | Valuations |
17.9.1 | Without prejudice to Clause 17.9.2, within 90 days of the end of each Half Year Period, the Company shall deliver to the Investment Agent an updated Valuation in respect of the Phase 2 Storage Terminal. |
17.9.2 | The Investment Agent may request a Valuation at any time when a Default is continuing. |
17.9.3 | The Company shall pay all costs and expenses payable in connection with each Valuation. |
17.10 | Cost Overruns |
The Company shall promptly fund all Cost Overruns from its own resources.
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17.11 | Insurance |
17.11.1 | Without prejudice to, and in addition to, any other insurance provisions in the Finance Documents, the Company shall in respect of all Insurances: |
(a) | effect and maintain all Insurances at its own expense: |
(i) | against those risks and to the extent as is usual for businesses owning or possessing similar assets or carrying on the same or substantially similar business; and |
(ii) | as required pursuant to the laws of the Emirates of Fujairah and applicable federal laws of the UAE; |
(b) | promptly and diligently perform and comply with the requirements of all covenants, undertakings and conditions as to insurance which are imposed by the terms of such insurances or any lease, agreement for lease or tenancy under which the Company derives its estate or interest in those assets; |
(c) | duly and punctually pay all premiums, fees and other moneys due and payable in respect of all such insurances do everything necessary to keep such insurances in force and promptly at the request of the Investment Agent produce receipts for the payment of the premiums; |
(d) | at the request of the Investment Agent, deposit copies of, with or produce for inspection originals of to the Investment Agent all Insurance to be maintained by it in accordance with this Clause 17.11; |
(e) | use all reasonable endeavours to prevent any acts, omissions, breaches or events of default occurring which would be reasonably likely to render any Insurance taken out by it void or voidable or entitle the insurers to cancel or suspend the Insurances or reduce or avoid any liability under it; and |
(f) | promptly upon becoming aware of the same notify the Investment Agent of any event or circumstance which might cause any Insurance to lapse or become invalid including any default by the Company. |
17.11.2 | Without prejudice to, and in addition to, any other insurance provisions in the Finance Documents, the Company shall ensure that all Insurances: |
(a) | are with reputable regulated independent insurance companies or underwriters approved by the Investment Agent; |
(b) | be in such amounts (acceptable to the Investment Agent) as would in the circumstances be prudent for such businesses (including an entitlement to receive the full replacement value from time to time of any assets destroyed or otherwise becoming a total loss); |
(c) | name (or, promptly after the date of this Agreement, be amended to name) the Investment Agent and the Security Agent as additional named insured for its rights and interests, warranted no operational interest and with full waiver of rights of subrogation against the Investment Agent and the Security Agent, but without the Investment Agent or the Security Agent thereby being liable to pay (but having the right to pay) premiums, calls or other assessments in respect of such insurance; |
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(d) | name the Security Agent as loss payee in accordance with the agreed loss payable clause; |
(e) | provide that all payments by or on behalf of the insurers under the Insurances to the Principal and the Security Agent shall be made without set-off, counterclaim or deductions or condition whatsoever; |
(f) | provide that such Insurances shall be primary without any right of contribution from other insurances which may be carried by the Investment Agent or the Security Agent; and |
(g) | provide that each of the Investment Agent and the Security Agent may make proof of loss if the Company fails to do so. |
17.11.3 | The Company shall promptly upon becoming aware of a claim, notify and keep the Investment Agent informed of any circumstances which give rise or might reasonably be foreseen to give rise to a claim or claims under any Insurance. |
17.11.4 | The Company shall not, unless with the prior written consent of the Investment Agent, take out additional insurances for the sole benefit of the Company or permit any other person to be named insured in insurances with respect to the Leased Asset (other than as required under the Finance Documents), and will, upon the request of the Investment Agent immediately furnish the Investment Agent with particulars of any such additional insurances (including copies of any cover notes or policies) and of the written consent of the insurers where such consent is necessary. |
17.11.5 | The Company shall procure that no Security shall exist over the Insurance or their proceeds save pursuant to the Transaction Security Documents. |
17.11.6 | The Company shall ensure that each Insurance contains such endorsements required by the Investment Agent from time to time. |
17.11.7 | If the Company fails to comply with any of its obligations under this Clause 17.11, the Investment Agent may (but shall be not obliged to) effect or renew any Insurance referred to in this Clause. |
17.11.8 | The Company shall within five Business Days of demand indemnify the Investment Agent against all actions, proceedings, demands, claims, costs, expenses, and other liabilities incurred by it in effecting or renewing any Insurance in accordance with Clause 17.11.7. |
17.12 | Access |
The Company shall permit the Investment Agent and the Bank Technical Adviser and/or the professional advisers and nominees of the Investment Agent at all reasonable times and on reasonable notice, at the risk and cost of the Company to:
(a) | have access to: |
(i) | the Project Site; |
(ii) | its assets, books, accounts and records in relation to the Project; and |
(b) | meet and discuss matters with senior management of the Company in relation to the Project, including, but not limited to, for the purpose of the Bank Technical Adviser being able to compile each Project Progress Report. |
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17.13 | Project Documents |
17.13.1 | The Company shall: |
(a) | perform and observe all its obligations, including making payment of all payments due from it, under each Project Document to which it is a party in accordance with each of their terms: |
(b) | take all appropriate action to protect and maintain its rights under the Project Documents to which it is a party; and |
(c) | exercise and enforce its rights against the other parties to the Project Documents to which it is a party so as to procure the due performance of such other parties obligations under the Project Documents. |
17.13.2 | The Company shall not: |
(a) | amend, vary or waive all or any part of a Project Document to which it is a party except: |
(iii) | where the amendment is not in any respect material; |
(iv) | for correction of manifest errors: or |
(v) | to the extent necessary to comply with applicable law; |
(b) | assign, transfer, novate, dispose of or sub-contract all or any part of a Project Document to which it is a party or Authorisation; or |
(c) | terminate any Project Document to which it is a party, |
without the prior written approval of the Investment Agent.
17.13.3 | The Company shall promptly provide the Investment Agent with a copy of all amendments, variations and waivers to any Project Document. |
17.14 | Project implementation |
The Company shall ensure that the Project is implemented in accordance with:
(a) | the Transaction Documents; |
(b) | the standards of good practice and quality employed in international projects of a kind similar to the Project from time to time; and |
(c) | all applicable laws including the laws of the Emirate of Fujairah and applicable federal laws of the UAE. |
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17.15 | IPO Event, fair and accurate disclosures |
The Company undertakes to comply (and shall procure that Listco complies) with all requirements under any applicable law or regulation, including the UK Prospectus Rules, applicable to an IPO Event, including fairly and accurately describing in any related prospectus or other documentation required for the IPO Event, the Finance Documents and key conditions to be satisfied in order for financing to be made available to the Company under the Finance Documents.
18 | Negative undertakings |
The undertakings in this Clause 18 remain in force from the date of this Agreement up to the end of the Security Period.
18.1 | Financial Indebtedness |
18.1.1 | Subject to Clauses 18.1.2, the Company shall not incur or allow to remain outstanding any Financial Indebtedness. |
18.1.2 | The Company shall be permitted to incur Financial Indebtedness: |
(a) | incurred under the Finance Documents; |
(b) | arising under any finance, capital or equipment leases entered into with respect to vehicles, plant and equipment in the ordinary course of its day-to-day trading activities and which does not exceed, in aggregate, AED10,000,000; |
(c) | which constitutes a Subordinated Shareholder Loan; or |
(d) | with the prior written consent of the Investment Agent. |
18.2 | Participations to Cost |
The Company shall ensure that the Participations to Cost does not at any time exceed 57 per cent.
18.3 | Acquisitions |
The Company shall not:
(c) | acquire a company or any shares or a business or undertaking (or, in each case, any interest in any of them); |
(d) | incorporate a company; or |
(e) | enter into any option or similar arrangement under which a person has a present, future, actual or contingent right to require the Company to acquire any asset which, if exercised, would breach the terms of any of the Transaction Documents, |
without the prior written consent of the Investment Agent.
18.4 | Disposals |
18.4.1 | Except as permitted by the Finance Documents, the Company shall not without the prior written consent of the Investment Agent enter into a single transaction or a series of transactions (whether related or not), whether voluntary or involuntary and whether at the same time or over a period of time, to sell, lease, transfer, license, loan, divest or otherwise dispose (each a Disposition) of any Secured Property, the Project, the Project Site, the Phase 2 Storage Terminal or enter into an agreement to make any such Disposition. |
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18.4.2 | Subject to compliance with Clause 16 (Financial covenants), the Company shall be permitted to make any Disposition of any asset which does not constitute Secured Property, the Project, the Project Site or the Phase 2 Storage Terminal. |
18.5 | Arm’s length basis |
The Company shall not enter into any transaction with any person in relation to the Project, the Project Site or the Phase 2 Storage Terminal except on arm’s length terms and for full market value or better.
18.6 | Negative pledge |
18.6.1 | Except as permitted by the Finance Documents, the Company shall not: |
(a) | without the prior written consent of the Investment Agent: |
(i) | sell, transfer or otherwise dispose of any of its assets on terms whereby they are or may be leased to or re-acquired by a related entity; |
(ii) | sell, transfer or otherwise dispose of any of its receivables on recourse terms: |
(iii) | enter into any arrangement under which money or the benefit of a bank or other account may be applied, set-off or made subject to a combination of accounts; or |
(iv) | enter into any other preferential arrangement having a similar effect, |
in circumstances where the arrangement or transaction is entered into primarily as a method of raising Financial Indebtedness or of financing the acquisition of an asset, or
(b) | without the prior written consent of the Investment Agent create or permit to subsist any Security over any Secured Property, the Project, the Project Site or the Phase 2 Storage Terminal. |
18.6.2 | Clause 18.6.1 does not apply to any Security or (as the case may be) Quasi-Security which is a Permitted Security. |
18.7 | Merger |
Other than where undertaken in preparation for an IPO Event, the Company shall not enter into any amalgamation, demerger, merger or corporate reconstruction or any joint venture or partnership agreement without the prior written consent of the Investment Agent.
18.8 | Change of business |
The Company shall ensure that no substantial change is made to the general nature of its business from that carried on at the date of this Agreement.
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18.9 | Loans or credit |
The Company shall not make any loans or grant any credit to or for the benefit of any person, other than in the normal course of its day-to-day trading activities where such loans do not, when aggregated with all such loans made in the Company, exceed AED2,000,000 without the prior written consent of the Investment Agent.
18.10 | Distributions |
Except any payments permitted under the terms of any Finance Document the Company shall not pay, make or declare any dividend, payment or other distribution (each a Distribution) on or in respect of its share capital (or any class of its share capital) to any party unless no Default is continuing or would result from the Distribution.
18.11 | Repayment of Subordinated Shareholder Loans |
The Company shall not repay or prepay any principal amount (or capitalised interest) outstanding under, or interest, fee or charge accrued or due under, any Subordinated Shareholder Loan other than as part of a Distribution permitted in accordance with Clause 18.10 (Distributions).
19 | Independent assessment |
The Investment Agent and the Security Agent have entered into this Agreement in reliance on the representations of each Participant and each Obligor that, and each Participant and the Company warrants to the Investment Agent and the Security Agent on the date of this Agreement that:
(a) | it has not relied on any statement, representation or warranty made by or on behalf of the Investment Agent or the Security Agent as to the Shari’ah compliance of the transactions contemplated by the Finance Documents or any of them; and |
(b) | it has independently made its own assessment as to whether such transactions are compliant with the Shari’ah. |
20 | Accounts |
20.1 | Appointment of Account Bank |
20.1.1 | The Company: |
(a) | appoints First Abu Dhabi Bank PJSC as Account Bank in relation to each Account; and |
(a) | authorises First Abu Dhabi Bank PJSC to open and maintain each Account. |
20.1.2 | The Company shall pay to the Account Bank such transaction charges and other fees as the Company and the Account Bank may agree in relation to the operation and maintenance of each Account, provided that such charges and fees shall be consistent with the Account Bank’s normal practice. |
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20.2 | Establishment of Accounts |
20.2.1 | The Company shall ensure that: |
(a) | on or before the date of this Agreement, it establishes with the Account Bank and maintains in accordance with the requirements of this Agreement each Account; and |
(b) | it does not without the prior written consent of the Investment Agent, open or maintain any account with any bank or financial institution except: |
(i) | each Phase 1 Account; |
(ii) | each Account; and |
(iii) | provided that Security is granted over such account in favour of the Security Agent, such other accounts notified in writing by the Company to the Investment Agent. |
20.2.2 | The terms of this Agreement shall override (to the extent of any inconsistency) any other terms agreed between the Company and the Account Bank in relation to the maintenance and operation of each Account. |
20.3 | Payment of Terminal Revenues |
20.3.1 | The Company shall procure that: |
(a) | all Terminal Revenues are paid directly into the Collection Account; and |
(b) | instructions are provided to the Account Bank to, each month: |
(i) | pay the Project Expenses; and |
(ii) | transfer to the Facility Service Reserve Account such amount as is necessary to cause the balance of the Facility Service Reserve Account to equal the Required FSRA Balance. |
20.3.2 | Other than a withdrawal made in accordance with this Clause 20.3.1, no withdrawal may be made from the Collection Account other than: |
(a) | for payment of any amount due to any Finance Party under any Finance Document; or |
(b) | for any other purpose provided no Default is continuing or would arise as a result of the relevant withdrawal. |
20.4 | Facility Service Reserve Account |
20.4.1 | The Company shall procure that, on each date falling 5 days prior to a Rental Payment Date, the Facility Service Reserve Account is credited with an amount equal to no less than: |
(a) | the sum (without double counting) of the Rental Payment and all Related Finance Charges due on the next Rental Payment Date; or |
(b) | if an IPO Event has occurred, the sum (without double counting) of the Rental Payment and all Related Finance Charges due on the next two Rental Payment Dates, |
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in each case as estimated by the Investment Agent and confirmed to the Company from time to time (the Required FSRA Balance).
20.4.2 | The Company shall procure that instructions are provided to the Account Bank, on the date falling three Business Days prior to each Rental Payment Date, to withdraw on that Rental Payment Date from the Facility Service Reserve Account the amounts then due in payment of accrued and outstanding Advance Rental Payments and Rental Payments on that date to the extent the amount to be applied pursuant to Clause 20.3.2(a) is insufficient to pay all amounts then due. |
20.4.3 | If, at any time on or after the FSRA Funding Date the amount standing to the credit of the Facility Service Reserve Account is less than the Required FSRA Balance, the Company shall, within 30 days, procure that the amount standing to the credit of the Facility Service Reserve Account is increased to an amount equal to the Required FSRA Balance. |
20.5 | Withdrawals during a Default |
At any time when an Event of Default is continuing, the Company irrevocably authorises the Account Bank to act on the instructions of the Investment Agent and/or Security Agent and, to the exclusion of the Company, to:
(a) | operate each Account in accordance with this Agreement; and |
(b) | apply the monies standing to the credit of an Account in payment of any amount due but unpaid to a Secured Party under the Finance Documents. |
20.6 | Miscellaneous |
20.6.1 | Other than as permitted pursuant to the terms of the Finance Documents, no withdrawal shall be made from any Account without the prior written consent of the Investment Agent. |
20.6.2 | No withdrawal shall be made from any Account if it would cause such account to be overdrawn. |
20.6.3 | No Finance Party is responsible or liable to the Company for: |
(a) | any non-payment of any liability of the Company which could be paid out of monies standing to the credit of an Account; or |
(b) | any withdrawal wrongly made, if made in good faith. |
20.6.4 | The Company must, within five Business Days of any request by the Investment Agent, supply the Investment Agent with the following information in relation to any payment received into an Account: |
(a) | the date of payment or receipt; |
(b) | the payer; and |
(c) | the purpose of the payment or receipt. |
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20.7 | Statements |
Promptly at the request of the Investment Agent (acting on the instructions of any Participant), the Company shall supply to the Investment Agent statements showing all payments into and out of each Account for any calendar month.
20.8 | Change of Account Bank |
20.8.1 | The Account Bank may be changed to another bank or financial institution authorised to accept deposits in the UAE approved by the Investment Agent (acting on the instructions of the Majority Participants) if the Investment Agent (acting on the instructions of the Majority Participants) so agrees and must be changed if: |
(a) | the Investment Agent (acting on the instructions of the Majority Participants) requires; or |
(b) | an Account Bank resigns on notice to the Company and the Investment Agent. |
20.8.2 | A change of Account Bank only becomes effective when: |
(a) | the proposed new Account Bank executes and delivers to the Security Agent a duly completed accession undertaking in form and substance satisfactory to the Investment Agent (acting on the instructions of the Majority Participants); and |
(b) | the Company provides to the Security Agent copies of all notices and acknowledgements that are required to be delivered by the Company and/or the new Account Bank under the relevant Transaction Security Document as conditions to the effectiveness of the change of Account Bank. |
20.8.3 | If there is a change of Account Bank, the Company shall procure that the amount (if any) standing to the credit of the Accounts maintained with the old Account Bank will be transferred to the corresponding Shari’a compliant account opened and maintained with the new Account Bank immediately upon the appointment of the new Account Bank taking effect. |
20.8.4 | The Company must take any action which the Security Agent may reasonably require to facilitate a change of Account Bank and any transfer of credit balances in an Account (including the execution of bank mandate forms). |
21 | Events of Default |
Each of the events or circumstances set out in this Clause 21 is an Event of Default (save for Clause 21.17 (Consequences of an Event of Default) and Clause 21.18 (Rights not exclusive)).
21.1 | Non-payment |
An Obligor does not pay on the due date any amount payable pursuant to a Finance Document at the place at and in the currency in which it is expressed to be payable unless its failure to pay is caused by administrative or technical error and payment is made within three Business Days of its due date.
21.2 | Vital covenants |
21.2.1 | Any requirement of Clause 16 (Financial covenants) is not complied with. |
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21.2.2 | Any requirement of Clause 18.1 (Financial Indebtedness) is not complied with. |
21.2.3 | Clause 20.4.1 is breached and is not remedied within the period set out in Clause 20.4.3. |
21.3 | Other obligations |
An Obligor does not comply with any provision of a Finance Document (other than the Service Agency Agreement) to which it is a party (other than those referred to in Clauses 21.1 (Non- payment) and Clause 21.2 (Vital covenants)) and such breach, if capable of being remedied, is not remedied within five Business Days of the earlier of (i) the Investment Agent giving notice to the relevant Obligor, or (ii) an Obligor becoming aware of the failure to comply.
21.4 | Misrepresentation |
Any representation or statement made or deemed to be made by an Obligor in the Finance Documents to which it is a party or any other document delivered by or on behalf of an Obligor under or in connection with any Finance Document is or proves to have been incorrect or misleading in any material respect when made or deemed to be made and the circumstances giving rise to such breach, if capable of being remedied, are not remedied within seven Business Days of the earlier of:
(a) | the Investment Agent giving notice to the relevant Obligor, and |
(b) | an Obligor becoming aware of the breach. |
21.5 | Cross default |
21.5.1 | Any Financial Indebtedness of an Obligor is not paid when due nor within any originally applicable grace period. |
21.5.2 | Any Financial Indebtedness of an Obligor is declared to be or otherwise becomes due and payable before its specified maturity. |
21.5.3 | Any Financial Indebtedness of an Obligor is declared to be or otherwise becomes due and payable prior to its specified maturity as a result of an event of default (however described). |
21.5.4 | Any commitment for any Financial Indebtedness of an Obligor is cancelled or suspended by a creditor of an Obligor as a result of an event of default (however described). |
21.5.5 | Any creditor of an Obligor becomes entitled to declare any Financial Indebtedness of an Obligor due and payable prior to its specified maturity as a result of an event of default (however described). |
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21.6 | Insolvency |
21.6.1 | Any Obligor is unable or admits inability to pay its debts as they fall due, suspends making payments on any of its debts or, by reason of actual or anticipated financial difficulties, commences negotiations with one or more of its creditors (other than the Finance Parties) with a view to rescheduling any of its indebtedness. |
21.6.2 | The value of the assets of any Obligor is less than its liabilities (taking into account contingent and prospective liabilities). |
21.6.3 | A moratorium is declared in respect of any indebtedness of any Obligor. |
21.7 | Insolvency proceedings |
Any corporate action, legal proceedings or other procedure or step is taken in relation to:
(a) | the suspension of payments, a moratorium of any indebtedness, winding-up, dissolution, administration or reorganisation (by way of voluntary arrangement, scheme of arrangement or otherwise) of any Obligor; |
(b) | a composition, compromise, assignment or arrangement with any creditor (other than the Finance Parties) of any Obligor; |
(c) | the appointment of a liquidator, receiver, administrative receiver, administrator, compulsory manager or other similar officer in respect of any Obligor or any of their assets; or |
(d) | enforcement of any Security over any assets of any Obligor, |
or any analogous procedure or step is taken in any jurisdiction.
This Clause 21.7 shall not apply to any winding-up petition (or analogous procedure or step) which is frivolous or vexatious and is discharged, stayed or dismissed within 20 Business Days of commencement or if earlier, the date on which it is advertised.
21.8 | Creditors’ process |
Any expropriation, attachment, sequestration, distress or execution affects any asset or assets of any Obligor having an aggregate value of AED1,000,000 (or the equivalent in another currency) and is not discharged within 30 days.
21.9 | Unlawfulness |
21.9.1 | It is or becomes unlawful for an Obligor to perform any of its material obligations under the Transaction Document (other than the Service Agency Agreement) to which it is a party. |
21.9.2 | It is or becomes unlawful for any other party to a Project Document other than the Company to perform any of its obligations under the Project Documents to which it is a party. |
21.9.3 | Any obligation or obligations of the Company under any Transaction Documents are not or cease to be legal, valid, binding or enforceable. |
21.9.4 | Any obligation or obligations of a party to a Project Document other than the Company are not or cease to be legal, valid, binding or enforceable. |
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21.9.5 | Any Transaction Document is not or ceases to be in full force and effect or any Transaction Security is not or ceases to be legal, valid, binding, enforceable, effective or perfected or is alleged by a party to it (other than a Finance Party) to be ineffective. |
21.10 | Transaction Documents |
21.10.1 | Any Obligor rescinds or purports to rescind or repudiate any Transaction Document (other than the Service Agency Agreement) to which it is a party in whole or in part. |
21.10.2 | Any other party to a Project Document other than an Obligor: |
(a) | rescinds or purports to rescind or repudiate any Project Document in whole or in part where to do so has or is reasonably likely to have a Material Adverse Effect; or |
(b) | does not comply with any of its obligations under the Project Documents where such non-compliance has or is reasonably likely to have a Material Adverse Effect. |
21.11 | Material Adverse Effect |
Any event or circumstance occurs which has a Material Adverse Effect.
21.12 | Litigation |
Any litigation. arbitration, administrative. governmental, regulatory or other investigation, proceeding or dispute is commenced or threatened in relation to the Transaction Documents or the transactions contemplated in the Transaction Documents or against any Obligor or its assets which if adversely determined have or are reasonably likely to have a Material Adverse Effect.
21.13 | Lessee Event of Default |
A Lessee Event of Default occurs.
21.14 | Project Lease and control |
21.14.1 | The Company ceases to lease the Project Site as lessee under the Lease. |
21.14.2 | The Company ceases to control all or any part of the Project Site. |
21.15 | Abandonment |
The Company or the Contractor abandons or suspends for a period exceeding 30 days, the construction or operation of all or a material part of the Project or evidences an intention to do so save where a suspension occurs in order to preserve the Project or the safety of individuals and does not last for more than 45 days.
