EXHIBIT (a)
THIS AGREEMENT is made the day of , 1998
BETWEEN
(1) SOCIETE GENERALE, a company incorporated in France with limited
liability whose UK head office is at Xxxxxxxx Xxxxx, Xxxxxxxx Xxxxxx,
Xxxxxx XX0X 0XX (the "Bank");
(2) TERRITORIAL RESOURCES INC., a company incorporated in the State of
Colorado, USA with limited liability whose registered office is at 000
Xxxxx Xxx Xxxxxxx Xxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000 XXX
("TRI"); and
(3) SOCO INTERNATIONAL PLC, a company incorporated in England with limited
liability whose registered office is at Xxxx Xxxxx, 00/00 Xxx Xxxx
Xxxxxx, Xxxxxx X0X 0XX ("Soco").
WHEREAS
(A) By a facility letter dated [ ] 1998 (the "Facility Letter") the
Bank has made available to TRI a short term advances facility (the
"Facility") of up to US$1,800,000 on the terms and subject to the
conditions therein contained.
(B) It has been agreed that immediately upon the completion of the
proposed acquisition by Soco of 51% or more of the issued share
capital of TRI (the "Merger"), Soco and TRI shall be substituted
jointly and severally as Borrower under the Facility Letter in place
of TRI.
(C) Words and expressions defined in the Facility Letter shall bear the
same meanings when used in this Agreement.
NOW IT IS HEREBY AGREED AS FOLLOWS
(1) NOVATION
The parties agree that in consideration of the releases and assumptions
contained in this Clause with immediate effect from the completion of the
Merger:-
(i) TRI and the Bank each fully and completely releases its interest,
rights and benefits and releases the other from all obligations
whatsoever owed by it under the Facility Letter;
(ii) Each of TRI and Soco jointly and severally assumes towards the Bank
all obligations and liabilities in each case identical in all respects
to those which, prior to completion of the Merger, TRI owed to the
Bank under the Facility Letter and acknowledges that the Bank has
interests, rights and benefits in each case identical in all respects
to those
which, prior to the completion of the Merger, the Bank enjoyed in
respect of the Facility Letter;
(iii) The Bank assumes towards each of TRI and Soco all obligations and
liabilities in each case identical in all respects to those which,
prior to the completion of the Merger, the Bank owed to TRI under the
Facility Letter and acknowledges that each of TRI and Soco jointly and
severally has interests, rights and benefits in each case identical in
all respects to those which, prior to completion of the Merger, TRI
enjoyed in respect of the Facility Letter;
(iv) Each of TRI and Soco agree to be jointly and severally bound by and be
jointly and severally subject to terms and conditions identical in all
respects to those by which, prior to completion of the Merger, TRI was
bound under the Facility Letter; and
(v) The Bank agrees to be bound by and subject to terms and conditions
identical in all respects to those by which, prior to completion of
the Merger, it was bound under the Facility Letter.
2. REPRESENTATIONS AND WARRANTIES
Soco represents and warrants to the Bank that:
(i) Soco is a public limited company, duly incorporated and validly
existing under the laws of England;
(ii) the execution, delivery and performance of this Agreement by Soco is
within Soco's corporate powers, has been duly authorised by all
necessary corporate action and does not contravene any provision of
law or regulation or of the Articles of Incorporation of Soco or any
contract or agreement binding on Soco;
(iii) the obligations and liabilities expressed to be assumed by Soco under
this Agreement are legal, valid and binding obligations of Soco
binding on Soco in accordance with their terms;
(iv) there are pending or threatened no actions or proceedings before any
court or administrative agency against Soco nor is Soco in breach of
or in default under any agreement to which it is a party or which is
binding on it or any of its assets, to an extent or in a manner which
may have an adverse effect on the financial condition or operations of
Soco, or impair Soco's ability to perform its obligations under this
Agreement;
(v) Soco has not taken any corporate action nor have any other steps been
taken or legal proceedings been started or (to the best of Soco's
knowledge and belief) threatened against Soco for its winding-up,
dissolution or reorganisation, or for the appointment of a
receiver, trustee or similar officer of it or of any or all of
its assets or revenues;
(vi) the information provided by Soco in connection with the negotiation of
this
Agreement is true, complete and accurate in all material respects and
Soco is not aware of any material facts or circumstances that have not
been disclosed to the Bank.
(3) UNDERTAKING
Soco hereby undertakes to provide the Bank on demand with such information
concerning its business and its ability to repay the Loan as the Bank may
require.
(4) EFFECTIVE DATE
For the avoidance of doubt, it is expressly agreed that the novation described
in paragraphs (1)(i) to (v) shall be deemed to take effect immediately as from
completion of the Merger notwithstanding the date on which this agreement is
signed.
(5) CONTINUING OBLIGATIONS
(i) Save as provided in this agreement the terms and conditions of the
Facility Letter shall remain in full force and effect and shall
continue following the novation described herein as if TRI and Soco
jointly were named therein as Borrower in place of TRI.
(ii) For the avoidance of all, if any, doubt, TRI hereby irrevocably and
unconditionally confirms that the security constituted by the Share
Charge in favour of the Bank shall remain in full force and effect as
security for the obligations of TRI under or in connection with the
Facility Letter and shall not be discharged, released, prejudiced or
in any way affected by the novation herein contained.
(6) ONE AGREEMENT
This agreement and the Facility Letter shall be read and construed as one
agreement and references in the Facility Letter to "this Agreement" and other
like expressions shall be deemed to refer to the Facility Letter as supplemented
by this agreement and references in the Facility Letter to "Soco" shall be
deemed to refer to each of TRI and Soco jointly and severally.
