Prospectus re Admission to the Official List - Heritage Oil

agreement of this nature. These circumstances include the occurrence of certain materialadverse changes in the condition or the management, business affairs or business prospects ofthe Company;(f) the Company has agreed to pay (together with any related value added tax) certain costs,charges, fees and expenses, in connection with, or incidental to Admission; and(g) the Company, HOC, and the Directors have given certain warranties and undertakings to theSponsor and the Company and HOC have on a joint and several basis given certain indemnitiesto the Sponsor that are typical of an arrangement of this nature.10.6 Placing Agreement for 2007 Equity FinancingOn 14 November 2007, HOC completed an equity financing raising proceeds of Cdn$181.5 millionfrom the issue of 3,000,000 HOC Common Shares. As part of the same transaction, the MajorShareholder sold 3,000,000 HOC Common Shares that it held, reducing its interest from52 per cent. to 33.2 per cent. of the issued and outstanding HOC Common Shares.The placing agreement for this financing contains customary warranties and undertakings whichwere given by HOC and the Directors as to the accuracy of the information contained in the placingagreement and other matters relating to the HOC Common Shares, the Group and its business.10.7 Underwriting Agreement for the HOC Bond Private PlacementIn February 2007, HOC raised $165 million by completing a private placement of HOC Bonds. TheHOC Bonds were issued at par and have a maturity of 5 years. The coupon and yield to maturity are8 per cent. annually. HOC Bonds are convertible into HOC Common Shares at a price of $47 perHOC Common Share, and the conversion price is subject to adjustment in certain circumstances.JPMorgan Cazenove acted as sole bookrunner for the issue.The HOC Bonds are in bearer form, serially numbered, in the denomination of $100,000 each withinterest coupons attached. The HOC Bonds and interest coupons constitute direct, unsubordinatedand unconditional obligations of HOC secured in the manner provided below and ranking paripassu and rateably without any preference among themselves.The obligations of HOC under the HOC Bonds are secured by a first fixed charge over all sumsstanding in credit to the escrow agreement (being the agreement whereby HOC deposited the sumof $19,836,663 in an escrow account) constituted by a security deed dated 16 February 2007 andmade in favour of The Bank of New York, as security trustee, for the benefit of the bondholders.So long as any HOC Bonds remains outstanding: (1) HOC will not make or declare any dividendpayment on the HOC Common Shares or make any other distributions to its shareholders nor shallit offer, purchase, redeem or otherwise acquire for consideration any HOC Common Shares, ineach case constituting on a consolidated basis more than 30 per cent. of the earnings of HOC forthe immediately preceding financial year; (2) the aggregate outstanding principal amount of allindebtedness for borrowed money raised by any person (but excluding any indebtedness forborrowed money raised by one member of the Group from another member of the Group) andbenefiting from any security interest given by HOC or any of its subsidiaries upon, or with respectto, or in respect of any company which for the time being holds an interest in, either the ZapadnoChumpasskoye licence or the licence relating to Block 1 and Block 3A, any assets used in thefurtherance of the activities permitted by these licences and any revenues derived from these twolicences shall not exceed $100,000,000 each; and (3) HOC will ensure that no indebtedness of HOCor any subsidiary and no guarantee by HOC or any subsidiary of any indebtedness of any person willbe secured by a security interest upon any of the present or future business, assets or revenues ofHOC or its subsidiaries unless HOC or the relevant subsidiary has taken certain required actions.Under the conditions of the HOC Bonds, HOC is required to take (or to procure that there istaken) all necessary action to ensure that immediately upon completion of the Plan ofArrangement, at its option, either (a) the Company is substituted under the bonds as principaldebtor in place of HOC or becomes a guarantor under the bonds and, in either case, to makenecessary consequential amendments such that the bonds may be converted into or exchanged forOrdinary Shares; or (b) such amendments are made to the bonds such that the bonds may beconverted into or exchanged for Ordinary Shares.285