21.16 | Completion |
21.16.1 | The Completion Date Certificate has not been issued on or before the Projected Completion Date. |
21.16.2 | The Completion Date does not occur on or before the Projected Completion Date. |
21.16.3 | Any Project Document terminates without the prior written consent of the Investment Agent where such termination has or could reasonably be expected to have a Material Adverse Effect. |
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21.17 | Consequences of an Event of Default |
21.17.1 | On and at any time after the occurrence of an Event of Default, the Investment Agent and/or the Security Agent may by notice to the Company: |
(a) | exercise its rights under the Purchase Undertaking; |
(b) | exercise its rights under the Transaction Security Documents; and/or |
(c) | take possession of all or some of the Leased Asset. |
21.17.2 | If an Event of Default is continuing and is capable of remedy, the Company may apply any amount standing to the credit of the Facility Service Reserve Account which is in excess of the Required FSRA Balance towards the remedy of that Event of Default provided that, following any such application, the amount standing to the credit of the Facility Service Reserve Account shall be at least equal to the Required FSRA Balance as is applicable at that time. |
21.18 | Rights not exclusive |
The rights of the Investment Agent pursuant to Clause 21.17 (Consequences of an Event of Default) are exclusive of and in addition and not dependent upon the exercise by the Investment Agent of any right or entitlement arising:
(a) | under any other Finance Document; |
(b) | under any other relevant document; or |
(c) | at law. |
22 | Fees |
22.1 | Arrangement fee |
The Company shall pay to the Investment Agent (for the account of the Arranger) an arrangement fee in the amount and at the times agreed in a Fee Letter.
22.2 | Structuring and underwriting fee |
The Company shall pay to the Investment Agent (for the account of the Arranger) a structuring and underwriting fee in the amount and at the times agreed in a Fee Letter.
22.3 | Security agency fee |
The Company shall pay to the Security Agent (for its own account) a security agency fee in the amount and at the times agreed in a Fee Letter.
22.4 | Investment agency fee |
The Company shall pay to the Investment Agent (for its own account) an investment agency fee in the amount and at the times agreed in a Fee Letter.
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23 | Costs and expenses |
23.1 | Finance Documents |
The Company shall on demand of the Investment Agent reimburse the Investment Agent (for the account of each relevant Secured Party) for all actual costs and expenses (including legal fees and out of pocket expenses) reasonably and properly incurred by a Secured Party in connection with the negotiation, preparation and execution of each Finance Document and the completion of the transactions contemplated by the Finance Documents.
23.2 | Other costs and expenses |
The Company shall on demand of the Investment Agent, reimburse the Investment Agent (for the account of each relevant Secured Party) for all reasonably and properly incurred actual costs and expenses (including legal fees and out of pocket expenses) incurred in or in connection with any amendment, waiver, approval, consent or suspension of any rights (or any proposal in relation to the foregoing) requested on behalf of the Company or any other party and relating to a Finance Document or the preservation and/or enforcement of any of its rights under any Finance Document.
23.3 | Management time and additional remuneration |
23.3.1 | Any amount payable to Security Agent under Clause 24.4 (Indemnity to the Security Agent) or the Investment Agent under Clause 24.3 (Indemnity to the Investment Agent) and this Clause 23.3.1 shall include the cost of utilising the Security Agent’s or Investment Agent’s, as relevant, management time or other resources and will be calculated on the basis of such reasonable daily or hourly rates as the Security Agent or Investment Agent, as relevant, may notify to the Company, and is in addition to any other fee paid or payable to the Security Agent or Investment Agent. |
23.3.2 | Without prejudice to Clause 23.3.1, in the event of: |
(a) | a Default: |
(b) | the Security Agent or the Investment Agent being requested by an Obligor or the Majority Participants to undertake duties which the Security Agent or the Investment Agent, as relevant, and the Company agree to be of an exceptional nature or outside the scope of the normal duties of the Security Agent or the Investment Agent, as relevant, under the Finance Documents; or |
(c) | the Security Agent or the Investment Agent, as relevant, and the Company agreeing that it is otherwise appropriate in the circumstances, |
the Company shall pay to the Security Agent or the Investment Agent, as relevant, any additional remuneration that may be agreed between them or determined pursuant to Clause 23.3.3.
23.3.3 | If the Security Agent or the Investment Agent, as relevant, and the Company fail to agree upon the nature of the duties, or upon the additional remuneration referred to in Clause 23.3.2 or whether additional remuneration is appropriate in the circumstances, any dispute shall be determined by an investment bank (acting as an expert and not as an arbitrator) selected by the Security Agent or the Investment Agent. as relevant, and approved by the Company or, failing approval, nominated (on the application of the Security Agent or the Investment Agent, as relevant) by the President for the time being of the Law Society of England and Wales (the costs of the nomination and of the investment bank being payable by the Company) and the determination of any investment bank shall be final and binding upon the Parties. |
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23.4 | Enforcement and preservation costs |
The Company shall on demand of the Investment Agent pay to the Investment Agent (for the account of each relevant Secured Party) the amount of all actual costs and expenses (including legal fees and out of pocket expenses) incurred by it in connection with the exercise, enforcement, preservation or protection of any rights, or any step taken with a view to such exercise, enforcement, preservation or protection, under any Finance Document and the Transaction Security and any proceedings instituted by or against a Secured Party as a consequence of taking or holding the Transaction Security or enforcing these rights, or the investigation of any possible Default.
23.5 | Obligor fails to comply |
If an Obligor fails to comply with any provision of any Finance Document to which it is a party, the Investment Agent shall have the right, but not the obligation, to effect compliance on behalf of such Obligor. In that event, the Company shall on demand reimburse the Investment Agent for all actual costs and expenses paid by each Finance Party in effecting such compliance and indemnify and keep indemnified each Finance Party against any and all actual claims, demands, losses, actions, suits, damages and liabilities of whatsoever nature arising out of or in connection with any such failure or omission excluding opportunity loss and cost.
24 | Indemnification and late payment |
24.1 | Currency indemnity |
24.1.1 | If any sum due from any Obligor under the Finance Documents to which it is a party (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 |
(a) | making or filing a claim or proof against any Obligor; and/or |
(b) | obtaining or enforcing an order, judgment or award in relation to any litigation or arbitration proceedings, |
the Company shall as an independent obligation, within three Business Days of demand, indemnify the Investment Agent or Security Agent (as relevant) against any actual 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 spot rate or rates of exchange available to that person at the time of its receipt of that Sum.
24.1.2 | Each Obligor waives any right it may have in any jurisdiction to pay any amount under the Finance Documents to which it is a party in a currency or currency unit other than that in which it is expressed to be payable. |
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24.2 | Other indemnities |
24.2.1 | The Company shall, within three Business Days of demand, indemnify each Secured Party to the fullest extent permitted by law and hold it harmless against any actual cost, loss or liability incurred by a Secured Party as a result of: |
(a) | the act or omission of an Obligor (or person for whom an Obligor is responsible) in relation to the Leased Asset; |
(b) | the protection and defence of a Finance Party’s right and interest in and to the Leased Asset; |
(c) | an Obligor’s actual liability under or breach of Environmental Laws including any actual liability under or breach of any conditions, obligations and requirements of any Authorisation; and |
(d) | the occurrence of any Event of Default, |
with any excess amount following full indemnification pursuant to this Clause being promptly returned to the Company.
24.3 | Indemnity to the Investment Agent |
The Company shall, within three Business Days of demand, indemnify the Investment Agent to the fullest extent permitted by law and hold it harmless against any actual cost, loss or liability incurred by the Investment Agent as a result of:
(a) | any actual cost, loss or liability incurred by the Investment Agent as a result of: |
(i) | investigating any event which it reasonably believes is a Default; or |
(ii) | acting or relying on any notice, request or instruction which it reasonably believes to be genuine, correct and appropriately authorised; or |
(iii) | instructing lawyers, accountants, tax advisers, surveyors or other professional advisers or experts as permitted under the Finance Documents; and |
(b) | any actual cost, loss or liability incurred by the investment Agent in acting as Investment Agent under the Finance Documents. |
24.4 | Indemnity to the Security Agent |
24.4.1 | The Company shall, within three Business Days of demand, indemnify the Security Agent to the fullest extent permitted by law and hold it harmless against any actual cost, loss or liability incurred by the Security Agent as a result of: |
(a) | any failure by the Company to comply with its obligations under Clause 22 (Costs and expenses); |
(b) | acting or relying on any notice, request or instruction which it reasonably believes to be genuine, correct and appropriately authorised; |
(c) | the taking, holding, protection or enforcement of the Transaction Security, |
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(d) | the exercise of any of the rights, powers, discretions, authorities and remedies vested in the Security Agent and each Receiver and Delegate by the Finance Documents or by law; |
(e) | any default by any Obligor in the performance of any of the obligations expressed to be assumed by it in the Finance Documents; or |
(f) | acting as Security Agent, Receiver or Delegate under the Finance Documents or which otherwise relates to any of the Secured Property |
24.4.2 | The Security Agent and every Receiver and Delegate may, in priority to any payment to the Secured Parties, indemnify itself out of the Secured Property in respect of, and pay and retain, all sums necessary to give effect to the indemnity in this Clause 24.4 and shall have a lien on the Transaction Security and the proceeds of the enforcement of the Transaction Security for all monies payable to it. |
24.5 | Exceptions |
The Company shall not be obliged to indemnify a Secured Party pursuant to Clause 24.1 (Currency indemnity) to Clause 24.4 (Indemnity to the Security Agent) for any actual cost, loss or liability to the extent that any such actual cost, loss or liability arises from the wilful misconduct or gross negligence of the relevant Secured Party or from a material breach by such Secured Party of its obligations under the Finance Documents.
24.6 | Late payment |
If an Obligor fails to pay any amounts payable by it under this Agreement or any of the Finance Documents on its due date (such amount the unpaid amount), then in addition to paying such amount such Obligor shall pay to the Investment Agent an amount equal to 2 per cent per annum of the unpaid amount which shall accrue daily after the due date for payment (such amount the late payment amount). The Investment Agent shall apply the late payment amount as follows:
(a) | in order to indemnify the relevant Finance Party for any actual costs (not any opportunity costs. funding costs and any payments in the nature of interest) it has incurred as a result of such Obligor failing to pay the relevant unpaid amount on the due date for payment, under the supervision of the Fatwa and Shari’ah Supervisory Board; and |
(b) | the balance to the relevant Finance Party for payment to charity under the supervision of the Fatwa and Shari’ah Supervisory Board. |
25 | Early payment and cancellation |
25.1 | Definitions |
For the purposes of this Clause 25, Single Participant Amount means, in relation to a payment to be remitted to a single Participant by the Investment Agent pursuant tor receipt of an early payment under Clause 25.2 (Illegality) or Clause 25.3(Right of payment of a single Participant) an amount in Dirhams equal to the aggregate (without double counting) of:
(i) | a Variable Rental Payment that is equal to A x (B + C) x N/360 where; |
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A | means an amount equal to the relevant outstanding Participation of the relevant Participant; |
B | means the Margin; |
C | means EIBOR; and |
N | means the number of days in the then-current Rental Period up to the date of the relevant early payment; |
(ii) | an amount equal to the relevant outstanding Participation of the relevant Participant; and |
(iii) | an amount equal to any other sum due but unpaid to the relevant Participant under the Finance Documents. |
25.2 | Illegality |
If it becomes unlawful in any jurisdiction for a Participant to perform any of its obligations as contemplated by this Agreement and the other Finance Documents or to fund or maintain its Participation:
(a) | the Participant shall promptly notify the Investment Agent upon becoming aware of that event; |
(b) | the Investment Agent shall notify the Company and upon such notification the Commitment of that Participant will be immediately cancelled; and |
(c) | on the next Advance Variable Rental Payment Date or next Rental Payment Date, as applicable, or, if earlier, the date specified by the Participant in the notice delivered to the Investment Agent (being no earlier than the last day of any applicable grace period permitted by law) the Company shall make an early payment in an amount equal to the Single Participant Amount. |
25.3 | Right of payment of a single Participant |
If:
(a) | any sum payable to any Participant (or to the Investment Agent for the account of any Participant) by the Company is required to be increased under Clause 6.1 (Tax gross- up); |
(b) | any Participant makes a claim under Clause 6.2 (Tax indemnity) or clause 6.8 (Increased Costs claims) of the Master Lease Forward Lease Agreement; or |
(c) | the Investment Agent receives notification pursuant to clause 6.9 (Adjustments to the Variable Rental Payments or Advance Variable Rental Payments) of the Master Lease Agreement, |
on the next Advance Variable Rental Payment Date or next Rental Payment Date, as applicable, the Company may, whilst the circumstance giving rise to the requirement for that increase or claim continues, make an early payment in an amount equal to the Single Participant Amount.
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25.4 | Terminal Earnings |
25.4.1 | Subject to Clause 25.4.3, to the extent Terminal Earnings are standing to the credit of the Collection Account on any Rental Payment Date (each such date an Earnings Sweep Date), the Company on that Earnings Sweep Date shall make an early payment of: |
(a) | Fixed Rental Payments that remain unpaid; and |
(b) | Advance Fixed Rental Payments that remain unpaid, |
in an amount equal to 50 per cent of Terminal Earnings standing to the credit of the Collection Account on that Earnings Sweep Date (the Earnings Sweep Amount).
25.4.2 | The Company shall procure that instructions are provided to the Account Bank, by no later than 3 p.m. on the date falling one Business Day prior to each Earnings Sweep Date, to withdraw on that Earnings Sweep Date Terminal Earnings in an amount equal to the Cash Sweep Amount from the Collection Account in satisfaction of the Company’s obligation to pay that Cash Sweep Amount to the Investment Agent on that Earnings Sweep Date and to apply all such Terminal Earnings in accordance with Clause 5.12 (Insurance and Compensation Proceeds and Terminal Earnings). |
25.4.3 | If: |
(a) | an IPO Event has occurred; and |
(b) | the Company is in compliance with its obligations under clause 20.4.1(b), Clause 25.4.1 shall not apply. |
25.5 | Insurance and Compensation Proceeds |
25.5.1 | To the extent Insurance and Compensation Proceeds are standing to the credit of the Collection Account on any Advance Variable Rental Payment Date, Advance Fixed Rental Payment Date or Rental Payment Date (each such date a Proceeds Sweep Date), the Company on that Proceeds Sweep Date shall make an early payment of: |
(a) | Fixed Rental Payments that remain unpaid; and |
(b) | Advance Fixed Rental Payments that remain unpaid, |
in an amount equal to the amount of Insurance and Compensation Proceeds standing to the credit of the Collection Account on that Proceeds Sweep Date (the Proceeds Sweep Amount).
25.5.2 | The Company shall procure that instructions are provided to the Account Bank, by no later than 3 p.m. on the date falling one Business Day prior to each Proceeds Sweep Date, to withdraw on that Proceeds Sweep Date Insurance and Compensation Proceeds in an amount equal to the Proceeds Sweep Amount from the Collection Account in satisfaction of the Company’s obligation to pay that Proceeds Sweep Amount to the Investment Agent on that Proceeds Sweep Date and to apply all such Insurance and Compensation Proceeds in accordance with Clause 5.12 (Insurance and Compensation Proceeds and Terminal Earnings). |
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25.6 | Voluntary early payment |
The Company may, if it gives the Investment Agent not less than 5 Business Days’ prior notice (or such shorter period as the Majority Participants may agree), make an early payment of:
(a) | Fixed Rental Payments that remain unpaid; and |
(b) | Advance Fixed Rental Payments that remain unpaid. |
on the next Rental Payment Date in a minimum amount of AED10,000,000 and, if above this amount, a multiple of AED2,000,000.
25.7 | Effect of early payments |
Any early payment of:
(a) | Fixed Rental Payments that remain unpaid; and/or |
(b) | Advance Fixed Rental Payments that remain unpaid, shall: |
(i) | be applied towards, and result in, the remaining instalments of Fixed Rental Payments and Advance Fixed Rental Payments being reduced in inverse order of maturity: |
(ii) | result in the cancellation of the Total Commitments by the same amount; and |
(iii) | be treated as an advance payment of the Exercise Price under the Purchase Undertaking or Sale Undertaking, as applicable (an Early Payment Advance) and shall be offset against an amount equal to such Early Payment Advance component of that Exercise Price. |
25.8 | Voluntary cancellation |
25.8.1 | The Company may, if it gives the Investment Agent not less than five Business Day’s prior notice, voluntarily cancel the whole or any part of the Total Commitments. Any such cancellation shall reduce the Commitment of each Participant rateably. |
25.8.2 | Any notice of cancellation under Clause 25.8.1 shall be irrevocable and shall specify the date on which the relevant cancellation is to be made and the amount of the cancellation. |
25.9 | Notices of cancellation or early payment |
Any notice of cancellation or early payment given by any Party under the Finance Documents shall be irrevocable and, unless a contrary indication appears in the Finance Documents, shall specify the date or dates upon which the relevant cancellation or early payment is to be made and the amount of that cancellation or early payment.
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26 | Changes |
26.1 | Transfers by the Participants |
Subject to this Clause 26, a Participant (the Existing Participant) may:
(a) | assign any of its rights and ownership interests; or |
(b) | transfer any of its rights, ownership interests and obligations, |
under the Finance Documents to another bank or financial institution or to a trust, fund or other entity which is regularly engaged in or established for the purpose of making or purchasing investments, securities or other financial assets or for the purposes of a Sukuk (the New Participant).
26.2 | Company notification |
An Existing Participant must provide the Company with no less than 5 Business Days’ prior notice before it makes any assignment or transfer in accordance with Clause 26.1 (Transfers by the Participants) unless the assignment or transfer is:
(a) | on or prior to the date of a Successful Syndication; |
(b) | made at a time when an Event of Default is continuing; |
(c) | to another Participant; or |
(d) | to an Affiliate of a Participant. |
26.3 | Conditions of assignment or transfer |
26.3.1 | An assignment will only be effective on: |
(a) | receipt by the Investment Agent of written confirmation from the New Participant (in form and substance satisfactory to the Investment Agent (an Assignment Agreement)) that the New Participant will assume the same obligations to the other Finance Parties and the other Secured Parties as it would have been under if it had been an Original Participant; and |
(b) | performance by the Investment Agent of all necessary “know your customer” and other similar checks under all applicable laws and regulations in relation to such assignment to a New Participant, the completion of which will be evidenced by the Investment Agent delivering to the Existing Participant and the New Participant a Transfer Certificate or Assignment Agreement (as applicable) countersigned by the Investment Agent. |
26.3.2 | A transfer will only be effective if the procedure set out in Clause 26.6 (Procedure for transfer) is complied with. |
26.3.3 | Each New Participant, by executing the relevant Transfer Certificate or Assignment Agreement confirms, for the avoidance of doubt, that the Investment Agent has authority to execute on its behalf any amendment or waiver that has been approved by or on behalf of the requisite Participant or Participants in accordance with this Agreement on or prior to the date on which the transfer or assignment becomes effective in accordance with this Agreement and that it is bound by that decision to the same extent as the Existing Participant would have been had it remained a Participant. |
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26.4 | Assignment or transfer fee |
The New Participant shall, on the date upon which an assignment or transfer takes effect, pay to the Investment Agent (for its own account) a fee of AED15,000, except where such assignment or transfer is effected as part of a Successful Syndication in which case no fee shall be payable.
26.5 | Limitation of responsibility of Existing Participants |
26.5.1 | Unless expressly agreed to the contrary, an Existing Participant makes no representation or warranty and assumes no responsibility to a New Participant for: |
(a) | the legality, validity, effectiveness, adequacy or enforceability of the Finance Documents, the Transaction Security or any other documents; |
(b) | the financial condition of any Obligor; |
(c) | the performance and observance by any Obligor of its obligations under the Finance Documents or any other documents; or |
(d) | the accuracy of any statements (whether written or oral) made in or in connection with any Finance Document or any other document, and any representations or warranties implied by law are excluded. |
26.5.2 | Each New Participant confirms to the Existing Participant, the other Finance Parties and the Secured Parties that it: |
(a) | has made (and shall continue to make) its own independent investigation and assessment of the financial condition and affairs of any Obligor and its related entitles in connection with its participation in this Agreement and has not relied exclusively on any information provided to it by the Existing Participant in connection with any Finance Document or the Transaction Security; and |
(b) | will continue to make its own independent appraisal of the creditworthiness of any Obligor and its related entities whilst any amount is or may be outstanding under the Finance Documents or any Commitment is in force. |
26.5.3 | Nothing in any Finance Document obliges an Existing Participant to: |
(a) | accept a re-transfer or re-assignment from a New Participant of any of the rights and obligations assigned or transferred under this Clause 25; or |
(b) | support any losses directly or indirectly incurred by the New Participant by reason of the non-performance by any Obligor of its obligations under the Finance Documents or otherwise. |
26.6 | Procedure for transfer |
26.6.1 | Subject to the conditions set out in Clause 26.2 (Conditions of assignment or transfer) a transfer is effected in accordance with Clause 26.6.4 when the Investment Agent executes an otherwise duly completed and duly executed Transfer Certificate delivered to it by the Existing Participant and the New Participant. |
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26.6.2 | The Investment Agent shall, subject to Clause 26.6.3, execute the Transfer Certificate referred to in Clause 26.6.1 on the date of receipt by it of a duly completed Transfer Certificate appearing on its face to comply with the terms of this Agreement and delivered in accordance with the terms of this Agreement. |
26.6.3 | The Investment Agent shall only be obliged to execute a Transfer Certificate delivered to it by the Existing Participant and the New Participant once it is satisfied it has complied with all necessary “know your customer” or other similar checks under its own internal procedures and all applicable laws and regulations in relation to the transfer to such New Participant. |
26.6.4 | On the Transfer Date: |
(a) | to the extent that in the Transfer Certificate the Existing Participant seeks to transfer its rights, ownership interests and obligations under the Finance Documents, each of the Company and the Existing Participant shall be released from further obligations towards one another under the Finance Documents and their respective rights and ownership interests against one another under the Finance Documents shall be cancelled (being the Discharged Rights and Obligations); |
(b) | each of the Company and the New Participant shall assume obligations towards one another and/or acquire rights and ownership interests against one another which differ from the Discharged Rights and Obligations only insofar as that Company and the New Participant have assumed and/or acquired the same in place of each released Obligor and the Existing Participant; |
(c) | the Arranger, the Investment Agent, the Security Agent, the New Participant and the other Participants shall acquire the same rights and assume the same obligations between themselves as they would have acquired and assumed had the New Participant been an Original Participant with the rights and/or obligations acquired or assumed by it as a result of the transfer and to that extent the Arranger, the Investment Agent, the Security Agent and the Existing Participant shall each be released from further obligations to each other under the Finance Documents; and |
(d) | the New Participant shall become a Party as a Participant. |
26.7 | Procedure for assignment |
26.7.1 | Subject to the conditions set out in Clause 26.2 (Conditions of assignment or transfer) an assignment may be effected in accordance with Clause 26.7.4 when the Investment Agent executes an otherwise duly completed and duly executed Assignment Agreement delivered to it by the Existing Participant and the New Participant. |
26.7.2 | The Investment Agent shall, subject to Clause 26.7.3, execute the Assignment Agreement referred to in Clause 26.7.1 on the date of receipt by it of a duly completed Assignment Agreement appearing on its face to comply with the terms of this Agreement and delivered in accordance with the terms of this Agreement. |
26.7.3 | The Investment Agent shall only be obliged to execute an Assignment Agreement delivered to it by the Existing Participant and the New Participant once it is satisfied it has complied with all necessary “know your customer” or other similar checks under its own internal procedures and all applicable laws and regulations in relation to the assignment to such New Participant. |
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26.7.4 | On the Transfer Date: |
(a) | the Existing Participant will assign absolutely all of its rights and ownership interests under the Finance Documents and in respect of the Transaction Security expressed to be the subject of the assignment in the Assignment Agreement; |
(b) | the Existing Participant will be released by each Obligor and the other Finance Parties from the obligations owed by it (the Relevant Obligations) and expressed to be the subject of the release in the Assignment Agreement (and any corresponding obligations by which it is bound in respect of the Transaction Security); and |
(c) | the New Participant shall become a Party as a Participant and will be bound by obligations equivalent to the Relevant Obligations. |
26.8 | Copy of Transfer Certificate or Assignment Agreement to the Company |
The Investment Agent shall, as soon as reasonably practicable after it has executed a Transfer Certificate or Assignment Agreement, send to the Company a copy of that Transfer Certificate or Assignment Agreement.
