Madagascar Oil Limited Conditional Framework Agreement (7391Q)

TIDMMOIL

RNS Number : 7391Q

Madagascar Oil Limited

02 March 2016

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA OR JAPAN

2 March 2016

MADAGASCAR OIL LIMITED

("Madagascar Oil" or the "Company")

Conditional Framework Agreement, Financing Commitment

and

Potential Delisting

Madagascar Oil announces that, following discussions with certain of its Lenders, namely Outrider Master Fund, LP ("Outrider"), BMK Resources Limited ("BMK") and The John Paul Dejoria Family Trust ("JPD") (together the "Relevant Lenders"), each also being a significant Shareholder of the Company, it has entered into a framework agreement (the "Framework Agreement") which, amongst other things, includes a structure for the Relevant Lenders to provide further financing to the Company (the "Financing"). Details of the Financing and Framework Agreement are set out below and the Framework Agreement is appended to this announcement, in full, as Appendix I.

Under the Framework Agreement, the Relevant Lenders have committed to invest US$2.0 million, via the Tranche 1 Placing of equity at a price of 1.00p per Common Share, should the Company choose to call on this commitment. As set out in greater detail below, this Financing commitment from the Relevant Lenders expires on 6 March 2016.

The Relevant Lenders may also participate in a Tranche 2 Funding, either by way of a further equity placing of between US$2.0 million and US$4.0 million, at 0.75p per Common Share, or a drawdown under the Facilities Agreement, depending on whether certain conditions have been satisfied under the Framework Agreement, including, inter alia, the Delisting of the Company. The Financing and the other key terms of the Framework Agreement are conditional on the Independent Directors of the Company electing to proceed with the Tranche 1 Placing, by 6 March 2016, as set out below.

As announced on 18 February 2016, in order to secure the Financing, which the Board believes is required for the Company to continue as a going concern, the Relevant Lenders have insisted that, should the Independent Directors of the Company call the Tranche 1 Placing, then the Company will also have to commit to convene a Special General Meeting to table resolutions to seek Shareholder approval to cancel the admission of its Common Shares to trading on AIM (the "Delisting").

The Board has agreed to this, and certain other conditions, as summarised below, all of which including, inter alia, the amendments to the Facilities Agreement and the Delisting arrangements, are subject to the Independent Directors calling on the Tranche 1 Placing.

For the avoidance of doubt all capitalised terms used herein shall have the same meaning, unless stated or the context requires otherwise, as given to them in the Framework Agreement, appended as Appendix I.

Summary of the Framework Agreement

As noted above, on 1 March 2016, the Company and the Relevant Lenders entered into the Framework Agreement in relation to, amongst other things, the subscription for the Tranche 1 Placing Shares, the Tranche 2 Funding, the amendment of the Facilities Agreement and the convening of the Delisting General Meeting, all of which are conditional on the Company calling on the funds committed under the Tranche 1 Placing.

Independent Directors' Election

The operative provisions of the Framework Agreement will only come into effect if the Independent Directors, in their sole discretion, resolve at a committee meeting of the Independent Directors, to make an election to proceed with the Tranche 1 Placing (the "Independent Directors' Election") and shall cease to have effect if the Independent Directors' Election does not occur by 3.00 p.m. (London time) on the fifth day immediately following the date of execution of the Framework Agreement being 6 March 2016 (or such later time and date as the Company and the Majority Lenders may agree) (the "Election Long Stop Date").

In the event the Company decides to pursue alternative financing and, as a result of this, the Independent Directors' Election is not made by the Election Long Stop Date, a break fee of US$250,000 (in aggregate), shall be payable by the Company to the Relevant Lenders, in addition to the costs of the Relevant Lenders incurred in preparing the Framework Agreement, which are capped at US$180,000.

Related Party Transaction

Given that the Framework Agreement has been entered into with the Relevant Lenders, of which two are substantial Shareholders in the Company, entering into the Framework Agreement constitutes a related party transaction under AIM Rule 13 of the AIM Rules for Companies.

Accordingly, the Independent Directors, as defined by the AIM Rules for the purposes of AIM Rule 13 (being Robert Estill, Michael Duginski and Iain Patrick), having consulted with the Company's nominated adviser, Strand Hanson Limited, consider that the terms of the Framework Agreement are fair and reasonable insofar as the Company's Shareholders are concerned.

Financing

Subject to both the Independent Directors exercising the Independent Directors' Election and the terms and conditions of the Framework Agreement, US$2.0 million is to be made available by the Relevant Lenders as follows:

-- Tranche 1 Placing: To be structured as a cash box placing to raise US$2.0 million from the Relevant Lenders on the terms set out in the Framework Agreement, by the issue of 143,636,885 new Common Shares at 1.3924 cents per Tranche 1 Placing Share (being the equivalent of 1.00p per Tranche 1 Placing Share).

-- Participation in the Tranche 1 Placing will also be offered to the Other Major Shareholders in proportion to their Pro-Rata Share, as defined in the Framework Agreement, of the total Tranche 1 Placing Shares, at that time. Accordingly, depending on the response of the Other Major Shareholders, there could be an increase in the size of the Tranche 1 Placing should the Other Major Shareholders elect to participate.

The Framework Agreement also provides for a further tranche of funding, being the Tranche 2 Funding, as set out below:

-- Tranche 2 Funding: The Tranche 2 Funding can take the form of either the Tranche 2 Placing or the Tranche 2 Loan, pursuant to the terms of the Framework Agreement.

o In the event that the Tranche 2 Loan Trigger is satisfied on or before the Tranche 2 Trigger Date, each of the Relevant Lenders agrees to provide the Tranche 2 Funding by way of the Tranche 2 Loan.

o Where the Tranche 2 Loan Trigger is not satisfied by the Tranche 2 Loan Trigger Date, each of the Relevant Lenders agrees to provide the Tranche 2 Funding by way of either the Tranche 2 Placing or the Tranche 2 Loan (and may support both processes in parallel) as may be directed by the Majority Lenders.

o The Tranche 2 Loan is envisioned to be at least US$2.0 million and can be increased by the mutual agreement of the Majority Lenders and the Company.

o If provided by way of the Tranche 2 Placing, the funding will be structured as a cash box placing to raise between US$2.0 million and US$4.0 million by the issue of new Common Shares at 1.0443 cents per Tranche 2 Placing Share (being the equivalent of 0.75p per Tranche 2 Placing Share).

o Shareholders should note that all Loans to be provided under the Facilities Agreement (including any Tranche 2 Loan) are now subject to the agreement of the Majority Lenders.

Participation in the Tranche 2 Placing will be offered to the Other Major Shareholders in proportion to their Pro-Rata Share of the total Tranche 2 Placing Shares, at that time.

Amendments to the Facilities Agreement

In order to facilitate the Financing, the following amendments and waiver have been agreed with the Relevant Lenders (in their capacity as Majority Lenders and Super Majority Lenders, respectively representing holders of over 66% and over 75% of the Loan amounts outstanding) with respect to the Facilities Agreement:

o The interim interest payment date of 31 March 2016 has been waived and interest shall continue to accrue until maturity or any earlier repayment.

o Subject to and with effect from Tranche 1 Admission, the fixed interest rate under the Facilities Agreement will increase, from 10% per annum, to 20% per annum.

o The arrangement fee for any future drawdowns (including the Tranche 2 Loan, if applicable) under the Facilities Agreement has been increased, from 5%, to 20%.

o An event of default will arise if, on or within 20 days after 30 April 2016, the Majority Lenders give notice to the Company that, in their opinion, insufficient progress has been made by the Company towards achieving its objectives.

o The Majority Lenders have additional powers to approve any further loans made under the Facilities Agreement, including the Tranche 2 Loan.

o The Relevant Lenders, have agreed to waive the requirement that the proceeds of the Tranche 1 Placing and Tranche 2 Placing (if applicable) are to be applied to the repayment of the Loans.

o In return for this waiver, the Company has agreed to pay a waiver fee of 20% of the amount raised in the Tranche 1 Placing and Tranche 2 Placing (if applicable) to the Lenders, such waiver fee to be added to the Lenders' outstanding Loan balance, rather than paid in cash.

o The Relevant Lenders have agreed not to offset their Loans against their subscriptions in the Tranche 1 Placing and Tranche 2 Placing (if applicable).