(7) JOINT AND SEVERAL LIABILITY
The obligations and liabilities of each of TRI and Soco towards the Bank under
or in connection with the Facility Letter and following the novation herein
described shall be joint and several obligations and liabilities.
(8) COUNTERPARTS
This Agreement may be executed in as many counterparts as may be deemed
necessary or convenient, and by the different parties hereto on separate
counterparts each of which, when
so executed, shall be deemed an original, but all such counterparts shall
constitute one and the same instrument.
(9) LAW
(i) This Agreement shall be governed by and construed in accordance with
the laws of England.
(ii) Each of the parties hereto agrees (but without prejudice to the right
of any party hereto to take proceedings in relation hereto before any
other court of competent jurisdiction), that the courts of England
shall have jurisdiction to hear and determine any suit, action or
proceeding, and to settle any disputes, which may arise in connection
herewith and, for such purposes, irrevocably submits to the
jurisdiction of such courts.
IN WITNESS whereof the parties hereto have caused this Agreement to be duly
executed on the date first above written
Signed by )
)
for and on behalf of )
SOCIETE GENERALE )
Signed by )
)
for and on behalf of )
TERRITORIAL RESOURCES INC. )
Signed by )
)
for and on behalf of )
SOCO INTERNATIONAL PLC )
DATED 1998
-----------------
TERRITORIAL RESOURCES INC.
-and-
SOCO INTERNATIONAL PLC
-and-
SOCIETE GENERALE,
LONDON BRANCH
__________________________
NOVATION AGREEMENT
__________________________
Draft 03/02/98
To: Territorial Resources Inc.
000 Xxxxx Xxx Xxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxx 00000
XXX
[ ] 1998
For the attention of: [*CONTACT NAME]
Dear Sirs,
RE: US$1,800,000 FACILITY
We, Societe Generale, are pleased to offer you a short term advances facility
on the terms and conditions set out below:-
1. BANK
Societe Generale, a company organised and existing under the laws of France
having its principal place of business in the United Kingdom at Xxxxxxxx
Xxxxx, Xxxxxxxx Xxxxxx, Xxxxxx XX0X 0XX (the "BANK").
2. BORROWER
Territorial Resources Inc. a company organised and existing under the laws of
the State of Colorado, USA whose registered office is at 000 Xxxxx Xxx
Xxxxxxx Xxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000, XXX (the "BORROWER").
3. THE FACILITY
The facility hereby offered (the "FACILITY") is a short term advances
facility in the maximum aggregate principal amount of one million eight
hundred thousand United States Dollars (US$1,800,000).
4. TERM
The Facility shall, unless cancelled earlier by the Borrower or the Bank
pursuant to the terms of this Agreement, terminate on whichever is the
earlier of (i) the Merger Date or (ii) 31st July1998. The date on which this
Agreement terminates is herein referred to as the "MATURITY DATE".
5. PURPOSE
The proceeds of the Facility are available to enable the Borrower to
repurchase a portion of its own issued share capital. The Bank shall not be
concerned to ensure that such application takes place.
6. CONDITIONS PRECEDENT; AVAILABILITY
(A) The Borrower may not utilise the Facility unless and until the Bank
has received, in form and content satisfactory to it, each of the
following:-
(i) This Agreement, duly countersigned by the Borrower;
(ii) The Share Charge, duly executed by the Borrower;
(iii) The Novation Agreement duly signed by each of the Borrower
and Soco;
(iv) A copy, certified a true copy by a duly authorised officer
of the Borrower, of resolutions of the [BOARD OF DIRECTORS]
of the Borrower, satisfactory to the Bank, approving the
execution, delivery and performance of each of this
Agreement, the Share Charge, the Novation Agreement and the
terms and conditions hereof and thereof and authorising a
named person or persons to sign and/or execute and deliver
on behalf of the Borrower each of this Agreement, the Share
Charge, the Novation Agreement and any documents or further
agreements to be delivered by the Borrower and the other
parties thereto;
(v) A copy, certified a true copy by a duly authorised officer
of the Borrower, of the Articles of Incorporation and
Bye-Laws of the Borrower as in force on the date of this
Agreement;
(vi) A copy, certified a true copy by a duly authorised officer
of Soco, of resolutions of the Board of Directors of Soco,
satisfactory to the Bank, approving the execution, delivery
and performance of the Novation Agreement;
(vii) A specimen of the signature of each person authorised by the
Borrower to sign each of this Agreement, the Share Charge,
the Novation Agreement and to sign and despatch all notices
and other communications as required or permitted to be
given by the Borrower hereunder or thereunder;
(viii) A specimen of the signature of each person authorised by
Soco to sign the Novation Agreement and to sign and despatch
all notices and other communications required or permitted
to be given by Soco thereunder or in relation to the
Facility;
(ix) Evidence satisfactory to the Bank that the Value of the
Shares exceeds 165% of the Sterling Amount of the Facility;
(x) Evidence satisfactory to the Bank that the Borrower is the
registered holder of, and has good title (unencumbered save
in favour of the Bank) to, the Shares;
(xi) Share Certificates in respect of the Shares;
(xii) Stock transfer forms executed in blank relating to the
Shares;
(xiii) The Bank's standard form of mandate, duly completed by the
Borrower, opening an account with the Bank on and subject to
the Bank's standard terms;
(xiv) A legal opinion from counsel acceptable to the Bank in the
State of Colorado, USA in form and substance satisfactory to
the Bank and covering such matters relating to the Borrower
as the Bank may require;
(xv) A legal opinion from English counsel acceptable to the Bank
in form and substance satisfactory to the Bank and covering
such matters relating to Soco as the Bank may require; and
(xvi) Such evidence as the Bank may require that Soco has agreed
to act as agent for service of process for the Borrower.