26.9 | Global Transfer Certificate |
The procedure prescribed for assignment an Existing Participant’s rights and ownership interests, or the transfer of an Existing Participant’s rights, ownership Interests and obligations, to a New Participant under this Clause 0 shall also apply in respect of the Global Transfer Certificate, except that for the purposes of the Global Transfer Certificate each reference to “the New Participant” in this Clause 0 shall be deemed to be a reference to “each New Participant”.
26.10 | Assignments and transfer by Obligors |
No Obligor may assign any of its rights or transfer any of its rights or obligations under the Finance Documents.
27 | “Know your customer” checks |
27.1 | Requests for documentation |
If the Investment Agent, the Security Agent or any Participant (or, in the case of Clause 27.1(c), any prospective new Participant) is obliged by:
(a) | the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation made after the date of this Agreement; |
(b) | any change in the status of an Obligor after the date of this Agreement; or |
(c) | a proposed transfer by a Participant of any of its rights and obligations under this Agreement to a party that is not a Participant before such transfer, |
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to comply with “know your customer” or similar identification procedures in circumstances where the necessary information is not already available to it, the Company shall promptly upon the request of the Investment Agent or any Participant supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Investment Agent (for itself or on behalf of the Security Agent or any Participant) or any Participant (for itself or, in the case of the event described in Clause 27.1(c), on behalf of any prospective new Participant) in order for the Investment Agent, the Security Agent or such Participant or, in the case of the event described in Clause 27.1(c), any prospective new Participant to carry out and be satisfied it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the Finance Documents.
27.2 | Supply of documentation |
Each Participant shall promptly upon the request of the Investment Agent supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Investment Agent (for itself or the Security Agent) in order for the Investment Agent or the Security Agent to carry out and be satisfied it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the Finance Documents.
28 | Language and translation |
28.1 | Any notice given under or in connection with any Finance Document shall be in English. |
28.2 | All other documents provided under or in connection with this Agreement shall be in English unless such document is required by applicable law to be in a language other than English, in which case it shall be accompanied by a translation into English certified by a qualified and/or licensed translator. |
28.3 | In the event that a competent court determines that a version of any document in a language other than English shall prevail, the parties agree that the English version may nevertheless be used to assist in any interpretation of the intentions of the parties. |
29 | Notices |
29.1 | Subject to Clauses 29.2 to 29.4, every notice, request, demand or other communication under or in connection with the Finance Documents shall: |
(a) | be in writing delivered personally, by courier, by prepaid letter or by fax; |
(b) | be deemed to have been received, in the case of a couriered notice or prepaid letter when delivered, and in the case of a fax, when a complete and legible copy is received by the addressee (unless the date of despatch is not a Business Day or the time of despatch of any fax is after the close of business in the UAE in which case it shall be deemed to have been received at the opening of business on the next such Business Day); and |
(c) | be sent to each Party in accordance with the details set out in Schedule 5 (Particulars of communication). |
29.2 | Any communication to be made between any two Parties under or in connection with the Finance Documents may be made by electronic mail or other electronic means to the extent that those two Parties agree that, unless and until notified to the contrary, this is to be an accepted form of communication and if those two Parties: |
(a) | notify each other in writing of their electronic mail address and/or any other information required to enable the sending and receipt of information by that means; and |
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(b) | notify each other of any change to their address or any other such information supplied by them by not less than five Business Days’ notice. |
29.3 | Any electronic communication made between those two Parties will be effective only when actually received in readable form and in the case of any electronic communication made by a Party to the Investment Agent or the Security Agent only if it is addressed in such a manner as the Investment Agent or Security Agent shall specify for this purpose. |
29.4 | Any electronic communication which becomes effective, in accordance with Clause 29.3, after 5.00 p.m. in the place of receipt shall be deemed only to become effective on the following day. For this purpose, the place of receipt of any electronic communication shall be deemed to be the address of the receiving Party in Schedule 5 (Particulars of communication). |
29.5 | Any communication or document made or delivered to the Company in accordance with this Clause 29 will be deemed to have been made or delivered to each Obligor. |
30 | Relationship with other Finance Documents |
30.1 | Relationship with other Finance Documents |
30.1.1 | Various provisions relating to the transactions contemplated by this Agreement are to be found in the other Finance Documents. |
30.1.2 | If there is any inconsistency between the provisions of this Agreement and any other Finance Document, those found in this Agreement shall prevail. |
30.2 | Terms of each Finance Document |
Each Party agrees to be bound by any terms expressed to be assumed by it (in any capacity) in any Finance Document to which it is party.
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31 | Calculations and certificates |
31.1 | Accounts |
In any litigation or arbitration proceedings arising out of or in connection with a Finance Document, the entries made in the accounts maintained by a Finance Party are prima facie evidence of the matters to which they relate.
31.2 | Certificates and determinations |
Any certification or determination by a Finance Party of a rate or amount under any Finance Document is, in the absence of manifest error, conclusive evidence of the matters to which it relates.
31.3 | Day count convention |
Any profit rate (including Variable Rental Payments and Advance Variable Rental Payments), commission or fee accruing under a Finance Document will accrue from day to day and is calculated on the basis of the actual number of days elapsed and a year of 360 days or, in any case where the practice in the London interbank market differs, in accordance with that market practice.
32 | Partial invalidity |
If, at any time, any provision of the Finance Documents is or becomes illegal, invalid or unenforceable in any respect under any law of any jurisdiction, neither the legality, validity or enforceability of the remaining provisions nor the legality, validity or enforceability of such provision under the law of any other jurisdiction will in any way be affected or impaired.
33 | Remedies and waivers |
No failure to exercise, nor any delay in exercising, on the part of any Secured Party, any right or remedy under the Finance Documents shall operate as a waiver, nor shall any single or partial exercise of any right or remedy prevent any further or other exercise or the exercise of any other right or remedy. The rights and remedies provided in the Finance Documents are cumulative and not exclusive of any rights or remedies provided by law.
34 | Counterparts |
Each Finance Document may be executed in any number of counterparts, and this has the same effect as if the signatures on the counterparts were on a single copy of the Finance Document.
35 | Waiver of immunity from suit and enforcement |
Each Obligor irrevocably and unconditionally:
(a) | waives any rights of immunity which it or its assets now has or may subsequently acquire in connection with any legal proceedings against it or its assets in relation to the Finance Documents; and |
(b) | consents generally in respect of any such proceedings to the giving of any relief or the issue of any process in connection with those proceedings, including, without limitation, the making, enforcement or execution against any assets whatsoever (irrespective of its use or intended use) on any order or judgment which may be made or given in those proceedings. |
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36 | Governing law and jurisdiction |
36.1 | Subject to Clause 36.2, this Agreement and all non-contractual obligations arising out of or connected with it shall be governed by, and construed in accordance with, English law. |
36.2 | The Parties agree that the creation and transfer of any proprietary rights of the Parties in relation to the Leased Asset shall be governed by, and construed in accordance with, the laws of Fujairah and the federal laws of the UAE as applied by the UAE federal courts. |
36.3 | Subject to Clause 36.4, the Parties submit, and waive any objection, to the exclusive jurisdiction of the courts of the DIFC to settle any dispute arising out of or in connection with this Agreement (including a dispute relating to the existence, validity or termination of this Agreement or any non-contractual obligation arising out of or in connection with this Agreement) (a Dispute). The Parties agree that the courts of the DIFC are the most appropriate and convenient courts to settle Disputes and accordingly no Party will argue to the contrary. |
36.4 | The Parties agree that the UAE federal courts shall have exclusive jurisdiction to settle any dispute arising out of or in connection with the proprietary rights of the Parties in relation to the Leased Asset. |
36.5 | Notwithstanding Clauses 36.1 to 36.4, the Parties agree that the Finance Parties may take proceedings relating to a Dispute in any other court with jurisdiction. To the extent allowed by law, the Finance Parties may take concurrent proceedings in any number of jurisdictions. |
37 | Shari’ah |
The Parties recognise and agree that the principle of the payment of interest is prohibited under Shari’ah and accordingly, to the extent that any court or legal system would (but for the provisions of this Clause 37) impose (whether by contract or by statute) any obligation to pay interest, the Parties hereby irrevocably and unconditionally expressly waive and reject any entitlement to recover interest from each other
This Agreement is entered into by the Parties on the date stated at the beginning of this Agreement.
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Execution pages of the Common Terms Agreement
The Company | ||
Signed by | ) | |
) | ||
duly authorised for and on behalf of Brooge Petroleum and Gas Investment Company FZC |
) ) ) |
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The Guarantors | ||
Signed by | ) | |
) | ||
duly authorised for and on behalf of Emirates Investments LLC FZC |
) ) |
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Signed by |
) ) |
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duly authorised for and on behalf of Al Brooge Capital Providing for Oil and Gas LLC |
) ) |
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Execution pages of the Common Terms Agreement
The Investment Agent | ||
Signed by | ) |
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) | ||
duly authorised for and on behalf of | ) | |
First Abu Dhabi Bank PJSC | ) | |
in its capacity as Investment Agent for and on | ) | |
behalf of the Participants | ) | |
The Arranger | ||
Signed by | ) | |
) | ||
duly authorised for and on behalf of | ) | |
First Abu Dhabi Bank PJSC | ) | |
in its capacity as Arranger | ) | |
The Security Agent | ||
Signed by | ) |
|
) | ||
duly authorised for and on behalf of | ) | |
First Abu Dhabi Bank PJSC | ) | |
in its capacity as Security Agent for and on | ) | |
behalf of the Participants | ) | |
The Account Bank | ||
Signed by | ) | |
) | ||
duly authorised for and on behalf of | ) | |
First Abu Dhabi Bank PJSC | ) | |
in Its capacity as Account Bank | ) | |
The Original Participant | ||
Signed by | ) | |
) | ||
duly authorised for and on behalf of | ) | |
First Abu Dhabi Bank PJSC | ) |
Execution pages of the Common Terms Agreement
Exhibit 10.59
EXECUTION VERSION
Title Agency Agreement
Dated 15 October 2018
Brooge Petroleum and Gas Investment Company FZC
(the Company)
First Abu Dhabi Bank PJSC
(the Investment Agent)
Dentons & Co Level 4
Trade Centre - West Tower
PO Box 47656 Abu Dhabi United Arab Emirates |
|
Contents
Content (i)
Title Agency Agreement
Dated 15 October 2018
Between
(1) | Brooge Petroleum and Gas Investment Company FZC, a free zone company incorporated under the laws of Fujairah Free Zone, Fujairah, UAE with registration number 13-FZC-1117 and whose principal place of business is at P.O. Box 50170, Fujairah, UAE (the Company); and |
(2) | First Abu Dhabi Bank PJSC, whose principal office is at FAB Building, Khalifa Business Park, Al Qurm District, P.O. Box 6316, Abu Dhabi, UAE acting in its capacity as Investment Agent for and on behalf of the Participants (the Investment Agent). |
Recitals
A. | The Master Istisna’ Agreement and the Master Forward Lease Agreement are being entered into on or around the date of this Agreement. |
B. | The parties wish to acknowledge and confirm that upon payment of the Final Istisna’ Instalment title to the Istisna’ Asset will be held in the name of the Company at the Registry as agent for and on behalf of the Investment Agent in accordance with the terms of this Agreement. |
It is agreed:
1 | Definitions and Interpretation |
1.1 | Definitions |
1.1.1 | Unless the context otherwise requires or unless otherwise defined in this Agreement, words and expressions defined in the Common Terms Agreement (directly or indirectly) shall have the same meaning when used in this Agreement. |
1.1.2 | In addition, in this Agreement: |
Common Terms Agreement means the common terms agreement dated on or about the date of this Agreement between the Company, each Guarantor, the Investment Agent, the Arranger, the Security Agent, the Account Bank and the Original Participant.
Party means any party to this Agreement.
Registry means any governmental authority or free zone in Fujairah, UAE at which title to the Istisna’ Asset is registered from time to time in the name of the Company, including Fujairah Municipality and the Fujairah Free Zone Authority.
1.2 | Interpretation |
The provisions of clauses 1.2 (Interpretation) of the Common Terms Agreement shall apply to this Agreement, mutatis mutandis, as if the same had been set out in full in this Agreement except that references to “this Agreement” in the Common Terms Agreement are to be construed as references to this Agreement.
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1.3 | Third Party Rights |
1.3.1 | Unless expressly provided to the contrary in this Agreement a person who is not a Party has no right to enforce or to enjoy the benefit of any term of this Agreement. |
1.3.2 | Notwithstanding any term of any Finance Document, the Parties may rescind, vary, waive, release, assign, novate or otherwise dispose of all or any of their respective rights or obligations under this Agreement without the consent of any person who is not a Party. |
2 | Declaration regarding registered ownership |
2.1 | The Parties acknowledge and declare that with effect from the date of payment of the Final Istisna’ Instalment, the registered title to the Istisna’ Asset at the Registry is held irrevocably and unconditionally in the name of the Company in the capacity as agent for and on behalf of the Investment Agent. |
2.2 | In order to protect the Investment Agent’s interests under the Master Istisna’ Agreement and/or to ensure that the transactions contemplated hereby and thereby are given full effect, the Company shall take whatever action is required by the Investment Agent, at the cost and expense of the Company, to perfect or otherwise document or complete the formal registration of title to the Istisna’ Asset from the Company to the Investment Agent (including by registering such transfer with any Registry so designated by the Investment Agent for this purpose). |
2.3 | Where the Investment Agent does not wish to perfect title and exercise its rights pursuant to Clause 2.2, title to the Istisna’ Asset shall remain in the name of the Company on the following terms: |
(a) | the registration of title shall be held and maintained by the Company as agent for and on behalf of the Investment Agent and the Company shall not otherwise be regarded as agent of the Investment Agent in any respect whatsoever; |
(b) | the Company acknowledges that its right, title, benefit and interest in and the Istisna’ Asset has been transferred to the Investment Agent in accordance with the Master Istisna’ Agreement and the Company also acknowledges that it is no longer the owner of the Istisna’ Asset; |
(c) | the Investment Agent has an absolute right of disposal in respect of the Istisna’ Asset in any manner whatsoever; and |
(d) | the Company shall not, without the prior written permission of the Investment Agent, take any action that may result in any change in the registration or ownership of the Istisna’ Asset or any Security over the Istisna’ Asset. |
2.4 | The duties of the Company in respect of the Istisna’ Asset under this Clause 2 shall commence upon payment of the Final Istisna’ Instalment pursuant to the Master Istisna’ Agreement and shall terminate upon the Investment Agent disposing of its ownership of the Istisna’ Asset in accordance with the Finance Documents. |
2.5 | The Company shall not resign, nor assign or transfer all or any of its duties or obligations under this Agreement to any other person except with the prior written consent of the Investment Agent. |
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3 | Indemnity |
The Company shall, within five Business Days of demand, indemnify the Investment Agent to the fullest extent permitted by law and hold it harmless against any Losses howsoever incurred by the Investment Agent as a result of any defects, either patent or latent, in any item of the Istisna’ Asset or for the direct or indirect damage to persons or property resulting from any such defects, unless such Losses are incurred as a result of the Investment Agent’s gross negligence or wilful misconduct.
4 | Incorporation of terms |
Clauses 12 (Amendments and waivers), 23 (Costs and expenses), 26 (Changes), 29 (Notices) and 32 (Partial invalidity) of the Common Terms Agreement shall apply to this Agreement, mutatis mutandis, as if the same had been set out in full in this Agreement except that references to “this Agreement” or “the Finance Documents” in the Common Terms Agreement are to be construed as references to this Agreement.
5 | Waiver of immunity from suit and enforcement |
The Company irrevocably and unconditionally:
(a) | waives any rights of immunity which it or its assets now has or may subsequently acquire in connection with any legal proceedings against it or its assets in relation to this Agreement; and |
(b) | consents generally in respect of any such proceedings to the giving of any relief or the issue of any process in connection with those proceedings, including, without limitation, the making, enforcement or execution against any assets whatsoever (irrespective of its use or intended use) on any order or judgment which may be made or given in those proceedings. |
6 | Governing law and jurisdiction |
6.1 | Subject to Clause 6.2, this Agreement and all non-contractual obligations arising out of or connected with it shall be governed by, and construed in accordance with, English law. |
6.2 | The Parties agree that the creation and transfer of any proprietary rights of the Parties in relation to the Istisna’ Asset shall be governed by, and construed in accordance with, the laws of Fujairah and the federal laws of the UAE as applied by the UAE federal courts. |
6.3 | Subject to Clause 6.4, the Parties submit, and waive any objection, to the exclusive jurisdiction of the courts of the DIFC to settle any dispute arising out of or in connection with this Agreement (including a dispute relating to the existence, validity or termination of this Agreement or any non-contractual obligation arising out of or in connection with this Agreement) (a Dispute). The Parties agree that the courts of the DIFC are the most appropriate and convenient courts to settle Disputes and accordingly no Party will argue to the contrary. |
6.4 | The Parties agree that the UAE federal courts shall have exclusive jurisdiction to settle any dispute arising out of or in connection with the proprietary rights of the Parties in relation to the Istisna’ Asset. |
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6.5 | Notwithstanding Clauses 6.1 to 6.4, the Parties agree that the Investment Agent may take proceedings relating to a Dispute in any other court with jurisdiction. To the extent allowed by law, the Investment Agent may take concurrent proceedings in any number of jurisdictions. |
7 | Shari’ah |
The Parties recognise and agree that the principle of the payment of interest is prohibited under Shari’ah and accordingly, to the extent that any court or legal system would (but for the provisions of this Clause 7) impose (whether by contract or by statute) any obligation to pay interest, the Parties hereby irrevocably and unconditionally expressly waive and reject any entitlement to recover interest from each other
This Agreement has been entered into on the date stated at the beginning of this Agreement.
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Execution page of the Title Agency Agreement
The Company | |||
Signed by | ) | ||
) | |||
duly authorised for and on behalf of Brooge Petroleum and Gas Investment Company FZC |
)
) ) |
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The Investment Agent | |||
Signed by
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) ) |
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duly authorised for and on behalf of First Abu Dhabi Bank PJSC in Its capacity as Investment Agent for and on behalf of the Participants |
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) )
)
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Execution page of the Title Agency Agreement
Exhibit 10.60
EXECUTION VERSION
Indemnity Undertaking
Dated 15 October 2018
Brooge Petroleum and Gas Investment Company FZC
(the Company)
in favour of
First Abu Dhabi Bank PJSC
(as Investment Agent)
Dentons & Co Level 4 Trade Centre - West Tower Abu Dhabi Mall PO Box 47656 Abu Dhabi United Arab Emirates |
|
Contents
Indemnity Undertaking
Dated 15 October 2018
By
(1) | Brooge Petroleum and Gas Investment Company FZC, a free zone company incorporated under the laws of Fujairah Free Zone, Fujairah, UAE with registration number 13-FZC-1117 and whose principal place of business is at P.O. Box 50170, Fujairah, UAE (the Company); |
in favour of
(2) | First Abu Dhabi Bank PJSC, whose principal office is at FAB Building, Khalifa Business Park, Al Qurm District, P.O. Box 6316, Abu Dhabi, UAE acting in its capacity as Investment Agent for and on behalf of the Participants (the Investment Agent). |
Recitals
A. | The Common Terms Agreement, Master Forward Lease Agreement, Master Istisna’ Agreement and other Finance Documents are being entered into on or around the date of this Undertaking. |
B. | The Company acknowledges its intention that each Finance Document shall be legal, valid and binding upon each party to each Finance Document, and hereby indemnifies the Investment Agent as set out below. |
The Company undertakes:
1 | Definitions and interpretations |
1.1 | Definitions |
1.1.1 | Unless the context otherwise requires or unless expressly defined in this Undertaking, words and expressions defined in the Common Terms Agreement (whether directly or indirectly) shall have the same meanings in this Undertaking. |
1.1.2 | In addition, in this Undertaking: |
Common Terms Agreement means the common terms agreement dated on or about the date of this Undertaking between the Company, each Guarantor, the Investment Agent, the Arranger, the Security Agent, the Account Bank and the Original Participant.
Exercise Price means an amount equal to the amount calculated under paragraph (a) of the definition “Exercise Price” in the Purchase Undertaking.
1.2 | Interpretation |
The provisions of clauses 1.2 (Interpretation) of the Common Terms Agreement shall apply to this Undertaking, mutatis mutandis, as if the same had been set out in full in this Undertaking except that references to “this Agreement” in the Common Terms Agreement are to be construed as references to this Undertaking.
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1.3 | Third Party Rights |
1.3.1 | Unless expressly provided to the contrary in this Undertaking a person who is not a Party has no right to enforce or to enjoy the benefit of any term of this Undertaking. |
1.3.2 | Notwithstanding any term of any Finance Document, the Parties may rescind, vary, waive, release, assign, novate or otherwise dispose of all or any of their respective rights or obligations under this Undertaking without the consent of any person who is not a Party. |
1.4 | Common Terms Agreement |
1.4.1 | This Undertaking and the rights and obligations of the Parties hereunder are subject to the provisions of the Common Terms Agreement. The provisions of the Common Terms Agreement that are expressed to apply to all Finance Documents apply equally to this Undertaking. |
1.4.2 | In the event of a conflict between the terms of this Undertaking and the terms of the Common Terms Agreement, the terms of the Common Terms Agreement shall prevail. |
2 | Acknowledgment and indemnity |
2.1 | The Company acknowledges and confirms that: |
(a) | it has entered into the relevant Finance Documents with the intention of at all times being bound by their terms; and |
(b) | notwithstanding any failure to register title to the Leased Assets in the name of the Investment Agent or otherwise perfect any of the Finance Documents, the Finance Documents shall be legal, valid and binding on the Company and enforceable against the Company in accordance with their terms. |
2.2 | To the extent that: |
(a) | the sale and purchase, lease or transfer of the Company’s right, title, benefit and interest in any of the Leased Asset pursuant to the Finance Documents; or |
(b) | any other term of any Finance Document, |
in each case, is not effective in any jurisdiction for any reason (an Affected Obligation), the Company hereby agrees:
(i) | it will continue to act in accordance with the terms of the Finance Documents, and in particular shall continue to make any payments to the Investment Agent required by them, as if the Finance Documents were fully binding upon it; and |
(ii) | as an independent obligation, to indemnify the Investment Agent against any actual cost, loss or liability incurred by it or any other Secured Party as a result of such ineffectiveness of such Affected Obligation including, but not limited to, the payment of any Exercise Price. |
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2.3 | Notwithstanding the terms of the Purchase Undertaking, the Company expressly undertakes and declares that if it breaches any declaration or undertaking in the Finance Documents or if it or any other person disputes or challenges the rights, interests, benefits and entitlements of the Investment Agent under the Finance Documents, the Company shall fully indemnify the Investment Agent within five Business Days of demand, it being agreed that the amount payable under any such indemnity will equal the Exercise Price, to the extent that that Exercise Price has not been unconditionally and irrevocably paid by the Company and received by the Investment Agent under the Purchase Undertaking. If any amount of the Exercise Price (or a part thereof) (a Relevant Amount) is or may in any way be subject to any steps, action or proceedings by any person to recover or turnover such Relevant Amount, then the relevant amount payable under this Clause as mentioned above shall be increased by the Relevant Amount. |
The Investment Agent may select if it wishes to pursue a claim against any Company under this Clause 2.3 or clause 5.3 of the Purchase Undertaking and the Company shall not make any objection to such selection and hereby waives any right to do so.