Delisting Arrangements

o Within 5 Business Days of any Independent Directors' Election to initiate the Tranche 1 Placing, the Company shall approve for dispatch the Delisting Circular to convene a Special General Meeting to table resolutions to seek Shareholder approval for the Delisting (the "Delisting General Meeting"). The Delisting Resolutions will be special resolutions requiring the support of 75 per cent. of votes cast to be passed.

(MORE TO FOLLOW) Dow Jones Newswires

March 02, 2016 02:01 ET (07:01 GMT)

o Following the Delisting General Meeting, and in the event that the Delisting Resolutions were not passed, the Majority Lenders may give notice to the Board for it to call another General Meeting (the "Second Delisting General Meeting") to propose resolutions to delist and the Board has agreed to call that meeting within 10 Business Days of receiving such notice.

o The Delisting has the support of the Relevant Lenders, who together with their Affiliates represent approximately 67.0 per cent. of the Company's issued share capital and who have irrevocably committed to the Company that they shall, and shall procure that each of its Affiliates (to the extent that any such Affiliate holds Voting Rights) shall, exercise all of its Voting Rights so as to vote in favour of each and all the Delisting Resolutions at the Delisting General Meeting and the Second Delisting Resolutions at the Second Delisting General Meeting (if applicable).

Appointment of the New Benchmark Directors

Pursuant to the terms of the Framework Agreement, the Board has resolved, subject to certain conditions (being, inter alia, the occurrence of Independent Directors' Election, the receipt of the Appointment Letters, and nominated adviser approval of their suitability if applicable) to accept the appointment of two directors nominated for appointment by the Benchmark Parties, in accordance with the terms of the Benchmark/SEP Relationship Agreement. Subject to these conditions being satisfied, the appointments will be effective on either Delisting or within 5 Business Days of the Delisting General Meeting if the Delisting Resolutions are not passed.

Continuing Obligations and Related Bye-Laws Amendments

The Independent Directors have negotiated several undertakings from the Relevant Lenders in order to give certain protections to Minority Shareholders following any Delisting, should it occur as a result of the Delisting General Meeting or the Second Delisting General Meeting, and to give the Minority Shareholders, as far as practicable, the opportunity to benefit from any accretion in value that may potentially be generated as the Partner Process runs its course.

These undertakings will be drafted as amendments to the Bye-Laws and any Delisting will be conditional on the passing of a resolution (the "Bye-Laws Resolution") to approve these amendments to the Bye-Laws (and vice versa) at the relevant General Meeting. The Relevant Lenders have, in the Framework Agreement, irrevocably committed to vote in favour of the Bye-Laws Resolution at the relevant General Meeting.

The key undertakings which will form the basis of the Bye-Laws Resolution, given by the Relevant Lenders and the Company (as indicated below) under Clause 6 of the Framework Agreement are as follows:

o the Relevant Lenders will not convert the outstanding balance under the Facilities Agreement into equity prior to 15 September 2016;

o the Relevant Lenders will not invoke any compulsory purchase rights pursuant to Section 103 of the Bermuda Companies Act to acquire shares owned by Minority Shareholders prior to 31 December 2016;

o the Company will continue to maintain a website to provide certain information to shareholders for a period of at least 24 months following the publication of the Circular; and

o the Company will endeavour, with effect from a Delisting, to make a trading service available to facilitate the trading of shares by minority shareholders, and the Relevant Lenders have given undertakings to assist with this process.

The Company and Relevant Lenders have also agreed that certain Drag Along and Tag Along rights will be incorporated into the Bye-Laws for the benefit of the minority shareholders in the event that the Company is subject to a change of control.

Shareholders should note that the Drag Along and Tag Along provisions would only become effective should the current protections under Bye-Law 50 (Takeover Offers) cease to have effect.

Minority Shareholders

As noted above, several undertakings have been given by the Relevant Lenders and the Company to the Minority Shareholders. Whilst the Minority Shareholders are not a party to the Framework Agreement, the Parties have agreed that certain undertakings (as referenced in clause 11.3 of the Framework Agreement) shall be enforceable in accordance with the Contracts (Rights of Third Parties) Act 1999 and may not be amended, varied or waived in any way by the Parties without the Approval of the Minority Shareholders.

The full text of the Framework Agreement is set out as Appendix I to this announcement.

Contact Information:

 
 Robert Estill - Chief Executive 
  Officer 
  Stewart Ahmed - Chief Operating 
  Officer 
  Gordon Stein - Chief Financial       [phone] 
  Officer                               2731 
 Strand Hanson Limited - Nominated 
  & Financial Adviser 
  Stuart Faulkner 
  Angela Hallett                        [phone] 
  James Dance                            3494 
 Jefferies International Limited 
  - Strategic Advisor                   [phone] 
  Richard Kent                           8102 
 VSA Capital Limited - Joint broker 
  Andrew Monk 
  Andrew Raca                          [phone] 
  Justin McKeegan                       5000 
 Mirabaud Securities LLP - Joint 
  broker                               [phone] 
  Rory Scott                            3360 
 Camarco - PR 
  Billy Clegg                          [phone] 
  Georgia Mann                          4980 
 

appendix I

FRAMEWORK AGREEMENT

   Dated                               2016 

MADAGASCAR OIL Limited

and

tHE PERSONS

set out in Schedule 1

 
 
   FRAMEWORK AGREEMENT 
---------------------- 
 

relating to Madagascar Oil Limited

Index

Clause Page

   1             Definitions and Interpretation 
   2             Condition 
   3             Funding 
   4             Implementation 
   5             Governance 
   6             Continuing Obligations 
   7             Remedies 
   8             Warranties 
   9             Governing Law and Jurisdiction 
   10           Notices 
   11           Miscellaneous 

Schedule 1 The Relevant Lenders

Schedule 2 Delisting Resolutions

Execution Page

   THIS FRAMEWORK AGREEMENT is made on                                          2016 

Between

(1) MADAGASCAR OIL LIMITED, incorporated in Bermuda with registered number 37901, whose registered office is at Canon's Court, 22 Victoria Street, Hamilton, HM12 Bermuda (the "Company"); and

   (2)          THE PERSONS whose names and addresses are set out in Schedule 1. 

WHEREAS

(A) The Company is a company limited by shares incorporated in Bermuda and whose Common Shares are admitted to trading on AIM.

(B) Subject to the Independent Directors' Election having occurred by the Election Long Stop Date, the Relevant Lenders have agreed to amend the Facilities Agreement, to subscribe for Tranche 1 Placing Shares and to provide the Tranche 2 Funding on the terms of this Agreement.

IT IS AGREED as follows:

   1              Definitions and Interpretation 

1.1 Definitions. In this Agreement the following expressions have the following meanings unless inconsistent with the context:

"Affiliate" means when used with reference to a Person (the "First Person"), shall mean either:

   (a)          any other Person that directly or indirectly: 
   (i)           is Controlled by that First Person; 
   (ii)          Controls that First Person; or 
   (iii)         is under common Control with that First Person, 

(b) if the First Person is an individual, the lineal descendants, step-children or adopted children of the First Person and any person with whom such First Person lives as partner in an enduring family relationship and any lineal descendants, step-children or adopted children of such person; or

(c) any Person acting in the capacity as trustee of a trust, the beneficiaries of which include the First Person or any person who by virtue of paragraphs (a) or (b) above is an Affiliate of the First Person;

"Agreed Form" means in relation to a document, in a form agreed by or on behalf of each of the Company and the Majority Lenders;

"AIM" means the market of that name operated by the London Stock Exchange;

"AIM Rules" means the AIM Rules for Companies, published by the London Stock Exchange;

"Appointment Letters" means the non-executive director letters of appointment to be entered into between each of the New Benchmark Directors and the Company;

"Approval of the Minority Shareholders" means the approval:

(a) in writing of Minority Shareholders holding between them more than 50% of the aggregate voting rights attached to the Common Shares held by the Minority Shareholders; or

(b) by way of a majority of the votes cast by Minority Shareholders in a general meeting (conducted on a poll and where each Minority Shareholder shall have one vote for each Common Share held by him),

provided that in any circumstances where a Lender or its Affiliates or its Connected Persons becomes a Minority Shareholder following the date of this Agreement, any Voting Rights of such Lender and its Affiliates and its Connected Persons shall be discounted from the denominator and numerator in determining whether or not the necessary threshold required for the purposes of an Approval of the Minority Shareholders has been obtained;