(B) Subject to:-
(i) the conditions set out in Clause 6(A) having been satisfied
as shown;
(ii) there having then occurred no breach of any of the terms or
conditions of this Agreement and the representations and
warranties set out in Clause 10 being true and accurate in
all respects;
(iii) there having then occurred no event or circumstance as is
described in Clause 17 ("Events of Default"), or event or
circumstance which, with the giving notice and/or lapse of
time and/or upon the Bank making a determination under
Clause 17 ("Events of Default") would constitute such an
event;
(iv) the Bank having received, by no later than 11.00 a.m. on the
second business day before the proposed Drawdown Date, a
notice of drawing in the form set out in Appendix One (which
shall be irrevocable) signed by a person duly authorised on
behalf of the Borrower and specifying the requested Drawdown
Date,
the Borrower may, on any business day during the Availability Period
draw Advances under the Facility PROVIDED THAT:-
(a) the term of each Advance shall expire on the Maturity Date;
(b) the amount of any Advance shall be either an integral
multiple of US$100,000 or the Available Facility Amount;
(c) a notice of drawing once given shall not be revocable by the
Borrower;
(d) the aggregate principal amount for the time being
outstanding shall at no time exceed the amount of the
Facility;
(e) not more than twenty Advances may be outstanding at any one
time;
(f) the Sterling Amount of the Outstandings does not exceed 165%
of the Value of the Shares on such date.
(C) If the Bank in its discretion allows the Borrower to draw any Advance
notwithstanding that some or all of the conditions specified in Clause
6(A) or (B) have not been satisfied the Bank shall not thereby be
deemed to have waived any such condition and the Borrower covenants
with the Bank to satisfy such conditions, or to procure that such
conditions are satisfied forthwith upon request from the Bank.
7. SECURITY
By way of continuing security for the payment of all amounts from time to
time falling due under this Agreement the Borrower shall execute and deliver
to the Bank the Share Charge relating to the Shares.
8. INTEREST AND LATE PAYMENTS
(A) The rate of interest applicable to each Advance shall be the rate per
annum determined by the Bank to be the AGGREGATE of (i) 0.6% AND (ii)
LIBOR.
(B) Interest accrued on each Advance will be payable by the Borrower in
arrears on the Maturity Date.
(C) If any sum payable hereunder is not paid when due under the terms
hereof, interest will accrue from day to day on such unpaid amount from
the date when due until payment, calculated (as well after as before
judgment) at the rate determined by the Bank to be the AGGREGATE of (i)
3%; AND (ii) LIBOR for the relevant period;
(D) For the purposes of this Facility "LIBOR" means, in relation to any
Advance or any unpaid sum, the rate per annum determined by the Bank to
be the arithmetic mean (rounded upwards, if not already such a
multiple, to the nearest whole multiple of one sixteenth of one percent
(1/16%)) of the rates at which the Bank was offering to prime banks in
the London Interbank Market, as at 11.00 a.m. on the relevant Quotation
Date, US$ deposits in an amount equal to or (in the Bank's opinion)
comparable with such Advance or the amount of such unpaid sum, and for
the period of the term of such Advance or period applicable to such
unpaid sum.
9. REPAYMENT
(A) Subject as provided below, all Advances together with accrued interest
thereon and all other amounts outstanding under the Facility, and any
other monies owing hereunder shall be paid in full, on the Maturity
Date. For the avoidance of all (if any doubt) no amounts repaid
hereunder shall be available for redrawing.
(B) The Borrower shall not repay or prepay all or any part of any Advance
except at the times and in the manner expressly provided for in this
Agreement and shall not be entitled to reborrow any amount repaid.
10. REPRESENTATIONS AND WARRANTIES
(A) The Borrower represents and warrants to the Bank that:
(i) the Borrower is a private limited company, duly incorporated
and validly existing under the laws of the State of
Colorado, USA;
(ii) the execution, delivery and performance of this Agreement,
the Share Charge and the Novation Agreement by the Borrower
are within the Borrower's corporate powers, have been duly
authorised by all necessary corporate action and do not
contravene any provision of law or regulation or of the
Articles of Incorporation or Bye-Laws of Incorporation of
the Borrower or any contract or agreement binding on the
Borrower;
(iii) the obligations and liabilities expressed to be assumed by
the Borrower under each of this Agreement, the Share Charge
and the Novation Agreement are legal, valid and binding
obligations of the Borrower binding on the Borrower in
accordance with their respective terms, and, without
prejudice to the foregoing, the Share Charge creates (inter
alia) valid first charges over the assets thereby charged
ranking in point of security ahead of all other creditors of
the Borrower;
(iv) there are pending or threatened no actions or proceedings
before any court or administrative agency against the
Borrower nor is the Borrower in breach of or in default
under any agreement to which it is a party or which is
binding on it or any of its assets, to an extent or in a
manner which may have an adverse effect on the financial
condition or operations of the Borrower, or impair the
Borrower's ability to perform its obligations under any of
this Agreement, the Share Charge or the Novation Agreement
and there are no pending or threatened disputes or
proceedings arising out of or in connection with the Shares;
(v) the Borrower has not taken any corporate action nor have any
other steps been taken or legal proceedings been started or
(to the best of the Borrower's knowledge and belief)
threatened against the Borrower for its winding-up,
dissolution or reorganisation, or for the appointment of a
receiver, trustee or similar officer of it or of any or all
of its assets or revenues nor have any proceedings analogous
to the foregoing been started or threatened in any other
jurisdiction;
(vi) save as provided in the Share Charge, the execution of this
Agreement, the Share Charge and the Novation Agreement and
the Borrower's exercise of its rights and performance of its
obligations hereunder and thereunder will not result in the
existence of, nor oblige the Borrower to create, any
encumbrance over all or any of its present or future
revenues or assets, nor result in any breach of any
agreement;
(vii) the financial statements most recently delivered to the Bank
by the Borrower were prepared in accordance with accounting
principles generally accepted in the State of Colorado, USA
and consistently applied, and give a true and fair view of
the financial condition of the Borrower and its subsidiaries
(if any) at the date to which they were prepared and the
results of the Borrower's operations during the financial
year ending on such date; since publication of such
financial statements there has been no material adverse
change in the business or financial condition of the
Borrower or any of its subsidiaries;
(viii) the information provided by the Borrower in connection with
the negotiation of the Facility and the preparation of the
Share Charge and the Novation Agreement is true, complete
and accurate in all material respects and the Borrower is
not aware of any material facts or circumstances that have
not been disclosed to the Bank and which might, if
disclosed, adversely affect the decision of a person
considering whether or not to provide finance to the
Borrower; and
(ix) no Event of Default has occurred and is continuing;
(x) the Borrower is the sole, absolute, legal and beneficial
owner of the Shares which are registered in its name and is
able freely to transfer them;
(xi) the Shares are not subject to Encumbrance of any type
whatsoever.