3 | Undertakings |
3.1 | Authorisations |
The Company shall promptly:
(a) | obtain, comply with and do all that is necessary to maintain in full force and effect; and |
(b) | (upon the reasonable request of the Investment Agent) supply certified copies to the Investment Agent of, |
any Authorisation required under any law or regulation of England, Dubai, the DIFC, Fujairah or the UAE to enable it to perform its obligations under this Undertaking, to ensure the legality, validity, enforceability or admissibility in evidence in England, Dubai, the DIFC, Fujairah and the UAE of this Undertaking.
3.2 | Pari passu ranking |
The Company shall ensure that at all times any unsecured and unsubordinated claims of the Investment Agent against the Company under this Undertaking rank in right of priority and payment with the claims of all the Company’s other unsecured and unsubordinated creditors except those creditors whose claims are mandatorily preferred by laws of general application to companies.
4 | Incorporation of terms |
Clauses 12 (Amendments and waivers), 23 (Costs and expenses), 26 (Changes), 29 (Notices) and 32 (Partial invalidity) of the Common Terms Agreement shall apply to this Undertaking, mutatis mutandis, as if the same had been set out in full in this Undertaking except that references to “this Agreement” or “the Finance Documents” in the Common Terms Agreement are to be construed as references to this Undertaking.
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5 | Waiver of immunity from suit and enforcement |
5.1 | The Company irrevocably and unconditionally: |
(a) | waives any rights of immunity which it or its assets now has or may subsequently acquire in connection with any legal proceedings against it or its assets in relation to this Undertaking; and |
(b) | consents generally in respect of any such proceedings to the giving of any relief or the issue of any process in connection with those proceedings, including, without limitation, the making, enforcement or execution against any assets whatsoever (irrespective of its use or intended use) on any order or judgment which may be made or given in those proceedings. |
6 | Governing law and jurisdiction |
6.1 | Subject to Clause 6.2, this Undertaking and all non-contractual obligations arising out of or connected with it shall be governed by, and construed in accordance with, English law. |
6.2 | The Parties agree that the creation and transfer of any proprietary rights of the Parties in relation to the Istisna’ Asset shall be governed by, and construed in accordance with, the laws of Fujairah and the federal laws of the UAE as applied by the UAE federal courts. |
6.3 | Subject to Clause 6.4, the Parties submit, and waive any objection, to the exclusive jurisdiction of the courts of the DIFC to settle any dispute arising out of or in connection with this Undertaking (including a dispute relating to the existence, validity or termination of this Undertaking or any non-contractual obligation arising out of or in connection with this Undertaking) (a Dispute). The Parties agree that the courts of the DIFC are the most appropriate and convenient courts to settle Disputes and accordingly no Party will argue to the contrary. |
6.4 | The Parties agree that the UAE federal courts shall have exclusive jurisdiction to settle any dispute arising out of or in connection with the proprietary rights of the Parties in relation to the Istisna’ Asset. |
6.5 | Notwithstanding Clauses 6.1 to 6.4, the Parties agree that the Investment Agent may take proceedings relating to a Dispute in any other court with jurisdiction. To the extent allowed by law, the Investment Agent may take concurrent proceedings in any number of jurisdictions. |
7 | Shari’ah |
The Parties recognise and agree that the principle of the payment of interest is prohibited under Shari’ah and accordingly, to the extent that any court or legal system would (but for the provisions of this Clause 7) impose (whether by contract or by statute) any obligation to pay interest, the Parties hereby irrevocably and unconditionally expressly waive and reject any entitlement to recover interest from each other
This Undertaking is executed by the Company as a deed and delivered on the date specified at the beginning of this Undertaking.
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Execution page of the Indemnity Undertaking | ||
The Company | ||
Executed as a Deed by | ) | |
) | ||
duly authorised for and | ) | |
on behalf of | ) | |
Brooge Petroleum and Gas Investment | ) |
|
Company FZC | ) |
Execution page of the Indemnity Undertaking
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Exhibit 10.61
Certain identified information has been excluded from the exhibit because it is both not material and would likely cause competitive harm to the registrant if publicly disclosed.
Dated | 13th March 2019 | |
Brooge Petroleum and Gas Investment Company FZE | ||
- and - | ||
SAHARA ENERGY RESOURCES DMCC |
Refinery and Services Agreement
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||
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Hogan Lovells (Middle East) LLP 19th Floor, Al Fattan Currency Tower, Dubai International Financial Centre, PO Box 506602, Dubai, UAE |
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Contents
Hogan Lovells
This Agreement is made this _________ day of March 2019
Between
(1) | Brooge Petroleum and Gas Investment Company FZE, a company incorporated under the laws of the Fujairah Free Zone (commercial registration no. 13-FZC-1117) whose registered office is at P.O. Box 50170, Fujairah Free Zone, United Arab Emirates (“BPGIC”); and |
(2) | SAHARA ENERGY RESOURCES DMCC, a company incorporated under the laws of United Arab Emirates, having its registered office at JLT Reef Tower, Cluster O, Office #2201, PO Box 309082, Dubai, United Arab Emirates (“Sahara”); |
(each a “Party” and together the “Parties”)
Whereas
(A) | Sahara wishes to engage BPGIC on developing and using a refinery unit in Fujairah, United Arab Emirates by providing a parcel of land, and the associated operation and storage services. |
(B) | BPGIC agrees to provide a parcel of its land in Fujairah to Sahara under the terms of a land utilization agreement for the purpose of building a refining unit. |
(C) | Sahara agrees to set up with sub-contractors such refining unit and wishes to engage BGPIC to carry out the Services (as defined in Clause 1). |
(D) | BPGIC agrees to provide the Services in return for the payment by Sahara of fees and expenses in accordance with the terms of this Agreement. |
It is agreed
1. | Definitions |
“Agreement” means this agreement including its recitals and schedules as the same may be amended from time to time.
“Ancillary Agreements” means the Land Utilization Agreement, the Refinery Operations Agreement, the Oil Storage Agreement and any other agreement executed by the Parties pursuant to this Agreement, all of which will have an initial term of 5 years, then a second period of 5 years in Sahara’s option and which, with the mutual agreement of the Parties, may be extended for a further 5 years;
“Applicable Laws” means any federal, emirate, municipal or authority statute, ordinance, regulation, guideline, rule, code, direction or any license, consent, permit, authorisation or other approval, including any conditions attached thereto, of the United Arab Emirates, the Emirate of Fujairah or any public body or authority, local or federal agency, department, inspector, ministry, official or public or statutory person which has appropriate jurisdiction;
“Business Day” means any day excluding Friday and Saturday and any day which shall be a legal holiday or a day on which banking institutions are authorised or required by law or other governmental action to be closed in the United Arab Emirates;
“DIFC” means the Dubai International Financial Centre;
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“Dispute” has the meaning given to it in Clause 20;
“Due Date” has the meaning given to it in Clause 11.3;
“EPC Contract” means the Engineering, Procurement and Construction contract to be entered into between Sahara and an EPC contractor chosen by Sahara for the design, procurement construction and commissioning of the refining unit.
“Effective Date” has the meaning given to it in Clause 14.1;
“Fee” has the meaning given to it in Clause 11.1;
”LCIA” means the London Court of International Arbitration;
“LIBOR” means the London interbank offered rates for deposits in US Dollars administered by ICE Benchmark Administration Limited (“ICE”) (or any other applicable entity which takes over administration of those rates) which appear on the relevant pages of the Reuters Service (currently page LIBOR01) or, if not available, on the relevant pages of any other service (such as Bloomberg Financial Markets Service) that displays such rates; provided that if ICE (or any other applicable entity which takes over administration of those rates) for any reason ceases (whether permanently or temporarily) to publish London interbank offered rates for deposits in US Dollars, “LIBOR” shall be determined by the Parties based on prevailing market practices then in effect;
“Land Utilization Agreement” means the land utilization agreement in the form which is to be agreed by the Parties to be entered into between the Parties in relation to the parcel of land to be allocated to Sahara by BPGIC on the terms set out in Clause 6;
“Minimum Payment” has the meaning given to it in Clause 11.2;
“Oil Storage Agreement” means the oil storage agreement in the form which is to be agreed by the Parties to be entered into by the Parties on the terms set out in Clause 9;
“Phase I” has the meaning given to it in Clause 7.3;
“Refinery” has the meaning given to it in Clause 7.1;
“Refinery Operations Agreement” means the refinery operations agreement in the form to be agreed by the Parties relating to the oil refinery to be built by Sahara on the land granted pursuant to the terms of the Sublease and which will be entered into by the Parties;
“Rules” means the DIFC-LCIA Arbitration Centre Rules as referred to in Clause 20.1;
“Services” means the provision of the land pursuant to the sublease and the services to be performed by BPGIC pursuant to the Oil Storage Agreement and the Refinery Operations Agreement;
“Storage Capacity” has the meaning given to it in Clause 9.2; and
“VAT” means value added tax.
2. | Interpretation |
Words importing the singular only also include the plural and vice versa where the context requires; words and expressions importing the masculine gender include the feminine; reference to person includes any public body and any body of persons incorporate or unincorporated. References to Clauses and to Schedules are references to clauses and schedules of this Agreement.
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3. | Headings |
Clause headings shall be deemed not to be part of the Agreement and shall not be taken into account in the interpretation thereof.
4. | Conditions Precedent |
4.1 | The rights and obligations of the Parties under this Agreement are conditional upon the satisfaction of the conditions precedent set forth below: |
(a) | BPGIC’s Conditions Precedent: |
(i) | BPGIC obtaining all requisite approvals, consents and authorizations required in connection with the Ancillary Agreements and with the construction and the location of the Refinery upon the agreed parcel of land. |
(b) | Sahara’s Conditions Precedent: |
(i) | Sahara obtaining all approvals, consents and authorizations required in connection with its activities as contemplated under and pursuant to the Ancillary Agreements and this Agreement and BPGIC will provide advices and assistance for such process. |
4.2 | In connection with the satisfaction of Clause 4.1 each Party agrees to provide reasonable assistance to the other Party as required. |
4.3 | The Parties agree to provide written confirmation of the satisfaction of the conditions precedent in Clause 4.1 within 2 Business Days upon satisfaction. |
5. | Transaction Timelines |
5.1 | The Parties will procure, insofar as they are able, that all Ancillary Agreements are signed by 31 March 2019. |
5.2 | The Parties will procure, insofar as they are able, that all conditions precedent in Clause 4 are completed by 30 April 2019, unless otherwise mutually agreed by the Parties. |
5.3 | Sahara will procure that the construction of the Refinery is completed by 31 December 2019, subject to Clause 5.4. |
5.4 | If the Refinery is not fully operational by 31 December 2019, the Parties agree to meet on or before said date to discuss the progress of the Refinery construction and, subject to mutual agreement, to revise the date upon which the Refinery must be fully operational. Pursuant to this, Sahara must be able to provide supporting documentation to provide sufficient evidence to satisfy BPGIC that the new operational date will not extend past March 31st 2020. In the event that Sahara is not able to produce such evidence the Parties agree to enter into commercial discussions to agree on a lease rate and lease duration based on the relevant market prices at the time of discussion for the purpose of negotiating a mutually agreed upon lease agreement to allow BPGIC to utilize the Storage Capacity. However, if the Parties are not able to agree on such a lease agreement then BPGIC shall be free to lease the Storage Capacity to a third party. |
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5.5 | For the purposes of Clause 11.6, BPGIC shall be entitled to lease out the Storage Capacity from 31 December 2019, until the date upon which the Refinery is fully operational, subject to both Parties’ timely coordination. |
6. |
Land Utilization |
6.1 | Pursuant to the terms of the Land Utilization, BPGIC agrees to provide a parcel of land to Sahara in Fujairah the area of which to be agreed between the Parties in consultation with a technical advisor to be appointed by Sahara. |
6.2 | The land utilization to Sahara pursuant to the terms of the Land Utilization shall be used by Sahara solely for the purpose of constructing an oil refinery as referred to in Clause 7. |
6.3 | Sahara shall not be required to pay any amounts to BPGIC in excess of the Fee unless otherwise agreed under the Ancillary Agreements. |
7. | Construction of Oil Refinery |
7.1 | Sahara agrees to order the construction of a refining unit (the “Refinery”) and arrange the installation of the Refinery with the assistance of BPGIC on a parcel of land to be allocated by BPGIC in accordance with the Land Utilization Agreement. |
7.2 | All costs associated with the Refinery including financing, procurement, design, construction, insurances, environmental compliances, permits, approvals, commissioning and testing shall be payable by and for the account of Sahara. |
7.3 | Sahara agrees to construct the Refinery in compliance with the relevant laws, regulations and best industry standards to accommodate an initial production capacity of 24,000 barrels per day (“Phase I”). Subject to the agreement of the Parties, which is intended to be increased in one or more phases up to a potential production capacity of 250,000 barrels per day. |
7.4 | Sahara agrees to use and pay for the exclusive use of the Storage Capacity in accordance with the Refinery Operating Agreement. |
7.5 | Sahara agrees that BPGIC shall be the operator of the Refinery for the exclusive use of Sahara in accordance with the Refinery Operating Agreement. |
7.6 | Sahara shall comply with all Applicable Laws relating to the construction, operation, ownership and maintenance of the Refinery. |
7.7 | Following termination of the Land Utilization Agreement, Sahara shall dismantle the Refinery from the land and return the land to BPGIC in an acceptable condition. The Parties may also discuss and agree on any alternative options such as the buyback of the Refinery by BPGIC. |
8. | Refinery Operating Services |
8.1 | BPGIC agrees to provide to Sahara refinery operating services pursuant to the terms and conditions of the Refinery Operations Agreement. |
9. | Oil Storage Services |
9.1 | BPGIC agrees to provide oil storage services pursuant to the terms and conditions of the Oil Storage Agreement. |
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9.2 | The Oil Storage Agreement will provide that BPGIC shall provide a storage capacity (the “Storage Capacity”) of approximately 178,716 cubic metres shell capacity to Sahara, provided in approximately five tanks. |
10. | Storage Contract |
The Parties agree that Sahara intends to enter into a separate storage contract with BPGIC for the storage of 2 million barrels of crude oil, subject to terms and conditions to be mutually agreed between the Parties. For the avoidance, of doubt this contract is not included in the definition of Ancillary Agreements.
11. | Fees and charges |
11.1 | In consideration for BPGIC providing the land pursuant to the Land Utilization and providing the services set out in the Oil Storage Agreement and the Refinery Operating Agreement, Sahara agrees to pay BPGIC a monthly fee (the “Fee”) which will be the higher of: (a) per barrel per day calculated on a monthly basis; or (b) the Minimum Payment. |
11.2 | Sahara agrees to pay BPGIC a minimum fee equal to per year divided over a 12 month period (i.e. per month) (the “Minimum Payment”) regardless of the actual number of barrels stored and refined. |
11.3 | The Fee shall be payable on a monthly basis commencing on the first date of operation of the Refinery and on the first Business Day of each subsequent month (the “Due Date”). |
11.4 | Save for the Fee and any profit share payable and agreed pursuant to Clause 11, the Ancillary Agreements shall not provide for any additional fees to be paid by Sahara to BPGIC. |
11.5 | The fees and charges set out in this Clause 11 may be reviewed every two years on the anniversary of the date of this Agreement but may only be varied with the prior consent of both Parties on an exclusively upwards basis. |
12. | Expenses |
12.1 | In addition to the Fee payable pursuant to Clause 11, within seven days of a written request from BPGIC, Sahara shall pay to BPGIC’s bank account the amount needed by BPGIC to pay or reimburse (as the case may be) the fees and expenses borne by BPGIC, as required in the Refinery Operation Agreement and the Oil Storage Agreement. |
12.2 | Any sum payable and due to BPGIC under the terms of this Agreement which is not paid to BPGIC by the relevant due date shall bear interest at LIBOR plus 2% from the due date until the date on which payment is actually made. |
12.3 | BPGIC shall be entitled to charge Sahara for any services provided to Sahara in addition to those listed in the Ancillary Agreements and any expenses incurred in connection with those services on such basis as shall be agreed by the Parties. |
13. | Profit Sharing |
Sahara and BPGIC agree to share of all profits which Sahara derives from any and all business introduced to Sahara by BPGIC associated with the Refinery unit through its direct or indirect efforts including, but not limited to, oil contracts. The terms of the aforementioned structure will be under a separate profit sharing agreement when such case occurs.
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14. | Duration and Termination |
14.1 | This Agreement shall be deemed to have commenced on the date hereof (the “Effective Date”) and subject to Clause 12.3 shall continue thereafter for a period of five years, with an option for Sahara to renew for five additional years then subsequent period(s) of five years, subject to the Parties’ agreement. |
14.2 | Following satisfaction of the conditions in Clause 4, this Agreement will terminate forthwith on the termination of the Ancillary Agreements. |
14.3 | The Ancillary Agreements will provide that if one agreement is terminated then of the Ancillary Agreements will be automatically terminated. |
14.4 | Termination of this Agreement shall be without prejudice to the rights, obligations and liabilities of the Parties which have accrued prior to the effective date of such termination. |
15. | Confidentiality |
15.1 | Save where such disclosure is necessary for the purpose of carrying out its obligations under this Agreement, neither Party shall, without the prior written consent of the other, disclose to any person any confidential or commercially sensitive information which has come into its possession or which may in the course of this Agreement come into its possession relating to the other Party. |
15.2 | The Parties shall be bound by the provisions of this Clause 15 for the duration of this Agreement and a period of three years thereafter. |
15.3 | The restriction on disclosure contained in Clause 15.1 shall not apply to the disclosure of information: |
(a) | to the extent required by law, regulatory authority, stock exchange which the party is in process of listing in or being listing at, or by an order of court; |
(b) | to any expert engaged by BPGIC and Sahara pursuant to Clause 12.1 where such disclosure is required for the performance of this Agreement; or |
(c) | where the relevant information is or has become available in the public domain (except as result of a breach of this Clause 15). |
16. | Assignment |
16.1 | Neither Party shall assign its rights or transfer its obligations under this Agreement to any other person, firm or company without the prior written consent of the other Party, subject to Clause 16.2. |
16.2 | Sahara shall be able to assign its rights under this Agreement to an affiliate, or a new entity created and owned by Sahara for the purposes of this Agreement, provided such assignment has been approved in advance by BPGIC. |
17. | No partnership or agency |
Nothing in this Agreement shall constitute a partnership between BPGIC and Sahara. Neither BPGIC or its staff shall be agents or employees of Sahara and neither it nor they shall be entitled to bind Sahara or to contract in its name or to create a liability against Sahara save as expressly authorised in writing by Sahara from time to time.
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18. | Notices |
Unless otherwise provided for herein, any notice or other communication to be given under this Agreement shall be in writing and shall be deemed to have been duly served on, given to or made if it is delivered by hand or sent by prepaid mail.
In the case of BPGIC to:
Brooge Petroleum and Gas Investment Company
Address:
P.O. Box 50170,
Fujairah Free Zone
United Arab Emirates
Attention: Nicolaas Paardenkooper, CEO
In the case of Sahara to:
Sahara Energy Resources DMCC Address:
JLT Reef Tower,
Cluster O, Office #2201,
PO Box 309082,
Dubai,
United Arab Emirates
19. | Payments |
19.1 | All sums payable under this Agreement are expressed excluding VAT. The payor shall pay in addition to any such sum the VAT (if any) payable at the rates in force from time to time. |
19.2 | BPGIC shall, from time to time, notify Sahara of its bank account details for payments to be made under this Agreement. |
20. | Arbitration |
20.1 | Any Dispute shall be referred to and finally resolved by arbitration under the DIFC-LCIA Arbitration Centre Rules (the “Rules”) which (save as modified by this Clause 20) are deemed to be incorporated by reference into this Clause 20. Capitalised terms used in this Clause 20 and not otherwise defined in this Agreement have the meanings given to them in the Rules. |
20.2 | The seat, or legal place, of arbitration shall be the Dubai International Financial Centre, Dubai, United Arab Emirates. |
20.3 | The number of arbitrators shall be three. The claimant (or, if more than one claimant, the claimants jointly) shall nominate one arbitrator and the respondent (or, if more than one respondent, the respondents jointly) shall nominate one arbitrator, in each case in accordance with the Rules. The third arbitrator, who will act as a chairperson of the arbitral tribunal, shall be nominated jointly by the two co-arbitrators, provided that if the third arbitrator has not been so nominated within 30 Business Days of the time-limit for service of the response, the third arbitrator shall be appointed by the LCIA Court. |
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21. | Applicable law |
This Agreement and any dispute, difference, controversy or claim arising out of or relating to this Agreement including the negotiation, existence, validity, invalidity, enforceability, breach or termination thereof regardless of whether the same shall be regarded as contractual or not (a “Dispute”), shall be governed by the federal laws of the United Arab Emirates and the law of the Emirate of Fujairah.
22. | Severability |
Should any part, term or provision of this Agreement be judged illegal or in conflict with any law, by a court of competent jurisdiction, the validity of the remaining portions or provisions shall not be affected thereby.
23. | No third party rights |
No person other than a Party may enforce this Agreement.
24. | Variation and amendment |
No variation, supplement, deletion or replacement of or from this Agreement or any of its terms shall be effective unless made in writing and signed by an authorised signatory of each Party.