"Benchmark Parties" means Benchmark and BMK;

"Benchmark/SEP Relationship Agreement" means the relationship agreement dated 18 December 2012 (as amended on 24 January 2013) entered into between the Company, the Benchmark Parties and SEP;

(MORE TO FOLLOW) Dow Jones Newswires

March 02, 2016 02:01 ET (07:01 GMT)

"Benchmark" means Benchmark Advantage Fund, Ltd, a company incorporated in the Cayman Islands with registered number 217893 and whose registered office is at PO Box 309, Ugland House, Grand Cayman KY1-1104, the Cayman Islands;

"BMK" means BMK Resources Ltd, a company incorporated in the Cayman Islands with registered number 273934 and whose registered office is at PO Box 309, Ugland House, Grand Cayman KY1-1104, the Cayman Islands;

"Board" means the board of directors of the Company;

"Broker's Agent" means Computershare Investor Services PLC, a company registered in England & Wales with company number 3498808 and whose registered office is at The Pavilions, Bridgwater Road, Bristol BS13 8AE;

"Broker's Agent Account" means a US$ dollar account in the name of Computershare Investor Services Plc with the following details:

NAME: CIS PLC RE: Corporate Actions - USD Application Account 24

BANK: Royal Bank of Scotland PLC

BIC/SWIFT: RBOSGB2L

IBAN: GB07RBOS16630000732633

"Business Day" means a day (other than a Saturday or Sunday) on which clearing banks in the City of London are open for the transaction of normal sterling banking business;

"Bye-Laws" means the bye-laws of the Company;

"Common Shares" means the common shares of US$0.001 each in the capital of the Company, and where the context requires, the Depositary Interests:

"Companies Act" means the Bermuda Companies Act 1981;

"Connected Persons" when used with reference to a Person (the "First Person") shall mean any Person (the "Second Person") who, pursuant to an agreement or arrangement (whether formal or informal), co-operates with that First Person in relation to:

(a) the acquisition of Voting Rights in the Company for the purpose of obtaining or consolidating control of the Company; or

(b) the taking of an action by the Second Person which the First Person would be prohibited from taking pursuant to Bye-Law 54 of the Bye-Laws or the undertakings in Clause 6 of this Agreement;

"Control" (including the terms "Controls", "Controlled" and "Controlling") means, in respect of any Person, the possession of, or the entitlement to currently possess, whether directly or indirectly, the power to manage or direct the management of such Person, or to appoint the managing and governing bodies of such Person, or a majority of the members thereof, whether through the ownership of voting securities, by contract or deed (which may include a shareholders' agreement, side letter or similar arrangement) or otherwise (and for the avoidance of doubt, a limited partnership shall be deemed to be Controlled by its manager, general partner and/or by such other Person or Persons to whom such Control may have been granted or whom the limited partnership may have appointed to carry out those functions ordinarily associated with the rights and obligations of the manager or general partner);

"Director" means a director of the Company;

"Delisting" means the proposed cancellation of the admission to trading on AIM of the Common Shares becoming effective in accordance with the provisions of this Agreement and the AIM Rules;

"Depositary" means Computershare Investor Services PLC (in their capacity as the holder of Common Shares on behalf of other persons pursuant to the terms of a depositary agreement with the Company) being a company registered in England & Wales with company number 3498808 and whose registered office is at The Pavilions, Bridgwater Road, Bristol BS13 8AE or any person appointed in replacement thereof;

"Depositary Interests" means a depositary interest issued by the Depositary representing an entitlement to a Common Share which may be traded through CREST in a dematerialised form;

"Delisting Circular" means the circular to be sent to the Shareholders, which includes a notice of the Delisting General Meeting containing the Delisting Resolutions;

"Delisting General Meeting" means the special general meeting of the Company to approve the Delisting Resolutions;

"Delisting Resolutions" means the special resolutions proposed in connection with Delisting in the Agreed Form appended to this Agreement as Schedule 2;

"DI Register" means the register of Depositary Interests maintained by the Depositary constituting the record of holders from time to time of the Depositary Interests;

"Election Press Announcement" means the announcement to be made by the Company in connection with any Independent Directors' Election;

"Exchange Rate" means exchange rate of GBP1 = US$1.3924 (being the exchange rate calculated on the last practicable date prior to the date of this Agreement);

"Facilities Agreement" means the agreement dated 29 June 2015 as amended and restated by an amendment and restatement agreement dated 29 September 2015 and entered into between the Company and the Lenders (as amended from time to time, including by this Agreement);

"Group" means the Company and all of its Subsidiaries and every person in relation to which the Company or any of its Subsidiaries is a Parent Company and "Group Company" means any one of them;

"JPD" means The John Paul Dejoria Family Trust, whose registered office is at 2934 Oestrick Lane, Austin, Texas 78733, USA;

"Independent Directors" means Directors who have not been appointed by any of the Lenders pursuant to a contractual right under the Relationship Agreements and as at the date of this Agreement are Iain Patrick, Robert Estill and Michael Duginski;

"Irrevocable Undertaking" means a deed of irrevocable undertaking in the Agreed Form provided by Shareholders to the Company to vote in favour of the Delisting Resolutions at the Delisting General Meeting and the Second Delisting Resolutions at the Second Delisting General Meeting (if applicable);

"Lenders" means Outrider, SEP, JPD and BMK;

"Loan" has the meaning given to such term in the Facilities Agreement;

"London Stock Exchange" means London Stock Exchange plc;

"Majority Lenders" has the meaning given to it in the Facilities Agreement;

"Maximum Commitment Amount" means the aggregate of the total amounts which may be committed or made available by the Relevant Lenders and the Other Major Shareholders (if applicable) to the Company pursuant to the Tranche 1 Placing and Tranche 2 Funding (including, for the avoidance of doubt, any Tranche 2 Placing Increase or Tranche 2 Loan Increase, as applicable) in accordance with the terms of this Agreement;

"Matched Trade Service" means an off market trading facility proposed to be made available on terms reasonably acceptable to the Board from the date of Delisting and administered by an administrator who is located in the United Kingdom and regulated by the Financial Conduct Authority and who will, where possible, match trades in the Common Shares between willing buyers and willing sellers;

"Minority Shareholders" means a Shareholder who, together with their Affiliates, holds five per cent. (5%) or less of the Common Shares from time to time;

"Nomad" means Strand Hanson Limited;

"Other Major Shareholders" means SEP and such other Shareholders as the Board may determine;

"Outrider" means Outrider Master Fund, LP, a company incorporated in the Cayman Islands with registered number 606863 and whose registered office is at c/o Elian Fiduciary Services (Cayman) Limited, 89 Nexus Way, Camama Bay, Grand Cayman KY1-9007, Cayman Islands;

"Outrider Relationship Agreement" means the relationship agreement dated 24 September 2014 entered into between the Company and Outrider;

"Parent Company" has the meaning given to it in section 1173(1) of the UK Companies Act 2006;

"Parties" means the parties to this Agreement, each of which is a "Party";

"Person" means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof;

"Placing Letters" means the Tranche 1 Placing Letters and the Tranche 2 Placing Letters;

"Placing Price" means the Tranche 1 Placing Price or the Tranche 2 Placing Price (as the case may be);

"Placing Shares" means the Tranche 1 Placing Shares and/or the Tranche 2 Placing Shares (as the case may be);

"Pro-Rata Share" means in the case of any Other Major Shareholder:

A

B

where:

A = the number of Common Shares held by such Other Major Shareholder (at such time of calculation); and

B = the total number of Common Shares in issue (at such time of calculation);

"Regulatory Information Service" means an information dissemination service provider approved by the Financial Conduct Authority whose name is on the list maintained by the Financial Conduct Authority;

"Related Party" means a Director, a Substantial Shareholder and each of their Affiliates;

"Relationship Agreements" means the Benchmark/SEP Relationship Agreement and the Outrider Relationship Agreement;

"Relevant Lenders" means Outrider, JPD and BMK, each of which is a "Relevant Lender";

"Required Information" means, in respect of a transaction, the following information:

   (a)          particulars of the transaction, including the name of any other relevant parties; 

(b) a description of the assets which are the subject of the transaction, or the business carried on by, or using, the assets;

   (c)           the full consideration and how it is being satisfied; and 
   (d)          in the case of a disposal, the application of the sale proceeds; 