(B) The representations made by the Borrower pursuant to Clause 10(A) shall
survive the execution of this Agreement and the drawing of each Advance
hereunder and shall be deemed to be repeated on each Drawdown Date, as
if made at and in respect of the circumstances existing at each such
time.
11. TAXES
(A) All payments to be made by the Borrower hereunder shall be made free and
clear of and without deduction for or on account of tax unless the
Borrower is required to make such a payment subject to the deduction or
withholding of tax, in which case the sum payable by the Borrower in
respect of which such deduction or withholding is required to be made
shall be increased to the extent necessary to ensure that, after the
making of such deduction or withholding, the Bank receives and retains
(free from any liability in respect of any such deduction or
withholding) a net sum equal to the sum which it would have received and
so retained had no such deduction or withholding been made or required
to be made.
(B) If at any time the Borrower is required to make any deduction or
withholding from any sum payable by him hereunder (or if thereafter
there is any change in the rates at which or the manner in which such
deductions or withholdings are calculated) the Borrower shall promptly
notify the Bank.
(C) If the Borrower makes any payment hereunder in respect of which it is
required to make any deduction or withholding it shall pay the full
amount required to be deducted or withheld to the relevant taxation or
other authority within the time allowed for such payment under
applicable law and shall deliver to the Bank within thirty days after it
has made such payment to the applicable authority an original receipt
(or a certified copy thereof) issued by such authority evidencing the
payment to such authority of all amounts so required to be deducted or
withheld.
(D) Without prejudice to the provisions of Clause 11(A), if the Bank is
required to make any payment on account of tax or otherwise (not being
tax imposed on the net income of its lending office by the jurisdiction
in which it is incorporated or in which its lending office is located)
on or in relation to any sum received or receivable by the Bank
hereunder (including, without limitation, any sum received or
receivable under this Clause 11) or any liability in respect of any
such payment is asserted, imposed, levied or assessed against the Bank,
the Borrower will upon demand of the Bank promptly indemnify the Bank
against such payment or liability, together with any interest,
penalties and expenses payable or incurred in connection therewith.
12. INCREASED COSTS
If by reason of (a) any change in law, treaty or regulation or in its
interpretation or administration and/or (b) compliance with any request or
direction (whether or not having the force of law) from, or requirement or
expressed expectation of, any central bank or other fiscal, monetary or other
authority (including in each case, without limitation, those relating to
taxation, any reserve, special deposit, cash ratio, liquidity or capital
adequacy requirement or other form of banking or monetary controls),
(i) the Bank incurs a cost as a result of its having entered into
and/or performing its obligations under this Agreement and/or as a
result of any Advance being outstanding hereunder;
(ii) there is any increase in the cost to the Bank of funding or
maintaining any Advance; or
(iii) the Bank becomes liable to make a payment (not being a payment of
tax on its overall net income) on or calculated by reference to the
amount of any Advance,
then and in each such case (a) the Bank shall notify the Borrower of the
relevant event promptly upon becoming aware of the same and (b) promptly
following any demand from time to time by the Bank the Borrower shall promptly
pay to the Bank amounts sufficient to indemnify the Bank against, as the case
may be, (i) such cost, (ii) such increased cost (or such proportion of such
increased cost as is in the opinion of the Bank attributable to the funding or
maintaining of any relevant Advance) or (iii) such liability.
13. MARKET DISRUPTION
(A) If and each time that the Bank determines (which determination shall be
conclusive and binding on the Borrower) that at or about 11.00 a.m. on
the Quotation Date in respect of any Advance prime banks are not making
available to it in the London Interbank Market deposits in United States
Dollars of the required amount and for the required period for funding
such Advance, or that by reason of circumstances affecting the London
Interbank Market generally, the rate at which such deposits are being so
made available does not accurately reflect the cost to it of funding
such Advance and/or that adequate and fair means do not exist for
ascertaining the interest rate in accordance with Clause 8 ("Interest
and Late Payments"), the Bank shall promptly give notice in writing of
such determination to the Borrower.
(B) If the Bank gives a notice under Clause 13(A), the rate of interest
applicable to the Advance in question shall be the rate per annum
determined by the Bank to be the aggregate of (i) 0.6% AND (ii) the rate
conclusively determined by the Bank to express, as a percentage rate per
annum, the cost to it of funding such Advance from whatever sources it
may select.