25. | Miscellaneous |
25.1 | Each Party agrees to act in good faith in dealing with one another pursuant to this Agreement. |
25.2 | Subject to the terms and conditions of this Agreement, each of the Parties will use its commercially reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or desirable, or advisable under applicable laws, so as to permit consummation of this Agreement as promptly as practicable and otherwise to enable execution of the Ancillary Agreements contemplated hereby and shall use commercially reasonable efforts to cooperate with the other Party to that end. |
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Signed by Nicolaas Paardenkooper, CEO | ) | |
for and on behalf of | ) | /s/ Nicolaas Pardenkooper |
Brooge Petroleum and Gas Investment Company FZE | ) | |
Signed by Wale Ajibade, Managing Director | ) | |
for and on behalf of | ) | /s/ Wale Ajibade |
Sahara Energy Resources DMCC | ) |
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Exhibit 10.62
Joint Development Agreement
Dated 14th May 2019
(1) | Brooge Petroleum and Gas Investment Company FZE |
(2) | Sahara Energy Resources DMCC |
Contents
Page | ||
1 | Definitions and Interpretation | 1 |
2 | Incorporation of BPGIC Sahara Energy Alliance FZE | 2 |
3 | License to use the tradename “BPGIC” | 3 |
4 | Ancillary Agreements | 3 |
5 | Timeline | 3 |
6 | Road Map / Next Steps | 3 |
7 | Term | 4 |
8 | This Agreement | 4 |
9 | Confidentiality | 4 |
10 | Assignment | 4 |
11 | Exclusivity | 5 |
12 | No partnership or agency | 5 |
13 | Arbitration | 5 |
14 | Governing Law | 5 |
15 | Severability | 5 |
16 | No third party rights | 5 |
17 | Variation and amendment | 6 |
18 | Miscellaneous | 6 |
i
This Joint Development and Agreement (the “Agreement”)
Dated 14 May 2019
Between
(1) | Brooge Petroleum and Gas Investment Company FZE, a company incorporated under the laws of the Fujairah Free Zone and the United Arab Emirates (commercial registration no. 13-FZC-1117) whose registered office is at PO Box 50170, Fujairah Free Zone, United Arab Emirates (“BPGIC”); and |
(2) | Sahara Energy Resources DMCC, a company incorporated under the laws of Dubai Multi Commodities Centre and United Arab Emirates (commercial license no. 32101) whose registered office is at 2201-C, Reef Tower, JLT, Dubai, United Arab Emirates (“Sahara”). |
(each a “Party” and together the “Parties”)
Whereas
(A) | Pursuant to a Refinery and Services Agreement dated 13 March 2019 (the “RSA”), the Parties have agreed to cooperate together for Sahara to develop a refinery unit in Fujairah, United Arab Emirates (the “Project”). |
(B) | Since the execution of the RSA, the parties have been working closely and in good faith to implement the terms of the RSA towards the development of the Project. |
(C) | During this implementation stage, the parties have identified certain key points and steps that need to be addressed for the purpose of the Project and the execution of the Ancillary Agreements (the “Key Points”). The parties have agreed to enter into this Agreement for the purpose of working together to discuss the Key Points and agreeing a road map to complete the steps necessary for the Project to be operational within the agreed period, as set out in the RSA. |
It is agreed as follows
1 | Definitions and Interpretation |
1.1 | Definitions |
Capitalized terms and expressions not defined in this Agreement shall have the same meaning given to them in the RSA
“Ancillary Agreements” means the Land Utilisation Agreement, the Refinery Operations Agreement and the Oil Storage Agreement as defined under the RSA;
“Business Day” means a day (other than a Friday or Saturday) on which banks are generally open in the UAE for normal business;
“Dispute” has the meaning given to it in Clause 14.1;
“Effective Date” means the date of this Agreement;
“Key Points” has the meaning given to it in recital (C);
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“LCIA” means the London Court of International Arbitration;
“Lease Agreement” means the agreement dated 2 February 2014 between the Fujairah Municipality and BPGIC as novated by the Fujairah Municipality to the Fujairah Oil Industry Zone pursuant to an agreement dated 1 September 2014 between the Fujairah Municipality, the Fujairah Oil Industry Zone and BPGIC;
“Project” has the meaning given to it in recital (A);
“RSA” has the meaning given to it in recital (A); and
“Rules” means the DIFC-LCIA Arbitration Centre Rules.
“Subsidiary” has the meaning given to it in clause 2.1.
1.2 | Interpretation |
1.2.1 | The headings in this Agreement are inserted for convenience only and shall not affect its construction. |
1.2.2 | A reference to a particular law is a reference to it as it is in force for the time being taking account of any amendment, extension, or re-enactment and includes any subordinate legislation for the time being in force made under it. |
1.2.3 | Unless the context otherwise requires, words in the singular include the plural and in the plural include the singular. |
1.2.4 | The table of contents and clause headings are included for the convenience of the Parties only and do not affect the Agreement’s interpretation. |
1.2.5 | References to a Party to this Agreement include the personal representatives, heirs, successors or permitted assigns (immediate or otherwise) of that Party. |
1.2.6 | Any obligation not to do anything shall be deemed to include an obligation not to suffer, permit or cause that thing to be done if it is within the power of the relevant person to prevent that thing being done. |
1.2.7 | Where the words “include(s)”, “including” or “in particular” are used in this Agreement, they are deemed to have the words without limitation following them. Where the context permits, the words other and otherwise are illustrative and shall not limit the sense of the words preceding them. |
2 | Incorporation of BPGIC Sahara Energy Alliance FZE |
2.1 | The Parties have been informed by the Fujairah Free Zone Authority that in order for the Parties to work together towards implementing the Project in the Fujairah Free Zone in accordance with the RSA, Sahara needs to incorporate an entity to be licensed by the Fujairah Free Zone Authority pursuant to the rules thereof (the “Subsidiary”). |
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2.2 | Sahara is in the process of incorporating the Subsidiary with the cooperation of BPGIC and for the avoidance of doubt, as at the operational start date, Sahara shall be the sole owner of the Refinery. |
2.3 | Once incorporated, and upon agreeing on the Key Points, the Parties agree that the Subsidiary will be the owner and developer of the Project, and in that capacity, Sahara will cause the Subsidiary to enter into some or all of the Ancillary Agreements. |
3 | License to use the tradename “BPGIC” |
3.1 | To reflect the strong and strategic relationship between the Parties, Sahara and BPGIC agreed to include their respective names to the name of the Subsidiary, and Sahara has obtained the initial approval of the Fujairah Free Zone Authority and reserved the name of the Subsidiary as ‘BPGIC Sahara Energy Alliance FZE’ whilst at the same time being the sole shareholder of the Subsidiary. |
3.2 | Subject to Clause 3.3, BPGIC (at no cost to Sahara) hereby grants Sahara a royalty free, non-exclusive license to include the tradename “BPGIC” in the name of the Subsidiary and allows the Subsidiary to use the same solely for the purpose of the Project. |
3.3 | In the event of the termination of any of the Ancillary Agreements, Sahara agrees to procure that the Subsidiary shall forthwith remove the initials ‘‘BPGIC’’ from its registered name and shall thereafter cease to use the initials ‘‘BPGIC’’ in its registered name or as a tradename within a reasonable period of time. |
4 | Ancillary Agreements |
4.1 | As identified in the RSA, the Ancillary Agreements need to be agreed and executed between the Parties before the Project commences. |
4.2 | The Parties shall use their best efforts to discuss and resolve the Key Points and finalise the terms of the Ancillary Agreements within the timeline set out in Clause 5. |
5 | Timeline |
5.1 | The Parties agree that the timeline of signing all the Ancillary Agreements by 31 March 2019 as set out in Clause 5.1 the RSA is hereby amended to 1st June 2019 or such later date as may be agreed between the Parties. |
5.2 | The timeline referenced in Clause 5.2 of the RSA for the completion of the conditions precedent as set out in Clause 4 of the RSA is hereby amended to the 1st July 2019. |
5.3 | For the avoidance of doubt all other timelines in the RSA shall remain unchanged. |
6 | Road Map / Next Steps |
6.1 | The Parties have agreed to work together in good faith in order to meet the revised timelines referred to in clause 5 above. |
6.2 | In parallel, the Parties agree to continue their efforts to finalise the incorporation and licensing of the Subsidiary. |
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6.3 | Once the Ancillary Agreements are in agreed form, the Parties will arrange for the execution of each Ancillary Agreement as soon as reasonably possible. |
7 | Term |
7.1 | This Agreement commences on the Effective Date and terminates on the date the RSA is terminated (for whatever reason). |
8 | This Agreement |
8.1 | This Agreement supplements the terms of the RSA in the areas specified in this Agreement. |
8.2 | Except as specifically varied by the terms of this Agreement, the original terms of the RSA shall remain in full force and effect. |
8.3 | In the event of any inconsistency between the terms of this Agreement and the RSA, the terms of this Agreement shall prevail. |
9 | Confidentiality |
9.1 | Subject to both parties agreeing their respective press releases and their announcements to be made at the signing ceremony for this Agreement and where such disclosure is necessary for the purpose of carrying out its obligations under this Agreement, or in accordance with the applicable laws, neither Party shall, without the prior written consent of the other, disclose to any person any confidential or commercially sensitive information which has come into its possession or which may in the course of this Agreement come into its possession relating to the other Party. |
9.2 | The Parties shall be bound by the provisions of this Clause 9 for the duration of this Agreement and a period of three years thereafter. |
9.3 | The restriction on disclosure contained in Clause 9.1 shall not apply to the disclosure of information: |
9.3.1 | to the extent required by law, regulatory authority, stock exchange which the party is in process of listing in or being listing at, or by an order of court; or |
9.3.2 | where the relevant information is or has become available in the public domain (except as result of a breach of this Clause 9). |
10 | Assignment |
10.1 | Neither Party shall assign its rights or transfer its obligations under this Agreement to any other person, firm or company without the prior written consent of the other Party, subject to Clause 10.2. |
10.2 | Sahara shall be able to assign its rights under this Agreement in part or full, to an affiliate, or a new entity created and owned by Sahara for the purposes of this Agreement, provided such assignment has been notified in advance to BPGIC, provided that notwithstanding any such assignment Sahara shall remain liable to fulfil its obligations under this Agreement. |
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11 | Exclusivity |
11.1 | BPGIC agrees that during the Term, it will not enter into an agreement with any third party for the development of a refinery that is designed, or intended to produce the same products as the Refinery, on any of the land leased by BPGIC pursuant to the Lease Agreement, without the mutual written agreement of both Parties. |
12 | No partnership or agency |
12.1 | Nothing in this Agreement shall constitute a partnership between BPGIC and Sahara. Neither BPGIC or its staff shall be agents or employees of Sahara and neither it nor they shall be entitled to bind Sahara or to contract in its name or to create a liability against Sahara save as expressly authorised in writing by Sahara from time to time. |
13 | Arbitration |
13.1 | Any Dispute shall be referred to and finally resolved by arbitration under the DIFC-LCIA Arbitration Centre Rules (the “Rules”) which (save as modified by this Clause 13) are deemed to be incorporated by reference into this Clause 13. |
13.2 | The seat, or legal place, of arbitration shall be the Dubai International Financial Centre, Dubai, United Arab Emirates. |
13.3 | The number of arbitrators shall be three. The claimant (or, if more than one claimant, the claimants jointly) shall nominate one arbitrator and the respondent (or, if more than one respondent, the respondents jointly) shall nominate one arbitrator, in each case in accordance with the Rules. The third arbitrator, who will act as a chairperson of the arbitral tribunal, shall be nominated jointly by the two co-arbitrators, provided that if the third arbitrator has not been so nominated within 30 Business Days of the time-limit for service of the response, the third arbitrator shall be appointed by the DIFC-LCIA. |
14 | Governing Law |
14.1 | This Agreement and any dispute, difference, controversy or claim arising out of or relating to this Agreement including the negotiation, existence, validity, invalidity, enforceability, breach or termination thereof regardless of whether the same shall be regarded as contractual or not (a “Dispute”), shall be governed by the federal laws of the United Arab Emirates. |
15 | Severability |
15.1 | Should any part, term or provision of this Agreement be judged illegal or in conflict with any law, by a court of competent jurisdiction, the validity of the remaining portions or provisions shall not be affected thereby. |
16 | No third party rights |
16.1 | No person other than a Party may enforce this Agreement. |
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17 | Variation and amendment |
17.1 | No variation, supplement, deletion or replacement of or from this Agreement or any of its terms shall be effective unless made in writing and signed by an authorised signatory of each Party. |
18 | Miscellaneous |
18.1 | Each Party agrees to act in good faith in dealing with one another pursuant to this Agreement. |
18.2 | Subject to the terms and conditions of this Agreement, each of the Parties will use its commercially reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or desirable, or advisable under applicable laws, so as to permit consummation of this Agreement as promptly as practicable and otherwise to enable execution of the Ancillary Agreements contemplated hereby and shall use commercially reasonable efforts to cooperate with the other Party to that end. |
Signatures Page
Signed by Nicolaas Paardenkooper duly authorised for and on behalf of Brooge Petroleum and Gas Investment Company FZE | /s/ Nicolaas Paardenkooper | |
Authorised Signatory |
Signed by Wale Ajibade duly authorised for and on behalf of Sahara Energy Resources DMCC | /s/ Wale Ajibade | |
Manager/Director |
Page 6
Exhibit 10.63
Addendum to Joint Development Agreement
Dated | 1 June 2019 |
(1) | Brooge Petroleum and Gas Investment Company FZE |
(2) | Sahara Energy Resources DMCC |
This Addendum to Joint Development Agreement is made on the 1st day of June 2019 (“Addendum”)
Between:
(1) | Brooge Petroleum and Gas Investment Company FZE, a company incorporated under the laws of the Fujairah Free Zone and the United Arab Emirates (commercial registration no. 13-FZC-1117) whose registered office is at PO Box 50170, Fujairah Free Zone, United Arab Emirates (“BPGIC”); and |
(2) | Sahara Energy Resources DMCC, a company incorporated under the laws of Dubai Multi Commodities Centre and United Arab Emirates (commercial license no. 32101) whose registered office is at 2201-C, Reef Tower, JLT, Dubai, United Arab Emirates (“Sahara”). |
(each a “Party” and together the “Parties”)
Whereas:
(A) | On 14 May 2019, the Parties entered into a Joint Development Agreement wherein the Parties have agreed to cooperate together for Sahara to develop a refinery unit in Fujairah, United Arab Emirates (the “Agreement”); and |
(B) | The Parties have agreed to supplement the Agreement to extend the timeline of signing all the Ancillary Agreements to 19th June 2019 or such later date as may be agreed between the Parties. |
(C) | These Recitals form part of the Addendum to the Agreement. |
It is agreed:
1 | Definitions and Interpretation |
1.1 | Unless otherwise expressly stated herein, words and expressions defined and references contained in the Agreement shall have the same meanings and interpretation in this Addendum. |
2 | Extension of Timeline |
2.1 | Pursuant to Clause 5.1 of the Agreement, the Parties have mutually agreed to extend the timeline of signing all the Ancillary Agreements till 19 June 2019 or such later date as may be agreed between the Parties starting from the date of signing of this Addendum. |
3 | General |
3.1 | The remaining clauses of the Agreement shall remain effective and binding upon the Parties in respect of matters not covered herein. |
3.2 | Except as otherwise provided, the Parties shall each bear their own costs and expenses incurred in complying with their obligations under this Addendum. |
3.3 | The invalidity or unenforceability of any portion or portions of this Addendum shall in no way affect the validity or enforceability of any other portion or provision hereof. Any invalid or unenforceable portion or provision shall be deemed severed from this Addendum and the balance of this Addendum shall be construed and enforced as if this Addendum did not contain such invalid or unenforceable portion or provision. |
Page 1
3.4 | This Addendum may be executed in any number of counterparts, and this has the same effect as if the signatures on the counterparts were on a single copy of this Addendum. |
3.5 | This Addendum may only be varied by written agreement of both Parties. |
3.6 | This Addendum, the Agreement and the RSA constitutes the entire agreement and there are no oral or other representations regarding the subject of this Addendum and Agreement that are binding on either party. |
3.7 | It is agreed between the Parties that time is of the essence in the performance of each Party’s obligations under the Agreement and this Addendum. |
This Addendum was signed on the date mentioned above and its provisions shall come into force from the date of signing hereof.
Signed by Nicolaas Paardenkooper duly authorised for and on behalf of Brooge Petroleum and Gas Investment Company FZE | /s/ Nicolaas Paardenkooper | |
Authorised Signatory |
Signed by Wale Ajibade duly authorised for and on behalf of Sahara Energy Resources DMCC | /s/ Wale Ajibade | |
Manager/Director |
Page 2
Exhibit 10.64
Second Addendum to Joint Development Agreement
Dated | July 2019 |
(1) | Brooge Petroleum and Gas Investment Company FZE |
(2) | Sahara Energy Resources DMCC |
This Second Addendum to Joint Development Agreement is made on the [ ] day of July 2019 (“Addendum”)
Between:
(1) | Brooge Petroleum and Gas Investment Company FZE, a company incorporated under the laws of the Fujairah Free Zone and the United Arab Emirates (commercial registration no. 13-FZC-1117) whose registered office is at PO Box 50170, Fujairah Free Zone, United Arab Emirates (“BPGIC”); and |
(2) | Sahara Energy Resources DMCC, a company incorporated under the laws of Dubai Multi Commodities Centre and United Arab Emirates (commercial license no. 32101) whose registered office is at 2201-C, Reef Tower, JLT, Dubai, United Arab Emirates (“Sahara”). |
(each a “Party” and together the “Parties”)
Whereas:
(A) | On 14 May 2019, the Parties entered into a Joint Development Agreement wherein the Parties have agreed to cooperate together for Sahara to develop a refinery unit in Fujairah, United Arab Emirates (the “Agreement”); and |
(B) | On 1 June 2019, the Parties entered into an Addendum to the Joint Development Agreement to extend the timeline of signing all the Ancillary Agreements to 19 June 2019. |
(C) | The Parties have agreed to supplement the Agreement and the Addendum to further extend the timeline of signing all the Ancillary Agreements from 19 June 2019 to 10 July 2019 or such later date as may be agreed between the Parties. |
(D) | The Parties have further agreed to supplement the Agreement to extend the timeline for the completion of the conditions precedent from 10 July 2019 to 1 August 2019. |
(E) | These Recitals form part of the Addendum to the Agreement. |
It is agreed:
1 | Definitions and Interpretation |
1.1 | Unless otherwise expressly stated herein, words and expressions defined and references contained in the Agreement shall have the same meanings and interpretation in this Addendum. |
2 | Extension of Timeline |
2.1 | Pursuant to Clause 5.1 of the Agreement, the Parties have mutually agreed to extend the timeline of signing all the Ancillary Agreements till 1 August 2019 or such later date as may be agreed between the Parties starting from the date of signing of this Addendum. |
2.2 | Pursuant to Clause 5.2 of the Agreement, the Parties have mutually agreed to extend the timeline for completion of the conditions precedent to 1 August 2019 or such later date as may be agreed between the Parties starting from the date of signing of this Addendum. |
Page 1
3 | General |
3.1 | The remaining clauses of the Agreement shall remain effective and binding upon the Parties in respect of matters not covered herein. |
3.2 | Except as otherwise provided, the Parties shall each bear their own costs and expenses incurred in complying with their obligations under this Addendum. |
3.3 | The invalidity or unenforceability of any portion or portions of this Addendum shall in no way affect the validity or enforceability of any other portion or provision hereof. Any invalid or unenforceable portion or provision shall be deemed severed from this Addendum and the balance of this Addendum shall be construed and enforced as if this Addendum did not contain such invalid or unenforceable portion or provision. |
3.4 | This Addendum may be executed in any number of counterparts, and this has the same effect as if the signatures on the counterparts were on a single copy of this Addendum. |
3.5 | This Addendum may only be varied by written agreement of both Parties. |
3.6 | This Addendum, the Agreement and the RSA constitutes the entire agreement and there are no oral or other representations regarding the subject of this Addendum and Agreement that are binding on either party. |
3.7 | It is agreed between the Parties that time is of the essence in the performance of each Party’s obligations under the Agreement and this Addendum. |
This Addendum was signed on the date mentioned above and its provisions shall come into force from the date of signing hereof.
Signed by Nicolaas Paardenkooper duly authorised for and on behalf of Brooge Petroleum and Gas Investment Company FZE | /s/ Nicolaas Paardenkooper | |
Authorised Signatory |
Signed by Wale Ajibade duly authorised for and on behalf of Sahara Energy Resources DMCC | /s/ Wale Ajibade | |
Manager/Director |
Page 2
Exhibit 10.65
Date: 27/05/2019
To: Mr. Saleh Mohamed Yammout
Dear Sir,
With reference to your job interview and the following discussions; we have the pleasure to submit our official work proposal as per the following terms and conditions:
Position:
You’ll work in the position of Chief Financial Officer.
Responsibilities:
You will report to the CEO or representative thereof.
Work Place:
Abu Dhabi - UAE and, you may be transferred to any other branch/ location within UAE as per the work needs pursuant to a notification to be submitted to you. You may be delegated on behalf of the company to different locations and countries if necessary.
Working Hours:
From Sunday to Thursday: From 8:30 am to 4:30 pm
Fridays & Saturdays are days off
Working hours may be changed from time to time as per the work requirements.
Date of commencement: From 27/ 05/2019
Benefits:
You will receive a total monthly salary of Sixty-Five Thousand Dirhams only (AED 65,000). The aforementioned salary includes: (basic salary & other allowances) as per the following:
a- Basic Salary:
The basic salary included in the above mentioned gross salary is Thirty Two Thousand and Five Hundred Dirhams only (AED 32,500).
Abu Dhabi, UAE
Tel + 971 2 633 3149
Fax + 971 2 633 3152
b- Other Allowances:
The remainder of the gross salary of Thirty-Two Thousand and Five Hundred Dirhams (AED 32,500) shall be distributed by the Employee for all other allowances as per the Employee’s personal preference.
Other Benefits Offered by the Company:
a. | Annual leave: |
You’ll be entitled to an annual leave of 30 payable days after the completion of 12 month as of the date of employment.
b. | Travel tickets: |
Business Class travel ticket for you and your wife to your home country after one year as of the date of employment.
c. | Medical Insurance: |
The company will provide medical insurance as per UAE Fujairah Law.
Bonuses:
You may be provided with bonuses based on your performance and company’s evaluation and sole discretion.
Termination of Service:
The Notice Period will be one month notice by either party for employment termination.
Return of Company Property
Upon the termination of your employment, for any reason whatsoever, you must immediately deliver up to the Company all correspondence, documents, papers, memoranda, notes, records (including any contained in magnetic media or other forms of computer storage), videos, tapes, and/or any other property of the Company which may be in your possession or under your control. You must not allow the same to be used by any other party whatsoever, and you must return the property to the Company without making or retaining any copies of it.
Abu Dhabi, UAE
Tel + 971 2 633 3149
Fax + 971 2 633 3152
Confidentiality
You shall, during the continuance of your employment and at all times thereafter and/ or after the end of your employment term, keep with absolute secrecy and shall not reveal, disclose or publish outside the Company to any person, firm or organization, unless nominated by the Company, or otherwise utilise other than for the proper performance of your duties any information of a confidential nature. This includes without limitation trade secrets, know-how, inventions, designs, processes, formulae, notations, improvements, financial information and lists of clients concerning the affairs or business or products of the Company or of any Group Company or of any of their predecessors in business or of any of their suppliers, agents, distributors or customers of which you may now or hereafter know or learn while in the Company’s employment, and shall not use for your own purposes other than those of the Company or of any Group Company any such confidential information.
Best Interests of the Company
a. | At all times during the continuance of this Agreement you shall use your best endeavours to promote and protect the interests of the Company (and any sister Company) and shall faithfully and diligently perform such duties and exercise such powers as may from time to time be assigned to or vested in you and shall not do anything that is or could be harmful to the Company or any sister Company. |
b. | You are required to devote your full time, attention and abilities to your job duties during working hours, and to act in the best interest of the Company. You must not be in any way directly engaged or concerned in any other business or undertaking without the written consent of the Board. |
Business Interests
During your employment with the Company, and at any time during the period of two years following the end of your employment term; you shall not directly or indirectly:
a. | engage or be concerned or interested in any business which competes with the business of the Company or any sister Company in which you were involved during your employment; or |
Abu Dhabi, UAE
Tel + 971 2 633 3149
Fax + 971 2 633 3152
b. | engage in competition with the Company or any sister Company, solicit away from the Company or any sister Company or deal with any of its or their clients with whom you had contact in the course of your employment; or |
c. | engage or solicit the employment or engagement of any employee employed by the Company in any capacity at the date of your termination who at any time during the term of your employment reported directly or indirectly to you or with whom you had regular contact in the course of their employment. |
d. | If any of the restrictions or obligations contained in this Clause are held not to be valid on the basis that they exceed what is reasonable for the protection of the goodwill or interest of the Company and any sister Company but would be valid if part of the wording were deleted then such restriction or obligation shall apply with such deletions as may be necessary to make such restriction or obligation enforceable. |
Intellectual Property
a. | To the extent permitted by law, all rights in patents, copyright, registered. design right, design right, trademarks, confidential information and know-how which arise by virtue of your activities during your employment shall belong to the Company absolutely. |
b. | You shall, at the request and expense of the Company, execute such documents and do such things as may be required to vest such rights in the Company or to provide evidence of such vesting, as the case may be. |
Deductions and Set-offs
“You consent to the deduction and set-off from your Salary or from any other sums owed to you by the Company of any sums owing by you to the Company at any time, which shall for the purposes of this clause include any sums equal to any loss which has been or which the Company genuinely estimates will be incurred by the Company or any sister Company arising from a breach by you of any of the terms of this Agreement.