"RIS Hours" means 7.00 a.m. to 6.30 p.m. on a Business Day, being the operating hours of the Regulatory Information Service;

"Second Delisting General Meeting" means the special general meeting of the Company to be convened in accordance with Clause 3.5(e)(iv) to approve the Second Delisting Resolutions;

"SEP" means SEP African Ventures Limited, a company incorporated in Gibraltar with registered number 90967 and whose registered office is at P.O. Box 199, 57/63 Line Wall Road, Gibraltar;

"Shareholder" means a shareholder of the Company;

(MORE TO FOLLOW) Dow Jones Newswires

March 02, 2016 02:01 ET (07:01 GMT)

"Signature Press Announcement" means the announcement to be made by the Company in connection with the execution of this Agreement;

"Substantial Shareholder" means a Shareholder holding Common Shares representing at least 10% of the aggregate Voting Rights of the Company;

"Subsidiaries" means each subsidiary and subsidiary undertaking (as defined in the UK Companies Act 2006) from time to time;

"Tranche 1 Admission" means the admission to trading on AIM of all of the Tranche 1 Placing Shares becoming effective in accordance with Rule 6 of the AIM Rules;

"Tranche 1 Placing" the proposed cash box placing of the Tranche 1 Placing Shares at the Tranche 1 Placing Price on the terms set out in this Agreement and in the Tranche 1 Placing Letter to raise US$2 million from the Relevant Lenders plus such additional amount that may be raised from the Other Major Shareholders if they elect to participate in full for their respective Pro-Rata Share as contemplated by Clause 3.3(b);

"Tranche 1 Placing Letter" means the placing letter in the Agreed Form to be signed by each of the Relevant Lenders and, to the extent that they participate in the Tranche 1 Placing, the Other Major Shareholders, pursuant to which they will subscribe for the Tranche 1 Placing Shares;

"Tranche 1 Placing Price" means US$0.013924 (representing 1p at the Exchange Rate) per Tranche 1 Placing Share;

"Tranche 1 Placing Shares" means the new Common Shares that may be issued pursuant to the Tranche 1 Placing;

"Tranche 1 Subscription Amount" means, in respect of each Relevant Lender, the cash amount set out against its name in column 3B of Schedule 1;

"Tranche 2 Admission" means the admission to trading on AIM of all of the Tranche 2 Placing Shares becoming effective in accordance with Rule 6 of the AIM Rules;

"Tranche 2 Funding" means the Tranche 2 Placing or the Tranche 2 Loan;

"Tranche 2 Loan" means a loan of US$2 million to be made pursuant to the terms of the Facilities Agreement;

"Tranche 2 Loan Increase" has the meaning given to it in Clause 3.6(d);

"Tranche 2 Loan Trigger" means:

   (i)           the termination of the Relationship Agreements and the Deed of Undertaking; 

and the first to occur of:

   (ii)          the passing of the Delisting Resolutions at the Delisting General Meeting; or 

(iii) the receipt by the Company of Irrevocable Undertakings from Shareholders holding Common Shares carrying at least 75% of the aggregate Voting Rights in the Company to vote in favour of the Delisting Resolutions;

"Tranche 2 Placing" the proposed cash box placing of the Tranche 2 Placing Shares at the Tranche 2 Placing Price on the terms set out in this Agreement and in the Tranche 2 Placing Letter to raise up to approximately US$2 million from the Relevant Lenders (or such greater amount pursuant to the Tranche 2 Placing Increase as may be determined in accordance with Clause 3.5(b)) plus such additional amount that may be raised from the Other Major Shareholders if they elect to participate in full for their respective Pro-Rata Share in accordance with Clause 3.5(e);

"Tranche 2 Placing Increase" has the meaning given to it in Clause 3.5(b);

"Tranche 2 Placing Letter" means the placing letter in substantially the same form as the Tranche 1 Placing Letter to be signed by each of the Relevant Lenders and, to the extent that they participate in the Tranche 2 Placing, the Other Major Shareholders, pursuant to which they will subscribe for the Tranche 2 Placing Shares;

"Tranche 2 Placing Price" means US$0.010443 (representing 0.75p at the Exchange Rate) per Tranche 2 Placing Share;

"Tranche 2 Placing Shares" means the new Common Shares that may be issued pursuant to the Tranche 2 Placing;

"Tranche 2 Subscription Amount" means, in respect of each Relevant Lender, the cash amount set out against its name in column 4B of Schedule 1;

"Tranche 2 Subscription Amount Increase" means, where the Company and the Majority Lenders have agreed to the Tranche 2 Placing Increase, in respect of each Relevant Lender, the cash amount required at the Tranche 2 Placing Price to subscribe for such additional number of Tranche 2 Placing Shares as may be allocated to it pursuant to Clause 3.5(f); and

"Voting Rights" means the rights attaching to Common Shares to vote at general meetings of the Company whether such rights are exercised in person or by proxy or proxies (as the case may be).

1.2 Construction of certain terms. In this Agreement, unless the context requires otherwise:

(a) references to recitals, clauses and schedules are to recitals, clauses and schedules of and to this Agreement;

(b) references to any act, statute or statutory provision include references to any such provision as amended, re-enacted or replaced from time to time and any former statutory provision replaced (with or without modification) by the provision referred to (save to the extent that such amendment, re-enactment or replacement would extend, create or increase the liability of any Party hereto);

(c) where the words "includes", "including", "in particular" or any similar expression are used in this Agreement, they are deemed to have the words "without limitation" following them;

(d) references to persons include references to individuals, firms, corporations or unincorporated associations (whether or not having separate legal personality and irrespective of the jurisdiction in or under the law of which it was incorporated or exists);

(e) references to the singular include references to the plural and vice versa and references to the masculine gender shall include references to the feminine and neuter gender and vice versa; and

(f) headings are inserted for convenience only and shall not affect the interpretation of this Agreement or any part thereof.

   2              Condition 

2.1 Clauses 3 to 6 (other than Clause 4.1(a) and Clause 4.1(b)) are conditional upon the Independent Directors, in their sole discretion, resolving at a committee meeting of the Independent Directors, to make an election to proceed with the Tranche 1 Placing (the "Independent Directors' Election") and shall cease to have effect if the Independent Directors' Election does not occur by 3.00 pm London time on the 5(th) day immediately following the date of this Agreement (or such later time and date as the Company and the Majority Lenders may agree)(the "Election Long Stop Date"). In the event that the Company decides to pursue alternative financing and as a result of this the Independent Directors' Election is not made by the Election Long Stop Date, a break fee of US$250,000 (in aggregate) shall be payable by the Company to the Relevant Lenders as the Majority Lenders direct, such amount to be paid towards the fees incurred by the Relevant Lenders in connection with this Agreement.

   3              Funding 
   3.1          Amendments to the Facilities Agreement 

(a) Pursuant to clause 31.1 of the Facilities Agreement, the Company and each of the Relevant Lenders (in their capacity as the Majority Lenders and Super Majority Lenders (as defined in the Facilities Agreement)) hereby agree that, on the date on this Agreement, the Facilities Agreement shall be amended as follows:

(i) the following defined terms shall be added to clause 1.1 (Definitions) of the Facilities Agreement:

"Delisting" has the meaning given to it in the Framework Agreement;

"Delisting General Meeting" has the meaning given to it in the Framework Agreement;

"Delisting Resolutions" has the meaning given to it in the Framework Agreement;

"Framework Agreement" means the agreement entered into on 2016 between the Borrower and the Relevant Lenders;

"Irrevocable Undertakings" has the meaning given to it in the Framework Agreement;

"Second Drawdown" means a Loan made during the Second Availability Period;

"Shareholder" has the meaning given to it in the Framework Agreement;

"Tranche 1 Admission" has the meaning given to it in the Framework Agreement;

"Tranche 2 Funding" has the meaning given to it in the Framework Agreement; and

"Voting Rights" has the meaning given to it in the Framework Agreement;

(ii) clause 5.2(b) of the Facilities Agreement shall be deleted in its entirety and a new clause 5.2(b) shall be inserted as follows:

"on or prior to any Second Drawdown Date, if it is satisfied (in its sole discretion) with the progress being made by the Borrower towards achieving its objectives (to include without limitation the Delisting) confirm to the Borrower that it will make a Loan available to the Borrower on any Second Drawdown Date in an amount up to its Available Commitment";