(C) The Bank and the Borrower shall consult in good faith immediately
following the giving of any notice under Clause 13(A) and following any
significant change in market conditions after service of such notice
with a view to returning to the normal provisions of this Agreement.
14. ILLEGALITY
If any law, regulation, treaty or official directive (whether or not having
the force of law) shall make it unlawful or contrary to an official directive
in any jurisdiction for the Bank to give effect to or maintain its
obligations as contemplated by this Agreement, the Bank shall not thereafter
be obliged to make any Advances hereunder and the amount of the Facility
shall be reduced to zero, and, if the Bank so requires, the Borrower shall on
such date as the Bank shall have specified prepay all or any outstanding
Advances together with accrued interest thereon and pay to the Bank any other
amounts due from the Borrower hereunder.
15. POSITIVE COVENANTS
(A) The Borrower shall:
(i) at all times retain good title to the Shares free from any
Encumbrance whatsoever (save for any rights or Encumbrances which
may be granted to the Bank);
(ii) from time to time at the request of the Bank, provide the Bank with
such information about the Borrower or the Shares as the Bank may
require;
(iii) procure that its obligations under this Agreement do and will rank
at least pari passu with all its other present and future unsecured
indebtedness, except for obligations which are mandatorily
preferred by law;
(iv) from time to time at the Bank's request do or procure the doing of
all such things (including, without limitation, the execution of
all such documents in form and substance satisfactory to the Bank)
as are necessary for giving full effect to this Agreement, the
Share Charge, the Novation Agreement and the security interests in
respect of the Shares granted in favour of the Bank as
contemplated herein and therein;
(v) obtain, comply with the terms of and do all that is necessary to
maintain in full force and effect all authorisations, approvals,
licences and consents required in or by all applicable laws and
regulations to enable the Borrower lawfully to enter into and
perform its obligations under this Agreement, the Share Charge and
the Novation Agreement; and
(vi) promptly notify the Bank of the occurrence of any of the events
specified in Clause 17 ("Events of Default").
(B) The Borrower covenants with the Bank to ensure that the Value of the
Shares shall at any given date from the date hereof to and including the
Maturity Date exceed 165% of the Sterling Amount of the Outstandings as
at such date.
(C) If at any time the provisions of Clause 15(B) are not for the time being
complied with, the Borrower shall, immediately after the Bank shall have
notified it of that fact and as the Bank may in its absolute discretion
decide:-
(i) repay all or part of the Outstandings as the Bank may require;
and/or
(ii) provide the Bank with such additional security as the Bank may
agree.
such that the aggregate of the amounts so repaid and/or the value of the
assets over which security is created is sufficient to ensure that the
requirements of Clause 15(B) are met.
(D) Without prejudice to the provisions of Clause 15(C), if at any time the
provisions of Clause 15(B) are not for the time being complied with the
Bank shall have the right at such time, without prior notice to the
Borrower, to enforce its security in respect of the Shares in accordance
with the terms of the Share Charge.
16. NEGATIVE COVENANTS
The Borrower shall not:-
(i) sell or otherwise dispose of or enter into a legally binding agreement
to sell or otherwise dispose of any of the Shares; or
(ii) create (or purport to create) or permit to exist any Encumbrance over
any of the Shares.
17. EVENTS OF DEFAULT
If any of the following events occur:-
(A) the Borrower fails to pay any sum payable under this Agreement when due;
(B) any representation, warranty or statement made by the Borrower in or in
connection with this Agreement or the Share Charge:-
(i) proves to have been incorrect or inaccurate when made, or
(ii) in the case of any certificate, statement or document delivered or
made by the Borrower pursuant hereto or thereto or in connection
herewith or therewith (including, without limitation, any legal
opinion provided to the Bank pursuant to Clause 6(A) or otherwise)
proves to have been incorrect or inaccurate when made,
in either case in a manner or to an extent which is in the Bank's
opinion material and adverse;
(C) any representation, warranty or statement made by Soco in or in
connection with the Novation Agreement proves to have been incorrect or
inaccurate when made;
(D) the Borrower defaults in the performance of any other provision of this
Agreement, the Share Charge or the Novation Agreement or Soco defaults
in the performance of any provision of the Novation Agreement;
(E) any financial indebtedness of the Borrower (which in the opinion of the
Bank is material having regard to the Borrower's ability to perform its
obligations hereunder) becomes due and payable prior to its specified
maturity, the Borrower is in breach of or default under any agreement or
document evidencing or regulating such indebtedness, the Borrower fails
to pay any sum (which in the opinion of the Bank is material) due to be
paid by the Borrower under any guarantee, the Borrower is unable or
fails or admits its inability to pay its debts as they fall due or the
Borrower makes a general assignment of the benefit of, or a composition
with its creditors;
(F) a resolution is passed at a meeting of the Borrower for (or to petition
for) its winding up or the Borrower presents any petition for its
winding up or an order for the winding up of the Borrower is made;
(G) any resolution is passed at a meeting of the Borrower for (or to
petition for) its administration or an application for an administration
order in relation to the Borrower is presented to court or is made;
(H) the Borrower agrees to any kind of composition, scheme, compromise or
arrangement involving its creditors;
(I) any administrative or other receiver or any manager of the Borrower or
any of its assets is appointed or legal steps are taken to enforce any
Encumbrance over any of its assets;
(J) there occurs, in relation to the Borrower, in any country or territory
in which it carries on business or to the jurisdiction of whose courts
it or any of its assets are subject, any event
which corresponds in that country or territory with any of those
mentioned in sub-clauses (F), (G), (H) or (I) inclusive above;
(K) any person, other than Soco, acquires 51% or more of the issued share
capital of the Borrower;
(L) any failure in the efficacy of any of the transactions contemplated in
this Agreement, the Share Charge or the Novation Agreement; and
(M) any change in the financial condition of the Borrower which, in the
Bank's opinion, is a material adverse change,
then the Bank shall be under no obligation to advance any moneys hereunder and
may by notice to the Borrower:-
(i) cancel any part of the Facility; and/or
(ii) require repayment (forthwith or otherwise as the Bank may require) of
all Advances and all other amounts outstanding under the Facility with
accrued interest thereon together with any other sums then owed by the
Borrower hereunder,
PROVIDED THAT immediately upon the occurrence of any of the events specified
in sub-clauses (E), (F), (G) and (H) above, and whether or not the Bank shall
previously have given any notice pursuant to paragraphs (i) or (ii) of this
Clause 17, the Facility shall automatically be cancelled and all Advances and
all interest, fees and all other sums payable under this Agreement shall
immediately become due and payable.