Abu Dhabi, UAE
Tel + 971 2 633 3149
Fax + 971 2 633 3152
Employment Term
The term of the contract shall be two renewable years after the consent of both parties.
Governing Law
This employment offer is governed by the laws of the Emirate of Fujairah, UAE.
You should comply with the rules of non-competitiveness, in particular, Art. 127 of Labor Law, UAE
Kindly note that this agreement will constitute an integral part of the Labor Contract.
In case you consent on the terms and conditions as mentioned above kindly sign below and return to the undersigned.
I accept the above mentioned terms and conditions.
Name: Mr. Saleh Mohamed Yammout
Date:
Signature: | /s/ Saleh Mohamed Yammout |
Brooge Petroleum and Gas Investment Co. | ||
Name: Mr. Nicolaas Paardenkooper | ||
Position: CEO | ||
Date: | ||
Signature: | /s/ Nicolaas Paardenkooper | |
Abu Dhabi, UAE
Tel + 971 2 633 3149
Fax + 971 2 633 3152
Exhibit 10.66
Executed version
LAND LEASE INITIAL AGREEMENT
between
FUJAIRAH OIL INDUSTRY ZONE
and
BROOGE PETROLEUM AND GAS INVESTMENT COMPANY FZE
Page 1 | 4
This Initial Agreement is entered into on July 14th, 2019
Between:
Fujairah Oil Industry Zone, P.O. Box 9900, Fujairah, United Arab Emirates (hereinafter referred to as “FOIZ”)
And
Brooge Petroleum & Gas Investment Company FZC (BPGIC), PO Box 50170, Fujairah, United Arab Emirates (hereinafter referred to as “BPGIC”)
together referred to as the “Parties”, or individually as “Party”.
WHEREAS:
A- | BPGIC is interested to construct and develop a high-tech and advanced Crude Oil storage and blending facility (the “Project”). As a consequence, BPGIC explored the possibility of procuring a land parcel of about 450,000 within FOIZ on a lease basis. |
B- | To support BPGIC in its endeavours to carry out technical and commercial feasibility, FOIZ is amenable to identify a land parcel of about 450,000 sq. m, with the possibility of leasing the Land to BPGIC. The Parties agree and acknowledge the mutual interest and wish to agree on a final long-term lease agreement (the “Lease”) in accordance with the terms and conditions as set forth below. |
NOW, THEREFORE, it is agreed as follows:
1- FRAMEWORK OF COOPERATION
1.1 Both Parties agree and acknowledge that BPGIC shall use its best endeavors to finalize its technical and design feasibility of the Project to be constructed on the Land. The Parties agree that this Initial Agreement only sets forth the understanding as of the date between the Parties hereto and shall not and is not intended to create any legally or financially binding commitments on either Party.
1.2 the Parties shall agree on and determine the interface of cooperation in order to assure a coordinated communication leading to the mutual agreement of the terms and conditions of the Lease.
Page 2 | 4
2 – DURATION
This Initial Agreement shall be effective from the Effective Date and shall remain in full force for 6 months automatically renewable for a further 6 months unless otherwise terminated by either Party.
3- MISCELLANEOUS
a) | This Initial Agreement and any of its provisions may only be altered or amended if in writing and signed by both Parties, except in case of earlier termination which can be carried unilaterally by either party |
b) | This Initial Agreement is not intended, nor shall create, express or imply, any legal relationship between the Parties that may be construed as an agency or partnership or otherwise and no Party shall be authorized to bind the other Party or to act in its name. |
c) | Nothing in this Initial Agreement shall be construed to grant, transfer or assign a Party any right or license under any intellectual property right (whether registered or unregistered), patent, know-how, trade secret, invention, discovery or improvement belonging to the other Party. |
d) | A person who is not a Party has no rights under applicable laws to enforce or enjoy the benefit of any provision of this Initial Agreement. |
e) | Neither this Initial Agreement, nor any of the rights, interests or obligations hereunder may be assigned, novated or otherwise transferred by a Party. |
4- GOVERNING LAW AND JURISDICTION
This Initial Agreement shall be governed by and construed, enforced and performed in accordance with the laws of the Free zone of the Emirate of Fujairah.
Page 3 | 4
IN WITNESS WHEREOF the Parties hereto have set their hands the day and year first above written.
SIGNED: | SIGNED: | |
|
|
|
For and on behalf of | For and on behalf of | |
Fujairah Oil Industry Zone | Brooge Petroleum and Gas Investment Company FZE |
Name: | Capt. Salem Al Hamoudi | Name: | Nicolaas L. Paardenkooper | |
Title: | Director | Title: | C.E.O. | |
Date: | July 14th 2019 | Date: | July 14th 2019 |
Page 4 | 4
Exhibit 10.67
EMPLOYMENT AGREEMENT
BETWEEN
BROOGE PETROLEUM AND GAS INVESTMENT COMPANY FZC
AND
LINA SALAH SAHEB
1st MAY 2019
Page 1 of 6 | Brooge Petroleum and Gas Investment Company FZC |
THIS EMPLOYMENT AGREEMENT (“Agreement”) is made on 1st of May 2019:
This document gives details of the terms and conditions of the employment contract between Brooge Petroleum and Gas Investment Company FZC, organized and existing under the laws and regulations applicable in the Fujairah Free Zone, United Arab Emirates, P.O. Box 50170 Fujairah, UAE (the “Company”) and Ms. Lina Salah Saheb, an Iraqi National, holding Iraqi passport, (the “Employee”) and sets out the particulars of employment with the Company.
Position:
The Employee will work in the position of Chief Strategy Officer and will comply with the job description in accordance with the associated roles and responsibilities attached at (Schedule A).
Responsibilities:
The Employee will report to the C.E.O or representative thereof.
Work Place:
Abu Dhabi - UAE and, The Employee may be transferred to any other branch/location within UAE as per the work needs pursuant to a notification to be submitted to the Employee. The Employee may be delegated on behalf of the Company to different locations and countries if necessary based on mutual consent.
Working Hours:
From Sunday to Thursday: From 8:30 am to 4:30 pm, Fridays and Saturdays are days off.
Date of commencement:
From 1st of May 2019
Page 2 of 6 | Brooge Petroleum and Gas Investment Company FZC |
Remuneration:
The Employee will receive a total monthly gross salary of Seventy Five Thousand Dirhams only (AED 75,000). The aforementioned salary includes (the basic salary and other allowances) as per the following:
a- Basic Salary:
The basic salary included in the above mentioned gross salary is Thirty Seven Thousand Five Hundred Dirhams only (AED 37,500).
b- Other Allowances:
The remainder of the gross salary of Thirty Seven Thousand Five Hundred Dirhams (AED 37,500) shall be distributed by the Employee for all other allowances as per the Employee’s personal preference.
Bonus:
The Employee may be provided with bonuses based on employee performance and Company’s evaluation and sole discretion.
Other Benefits Offered by the Company:
a. Accommodation Allowance
The Employee will receive an annual accommodation allowance of One Hundred and Eighty Thousand Dirhams (AED 180,000) to be paid in two installments on semiannual bases.
b. Leaves:
The Employee is entitled to an annual leave of 30 payable working days and the official UAE national holidays.
Page 3 of 6 | Brooge Petroleum and Gas Investment Company FZC |
c. Travel tickets:
The Employee will be provided two business class air tickets on an annual bases
d. Medical Insurance:
The Company will provide medical insurance as per UAE Laws.
Termination of Service:
Either Party hereto may terminate this Agreement with providing a period notice of 60 days.
Return of Company Property
Upon the termination/expiration of your employment, for any reason whatsoever, you must immediately deliver up to the Company all correspondence, documents, papers, memoranda, notes, records (including any contained in magnetic media or other forms of computer storage), videos, tapes, and/or any other property of the Company which may be in your possession or under your control. You must not allow the same to be used by any other party whatsoever, and you must return the property to the Company without making or retaining any copies of it.
Confidentiality
You shall, during the continuance of your employment and at all times thereafter and/or after the end of your employment term, keep with absolute secrecy and shall not reveal, disclose or publish outside the Company to any person, firm or organization, unless nominated by the Company, or otherwise utilize any information of a confidential nature. This includes without limitation trade secrets, know-how, inventions, designs, processes, formulae, notations, improvements, financial information and lists of clients concerning the affairs or business or products of the Company or of any Group Company or of any of their predecessors in business or of any of their suppliers, agents, distributors or customers of which you may now or hereafter know or learn while in the Company’s employment, and shall not use for your own purposes other than those of the Company or of any Group Company any such confidential information.
Page 4 of 6 | Brooge Petroleum and Gas Investment Company FZC |
Best Interests of the Company
a. | At all times during the continuance of this Agreement you shall use your best endeavours to promote and protect the interests of the Company (and any sister Company) and shall faithfully and diligently perform such duties and exercise such powers as may from time to time be assigned to or vested in you and shall not do anything that is or could be harmful to the Company or any sister Company. |
b. | You are required to devote your full time, attention and abilities to your job duties during working hours, and to act in the best interest of the Company. You must not be in any way directly engaged or be concerned in any other business or undertaking without the written consent of the Board. |
Intellectual Property
a. | To the extent permitted by law, all rights in patents, copyright, design rights, trade marks, confidential information and know-how which arise by virtue of your activities during your employment shall solely belong to the Company. |
b. | You shall, at the request and expense of the Company, execute such documents and do such things as may be required to vest such rights in the Company or to provide evidence of such vesting, as the case may be. |
Deductions and Set-offs
You consent to the deduction and set-off from your Salary or from any other sums owed to you by the Company of any sums owing by you to the Company at any time, which shall for the purposes of this clause include any sums equal to any loss which has been or which the Company genuinely estimates will be incurred by the Company or any sister Company arising from a breach by you of any of the terms of this Agreement.
Employment Term
The term of the contract shall be five years automatically renewed for a similar period of time unless terminated otherwise.
Page 5 of 6 | Brooge Petroleum and Gas Investment Company FZC |
Governing Law
This employment offer is governed by the laws of the Emirate of Abu Dhabi, UAE.
You should comply with the rules of non-competitiveness, in particular, Art. 127 of Labor Law, UAE
In case you consent on the terms and conditions as mentioned above kindly sign below and return to the undersigned.
For and on behalf of/ Brooge Petroleum and Gas Investment Company FZC (BPGIC)
Name: | Nicolaas Paardenkooper | |
Position: | C.E.O | |
Date: | ||
Signature: | /s/ Nicolaas Paardenkooper |
I accept the above mentioned terms and conditions.
Name: | Lina Salah Saheb | |
Date: | ||
Signature: | /s/ Lina Salah Saheb |
Page 6 of 6 | Brooge Petroleum and Gas Investment Company FZC |
Exhibit 10.68
Third Addendum to Joint Development Agreement
Dated 6th September 2019
(1) Brooge Petroleum and Gas Investment Company FZE
(2) Sahara Energy Resources DMCC
Hogan Lovells |
This Third Addendum to Joint Development Agreement is made on the [ ] day of September 2019 (“Third Addendum”)
Between:
(1) | Brooge Petroleum and Gas Investment Company FZE, a company incorporated under the laws of the Fujairah Free Zone and the United Arab Emirates (commercial registration no. 13-FZC-1117) whose registered office is at PO Box 50170, Fujairah Free Zone, United Arab Emirates (“BPGIC”); and |
(2) | Sahara Energy Resources DMCC, a company incorporated under the laws of Dubai Multi Commodities Centre and United Arab Emirates (commercial license no. 32101) whose registered office is at 2201-C, Reef Tower, JLT, Dubai, United Arab Emirates (“Sahara”). |
(each a “Party” and together the “Parties”)
Whereas:
(A) | On 14 May 2019, the Parties entered into a Joint Development Agreement wherein the Parties have agreed to cooperate together for Sahara to develop a refinery unit in Fujairah, United Arab Emirates (the “Agreement”); and |
(B) | On 1 June 2019, the Parties entered into an Addendum to the Agreement to extend the timeline of signing all the Ancillary Agreements to 19 June 2019. |
(C) | On 30 July, the Parties entered into a Second Addendum to the Agreement (the “Second Addendum”) to extend the timeline of signing all the Ancillary Agreements and the completion of all conditions precedent to 1 August 2019. |
(D) | The Parties have agreed to supplement the Agreement, the Addendum and the Second Addendum to further extend the timeline of signing all the Ancillary Agreements and the completion of all conditions precedent from 1 August 2019 to 30 September 2019 or such later date as may be agreed between the Parties. |
(E) | These Recitals form part of the Third Addendum. |
It is agreed:
1 | Definitions and Interpretation |
1.1 | Unless otherwise expressly stated herein, words and expressions defined and references contained in the Agreement shall have the same meanings and interpretation in this Third Addendum. |
2 | Extension of Timeline |
2.1 | Pursuant to Clause 5.1 of the Agreement, the Parties have mutually agreed to extend the timeline of signing all the Ancillary Agreements until 30 September 2019 or such later date as may be agreed between the Parties starting from the date of signing of this Third Addendum. |
2.2 | Pursuant to Clause 5.2 of the Agreement, the Parties have mutually agreed to extend the timeline for completion of the conditions precedent to 30 September 2019 or such later date as may be agreed between the Parties starting from the date of signing of this Third Addendum. |
2 | Hogan Lovells |
3 | General |
3.1 | The remaining clauses of the Agreement shall remain effective and binding upon the Parties in respect of matters not covered herein. |
3.2 | Except as otherwise provided, the Parties shall each bear their own costs and expenses incurred in complying with their obligations under this Third Addendum. |
3.3 | The invalidity or unenforceability of any portion or portions of this Third Addendum shall in no way affect the validity or enforceability of any other portion or provision hereof. Any invalid or unenforceable portion or provision shall be deemed severed from this Third Addendum and the balance of this Third Addendum shall be construed and enforced as if this Third Addendum did not contain such invalid or unenforceable portion or provision. |
3.4 | This Third Addendum may be executed in any number of counterparts, and this has the same effect as if the signatures on the counterparts were on a single copy of this Addendum. |
3.5 | This Third Addendum may only be varied by written agreement of both Parties. |
3.6 | This Third Addendum, the Agreement and the RSA constitutes the entire agreement and there are no oral or other representations regarding the subject of this Third Addendum and Agreement that are binding on either party. |
3.7 | It is agreed between the Parties that time is of the essence in the performance of each Party’s obligations under the Agreement and this Third Addendum. |
This Third Addendum was signed on the date mentioned above and its provisions shall come into force from the date of signing hereof.
Signed by Nicolaas Paardenkooper duly authorised for and on behalf of Brooge Petroleum and Gas Investment Company FZE |
|
|
Signed by Wale Ajibade duly authorised for and on behalf of Sahara Energy Resources DMCC |
|
3 | Hogan Lovells |
Exhibit 10.69
Certain identified information has been excluded from the exhibit because it is both not material and would likely cause competitive harm to the registrant if publicly disclosed.
Brooge Petroleum And Gas Investment Company FZE
- and -
Al brooge international advisory llc
Main Terminal Lease and Offtake Agreement
This Agreement is made this 01st day of August 2019
Between
(1) | Brooge Petroleum and Gas Investment Company (BPGIC), a company incorporated under the laws of the Fujairah Free Zone (commercial registration no. 13-FZC-1117) whose registered office is at P.O. Box 50170, Fujairah Free Zone, United Arab Emirates, referred to hereinafter as (the “Lessor”), and |
(2) | Al Brooge International Advisory LLC, a company incorporated under the laws of United Arab Emirates, having its registered office at P.O. Box 29939, Abu Dhabi, United Arab Emirates, referred to hereinafter as (the “Lessee”) ; |
(each a “Party” and together the “Parties”)
A) | Interpretation |
Words importing the singular only also include the plural and vice versa where the context requires; words and expressions importing the masculine gender include the feminine; reference to person includes any public body and any body of persons incorporate or unincorporated. References to Clauses and to Schedules are references to clauses and schedules of this Agreement.
B) | Headings |
Clause headings shall be deemed not to be part of the Agreement and shall not be taken into account in the interpretation thereof.
RECITALS
WHEREAS, the Lessor is having an oil storage facility located in Fujairah, UAE (the “Terminal”) with a total capacity of 399,324 cubic meters which is allocated for Fuel Oil and Clean Products (“Phase I”).
WHEREAS, the Lessee is interested in leasing the full capacity of the Lessor mentioned above.
Therefore, in consideration of the mutual covenants, undertakings and conditions set forth below, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:
1. | Definitions |
Unless expressly provided otherwise, the capitalized terms as used in this
Agreement shall have the following meaning:
- | “Agreement” means this main lease and offtake management Agreement |
- | “Applicable Laws” means any federal, emirate, municipal or authority statute, ordinance, regulation, guideline, rule, code, direction or any license, consent, permit, authorisation or other approval, including any conditions attached thereto, of the United Arab Emirates, the Emirate of Fujairah or any public body or authority, local or federal agency, department, inspector, ministry, official or public or statutory person which has appropriate jurisdiction; |
- | “Business Day” means a day (other than Friday or any other day that shall be legal holiday in the United Arab Emirates) which banks are open for general business in the United Arab Emirates; |
- | “Confidential Information” means any and all information of any kind and nature whatsoever, written or oral, including, without limitation, financial information, trade secrets, client, customer or supplier lists or other proprietary business information about the Parties and the Terminal, which Information is not known to the general public or to the persons unaffiliated to the Parties; |
- | “DIFC” means the Dubai International Financial Centre; |
- | “Dispute” has the meaning given to it in Clause 20; |
- | “Due Date” has the meaning given to it in Clause 11.3; |
- | “Effective Date” has the meaning given to it in Clause 14.1; |
- | “Fee Threshold” means per cubic meter per month; |
- | “Effective Date” means the date of signature of this agreement; |
- | “Fees” means such fee paid by the Lessee to the Lessor during each contractual month in accordance with the terms of this Agreement; |
- | “LCIA” means the London Court of International Arbitration; |
- | “LIBOR” means the London interbank offered rates for deposits in US Dollars administered by ICE Benchmark Administration Limited (“ICE”) (or any other applicable entity which takes over administration of those rates) which appear on the relevant pages of the Reuters Service (currently page LIBOR01) or, if not available, on the relevant pages of any other service (such as Bloomberg Financial Markets Service) that displays such rates; provided that if ICE (or any other applicable entity which takes over administration of those rates) for any reason ceases (whether permanently or temporarily) to publish London interbank offered rates for deposits in US Dollars, “LIBOR” shall be determined by the Parties based |
- | “Phase I” means the Lessor’s oil storage terminal of 399,324 cubic meters located in Fujairah Port, United Arab Emirates; |
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- | “Storage Fees” means the price in United States Dollars per cubic meter per month of storage at which the Lessee pays the Lessor for the lease of storage capacity and being in respect of each calendar month and as adjusted thereafter. |
- | “Sublease Agreements” means any sublease agreement signed between Lessee and a sub lessee pursuant to this Agreement, which, with the mutual agreement of the Parties, may be executed with respect to Phase I; |
- | “Storage Capacity” means 399,324 cubic meters of the total storage capacity at the Lessor’s Terminal to be used for the storage of the Lessee’s Products; |
- | “Services” has the meaning set forth in Article 4; |
- | “Rules” means the DIFC-LCIA Arbitration Centre Rules as referred to in Clause 20.1; |
- | “Throughput Fees” means the price in United States Dollars per cubic meter per month of throughput at which the Lessee pays the Lessor for each throughput of products and being in respect of each calendar month; |
- | “Inter-Tanks Fees” means the price in United States Dollars per cubic meter per month for each transfer of the Lessee’s products in between tanks and being in respect of each calendar month; |
- | “Blending Fees” means the price in United States Dollars per cubic meter per month of each product blending of the Lessor and being in respect of each calendar month; |
- | “USD” means United States Dollars. |
The definitions contained in this Agreement are an integral part of this Agreement and shall be read and interpreted with it. Reference to the Agreement includes any Appendices as added or amended from time to time in accordance with the terms of this Agreement.
2. | Agreement |
2.1 | According to the terms and conditions of this Agreement, and in accordance with both Parties desire and agreement, the Lessor hereby consents to lease to the Lessee its oil storage capacity of 399,324 cubic meters in order to serve the Lessee’s oil trading activities as per the terms herein. |
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3. | Agreement Duration |
3.1 | The term of this Agreement shall be for a period of 4 (four) years which commences on the date mentioned here above and shall expire on the last day of the month of April of the year 2023; |
3.2 | Upon the Agreement expiry date the period shall be automatically extended by a further 5 (five) years unless either Party notifies the other in writing not less than six months prior to any such expiry date of its intention not to extend the validity of this Agreement, in such case this Agreement shall expire upon the then forthcoming expiry date. |
4. | Services |
4.1 | the Lessor shall allocate the storage tanks described in the Terminal layout annexed to this Agreement at Annexure A to store the Lessee’s oil products; |
4.2 | The Lessee’s products specifications should always be approved by the Lessor prior to uploading and should always be incompliance with the Port of Fujairah Environmental Standards and the Lessor’s tanks specifications, and should not be considered as hazardous products; |
Lessee hereby further undertakes not to store any sanctioned products at the Lessor’s Terminal.
4.3 | the Lessor shall provide the Lessee with oil storage, throughput, blending, heating and inter tanks transfer services (the “Services”); |
4.4 | In case the Lessee’s products were proven to be sanctioned and/or of poor quality and/or hazardous; then the Lessor will be entitled to refuse provide the Services |
4.5 | The Lessor is hereby entitled to move the Lessee’s products in case of maintenance and/or emergency. |
5. | Fees and Payment |
5.1 | Fees: In consideration of the Services; the Lessee shall pay the below fees to the Lessor’s designated bank account designated for the Terminal purposes. |
5.1.1 | Storage Fee: in consideration of the leased storage tanks described at Article 4 above; the Lessee shall pay the Lessor a Storage Fee of per cubic meter per month. |
The Lessee shall pay the Lessor all Storage Fees due amounts in advance on a monthly basis.
5.1.2 | Throughput Fee: in consideration of the Lessee’s throughput of products, the Lessee shall pay the Lessor Throughput Fees of per cubic meter per month. |
The Lessee shall pay the Lessor all due amounts pertaining to the Throughput Fees within 14 calendar days as of receiving the Lessor’s Invoice at the end of each calendar month.
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5.1.3 | Supplementary Fee: In the event that the throughput in any year exceeds agreed volume, a supplementary fee at the rate of per metric ton of throughput shall apply and paid annually in arrears at the end of each year against the Lessor’s invoice. |
5.1.4 | Blending Fee: in consideration of the Lessee’s products blending, the Lessee shall pay the Lessor Blending Fees of per cubic meter per month. |
The Lessee shall pay the Lessor all due amounts pertaining to the Blending Fee within 14 calendar days as of receiving the Lessor’s Invoice at the end of each calendar month.
5.1.5 | Inter Tank Transfer Fee: in consideration of the Lessee’s products transfer in between tanks, the Lessee shall pay the Lessor Inter Tank Transfer Fees of per cubic meter per month. |
The Lessee shall pay the Lessor all due amounts pertaining to the Inter Tank Transfer Fee within 14 calendar days as of receiving the Lessor’s Invoice at the end of each calendar month.