(iii) clause 5.3(b) of the Facilities Agreement shall be deleted in its entirety and a new clause 5.3(b) of the Facilities Agreement shall be inserted as follows:

"on any Second Drawdown Date (whether on or after the date of the Tranche 2 Funding), where it has agreed to make a Loan in the amount confirmed pursuant to clause 5.2(b), make a Loan of such an amount provided such Loan is approved by the Majority Lenders (acting in their sole discretion), such approval to be notified to the Borrower and in the event that no such approval and notice is provided in respect of all such Loans in the amounts confirmed by such Lenders, no Loan will be made by any Lender on such Second Drawdown Date. Each Lender providing such a Loan hereby irrevocably waives any additional conditions (including any requirements to provide confirmations under this Agreement) to the making of the Tranche 2 Funding by way of such a Second Drawdown and is hereby irrevocably deemed to have provided any confirmations which may be required from it under this Agreement for the Tranche 2 Funding in each case with respect to such waiver and confirmations provided that no Event of Default under clause 20.7(a)(iii) or Clause 20.7(a)(iv) has occurred and is continuing (other than an Event of Default arising pursuant to or in connection with any action

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taken by the Lenders)";

   (iv)         a new clause 5.5 shall be added to the Framework Agreement: 

"Restrictions on Second Drawdowns

Clause 5.1 is subject to this clause 5.5. The Borrower shall not make any Request (and any Purported Request shall be deemed null and void) nor shall any Second Drawdown be made or permitted in each case during the Second Availability Period other than as contemplated by the Framework Agreement until or following the date which is 5 Business Days after the completion of the Tranche 2 Funding without the prior written approval of the Majority Lenders";

(v) "subject to and with effect from Tranche 1 Admission, clause 10.1 of the Facilities Agreement shall be deleted in its entirety and a new clause 10.1 of the Facilities Agreement shall be inserted as follows: "Interest will accrue on each Loan at a fixed rate of ten per cent per annum. The interest will accrue at this rate with effect from the Drawdown Date of the relevant Loan until Tranche 1 Admission. Following Tranche 1 Admission, interest will accrue from such date on each Loan outstanding at a fixed rate of twenty per cent per annum";

(vi) the words "on 31 March 2016 and" shall be deleted from clause 10.2(a) of the Facilities Agreement;

(vii) clause 11.1(c) of the Facilities Agreement should be deleted in its entirety and a new clause 11.1(c) of the Facilities Agreement shall be inserted as follows:

"On each Second Drawdown Date, an arrangement fee equal to 20% of the Loan made by that Lender on that date, which shall be deemed added to the amount of the Loan outstanding on that date"; and

(viii) clause 20.15 of the Facilities Agreement shall be deleted in its entirety and a new clause 20.15 of the Facilities Agreement shall be inserted as follows:

"The Majority Lenders confirm (having considered, among other things, the items set out in the report provided by the Borrower pursuant to Clause 17.3 (Strategic Transaction) on, or within 20 days after, 30 April 2016, that, in their opinion, insufficient progress has been made by the Borrower towards achieving its objectives."

   3.2          Waiver under the Facility Agreement 

(a) Each of the Relevant Lenders (in their capacity as the Majority Lenders and Super Majority Lenders (as defined in the Facilities Agreement)) and the Company hereby agrees in accordance with clause 31.1 of the Facilities Agreement:

(i) that the net proceeds of the Placing Shares shall be applied by the Company in accordance with Clause 3.7 and shall not be applied to repayment of the Loans; and

(ii) that the Placing Price for the Placing Shares shall be paid in cash and shall not be set off against the Loans and that accordingly, pursuant to Clause 3.3 and 3.5 (as applicable), it shall pay the Placing Price in cash for the Placing Shares subscribed for by it pursuant to the Placing Letters without set off against the Loans,

and in respect of the Tranche 1 Placing and the Tranche 2 Placing (if applicable), the requirements of clause 8.3 of the Facilities Agreement shall be deemed waived accordingly.

(b) In consideration of the waiver provided on behalf of the Lenders pursuant to Clause 3.2(a)(i), the Company will on:

(i) Tranche 1 Admission, pay a waiver fee to the Lenders which is equal to 20 per cent. of the amount paid by the subscribers in the Tranche 1 Placing for the Tranche 1 Placing Shares; and

(ii) Tranche 2 Admission (if applicable), pay a waiver fee to the Lenders which is equal to 20 per cent. of the amount paid by the subscribers in the Tranche 2 Placing for the Tranche 2 Placing Shares,

and any such waiver fee shall not be paid by the Company in cash and shall instead be deemed to be added (pro rata as amongst the Lenders) to the outstanding Loans under the Facilities Agreement.

(c) The Facilities Agreement shall remain in full force and effect and, except as expressly set out in this Agreement, nothing in this Agreement shall be deemed to be a waiver by the Lenders of, or consent by the Lenders to, any breach or potential breach (present or future) of any provision of the Facilities Agreement.

   3.3          Tranche 1 Placing 
   (a)          Each of the Relevant Lenders agrees that it shall: 

(i) subscribe in cash (in US$ dollars) for the number of Tranche 1 Placing Shares at the Tranche 1 Placing Price set out against its name in column 3A of Schedule 1 (for which the aggregate subscription price shall be its Tranche 1 Subscription Amount); and

(ii) execute the Tranche 1 Placing Letter on the date of the Independent Directors' Election and, within 2 Business Days, pay its Tranche 1 Subscription Amount in cash to the Broker's Agent Account to be held by the Broker's Agent pending Tranche 1 Admission. For the avoidance of doubt, elections made by Other Major Shareholders under Clause 3.3(b) will not have any effect on the subscription for Tranche 1 Placing Shares made by the Relevant Lenders.

   (b)          The Company shall: 

(i) on the date of the Independent Directors' Election, offer the Other Major Shareholders a number of Tranche 1 Placing Shares equal to their Pro-Rata Share of the total Tranche 1 Placing Shares and such offer shall be open for acceptance at the election of the Other Major Shareholders for a 10 day period commencing on the date of the Independent Directors' Election (the "Tranche 1 Offer Period") on the terms of the Tranche 1 Placing Letters; and

(ii) provide the Relevant Lenders with details of whether the Other Major Shareholders have elected to participate in the Tranche 1 Placing (including with respect to the amount of each Other Major Shareholder's allocated subscription at the Tranche 1 Placing Price) as soon as reasonably practicable after such election is received.

(c) Tranche 1 Admission will then occur within 5 Business Days following the end of the Tranche 1 Offer Period, or, if earlier, the date on which the Company receives a signed Tranche 1 Placing Letter from each of the Other Major Shareholders approached by the Company pursuant to Clause 3.3(b)(i).

(d) The Company undertakes that the Tranche 1 Placing Shares shall carry Voting Rights and be eligible for voting at the Delisting General Meeting and where required shall adjourn the Delisting General Meeting until such time as the Tranche 1 Placing Shares become so eligible.

   3.4          Tranche 2 Funding 

In the event that the Tranche 2 Loan Trigger is satisfied on or before 12 April 2016 or such later date not later than 30 May 2016 as may be notified to the Company in writing by the Majority Lenders (the "Tranche 2 Trigger Date"), each of the Relevant Lenders hereby agrees to provide the Tranche 2 Funding by way of the Tranche 2 Loan (in accordance with Clause 3.6). Where the Tranche 2 Loan Trigger is not satisfied by the Tranche 2 Trigger Date, each of the Relevant Lenders hereby agrees to provide the Tranche 2 Funding by way of either the Tranche 2 Placing or the Tranche 2 Loan (and where required by the Majority Lenders to support both processes in parallel) as may be directed by the Majority Lenders.

   3.5          Tranche 2 Placing 

(a) This Clause is subject to the Tranche 2 Funding being provided by way of the Tranche 2 Placing in accordance with Clause 3.4.

(b) The Board and the Majority Lenders may agree in writing on or before the Tranche 2 Trigger Date to increase the number of Tranche 2 Placing Shares to be subscribed by the Relevant Lenders and offered to the Other Major Shareholders at the Tranche 2 Placing Price up to an amount agreed between the Majority Lenders and the Company but, in any event, so that the total size of the Tranche 2 Placing does not exceed US$4 million (the "Tranche 2 Placing Increase"), in which case, the number of the Tranche 2 Placing Shares that constitute the total Tranche 2 Placing Increase to be subscribed by each Relevant Lender and any participating Other Major Shareholder shall be determined pursuant to Clause 3.5(f).