18. INDEMNITIES
The Borrower shall on first demand indemnify the Bank against any claim,
cost, loss or expense (including funding breakage costs and the costs of
terminating any interest rate swaps or other hedging or funding arrangements
entered into by the Bank in relation to this Agreement) incurred by the Bank
as a result of (a) default by the Borrower in the due payment of any sum due
under this Agreement, (b) receipt by the Bank of any amount outstanding
hereunder otherwise than on the Maturity Date, or (c) any Advance not being
made (other than as a result of the Bank's default) after the giving of the
notice of drawing applicable thereto.
19. BENEFIT OF AGREEMENT
(A) The Agreement shall bind and enure to the benefit of the Borrower and
the Bank and their respective successors and assigns.
(B) The Bank may assign the whole or any part of the benefit of this
Agreement to any person.
(C) The Borrower may not assign or transfer all or any part of his rights
and benefits under this Agreement.
(D) The Bank may disclose to a potential assignee of all or any part of its
rights under or in respect of this Agreement or to any person who may
otherwise enter into contractual relations with the Bank in relation to
this Agreement such information about the Facility and the security
provided in connection therewith as the Bank thinks fit. If, in respect
of the Facility, any of the Bank's affiliates provides the Bank with any
assistance with respect to
any such assignment or other contractual relations, then the Bank may
disclose such information to such affiliate and such affiliate may
disclose such information to such assignee or other person.
20. NOTICES
(A) Each notice, request, demand or other document to be given or made
under this Agreement shall be in writing, addressed to the Borrower at
the address shown above or at such other address as the Borrower may
inform the Bank for this purpose and to the Bank at its address shown
above.
(B) Any notice, request, demand or other communication to be given or made
to the Borrower shall be deemed made (i) when despatched (if given or
made by facsimile or telex) or (ii) when left at the address mentioned
above or (iii) 7 days after posting addressed as required above (if
given or made by letter).
21. FEES AND EXPENSES
(A) The Borrower shall pay to the Bank an arrangement fee in the amount of
US$5,000 on the date on which the Borrower accepts the terms and
conditions of this Agreement by countersigning and returning the
enclosed copy hereof.
(B) The Borrower shall reimburse the Bank for all legal costs incurred by
the Bank in the negotiation, preparation and execution of this
Agreement, the Share Charge and the Novation Agreement (and any
amendment or variation thereto), together with all legal costs incurred
by the Bank in connection with the enforcement or preservation of any
of the Bank's rights thereunder.
(C) The Borrower shall, from time to time, reimburse the Bank on an
indemnity basis for any cost or expense (including without limitation,
valuation fees) incurred from time to time by the Bank from third
parties, in the negotiation, preparation, administration, execution,
registration and perfection of this Agreement, the Share Charge and any
security arrangements created thereby, the completion of the
transactions and documents herein or therein contemplated or the
preservation or enforcement of any of the Bank's rights under this
Agreement, the Share Charge and the Novation Agreement including,
without limitation, all stamp duty, registration and other taxes to
which the same or any judgment given in connection herewith or
therewith may be subject.
22. MISCELLANEOUS
(A) The currency of account and payment with regard to all the obligations
of the Borrower hereunder is United States Dollars, provided however
that any sum payable to the Bank under any of the indemnities
contained herein shall, unless the context otherwise requires, be
payable in the currency in which relevant loss or expense is suffered
or incurred by the Bank.
(B) All sums falling due hereunder by way of interest shall be calculated
on the basis of a year of 360 days from day to day for the actual
number of days elapsed unless the Bank determines, in its absolute
discretion, that a different basis is customarily applied in which
case such different basis shall be applied.
(C) Any release, discharge or settlement between the Borrower and the Bank
shall be conditional upon no security, disposition or payment to the
Bank by the Borrower, or any other person being void or being set
aside or ordered to be refunded for any reason and if such condition
shall not be fulfilled the Bank shall be entitled to enforce the
provisions of this Agreement subsequently as if such release,
discharge or settlement had not occurred.
23. PAYMENTS
(A) All payments to be made by the Borrower to the Bank shall be made free
and clear of and without deduction for or on account of (i) any
set-off or counterclaim or (ii) (other than as required by law) any tax
or other matter. All payments to be made by the Borrower under this
Agreement shall be made in the currency required hereunder and in
immediately available freely transferable cleared funds to the Bank at
its address mentioned above (or in such other manner or to such account
as the Bank, or its assignee, (if any), may have specified for this
purpose) by no later than 11.00 a.m. (local time) on the due date for
any such payment.