5.1.6 | Heating Fee: in consideration of the Lessee’s products heating, the Lessee shall pay the Lessor Heating Fees of per cubic meter per month. |
The Lessee shall pay the Lessor all due amounts pertaining to the Blending Fee within 14 calendar days as of receiving the Lessor’s Invoice at the end of each calendar.
5.2 | Port of Fujairah Additional Charges: Any tariffs charged by the Port of Fujairah in respect to the Lessee’s Products including (but not limited) transportation, loading, unloading, use of berths, marine charges, administration charges, penalties and/or use of any of the Port’s facilities shall be paid by the Lessee. |
5.2.1 | the Lessee shall pay the Lessor any additional charges or penalties invoiced by the Port of Fujairah in respect to the Lessee’s use. The Lessor shall submit the invoices to the Lessee on prompt bases. |
5.2.2 | The Lessee shall pay the Lessor such invoices within 14 calendar days from the date of the receipt of the invoice. |
5.3 | Fair Market Value Adjustment: Starting from the second year and every two years thereafter (the” Review Date”) the Lessor may elect to review and amend the Fees to the fair market rate of the Services at such point of time. |
Such election shall be made by giving the Lessee at least thirty (30) days written notice prior to such date and subject to mutual agreement.
5.3.1 | the market rate shall be reviewed to equal: |
a. | the Fees payable immediately before the Review Date; or |
b. | the market rate agreed between the Parties (if higher than the current Fees) |
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6. | Limitations on Authority |
6.1 | The Lessee is prohibited from, and restricted to carry out any of the following: |
(a) | Disposition of Assets: Sell, pledge, mortgage, convey, or make any license, exchange or other transfer or disposition of any property or assets of the Lessor, including any property or assets purchased by Lessor: |
(b) | Contract: Make, enter into, execute, amend, modify or supplement any contract or agreement (i) on behalf of, or in the name of, or purporting to bind the Lessor or (ii) assign such contract or agreement to the Lessor at any time or for any purpose; |
(c) | Liens: Create, incur or assume any lien upon the Terminal; |
(d) | Transactions on Behalf of Others: Engage in any other transaction on behalf of the Lessor or any other person or entity not expressly authorized under this Agreement and/or that violates applicable Laws and/or this Agreement and/or any further agreed amendments to this Agreement; |
7. | Title to Materials and Equipments |
7.1 | The Lessee shall return vacant possession of the Leased Storage Tanks to the Lessor on the expiration date of the agreement. |
8. | Default |
8.1 | the occurrence of any of the following shall be deemed a default: |
a) | If a request or petition for liquidation, reorganization, adjustment of debts, arrangement, or similar relief under the bankruptcy, insolvency or similar laws of the UAE, or any foreign jurisdiction shall be filed by or against Lessee, or any formal or informal proceeding for the reorganization, dissolution or liquidation or settlement of claims against, or winding up of affairs of Lessee. |
b) | Failure of Lessee to pay Lessor any due payments in timely manner under this Agreement. |
8.2 | In the event Lessor considers that Lessee is in default under this Agreement or that Lessee has not complied with its obligations hereunder, both express and implied, including the non-payment of any due Fees, Lessor shall notify Lessee in writing, setting out specifically in what respects Lessee is in default or Lessee has breached this Agreement. Lessee shall then have fifteen (15) days after date of receipt of said notice, within which to meet or commence to meet all or any part of the breaches mentioned by Lessor, or to correct any default. The service of said notice shall not restrict the right of the Lessor to take any immediate action or filing a claim on this Agreement for any cause. |
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8.3 | Upon the occurrence of the event of default, and after notice thereof and opportunity but failure to cure or commence to cure as set forth above, the Agreement shall be terminated without the need of any further notice to this effect, and the Lessee agrees to surrender possession of the leased tanks to the Lessor immediately and any further presence to the Lessee in the Terminal shall be considered illegal. If Lessee fails to surrender possession of the leased tanks as required under this Agreement, Lessor may institute proceedings necessary to clear title or to take possession, and in that event, in addition to all other relief that may be granted to Lessor, Lessor shall be entitled to recover against Lessee all attorney fees, investigation charges, court costs and expert fees thus expended by Lessor. |
8.4 | Upon default by Lessee, Lessor shall be entitled to exercise any remedies available at law, in equity, products or otherwise, each such remedy being considered cumulative. No single exercise of any remedy set forth herein shall be considered as a waiver to exercise any other remedy. |
8.5 | Upon the Termination for Default in accordance with Article 9.3, the Lessee shall be obligated to pay the agreed rate of fees for the coming one year to be paid as an agreed penalty for the Lessee’s Default. |
9. | Indemnity |
9.1 | Lessee agrees to defend, indemnify and hold harmless Lessor and Lessor’s heirs, successors, representatives, employees, agents and assigns from and against any and all claims, demands and causes of action for injury (including death) or damage to persons or property or fines or penalties, or environmental matters arising out of, incidental to or resulting from the operations of or for Lessee or Lessee’s servants, agents, employees, guests, licensees, invitees or independent contractors, and from and against all costs and expenses incurred by the Lessor by reason of any such claim, including attorneys’ fees; and each assignee of this Agreement, or an interest therein. |
10. | Sublease |
10.1 | Lessor hereby agrees to give Lessor rights of Phase I sublease of part or all of the capacity of Phase I subject to Lessor prior approval of each sublease on the term and conditions acceptable to Lessor |
10.2 | Lessee is required to conduct all needed due diligence for each sub lessee prior to engaging in any sub lease |
10.3 | Lessee hereby agrees to be liable for ensuring that Phase I capacity is always at 100% occupancy levels and to compensate the Lessor of any loss of revenues which falls below the Fee Threshold and below the aforementioned occupancy levels |
10.4 | In case any given sub lessee had the preference of signing a lease agreement directly with Lessor; then such preference shall not be deemed as a release of Lessee’s obligations and liabilities to compensate Lessor of any losses of revenues, and Lessee would be required to make the relevant storage capacity available to sub lessee |
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11. | Guarantee |
10.1 | Pursuant to the terms of this Agreement, Lessee agrees to provide a Guarantee of Phase I income as referred to in Schedule A |
12. | Confidentiality |
a. | Save where such disclosure is necessary for the purpose of carrying out its obligations under this Agreement, neither Party shall, without the prior written consent of the other, disclose to any person any confidential or commercially sensitive information which has come into its possession or which may in the course of this Agreement come into its possession relating to the other Party. |
b. | The Parties shall be bound by the provisions of this Clause 12 for the duration of this Agreement and a period of three years thereafter. |
c. | The restriction on disclosure contained in Clause 12.1 shall not apply to the disclosure of information |
i. | to the extent required by law, regulatory authority, stock exchange which the party is in process of listing in or being listing at, or by an order of court; |
ii. | where the relevant information is or has become available in the public domain (except as result of a breach of this Clause 12). |
13. | Assignment |
a. | Neither Party shall assign its rights or transfer its obligations under this Agreement to any other person, firm or company without the prior written consent of the other Party, subject to Clause 12. |
b. | Lessor shall be able to assign its rights under this Agreement to an affiliate, or a new entity created and owned by Lessor. |
14. | No Partnership or Agency |
Nothing in this Agreement shall constitute a partnership between Lessor and Lessee. Neither Lessor or its staff shall be agents or employees of Lessee and neither it nor they shall be entitled to bind Lessee or to contract in its name or to create a liability against Lessee save as expressly authorised in writing by Lessee from time to time.
15. | Notices |
Unless otherwise provided for herein, any notice or other communication to be given under this Agreement shall be in writing and shall be deemed to have been duly served on, given to or made if it is delivered by hand or sent by prepaid mail.
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In the case of Lessor to:
Brooge Petroleum and Gas Investment Company
Address:
P.O. Box 50170,
Fujairah Free Zone
United Arab Emirates
In the case of Lessee to:
Brooge International Advisory LLC
Address: PO Box 29939
Abu Dhabi,
United Arab Emirates
16. | Arbitration |
a. | Any Dispute shall be referred to and finally resolved by arbitration under the DIFC-LCIA Arbitration Centre Rules (the “Rules”) which (save as modified by this Clause 16) are deemed to be incorporated by reference into this Clause 20. Capitalised terms used in this Clause 16 and not otherwise defined in this Agreement have the meanings given to them in the Rules. |
b. | The seat, or legal place, of arbitration shall be the Dubai International Financial Centre, Dubai, United Arab Emirates. |
c. | The number of arbitrators shall be three. The claimant (or, if more than one claimant, the claimants jointly) shall nominate one arbitrator and the respondent (or, if more than one respondent, the respondents jointly) shall nominate one arbitrator, in each case in accordance with the Rules. The third arbitrator, who will act as a chairperson of the arbitral tribunal, shall be nominated jointly by the two co-arbitrators, provided that if the third arbitrator has not been so nominated within 30 Business Days of the time-limit for service of the response, the third arbitrator shall be appointed by the LCIA Court. |
17. | Applicable Law |
This Agreement and any dispute, difference, controversy or claim arising out of or relating to this Agreement including the negotiation, existence, validity, invalidity, enforceability, breach or termination thereof regardless of whether the same shall be regarded as contractual or not (a “Dispute”), shall be governed by the federal laws of the United Arab Emirates and the law of the Emirate of Fujairah.
18. | Severability |
Should any part, term or provision of this Agreement be judged illegal or in conflict with any law, by a court of competent jurisdiction, the validity of the remaining portions or provisions shall not be affected thereby.
19. | No Third Party Rights |
No person other than a Party may enforce this Agreement.
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20. | Variation and Amendment |
No variation, supplement, deletion or replacement of or from this Agreement or any of its terms shall be effective unless made in writing and signed by an authorised signatory of each Party.
21. | Force Majeure |
21.1 | Scope of Force Majeure |
Any delays in or failure of performance by either Party shall not constitute default hereunder or give liability for any claims if and to the extent such delays in or failures of performance are, without the fault or negligence on the part of the affected Party, caused by Force Majeure. “Force Majeure” shall mean any event or circumstances, which is not within the reasonable control of the Party affected by the cause and which, by the exercise of diligence, such Party is unable to foresee or prevent and may include, but shall not be limited to:
(a) | war, hostilities, revolution, riots, insurrection or other civil commotion, acts of terrorism or sabotage; |
(b) | nuclear explosion, radioactive, biological or chemical contamination, ionizing radiation, or the discovery of such contamination or radiation; |
(c) | strikes and/or lockouts except any such action by employees or subcontractors or agents of the Party claiming Force Majeure; |
(d) | any effect of the natural elements, including lightning, fire, earthquake, sandstorm, flood, storm, tsunami, cyclone, typhoon or tornado; |
(e) | explosion (other than nuclear explosion or an explosion resulting from an act or war); |
(f) | epidemic or plague; |
(g) | inability to obtain necessary equipment or materials due to blockade, embargo or sanctions; and |
(h) | any act of omission of any competent authority including any refusal to issue, withdrawal, non-renewal or non-extension of a license, permit or approval. |
22. | Miscellaneous |
a. | Each Party agrees to act in good faith in dealing with one another pursuant to this Agreement. |
b. | Subject to the terms and conditions of this Agreement, each of the Parties will use its commercially reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or desirable, or advisable under applicable laws, so as to permit consummation of this Agreement as promptly and shall use commercially reasonable efforts to cooperate with the other Party to that end. |
c. | This Agreement shall form the entire agreement between the parties and shall supersede all prior agreements and discussions. Any provision of this Agreement may be amended or waived if, in writing and is duly signed by both parties. |
d. | Each party represents and warrants for the benefit of the other party from the Effective date of this Agreement that: |
- | It has the legal capacity to enter into this Agreement; |
- | The execution by it of this Agreement has been duly authorized; |
- | It has and will at all times maintain all authorizations, approvals and licenses required to enable it lawfully to perform its obligations under this Agreement. |
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Signed by Mr. Nicolaas Paardenkooper | /s/ Mr. Nicolaas Paardenkooper | ) | ||
for and on behalf of | ) | |||
BROOGE PETROLEUM AND GAS INVESTMENT COMPANY | ) | |||
Signed by H.E Suhail Suhail Al Mazrouie | /s/ H.E Suhail Suhail Al Mazrouie | ) | ||
for and on behalf of | ) | |||
AL BROOGE INTERNATIONAL ADVISORY LLC | ) |
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In witness whereof the Parties hereto have entered into this Guarantee on the day and year first above written.
Signed by | ) | ||
H.E Suhail Suhail Al Mazrouie | ) | /s/ H.E Suhail Suhail Al Mazrouie | |
for and on behalf of | ) | ||
Al Brooge International Advisory LLC | ) |
In the presence of | |||
Name: | /s/ Ann Caramel de Vera | ||
Address: | Ann Caramel de Vera | ||
Al Sayegh building, Hamdan | |||
street 04 floor |
Signed by | ) | ||
Mr. Nicolaas Pardenkooper | ) | /s/ Mr. Nicolaas Pardenkooper | |
for and on behalf of | ) | ||
Brooge Petroleum and Gas Investment Company | ) |
In the presence of | |||
Name: | /s/ Ann Caramel de Vera | ||
Address: | Ann Caramel de Vera | ||
Al Sayegh building, Hamdan | |||
street 04 floor |
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Exhibit 10.70
Exhibit 10.71
PRIVATE & CONFIDENTIAL
Date: 10th September, 2019
Our Ref.: SE/CB/EMAIL/UID-29349/2019
To: Brooge Petroleum and Gas Investment Company FZC. (the Customer),
P.O. Box 50170,
Fujairah, U.A.E.
Dear Sirs,
AMENDMENT TO FACILITY LETTER
We (the Bank) refer to the Facility Offer Letter Ref. SE/CB/55-126/UID-29349/2018 dated 19th April, 2018 (the Facility Letter) and its subsequent addendums (if any) under which we granted the Customer facilities (the Facility) and Capitalised terms used in this amendment letter (the Amendment to Facility Letter) and Facility Offer Letter Ref: CAD/039/14 dated 06th April, 2014 and its subsequent Facility Offer Letter (Addendums) and other ‘Transaction Docurnents’,(collectively the First Facility Offer Letter) duly executed between the Customer and First Abu Dhabi Bank — Islamic Banking Division (formerly referred to as “National Bank of Abu Dhabi, PJSC - Islamic Banking Division” / “Abu Dhabi National Islamic Finance) shall have the meanings given to them in each respectively.
We are pleased to confirm that with effect from the date of the Customer countersignature of this Amendment to Facility Letter, the Facility Letter and the terms of the Facility shall be amended for the clause set out below:
1) | Payment: An additional Fixed Rental Payment dated 30th November, 2019 has been included in the existing payment schedule to pay the outstanding Fixed Rental Payments along with all other upcoming Fixed Rental Payments to be paid on their corresponding due dates as per the existing payment schedule of “Contract for Works & Forward Lease — I” Facility extended to the Customer under the First Facility Offer Letter, as detailed below: |
Page 1 of 4
Date: 10th September, 2019
Our Ref: SE/CB/EMAIL/UID-29349/2019 |
|
All other details including but not limited to the Pricing and Variable Rental Payments as per First Facility Offer Letter to remain unchanged.
2) | All other details including but not limited to the Pricing and Variable Rental Payments to remain unchanged and to be paid on their corresponding due dates as per the existing payment schedule of “Contract for Works & Forward Lease — II” Facility extended to the Customer under First Facility Offer Letter, as detailed below: |
Page 2 of 4
Date: 10th September, 2019
Our Ref: SE/CB/EMAIL/UID-29349/2019
3) | All other details, Pricing and Installment Payments to remain unchanged and to be paid on their corresponding due dates including its final Installment Payment due on 14th October, 2019 as per the existing payment schedule of “London Metal Exchange (LME) - Murabaha” Facility extended to the Customer under First Facility Offer Letter. |
4) | Late payment Charges whereby below provision 20 in the First Facility Offer Letter will be deleted and will be replaced with subsequent wording: |
“20. You hereby commit yourself and undertake, in the event of any delay by way of procrastination in the payment of any Rental Payment (advanced or normal) or any other amount due to ISD-NBAD on its due date, to donate to charity an amount to be added by ISD-NBAD to any next Rental Payment and calculate for the delay period on the basis of 2.0% p.a of the overdue amount. Any delay in payment from your side shall be deemed as procrastination unless prove otherwise. The said amount shall be dispensed of for charitable purposes under the supervision of the Fatwa and Shariah’ Supervisory Board of National Bank of Abu Dhabi - Islamic banking Division. ISD-NBAD shall not retain such amount nor account for its profits.”
20.1 If any sum due and payable by you pursuant to this Amendment to Facility Letter and the Facility Letter is not paid on its due date in accordance with the provisions of the Facility (the balance for the time being unpaid being an unpaid amount), you shall make a payment to the Bank in respect of the unpaid amount calculated in accordance with clause 20.3 (such amount being the Late Payment Amount).
20.2 The Bank shall distribute the Late Payment Amount (after deducting the actual costs of the Bank) to such charitable foundations as the Bank may select in its absolute discretion and in all cases under the supervision of the Bank’s Internal Shariah Supervision Committee (ISSC).
20.3 The Late Payment Amount in respect of an unpaid amount for any period relating thereto shall be an amount equal to the result obtained upon application of the formula:
A x (B + M + P) x (N/360)
where:
“A” is the unpaid amount;
“B” is the Benchmark Rate;
“M” is the Margin;
“P” is the Late Payment Default Rate [of 3.5% p.a.]; and
“N” is the number of days in the period beginning on the due date for payment of such unpaid amount and ending on the date that your obligation to pay the same is discharged.”
Conditions Precedent:
Each of the following shall be provided to the Bank in a form satisfactory to the Bank prior to implementation of variation of payment terms on the Facility:
1) | Duly accepted this Addendum Facility Letter. |
2) | Assignment Agreement of projects proceeds for the projects financed by the Bank, in favour of First Abu Dhabi Bank PJSC. |
3) | Shareholders’ resolution committing to partially pre-settle AED 100.0 Million of the outstanding exposure under the “Contract for Works & Forward Lease - I” and “Contract for Works & Forward Lease - II” Facility from the listing proceeds by 31st December, 2019. |
4) | Execution and perfection of any other agreement including but not limited to Addendum to Master Forward Lease Agreement as stipulated by the Bank from time to time. |
All other terms and conditions of the Facility and the Facility Letter are unchanged, and the Facility Letter shall, as amended by this Amendment to Facility Letter, remain in full force and effect.
This Amendment to Facility Letter is an amendment and forms an integral part of the Bank’s Facility Letter.
Page 3 of 4
Date: 10th September, 2019
Our Ref: SE/CB/EMAIL/UID-29349/2019
Please sign and return copy of this Amendment to Facility Letter as a token of your acceptance.
Yours faithfully,
Signature: | /s/ Cristobal Figueroa | Signature: | /s/ Khalid Durra | |
Name: | Cristobal Figueroa | Name: | Khalid Durra |
For and on behalf of
First Abu Dhabi Bank PJSC. {formerly known as National Bank of Abu Dhabi - Islamic Banking Division “/“ Abu Dhabi National Islamic Finance”}
We agree and accept the offer contained in this Amendment to Facility Letter and to be bound by its terms & conditions.
Signature: | /s/ Nicolaas Paardenkooper | Signature: | ||
Name: |
Nicolaas Paardenkooper |
Name: | ||
Date: | 10 September 2019. | Date: |
For and on behalf of
Brooge Petroleum and Gas Investment Company FZC.
(Company Stamp)
Page 4 of 4
Exhibit 10.72
Certain identified information has been excluded from the exhibit because it is both not material and would likely cause competitive harm to the registrant if publicly disclosed.
Brooge Petroleum and Gas Investment Company FZE
- and -
Al Brooge International Advisory LLC
Main Terminal Lease And Offtake Agreement- Phase II
This Agreement is made effective as on 20th September 2019.
Between
(1) | Brooge Petroleum and Gas Investment Company (BPGIC), a company incorporated under the laws of the Fujairah Free Zone (commercial registration no. 13-FZC-1117) whose registered office is at P.O. Box 50170, Fujairah Free Zone, United Arab Emirates, referred to hereinafter as (the “Lessor” or “Operator”), and |
(2) | Al Brooge International Advisory LLC, a company incorporated under the laws of United Arab Emirates, having its registered office at P.O. Box 29939, Abu Dhabi, United Arab Emirates, referred to hereinafter as (the “Lessee”); |
(each a “Party” and together the “Parties”)
A) | Interpretation |
Words importing the singular only also include the plural and vice versa where the context requires; words and expressions importing the masculine gender include the feminine; reference to person includes any public body and any body of persons incorporate or unincorporated. References to Clauses and to Schedules are references to clauses and schedules of this Agreement.
B) | Headings |
Clause headings shall be deemed not to be part of the Agreement and shall not be taken into account in the interpretation thereof.
RECITALS
WHEREAS, the Lessor is constructing an extended oil storage capacity to its current facility located in Fujairah, UAE (the “Terminal”) with a total capacity of 601,600 cubic meters which is allocated for Crude Oil (“Phase II”).
WHEREAS, the Lessee is interested in leasing the full capacity of the Lessor mentioned above.
Therefore, in consideration of the mutual covenants, undertakings and conditions set forth below, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:
1. | Definitions |
Unless expressly provided otherwise, the capitalized terms as used in this
Agreement shall have the following meaning:
- | “Agreement” means this main lease and offtake management Agreement |
- | “Applicable Laws” means any federal, emirate, municipal or authority statute, ordinance, regulation, guideline, rule, code, direction or any license, consent, permit, authorization or other approval, including any conditions attached thereto, of the United Arab Emirates, the Emirate of Fujairah or any public body or authority, local or federal agency, department, inspector, ministry, official or public or statutory person which has appropriate jurisdiction; |
- | “Business Day” means a day (other than Friday or any other day that shall be legal holiday in the United Arab Emirates) which banks are open for general business in the United Arab Emirates; |
- | “Confidential Information” means any and all information of any kind and nature whatsoever, written or oral, including, without limitation, financial information, trade secrets, client, customer or supplier lists or other proprietary business information about the Parties and the Terminal, which Information is not known to the general public or to the persons unaffiliated to the Parties; |
- | “DIFC” means the Dubai International Financial Centre; |
- | “Dispute” has the meaning given to it in Clause 16; |
- | “Due Date” has the meaning given to it in Clause 11.3; |
- | “Effective Date” means the date of signature of this agreement; |
- | “Fee Threshold” means per cubic meter per month; |
- | “Commencement Date” means 7 (seven) calendar days as on the date on which the Operator provides a written notice of the Phase II readiness of operations; |
- | “Fees” means such fee paid by the Lessee to the Lessor during each contractual month in accordance with the terms of this Agreement; |
- | “LCIA” means the London Court of International Arbitration; |
- | “LIBOR” means the London interbank offered rates for deposits in US Dollars administered by ICE Benchmark Administration Limited (“ICE”) (or any other applicable entity which takes over administration of those rates) which appear on the relevant pages of the Reuters Service (currently page LIBOR01) or, if not available, on the relevant pages of any other service (such as Bloomberg Financial Markets Service) that displays such rates; provided that if ICE (or any other applicable entity which takes over administration of those rates) for any reason ceases (whether permanently or temporarily) to publish London interbank offered rates for deposits in US Dollars, “LIBOR” shall be determined by the Parties based |
- | “Phase II” means the Lessor’s oil storage terminal of 601,600 cubic meters located in Fujairah Port, United Arab Emirates; |
- | “Storage Fees” means the price in United States Dollars per cubic meter per month of storage at which the Lessee pays the Lessor for the lease of storage capacity and being in respect of each calendar month and as adjusted thereafter. |
- | “Sublease Agreements” means any sublease agreement signed between Lessee and a sublessee pursuant to this Agreement, which, with the mutual agreement of the Parties, may be executed with respect to Phase II; |
- | “Storage Capacity” means 601,600 cubic meters of the total storage capacity at the Lessor’s Phase II to be used for the storage of the Lessee’s Products; |
- | “Services” has the meaning set forth in Article 4; |
- | “Rules” means the DIFC-LCIA Arbitration Centre Rules as referred to in Clause 17; |
- | “Throughput Fees” means the price in United States Dollars per cubic meter per month of throughput at which the Lessee pays the Lessor for each throughput of products and being in respect of each calendar month; |
- | “Terminal constructing time” means the time that the EPC contractor, appointed by Lessor for Phase II consisting of 601,600 M3 storage capacity, required to construct, test and handover to Lessor for operational purposes. |
- | “Inter-Tanks Fees” means the price in United States Dollars per cubic meter per month for each transfer of the Lessee’s products in between tanks and being in respect of each calendar month; |
- | “Blending Fees” means the price in United States Dollars per cubic meter per month of each product blending of the Lessor and being in respect of each calendar month; |
- | “USD” means United States Dollars. |
- | “Volume Commitment for Storage” means the Lessee’s commitment to renting a storage capacity of 601,600 cubic meter at the Terminal (the “Volume Commitment”), subject to the terms of this Agreement. |
The definitions contained in this Agreement are an integral part of this Agreement and shall be read and interpreted with it. Reference to the Agreement includes any Appendices as added or amended from time to time in accordance with the terms of this Agreement.