(c) Each of the Relevant Lenders agrees that it shall, on the Business Day following the Tranche 2 Trigger Date:

   (i)           subscribe in cash (in US$ dollars) at the Tranche 2 Placing Price for: 

(A) the number of Tranche 2 Placing Shares set out against its name in column 4A of Schedule 1 (for which the aggregate subscription price shall be its Tranche 2 Subscription Amount); and

(B) (where, pursuant to Clause 3.5(b), the Majority Lenders and the Company have agreed to the Tranche 2 Placing Increase) such additional number of Tranche 2 Placing Shares as may be allocated to it pursuant to Clause 3.5(f) (for which the aggregate subscription price shall be its Tranche 2 Subscription Amount Increase); and

   (ii)          execute the Tranche 2 Placing Letter. 

(d) Each of the Relevant Lenders agrees that it shall pay its Tranche 2 Subscription Amount and (if applicable) its Tranche 2 Subscription Amount Increase, in cash on the 7(th) Business Day following the Tranche 2 Trigger Date to the Broker's Agent Account (or such other account as may be designated for such purpose and notified to the Relevant Lenders in writing by the Company). For the avoidance of doubt, elections made by Other Major Shareholders under Clause 3.5(e) below will not have any effect on the subscription for Tranche 2 Placing Shares made by the Relevant Lenders.

   (e)          The Company shall: 

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(i) within 2 Business Days following the Tranche 2 Trigger Date, offer the Other Major Shareholders a number of Tranche 2 Placing Shares equivalent to their Pro-Rata Share of the total Tranche 2 Placing Shares (having taken into account all Tranche 2 Placing Shares to be subscribed for by the Relevant Lenders and offered to the Other Major Shareholders) and such offer shall be open for acceptance at the election of the Other Major Shareholders for a period ending on the 5(th) Business Day following the date that the offer is made on the terms of the Tranche 2 Placing Letters;

(ii) provide the Relevant Lenders with details of whether the Other Major Shareholders have elected to participate in the Tranche 2 Placing (including with respect to the amount of each Other Major Shareholder's allocated subscription at the Tranche 2 Placing Price) as soon as reasonably practicable after such election is received;

(iii) upon receipt of an election from any of the Other Major Shareholders pursuant to Clause 3.5(e)(i) and subject to the Majority Lenders and the Company agreeing to the Tranche 2 Placing Increase in accordance with Clause 3.5(b), specify to the Relevant Lenders the number of Tranche 2 Placing Shares allocated to the Relevant Lenders in accordance with Clause 3.5(f); and

(iv) within 10 Business Days of receipt of a notice signed by the Majority Lenders, despatch a new circular (substantially in the same form as the Delisting Circular) (the "Second Delisting Circular") to the Shareholders which will include a notice of the Second Delisting General Meeting containing the resolutions to be proposed at such a meeting for the purposes of approving Delisting (and any changes to the Bye-Laws which may be requested by the Majority Lenders and agreed between the Parties, provided that, to the extent that the Relationship Agreements and Deed of Undertaking are in force at such time, the amendments are not inconsistent with the provisions contained in the Relationship Agreements and Deed of Undertaking) (the "Second Delisting Resolutions").

(f) The Parties acknowledge that if the Majority Lenders and the Company agree to the Tranche 2 Placing Increase pursuant to Clause 3.5(b), the additional Tranche 2 Placing Shares arising as a result of the Tranche 2 Placing Increase shall be allocated between each of the Relevant Lenders and each of the participating Other Major Shareholders by the Board as follows: (the "Tranche 2 Allocation Mechanic"):

(i) with respect to the Relevant Lenders, as agreed between the Relevant Lenders and the Company (taking into account the offers made to the Other Major Shareholders pursuant to Clause 3.5(e)(i)) up to any limitations beyond which a mandatory offer would be required pursuant to Bye-Law 50 of the Bye-Laws (subject to any relaxation of such limitations permitted by the Bye Laws or the Relationship Agreements) and thereafter between those remaining participating Relevant Lenders not subject to such limitations; and

(ii) with respect to the Other Major Shareholders, based on the Pro-Rata Share of each participating Other Major Shareholder in accordance with Clause 3.5(e)(i).

   3.6          Tranche 2 Loan 

(a) This Clause is subject to the Tranche 2 Funding being provided by way of the Tranche 2 Loan in accordance with Clause 3.4.

(b) The Company shall notify the Relevant Lenders within 2 Business Days of the Tranche 2 Loan Trigger being satisfied.

(c) Subject to, and on the 5(th) Business Day following, the Company's notification of satisfaction of the Tranche 2 Loan Trigger pursuant to Clause 3.6(b) or the Majority Lenders' notification that the Tranche 2 Loan Trigger has not been satisfied but the Tranche 2 Funding may be implemented by way of the Tranche 2 Loan (as the case may be), each of the Relevant Lenders hereby agrees in their capacity as Majority Lenders to provide the Tranche 2 Funding by way of the Tranche 2 Loan as a Second Drawdown (as defined in the Facilities Agreement) upon the receipt of a Request (as defined in the Facilities Agreement) approved by the Majority Lenders for the amount confirmed pursuant to the operation of clause 5 of the Facilities Agreement and, for the avoidance of doubt, subject in all respects to the terms of clause 5.3(b) of the Facilities Agreement.

(d) The Board and the Majority Lenders may agree in writing on the date that the Majority Lenders approve a Second Drawdown pursuant to clause 5.3(b) of the Facilities Agreement to increase the amount of the Tranche 2 Loan up to an amount agreed between the Majority Lenders and the Company (the "Tranche 2 Loan Increase"), in which case the funding of the Tranche 2 Loan Increase shall be made in accordance with the Facilities Agreement and allocated between the Relevant Lenders as agreed between the Relevant Lenders and the Company.

   3.7          Use of Proceeds 

The Company will apply the net proceeds of the Tranche 1 Placing and the Tranche 2 Funding to meeting the costs and expenses of the Tranche 1 Placing and the Tranche 2 Funding and restructuring the Company pursuant to this Agreement, which shall include, but not to be limited to:

(a) the fees incurred by the Company in connection with the Tranche 1 Placing and the Tranche 2 Funding, Delisting and/or this Agreement and the matters contemplated by it;

(b) the fees incurred by the Relevant Lenders to the extent payable by the Company pursuant to Clause 11.10; and

(c) to the application of the remaining funds in accordance with the provisions of the Facilities Agreement relating to the use of proceeds.

   3.8          Further Funding 

Until 30 May 2016 or, if earlier, until such time as the Maximum Commitment Amount has been fully utilised by the Company and the Company requires any additional funding, the Company undertakes that it shall not take any action or decision under or in connection with the Facilities Agreement other than in accordance with this Framework Agreement (including, without limitation, the making of any Request under the Facilities Agreement) in respect of any such additional funding requirement without prior consultation with the Majority Lenders.

   4              Implementation 
   4.1          Company obligations 

The Company shall:

(a) make the Signature Press Announcement by releasing it on a Regulatory Information Service promptly following the execution of this Agreement, save that if this occurs outside RIS Hours then the Company will make the Signature Press Announcement at 7:00 a.m. on the next Business Day;

(b) on the date of any Independent Directors' Election, make the Election Press Announcement by releasing it on a Regulatory Information Service promptly following any Independent Directors' Election, save that if this occurs outside RIS Hours then the Company will make the Election Press Announcement at 7:00 a.m. on the next Business Day;

(c) within 5 Business Days of the Independent Directors' Election, procure that the Board approve the Delisting Circular and submit it to the Company's printers for printing and despatch to the Shareholders; and

(d) procure that the Board, subject always to their fiduciary duties, shall not adjourn the Delisting General Meeting or the Second Delisting General Meeting save where required to do so under Clause 3.3(d) above, by law, under the Bye-Laws or with the written consent of the Majority Lenders.