(B) The Bank is authorised to apply any credit balance to which the
Borrower is entitled on any account of the Borrower with the Bank in
satisfaction of any sum due and payable from the Borrower to the Bank
under the Facility but unpaid; for this purpose the Bank 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.
(C) Notwithstanding any other provision of this Agreement, express or
implied, the Bank shall have an absolute and unfettered right to
appropriate any payments received from the Borrower to such of the
Borrower's obligations under this Agreement (and whether to the
principal, interest or any other sums payable) as the Bank may
determine, to the exclusion of any right on the part of the Borrower
to make any appropriation in respect of such payments.
24. INTERPRETATION
In this Agreement, unless the context otherwise requires:-
"ADVANCE" means an advance made or to be made by the Bank under this
Agreement;
The expressions "THE AGREEMENT" or "THIS AGREEMENT" means and
includes, as the context so admits, the agreement resulting from the
acceptance by the Borrower of the terms and conditions set out in this
letter of offer, and any reference to the "DATE" of this Agreement
means the date of such acceptance by the Borrower;
"AVAILABILITY PERIOD" means the period commencing on the date of this
Agreement and ending on 30th June 1998;
"AVAILABLE FACILITY AMOUNT" means, at any time, the amount of the
Facility less the aggregate amount (if any) of each outstanding Advance
made hereunder;
"BUSINESS DAY" means a day (other than Saturday and Sunday) on which
banks are open for domestic and foreign exchange business in London and
New York;
Any reference to a CLAUSE is, unless the context otherwise requires, a
reference to a clause of this Agreement;
"DRAWDOWN DATE" means the date on which an Advance is drawn or to be
drawn by the Borrower hereunder;
"ENCUMBRANCE" means any mortgage, charge, pledge, lien, hypothecation,
other security interest or security arrangement of any kind;
"FACILITY" has the meaning ascribed to that term in Clause 3;
Any reference to "FINANCIAL INDEBTEDNESS" of any person shall be
construed so as to include, without limitation, any indebtedness of
such person for or in respect of borrowed money, amounts raised under
or liabilities in respect of any note purchase or acceptance credit
facility, amounts raised by or pursuant to the issue of any notes,
bonds, debentures or other debt securities or any other transaction
(including, without limitation, forward sale or purchase agreements,
leases, hire purchase and conditional sale agreements) having the
commercial effect of a borrowing entered into by any person to finance
its operations or capital requirements;
"INDEBTEDNESS" shall be construed so as to include any obligation
(whether incurred as principal or surety) for the payment or repayment
of money, whether present or future, actual or contingent;
"LOAN " means the aggregate principal amount of all Advances made by
the Bank hereunder or (as the context requires) the amount thereof for
the time being outstanding;
"MATURITY DATE" has the meaning ascribed to that term in Clause 4;
"MERGER DATE" means the date on which the proposed acquisition by Soco
of 100% of the issued share capital of the Borrower is completed.
"NOVATION AGREEMENT" means an agreement to be entered into between the
Bank, the Borrower and Soco whereupon, on the Merger Date, the Borrower
and Soco shall be substituted as joint and several obligors in place of
the Borrower as borrower hereunder;
"OUTSTANDINGS" means the amount of the Loan from time to time
outstanding together with all unpaid interest and interest thereon and
all other monies owed to the Bank hereunder;
Any reference to a "PARAGRAPH" is, unless the context otherwise
requires, a reference to a paragraph of a clause of this Agreement;
Any reference to a "PERSON" shall be construed as a reference to any
person, firm, company, corporation, government, state or agency of a
state or any association or partnership (whether or not having separate
legal personality) of two or more of the foregoing;
"QUOTATION DATE" means, in relation to any Advance, the day
conclusively determined by the Bank to be the day on which quotations
would ordinarily be given by prime banks in the London Interbank Market
for deposits in United States Dollars for delivery on the Drawdown Date
of such Advance and for the term of such Advance, PROVIDED THAT if the
Bank determines that quotations would ordinarily be given on more than
one date, the Quotation Date shall be the last of those dates;
"SHARES" means those shares in Soco held by the Borrower, details of
which are set out in Appendix Two hereto;
"SHARE CHARGE" means the mortgage to be created by the Borrower over
the Shares in such form as the Bank may require pursuant to Clause 7;
"SOCO" means Soco International Plc, a company incorporated under the
laws of England under company number 3300821 whose registered office is
at Xxxx Xxxxx, 00/00 Xxx Xxxx Xxxxxx, Xxxxxx X0X 0XX;
"STERLING AMOUNT" means in relation to any amount denominated in a
currency other than Pounds Sterling at any time, the amount of Pounds
Sterling determined by the Bank to be required to purchase the relevant
amount of such other currency at the Bank's spot buying rate of
exchange in London at such time;
"TAX" shall be construed so as to include any tax, levy, impost, duty
or other charge of a similar nature (including without limitation any
penalty payable in connection with any failure to pay or any delay in
paying any of the same);
Any reference to a TIME is, unless otherwise stated, to London time.
"UNITED STATES DOLLARS" and "US$" means the lawful currency for the
time being of the United States of America;
"VALUE" means in relation to any of the Shares on any day the mid-market
value as quoted in the London Stock Exchange Daily Official List on such
day.
25. CALCULATIONS AND EVIDENCE OF DEBT
(A) The Bank shall maintain in its books a control account in which shall
be recorded (i) the amount of all principal, interest or other sums due
or to become due from the Borrower to the Bank hereunder and (ii) the
amount of any sum received or recovered by the Bank hereunder.
(B) In any legal action or proceeding arising out of or in connection with
this Agreement, the entries made by the Bank in such control account
shall, in the absence of manifest error, be conclusive evidence of the
existence and amounts of the obligations of the Borrower therein
recorded.