2. | Agreement |
2.1 | According to the terms and conditions of this Agreement, and in accordance with both Parties desire and agreement, the Lessor hereby consents to lease to the Lessee its oil storage capacity of 601,600 cubic meters in order to serve the Lessee’s oil trading activities as per the terms herein. |
3. | Agreement Duration |
3.1 | The term of this Agreement shall be for a period of 5 (five) years which starts as on the commencement date hereinabove; |
3.2 | Upon the Agreement expiry date the period shall be automatically extended by a further 5 (five) years unless either Party notifies the other in writing not less than six months prior to any such expiry date of its intention not to extend the validity of this Agreement, in such case this Agreement shall expire upon the then forthcoming expiry date. |
4. | Services |
4.1 | the Lessor shall allocate the storage tanks described in the Terminal layout annexed to this Agreement at Annexure A to store the Lessee’s oil products; |
4.2 |
The Lessee’s products specifications should always
be approved by the Lessor prior to uploading and should always be incompliance with the Port of Fujairah Environmental
Standards and the Lessor’s tanks specifications, and should not be considered as hazardous products;
Lessee hereby further undertakes not to store any sanctioned products at the Lessor’s Terminal. |
4.3 | the Lessor shall provide the Lessee with oil storage, throughput, blending, heating and inter tanks transfer services (the “Services”); |
4.4 | In case the Lessee’s products were proven to be sanctioned and/or of poor quality and/or hazardous; then the Lessor will be entitled to refuse provide the Services |
4.5 | The Lessor is hereby entitled to move the Lessee’s products in case of maintenance and/or emergency. |
5. | Fees and Payment |
5.1 | Fees: In consideration of the Services; the Lessee shall pay the below fees to the Lessor’s designated bank account designated for the Terminal purposes. |
5.1.1 |
Storage Fee: in consideration of the leased
storage tanks described at Article 4 above; the Lessee shall pay the Lessor a Storage Fee of per cubic meter per month.
The Lessee shall pay the Lessor all Storage Fees due amounts in advance on a monthly basis. |
5.1.2 | Excess Throughput Fee: in consideration of the Lessee’s throughput of products, the Lessee shall have at no extra cost a throughput allowance equal to one Tank Turn allocated to the Lessee per month. If the Lessee exceeds this allowance, the Lessee shall pay to the Lessor, Excess Throughput Charges in respect of the excess above the Volume Commitment delivered or redelivered at a rate in per cubic meter of the volume of the product handled per each import/export. Excess Throughput Charges will be reviewed and may be adjusted annually by the Operator. |
The Lessee shall pay the Lessor all due amounts pertaining to the Excess Throughput Fees within 14 calendar days as of receiving the Lessor’s Invoice at the end of each calendar month.
5.1.3 | Blending Fee: in consideration of the Lessee’s products blending, the Lessee shall pay the Lessor Blending Fees of per cubic meter per month. |
The Lessee shall pay the Lessor all due amounts pertaining to the Blending Fee within 14 calendar days as of receiving the Lessor’s Invoice at the end of each calendar month.
5.1.4 | Inter Tank Transfer Fee: in consideration of the Lessee’s products transfer in between tanks, the Lessee shall pay the Lessor Inter Tank Transfer Fees of per cubic meter per month. |
The Lessee shall pay the Lessor all due amounts pertaining to the Inter Tank Transfer Fee within 14 calendar days as of receiving the Lessor’s Invoice at the end of each calendar month.
5.1.5 | Heating Fee: in consideration of the Lessee’s products heating, the Lessee shall pay the Lessor Heating Fees of per cubic meter per month. |
The Lessee shall pay the Lessor all due amounts pertaining to the Blending Fee within 14 calendar days as of receiving the Lessor’s Invoice at the end of each calendar.
5.2 | Port of Fujairah Additional Charges: Any tariffs charged by the Port of Fujairah in respect to the Lessee’s Products including (but not limited) transportation, loading, unloading, use of berths, marine charges, administration charges, penalties and/or use of any of the Port’s facilities shall be paid by the Lessee. |
5.2.1 | the Lessee shall pay the Lessor any additional charges or penalties invoiced by the Port of Fujairah in respect to the Lessee’s use. The Lessor shall submit the invoices to the Lessee on prompt bases. |
5.2.2 | The Lessee shall pay the Lessor such invoices within 14 calendar days from the date of the receipt of the invoice. |
5.3 | Fair Market Value Adjustment: Starting from the second year and every two years thereafter (the “Review Date”) the Lessor may elect to review and amend the Fees to the fair market rate of the Services at such point of time. |
Such election shall be made by giving the Lessee at least thirty (30) days written notice prior to such date and subject to mutual agreement.
5.3.1 | the market rate shall be reviewed to equal: |
a. | the Fees payable immediately before the Review Date; or |
b. | the market rate agreed between the Parties (if higher than the current Fees) |
6. | Operation and Maintenance |
The construction of BPGIC Terminal Phase 2 which is consisting of 8 (eight) tanks with a geometric capacity of 601,600 m3 in total for Crude oil storage or 431,024 M3 Crude oil (tank 201/202/203/204) and 170,576 M3 Fuel oil (tank 205/206/207/208))
It is understood between Operator and Customer that the Operator provides a regular update to the Customer on the Terminal readiness well in advance before the start of this contract with no liability to the Operator in case the Terminal Constructing Time is exceeded by the appointed EPC contractor.
The Operator at all times during the term of the Agreement shall operate and maintain the Terminal and related equipment provided hereunder in good and serviceable condition to the Standards of a Reasonable and Prudent Operator. Provided that the Operator promptly notifies the Customer, the Operator shall be entitled, at any time and from time to time, to carry out Maintenance Works to the Terminal or to have these carried out, and furthermore to effect alterations or to have these effected or alternatively to fit additional or special equipment to the Terminal or to have these fitted, whenever the Operator deems it necessary or prudent to do so or if the Operator is obliged to do so pursuant to Applicable Law.
7. | Limitations on Authority |
7.1 | The Lessee is prohibited from, and restricted to carry out any of the following: |
(a) | Disposition of Assets: Sell, pledge, mortgage, convey, or make any license, exchange or other transfer or disposition of any property or assets of the Lessor, including any property or assets purchased by Lessor; |
(b) | Contract: Make, enter into, execute, amend, modify or supplement any contract or agreement (i) on behalf of, or in the name of, or purporting to bind the Lessor or (ii) assign such contract or agreement to the Lessor at any time or for any purpose; |
(c) | Liens: Create, incur or assume any lien upon the Terminal; |
(d) | Transactions on Behalf of Others: Engage in any other transaction on behalf of the Lessor or any other person or entity not expressly authorized under this Agreement and/or that violates applicable Laws and/or this Agreement and/or any further agreed amendments to this Agreement; |
8. | Title to Materials and Equipments |
8.1 | The Lessee shall return vacant possession of the Leased Storage Tanks to the Lessor on the expiration date of the agreement. |
9. | Default |
9.1 | the occurrence of any of the following shall be deemed a default: |
a) | If a request or petition for liquidation, reorganization, adjustment of debts, arrangement, or similar relief under the bankruptcy, insolvency or similar laws of the UAE, or any foreign jurisdiction shall be filed by or against Lessee, or any formal or informal proceeding for the reorganization, dissolution or liquidation or settlement of claims against, or winding up of affairs of Lessee. |
b) | Failure of Lessee to pay Lessor any due payments in timely manner under this Agreement. |
9.2 | In the event Lessor considers that Lessee is in default under this Agreement or that Lessee has not complied with its obligations hereunder, both express and implied, including the non-payment of any due Fees, Lessor shall notify Lessee in writing, setting out specifically in what respects Lessee is in default or Lessee has breached this Agreement. Lessee shall then have fifteen (15) days after date of receipt of said notice, within which to meet or commence to meet all or any part of the breaches mentioned by Lessor, or to correct any default. The service of said notice shall not restrict the right of the Lessor to take any immediate action or filing a claim on this Agreement for any cause. |
9.3 | Upon the occurrence of the event of default, and after notice thereof and opportunity but failure to cure or commence to cure as set forth above, the Agreement shall be terminated without the need of any further notice to this effect, and the Lessee agrees to surrender possession of the leased tanks to the Lessor immediately and any further presence to the Lessee in the Terminal shall be considered illegal. If Lessee fails to surrender possession of the leased tanks as required under this Agreement, Lessor may institute proceedings necessary to clear title or to take possession, and in that event, in addition to all other relief that may be granted to Lessor, Lessor shall be entitled to recover against Lessee all attorney fees, investigation charges, court costs and expert fees thus expended by Lessor. |
9.4 | Upon default by Lessee, Lessor shall be entitled to exercise any remedies available at law, in equity, products or otherwise, each such remedy being considered cumulative. No single exercise of any remedy set forth herein shall be considered as a waiver to exercise any other remedy. |
9.5 | Upon the Termination for Default in accordance with Article 9.3, the Lessee shall be obligated to pay the agreed rate of fees for the coming one year to be paid as an agreed penalty for the Lessee’s Default. |
10. | Indemnity |
10.1 | Lessee agrees to defend, indemnify and hold harmless Lessor and Lessor’s heirs, successors, representatives, employees, agents and assigns from and against any and all claims, demands and causes of action for injury (including death) or damage to persons or property or fines or penalties, or environmental matters arising out of, incidental to or resulting from the operations of or for Lessee or Lessee’s servants, agents, employees, guests, licensees, invitees or independent contractors, and from and against all costs and expenses incurred by the Lessor by reason of any such claim, including attorneys’ fees; and each assignee of this Agreement, or an interest therein. |
11. | Sublease |
11.1 | Lessor hereby agrees to give Lessee rights of Phase II sublease of part or all of the capacity of Phase II subject to Lessor prior approval of each sublease on the term and conditions acceptable to Lessor |
11.2 | Lessee is required to conduct all needed due diligence for each sub lessee prior to engaging in any sub lease |
11.3 | Lessee hereby agrees to be liable for ensuring that Phase II capacity is always at 100% occupancy levels and to compensate the Lessor of any loss of revenues which falls below the Fee Threshold and below the aforementioned occupancy levels |
11.4 | In case any given sub lessee had the preference of signing a lease agreement directly with Lessor; then such preference shall not be deemed as a release of Lessee’s obligations and liabilities to compensate Lessor of any losses of revenues, and Lessee would be required to make the relevant storage capacity available to sub lessee |
12. | Not Used |
13. | Confidentiality |
a. | Save where such disclosure is necessary for the purpose of carrying out its obligations under this Agreement, neither Party shall, without the prior written consent of the other, disclose to any person any confidential or commercially sensitive information which has come into its possession or which may in the course of this Agreement come into its possession relating to the other Party. |
b. | The Parties shall be bound by the provisions of this Clause 13 for the duration of this Agreement and a period of three years thereafter. |
c. | The restriction on disclosure contained in Clause 13 shall not apply to the disclosure of information: |
i. | to the extent required by law, regulatory authority, stock exchange which the party is in process of listing in or being listing at, or by an order of court; |
ii. | where the relevant information is or has become available in the public domain (except as result of a breach of this Clause 13). |
14. | Assignment |
a. | Neither Party shall assign its rights or transfer its obligations under this Agreement to any other person, firm or company without the prior written consent of the other Party, subject to this Clause 14. |
b. | Lessor shall be able to assign its rights under this Agreement to an affiliate, or a new entity created and owned by Lessor. |
15. | No Partnership or Agency |
Nothing in this Agreement shall constitute a partnership between Lessor and Lessee. Neither Lessor or its staff shall be agents or employees of Lessee and neither it nor they shall be entitled to bind Lessee or to contract in its name or to create a liability against Lessee save as expressly authorised in writing by Lessee from time to time.
16. | Notices |
Unless otherwise provided for herein, any notice or other communication to be given under this Agreement shall be in writing and shall be deemed to have been duly served on, given to or made if it is delivered by hand or sent by prepaid mail.
In the case of Lessor to:
Brooge Petroleum and Gas Investment Company
Address:
P.O. Box 50170,
Fujairah Free Zone
United Arab Emirates
In the case of Lessee to:
Brooge International Advisory LLC Address:
PO Box 29939
Abu Dhabi,
United Arab Emirates
17. | Arbitration |
a. | Any Dispute shall be referred to and finally resolved by arbitration under the DIFC-LCIA Arbitration Centre Rules (the “Rules”) which (save as modified by this Clause 17) are deemed to be incorporated by reference into this Clause 17. Capitalised terms used in this Clause 17 and not otherwise defined in this Agreement have the meanings given to them in the Rules. |
b. | The seat, or legal place, of arbitration shall be the Dubai International Financial Centre, Dubai, United Arab Emirates. |
c. | The number of arbitrators shall be three. The claimant (or, if more than one claimant, the claimants jointly) shall nominate one arbitrator and the respondent (or, if more than one respondent, the respondents jointly) shall nominate one arbitrator, in each case in accordance with the Rules. The third arbitrator, who will act as a chairperson of the arbitral tribunal, shall be nominated jointly by the two co-arbitrators, provided that if the third arbitrator has not been so nominated within 30 Business Days of the time-limit for service of the response, the third arbitrator shall be appointed by the LCIA Court. |
18. | Applicable Law |
This Agreement and any dispute, difference, controversy or claim arising out of or relating to this Agreement including the negotiation, existence, validity, invalidity, enforceability, breach or termination thereof regardless of whether the same shall be regarded as contractual or not (a “Dispute”), shall be governed by the federal laws of the United Arab Emirates and the law of the Emirate of Fujairah.
19. | Severability |
Should any part, term or provision of this Agreement be judged illegal or in conflict with any law, by a court of competent jurisdiction, the validity of the remaining portions or provisions shall not be affected thereby.
20. | No Third Party Rights |
No person other than a Party may enforce this Agreement.
21. | Variation and Amendment |
No variation, supplement, deletion or replacement of or from this Agreement or any of its terms shall be effective unless made in writing and signed by an authorised signatory of each Party.
22. | Force Majeure |
22.1 | Scope of Force Majeure |
Any delays in or failure of performance by either Party shall not constitute default hereunder or give liability for any claims if and to the extent such delays in or failures of performance are, without the fault or negligence on the part of the affected Party, caused by Force Majeure. “Force Majeure” shall mean any event or circumstances, which is not within the reasonable control of the Party affected by the cause and which, by the exercise of diligence, such Party is unable to foresee or prevent and may include, but shall not be limited to:
(a) | war, hostilities, revolution, riots, insurrection or other civil commotion, acts of terrorism or sabotage; |
(b) | nuclear explosion, radioactive, biological or chemical contamination, ionizing radiation, or the discovery of such contamination or radiation; |
(c) | strikes and/or lockouts except any such action by employees or subcontractors or agents of the Party claiming Force Majeure; |
(d) | any effect of the natural elements, including lightning, fire. earthquake, sandstorm, flood, storm, tsunami, cyclone, typhoon or tornado; |
(e) | explosion (other than nuclear explosion or an explosion resulting from an act or war); |
(f) | epidemic or plague; |
(g) | inability to obtain necessary equipment or materials due to blockade, embargo or sanctions; and |
(h) | any act of omission of any competent authority including any refusal to issue, withdrawal, non-renewal or non-extension of a license, permit or approval. |
23. | Miscellaneous |
a. | Each Party agrees to act in good faith in dealing with one another pursuant to this Agreement. |
b. | Subject to the terms and conditions of this Agreement, each of the Parties will use its commercially reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or desirable, or advisable under applicable laws, so as to permit consummation of this Agreement as promptly and shall use commercially reasonable efforts to cooperate with the other Party to that end. |
c. | This Agreement shall form the entire agreement between the parties and shall supersede all prior agreements and discussions. Any provision of this Agreement may be amended or waived if, in writing and is duly signed by both parties. |
d. | Each party represents and warrants for the benefit of the other party from the Effective date of this Agreement that: |
- | It has the legal capacity to enter into this Agreement; |
- | The execution by it of this Agreement has been duly authorized; |
- | It has and will at all times maintain all authorizations, approvals and licenses required to enable it lawfully to perform its obligations under this Agreement. |
Signed by Mr. Nicolaas Paardenkooper | /s/ Mr. Nicolaas Paardenkooper | ) |
for and on behalf of | ) | |
Brooge Petroleum and Gas Investment Company | ) |
Signed by | ||
H.E Suhail Suhail Al Mazrouei | /s/ H.E Suhail Suhail Al Mazrouei | ) |
for and on behalf of | ) | |
Al Brooge International Advisory LLC | ) |
Exhibit 21.1
Subsidiaries of the Registrant
Name of Subsidiary | Jurisdiction of Incorporation |
Brooge Merger Sub Limited | Cayman Islands |
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the inclusion in this Registration Statement on Form F-4 of Brooge Holdings Limited (the “Company”) of our report dated March 29, 2019 with respect to our audit of Twelve Seas Investment Company’s financial statements as of December 31, 2018 and 2017 and for the year ended December 31, 2018 and the period from November 30, 2017 to December 31, 2017, which includes an explanatory paragraph as to Twelve Seas Investment Company’s ability to continue as a going concern and appears in the Prospectus as part of this Registration Statement. We also consent to the reference to our Firm under the caption “Experts” in such Prospectus.
/s/ UHY LLP
New York, New York
September 27, 2019
Exhibit 23.2
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the reference to our firm under the caption "Experts" and to the use of our report dated 27 September 2019, with respect to the financial statements of Brooge Petroleum and Gas Investment Company FZE, included in the Registration Statement (Form F-4) and related proxy statement/prospectus of Brooge Holdings Limited for the registration of up to 28,901,900 ordinary shares, 21,229,000 warrants and 21,229,000 ordinary shares issuable upon exercise of warrants of Brooge Holdings Limited.
/s/ Ernst & Young
Abu Dhabi, United Arab Emirates
27 September 2019
Exhibit 23.3
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the reference to our firm under the caption "Experts" and to the use of our report dated 27 September 2019, with respect to the financial statements of Brooge Holdings Limited, included in the Registration Statement (Form F-4) and related proxy statement/prospectus of Brooge Holdings Limited for the registration of up to 28,901,900 ordinary shares, 21,229,000 warrants and 21,229,000 ordinary shares issuable upon exercise of warrants of Brooge Holdings Limited.
/s/ Ernst & Young
Abu Dhabi, United Arab Emirates
27 September 2019
Exhibit 99.2
CONSENT TO BE NAMED DIRECTOR
Pursuant to Rule 438 under the Securities Act of 1933, as amended, I hereby consent to being named in the Registration Statement on Form F-4, together with any and all amendments or supplements thereto, of filed by Brooge Holdings Limited, a Cayman Islands corporation (the “Company”), as a person who has agreed to serve as a director of the Company upon closing of the transaction contemplated therein and the inclusion of my biographical information in the Registration Statement. I also consent to the filing of this consent as an exhibit to the Registration Statement.
Dated: | 27/5/2019 |
/s/ Dr. Yousef Alassaf | |
Signature |
Print Name: Dr. Yousef Alassaf |
Exhibit 99.3
CONSENT TO BE NAMED DIRECTOR
Pursuant to Rule 438 under the Securities Act of 1933, as amended, I hereby consent to being named in the Registration Statement on Form F-4, together with any and all amendments or supplements thereto, of filed by Brooge Holdings Limited, a Cayman Islands corporation (the “Company”), as a person who has agreed to serve as a director of the Company upon closing of the transaction contemplated therein and the inclusion of my biographical information in the Registration Statement. I also consent to the filing of this consent as an exhibit to the Registration Statement.
Dated: | 26/5/2019 |
/s/ Nico Paardenkooper | |
Signature |
Print Name: Nico Paardenkooper |
Exhibit 99.4
CONSENT TO BE NAMED DIRECTOR
Pursuant to Rule 438 under the Securities Act of 1933, as amended, I hereby consent to being named in the Registration Statement on Form F-4, together with any and all amendments or supplements thereto, of filed by Brooge Holdings Limited, a Cayman Islands corporation (the “Company”), as a person who has agreed to serve as a director of the Company upon closing of the transaction contemplated therein and the inclusion of my biographical information in the Registration Statement. I also consent to the filing of this consent as an exhibit to the Registration Statement.
Dated: | 28/05/2019 |
/s/ Abu Bakar Chowdhury | |
Signature |
Print Name: Abu Bakar Chowdhury |
Exhibit 99.5
CONSENT TO BE NAMED DIRECTOR
Pursuant to Rule 438 under the Securities Act of 1933, as amended, I hereby consent to being named in the Registration Statement on Form F-4, together with any and all amendments or supplements thereto, of filed by Brooge Holdings Limited, a Cayman Islands corporation (the “Company”), as a person who has agreed to serve as a director of the Company upon closing of the transaction contemplated therein and the inclusion of my biographical information in the Registration Statement. I also consent to the filing of this consent as an exhibit to the Registration Statement.
Dated: | 18 May 2019 |
/s/ Simon Madgwick | |
Signature |
Print Name: Simon Madgwick |
Exhibit 99.6
CONSENT TO BE NAMED DIRECTOR
Pursuant to Rule 438 under the Securities Act of 1933, as amended, I hereby consent to being named in the Registration Statement on Form F-4, together with any and all amendments or supplements thereto, of filed by Brooge Holdings Limited, a Cayman Islands corporation (the “Company”), as a person who has agreed to serve as a director of the Company upon closing of the transaction contemplated therein and the inclusion of my biographical information in the Registration Statement. I also consent to the filing of this consent as an exhibit to the Registration Statement.
Dated: | 15/5/2019 |
/s/ Saeb El Zein | |
Signature |
Print Name: Saeb El Zein |
Exhibit 99.7
CONSENT TO BE NAMED DIRECTOR
Pursuant to Rule 438 under the Securities Act of 1933, as amended, I hereby consent to being named in the Registration Statement on Form F-4, together with any and all amendments or supplements thereto, of filed by Brooge Holdings Limited, a Cayman Islands corporation (the “Company”), as a person who has agreed to serve as a director of the Company upon closing of the transaction contemplated therein and the inclusion of my biographical information in the Registration Statement. I also consent to the filing of this consent as an exhibit to the Registration Statement.
Dated: | 29/5/2019 |
/s/ Saleh Yammout | |
Signature |
Print Name: Saleh Yammout |