   4.2          Lender obligations 

Each of the Relevant Lenders:

(a) shall promptly provide the Company with all information and assistance as the Company may reasonably require in connection with the preparation of the Delisting Circular and the Second Delisting Circular (if applicable) (including input on the sections of the Delisting Circular and/or the Second Delisting Circular which detail the Company's strategy after Delisting) and any supplementary circular to the Delisting Circular and/or the Second Delisting Circular if required;

(b) shall on the date of this Agreement enter into an Irrevocable Undertaking that it shall, and shall procure that each of its Affiliates (to the extent that any such Affiliate holds Voting Rights) shall:

(i) exercise all of its Voting Rights so as to vote in favour of each and all the Delisting Resolutions at the Delisting General Meeting and, if a Second Delisting General Meeting is convened in accordance with the terms of this Agreement, the Second Delisting Resolutions at the Second Delisting General Meeting; and

(ii) procure that any potential transferee of any of its Common Shares enter into an irrevocable undertaking with the Company substantially in the form contemplated by this Clause 4.2(b) prior to completing a transfer of any of its Common Shares prior to the Delisting General Meeting or the Second Delisting General Meeting (if applicable); and

(c) acknowledges and agrees that this Agreement shall be described in the Signature Press Announcement and may be attached to or published with the Signature Press Announcement, Delisting Circular and Second Delisting Circular and irrevocably agrees to its name being included in the same in the form and context in which it appears.

   4.3          General 

Without limiting Clause 4, the Company agrees to:

(a) use all reasonable endeavours to ensure that Delisting occurs on the sixth Business Day following the passing of the Delisting Resolutions at the Delisting General Meeting;

(b) do all such further acts and things and execute all such documents as may be reasonably necessary or desirable in connection with Delisting on a prompt and timely basis in order to meet the timeframes specified in this Clause 4; and

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(c) provide the Relevant Lenders with copies of each of the Election Press Announcement, the Delisting Circular and any Second Delisting Circular (as the case may be) at the same time as copies of the same are provided to the Board for approval at a meeting of the Board, and, subject to the Board's fiduciary duties, take into account any reasonable amendments that would not result in a breach by the Company of the AIM Rules provided by each Relevant Lender in advance of or at such meeting of the Board in relation to references to that Relevant Lender in such documents.

   5              Governance 
   5.1          Appointment of New Directors 

The Company undertakes to procure that the Board will hold a meeting of the Board prior to the execution of this Agreement where it shall resolve to, subject to the Independent Directors' Election, accept the appointment of up to two nominees as Directors (the "New Benchmark Directors") nominated for appointment by the Benchmark Parties pursuant to clause 2.1 of the Benchmark/SEP Relationship Agreement on and with effect from, and subject to, Delisting and the Board's prior receipt of each of the Appointment Letters, provided that if the Delisting Resolutions are not passed at the Delisting General Meeting, then the appointment of the New Benchmark Directors will be accepted by the Board within 5 Business Days of the Delisting General Meeting subject to the Nomad having provided the required confirmation under clause 2.2 of the Benchmark/SEP Relationship Agreement and the Board's prior receipt of each of the Appointment Letters.

   6              Continuing Obligations 
   6.1          Non-conversion of loans 

(a) Each of the Relevant Lenders undertakes to the Company that it shall not, and shall procure that each of its Affiliates shall not, prior to the earlier of (A) 15 September 2016; and (B) the date on which the Company ceases to have any Minority Shareholders:

(i) convert any loans which it or its Affiliates has made or may make to the Company pursuant to the Facilities Agreement or otherwise into shares or securities in the Company or any Group Company or otherwise receive or subscribe for shares or securities in the Company or any Group Company issued to finance (or which have the effect of financing) the repayment of such loans;

(ii) take any action which has substantially the same effect as those set out in Clause 6.1(a)(i) above; or

(iii) propose or vote in favour of resolutions proposed at a general meeting or sign a written resolution of the Company which would grant the Directors an authority to issue shares or securities in the Company for the purposes set out in Clause 6.1(a)(i) or (ii) above.

(b) The Company undertakes to the Relevant Lenders and the Minority Shareholders that it shall not, prior to the earlier of (A) 15 September 2016; and (B) the date on which the Company ceases to have any Minority Shareholders:

(i) convert any loans which have been made to the Company by the Lenders or any of their Affiliates pursuant to the Facilities Agreement or otherwise into shares or securities in the Company or any Group Company or otherwise issue or sell shares or securities in the Company or any Group Company to finance (or which have the effect of financing) the repayment of such loans; or

(ii) take any action which has substantially the same effect as those set out in Clause 6.1(b)(i) above; or

(iii) propose any resolutions of the Company which would grant the Directors an authority to issue shares or securities in the Company for the purposes set out in Clauses 6.1(b)(i) or 6.1(b)(ii) above.

   6.2          Statutory squeeze-out rights 

Each of the Relevant Lenders undertakes to the Company and to the Minority Shareholders that it shall not, and shall procure that each of its Affiliates and its Connected Persons shall not, prior to the earlier of (A) 31 December 2016; and (B) the date on which the Company ceases to have any Minority Shareholders, give notice to any Shareholder to acquire that Shareholder's Common Shares pursuant to section 103 of the Companies Act.

   6.3          Company Website 

Each of the Relevant Lenders undertakes to the Company that it shall, and shall procure that each of its Affiliates shall, and the Company undertakes to the Relevant Lenders and the Minority Shareholders that it shall subject to Delisting and until the earlier of (A) the second anniversary of Delisting; or (B) the date on which the Company ceases to have any Minority Shareholders, take all and any actions which may be required to enable the Company to maintain a website for the Group which shall include:

   (a)          a copy of this Agreement; 

(b) copies of the Company's annual audited accounts and, if prepared, half-yearly financial reports;

(c) information on all transactions undertaken by the Company or any Group Company, other than transactions undertaken in the ordinary course of business, which have a value in excess of US$2 million (including the Required Information);

(d) information on any transactions with Related Parties (including the Required Information);

   (e)          details of the Directors and any changes to the Board; 

(f) information on any issues of shares in the Company or any Group Company (other than any issuance of shares by one Group Company to another Group Company);

(g) information on any dividends declared by the Company or any Group Company (other than dividends declared by one Group Company in favour of another Group Company); and

(h) details of any proposed transfer of shares which would trigger a tag-along offer under the Bye-Laws and details of any related offer made to Shareholders.

   6.4          Matched Trade Service 

(a) The Relevant Lenders agree and acknowledge that the Company is investigating whether, on and subject to and with effect from Delisting, it is able to make the Matched Trade Service available at the Company's sole cost.

(b) Each of the Relevant Lenders undertakes to the Company that it shall not, and shall procure that each of its Affiliates shall not, use the Matched Trade Service to sell and/or transfer Common Shares held by them.

   (c)           Each of the Relevant Lenders undertakes to the Company that it shall: 

(i) provide the Bermudan Monetary Authority (the "BMA") with all and any such information as the BMA may reasonably require in order for the BMA to grant a general permission for the transfers of Common Shares carrying up to 10% of the aggregate Voting Rights of the Company and in connection with the setting up of the Matched Trade Service; and

(ii) subject to Delisting and until the second anniversary of Delisting, use reasonable endeavours to enable the Company to make the Matched Trade Service available (including, but not limited to, the engagement of the Depositary and the maintenance of the DI Register) at the Company's sole cost.

(d) If for any reason the Company cannot make a Matched Trade Service available, the Company will use reasonable endeavours to put in place alternative trading procedures and the Parties undertake to use reasonable endeavours to assist with this.

   7              Remedies 
   7.1          Remedies 

In view of the difficulties in placing a monetary value upon the effects of any breach of the terms of the undertakings referred to in this Agreement, each of the Parties recognises that the other Parties and the Minority Shareholders may be entitled to seek injunctive relief as well as any other relief which may be appropriate under the circumstances in any court of competent jurisdiction in the event of any breach or anticipatory breach of the obligations set out above.

   8              Warranties 
   8.1          Relevant Lenders 

Each of the Relevant Lenders warrants and confirms to the Company that the Common Shares beneficially owned by it are free from all liens, charges, encumbrances and third party rights, and that it has full power and authority to perform its obligations under this Agreement.

   8.2          Company 

The Company warrants that it has full power and authority to perform its obligations under this Agreement.

   9              Governing Law and Jurisdiction 
   9.1          English law 

This Agreement and any non-contractual obligations arising out of it or in connection with it are governed by, and shall be construed in accordance with, English law.

   9.2          English jurisdiction 

The Parties submit to the non-exclusive jurisdiction of the English courts in respect of any claim, dispute or difference arising out of or in connection with this Agreement and agree that, in respect of proceedings in England or any other jurisdiction, process may be served on any of them in the manner specified for notices in Clause 10.

   9.3          Appointment of process agent 

Each of the Parties irrevocably appoints Elemental CoSec Limited of 27 Old Gloucester Street, London, WC1N 3AX United Kingdom, as its agent for service of process in respect of proceedings before such courts.

   9.4          Service on process agent 

Any communication served on the agent referred to in Clause 9.3 shall be deemed served in accordance with the provisions of Clause 10. If such agent (or any replacement agent appointed pursuant to this Clause 9.4) at any time ceases for any reason to act as such, the relevant appointer irrevocably agrees to appoint a replacement agent for service of process having an address for service in England and shall notify the other Parties of the name and address of such replacement agent in writing within 20 Business Days of such other agent ceasing to act. Failing such appointment and notification, the other Parties shall be entitled by notice to the relevant appointer to appoint such a replacement agent on its behalf.

   9.5          Meaning of "proceedings" 

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In this Clause 9, "proceedings" means proceedings of any kind, including an application for a provisional or protective measure.

   10           Notices 
   10.1        General 

Any notice or other document to be served under this Agreement must be in writing and may be delivered or sent by pre-paid first class letter post (or registered airmail in the case of an address outside of the United Kingdom) or facsimile transmission to the Party to be served at that Party's address set out in this Agreement or at such other address or number as that Party may from time to time notify in writing to each other Party to this Agreement or any other usual address or in any other manner permitted by the law of the place of service or the law of the jurisdiction where proceedings are instituted.

   10.2        Date and time of delivery 

Any notice or document shall be deemed served:

   (a)          if delivered, at the time of delivery; 

(b) if sent by first-class post to an address in the United Kingdom, on the second Business Day after the date on which it was posted;

(c) if sent by registered airmail to an address outside of the United Kingdom, on the 5(th) Business Day after the date on which it was posted; or

(d) if sent by facsimile transmission, at the time of transmission if between the hours of 9.00 am and 5.00 pm on a Business Day or otherwise at 9.00 am on the next Business Day.

   10.3        Proof of service 

In proving service (without prejudice to any other means):

(a) by post, it shall only be necessary to prove the notice or document was contained in an envelope properly stamped and posted as provided in this Clause 10; or

(b) by facsimile transmission, it shall be necessary to prove that the notice or document was duly received by production of a copy fax bearing the addressee's automatic record of correct transmission.

   11           Miscellaneous 
   11.1        Assignment 

This Agreement is personal to the Parties and the rights and obligations of the Parties may not be assigned or otherwise transferred without the prior written consent of the other Parties (such consent not to be unreasonably withheld or delayed by the other Parties).

   11.2        Further assurance 

Each Party shall use reasonable endeavours from time to time do or procure to be done all such further acts and things and execute or procure the execution of all such other documents as may be reasonably necessary to give effect to the provisions of this Agreement.

   11.3        Third Party rights 

(a) Subject to Clause 11.3(b), this Agreement is made for the benefit of the Parties and their successors and permitted assigns only and is not intended to benefit, and no term thereof shall be enforceable by, any other person by virtue of the Contracts (Rights of Third Parties) Act 1999 by any person not a Party to it.

(b) Clauses 6.1(b), 6.2 and 6.3 (and in the case of Clause 6.3 with respect to obligations of the Company but not the Relevant Lenders) are intended to benefit the Minority Shareholders and shall be enforceable in accordance with the Contracts (Rights of Third Parties) Act 1999, notwithstanding that the Minority Shareholders are not a party to this Agreement.

(c) Clauses 6.1(b), 6.2 and 6.3 may not be amended, varied or waived in any way and at any time by the Parties without the Approval of the Minority Shareholders.

   11.4        Waiver 

No waiver of any term, provision or condition of this Agreement shall be effective except to the extent made in writing and signed by the waiving Party. No omission or delay on the part of any Party in exercising any right, power or privilege under this Agreement shall operate as a waiver by it of any right to exercise it in future or of any other of its rights under this Agreement.

   11.5        Variation 

No variation of this Agreement shall be effective unless made in writing and signed by all the Parties.

   11.6        Counterparts 

This Agreement may be executed in any number of counterparts and by the several Parties on separate counterparts each of which, when so executed, shall be an original, but all counterparts shall together constitute one and the same instrument.

   11.7        Invalidity 

The invalidity, illegality or unenforceability of any provision of this Agreement shall not affect the other provisions of this Agreement.

   11.8        Conflict with Bye-Laws 

In the event of any conflict or inconsistency between the Bye-Laws and the provisions of this Agreement the Parties shall use their reasonable endeavours to procure that the terms of the Bye-laws are amended so as to accord with the provisions of this Agreement.

   11.9        Rights and obligations are several 

The rights and obligations of the Relevant Lenders pursuant to this Agreement are several.

   11.10     Costs 

Each Party shall bear its own costs incurred in connection with this Agreement save that the Company shall bear the fees incurred by the Relevant Lenders in connection with this Agreement up to an amount of US$180,000, which shall include, but not be limited to, the fees of the Relevant Lenders' English law solicitors.

THIS DOCUMENT has been executed as a deed by or on behalf of the Parties and has, on the date stated at the beginning of this Agreement, been delivered as a deed.

Schedule 1

The Relevant Lenders

 
 Name and Address   Number of Common         Tranche 1          Tranche 1          Tranche 2          Tranche 2 
 (1)                Shares held (2)          Placing Shares     Subscription       Placing Shares     Subscription 
                                             (3A)               Amount (3B)        (4A)               Amount (4B) 
-----------------  -----------------------  -----------------  -----------------  -----------------  ----------------- 
 Outrider Master 
  Fund, LP 
  c/o Elian 
  Fiduciary 
  Services 
  (Cayman) 
  Limited, 89 
  Nexus Way, 
  Camama Bay, 
  Grand Cayman 
  KY1-9007, 
  Cayman Islands    187,790,232              35,909,221         US$500,000         47,878,962         US$500,000 
-----------------  -----------------------  -----------------  -----------------  -----------------  ----------------- 
 The John Paul 
  Dejoria Family 
  Trust 
  2934 Oestrisk 
  Lane, Austin, 
  Texas, 78733, 
  USA                          42,358,657    35,909,221         US$500,000         47,878,962         US$500,000 
-----------------  -----------------------  -----------------  -----------------  -----------------  ----------------- 
 BMk Resources 
  Limited 
  PO Box 309, 
  Ugland House, 
  Grand Cayman 
  KY1-1104, the 
  Cayman Islands               206,823,648   71,818,443         US$1,000,000       95,757,924         US$1,000,000 
-----------------  -----------------------  -----------------  -----------------  -----------------  ----------------- 
 

Schedule 2

Delisting Resolutions

1. THAT subject to and conditional on the passing of Resolution 2, the admission of the Company's common shares of par value US$0.001 each to trading on AIM, a market operated by the London Stock Exchange plc, be cancelled (the "De-listing") and that each of the directors and officers of the Company be authorised and directed to execute and deliver any and all documents and take all actions as he may consider necessary or expedient in connection with the De-listing.

2. THAT subject to and conditional on the passing of Resolution 1, the third amended and restated bye-laws (attached as Schedule 1 to this notice of special general meeting) be approved and adopted by the Company as the new bye-laws of the Company in substitution for and to the exclusion of the existing bye-laws of the Company with effect from the De-listing.

Execution PageS

   EXECUTED as a DEED on behalf of                                                             ) 
   MADAGASCAR OIL  Limited                                                                       ) 
   a company incorporated in Bermuda                                                      ) 

by )

being a person who, in accordance with )

the laws of that territory is acting under )

   the authority of the company,                                                                   ) 
   in the presence of a witness:                                                                     ) 

Authorised signatory:

Signature of witness:

Name of witness:

Address of witness:

   EXECUTED as a DEED on behalf of                                                             ) 
   BMK RESOURCES LIMITED                                                                            ) 
   a company incorporated in the Cayman Islands                                 ) 

by )

being a person who, in accordance with )

the laws of that territory is acting under )

   the authority of the company,                                                                   ) 
   in the presence of a witness:                                                                     ) 

Authorised signatory:

Signature of witness:

Name of witness:

Address of witness:

   EXECUTED as a DEED on behalf of                                                             ) 
   outrider master fund, lp                                                                     ) 
   a company incorporated in the Cayman Islands                                 ) 

by )

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