(C) A certificate of the Bank as to any amount for the time being required
to indemnify it against any amount provided herein or any other
calculation to be made by the Bank hereunder shall, in the absence of
manifest error, be conclusive evidence in any legal action or
proceeding arising out of or in connection with this Agreement.
26. PARTIAL INVALIDITY
If at any time any provision hereof is or becomes illegal, invalid or
unenforceable in any respect under the law of any jurisdiction neither the
legality, validity or enforceability of the remaining provisions hereof nor the
legality, validity or enforceability of such provision under the law of any
other jurisdiction shall be in any way affected or impaired thereby.
27. WAIVERS; REMEDIES CUMULATIVE
No failure or delay by the Bank in exercising any right, power or privilege
under this Agreement shall impair such right, power of privilege or be construed
as a waiver thereof nor shall any single or
partial exercise of any right, power or privilege preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies of the Bank herein provided are
cumulative and not exclusive of any rights and remedies provided by law.
28. LAW
This Agreement shall be governed by and construed in accordance with English
law.
29. JURISDICTION
(A) The Borrower hereby irrevocably agrees for the benefit of the Bank (and
without prejudice to the right of the Bank to take proceedings in
relation hereto before any other court of competent jurisdiction) that
the courts of England shall have jurisdiction to hear and determine
any suit, action or proceeding, and to settle any disputes, which may
arise out of or in connection with this Agreement, the Share Charge or
the Novation Agreement and, for such purposes, hereby irrevocably
submits to the jurisdiction of such courts.
(B) The Borrower hereby irrevocably agrees that any writ, judgment or other
legal process shall be sufficiently served on it in connection with any
proceedings in England if delivered to Soco at its registered office
from time to time, being, as at the date of this Agreement, Xxxx Xxxxx,
00/00 Xxx Xxxx Xxxxxx, Xxxxxx X0X 0XX.
The offer set forth above may be accepted by the Borrower countersigning and
returning to the Bank the enclosed copy hereof but will lapse if the Bank has
not received the enclosed copy hereof, duly countersigned, by [*DATE] from the
date hereof.
Yours faithfully,
For and on behalf of
SOCIETE GENERALE, LONDON BRANCH
___________________________ ___________________________
[ ] [ ]
Agreed and accepted
By: _____________________
for and on behalf of
TERRITORIAL RESOURCES INC.
Date:
APPENDIX ONE
NOTICE OF DRAWDOWN
Societe Generale
London Branch
Xxxxxxxx Xxxxx
Xxxxxxxx Xxxxxx
Xxxxxx XX0X 0XX
[ - ] 1998
Attention: Head of Corporate Banking
Dear Sirs
RE: US$1,800,000 SHORT TERM ADVANCES FACILITY
We refer to the one million eight hundred thousand United States Dollars
short term advances facility which you have agreed to make available to us
under the terms of a Facility Letter (the "Facility Letter") dated
[ ] 1998.
In accordance with the provisions of clause 6(B) of the Facility Letter we
hereby give you irrevocable notice that we wish to draw down an Advance in
the amount of US$[ ] on [ ]1998 upon the
terms and subject to the conditions contained in the Facility Letter.
We confirm that at the date hereof the representations set out in Clause 10
of the Facility Letter are true, complete and accurate and that no event
which is or may become (with the passage of time or the giving of notice or
both) an Event of Default (as defined in the Facility Letter) has occurred.
We would be grateful if you would pay the proceeds of the Advance to
[*ACCOUNT DETAILS].
Yours faithfully
----------------------------------
for and on behalf of
TERRITORIAL RESOURCES INC.
APPENDIX TWO
THE SHARES
NUMBER COMPANY DESCRIPTION
600,000 Soco International Plc 20 xxxxx ordinary shares
To: Societe Generale
London Branch
Xxxxxxxx Xxxxx
Xxxxxx XX0X 0XX
Dear Sirs
We act generally as Legal Counsel to Territorial Resources Inc. ("TRI"). We
refer to (1) the facility letter dated [ ] 1998 for a short term
advances facility in the maximum aggregate sum of US$1,800,000 to be made
available by Societe Generale (the "Bank") to TRI (the "Facility Letter"),
(2) the share charge dated [ ] 1998 made by TRI in favour of the
Bank over certain shares in Soco International plc (the "Share Charge") and
(3) the novation agreement dated [ ] 1998 made between TRI, the Bank
and Soco International plc (the "Novation Agreement").
1. We have examined the following documents:
(a) The Facility Letter;
(b) The Share Charge;
(c) The Novation Agreement;
(d) The Articles of Incorporation and Bye-Laws of Incorporation of TRI;
and
(e) Certified true copies of the Board Resolutions of TRI dated [ ] 1998.
We have also examined such other documents and obtained from officers and
representatives of TRI such certificates and assurances as to factual matters
as we have considered necessary for the purposes of this opinion.
2. Having considered the above documents and having regard to the relevant
laws of the State of Colorado and the federal laws of the United States
of America, we are pleased to advise that in our opinion:-
(i) TRI is a private limited company duly organised, validly existing
and in all respects in good standing under the laws of the State of
Colorado and has full power and authority to own its property and
assets and to carry on its business as it is now being conducted;
(ii) TRI has full power and authority to incur the obligations referred
to in each of the Facility Letter, the Share Charge and the
Novation Agreement, to execute and deliver each of the Facility
Letter, the Share Charge and the Novation Agreement, to comply with
the provisions thereof and to perform all of its obligations
thereunder and in particular (but without limitation) to create
security over its shares in Soco International plc on
the terms provided in the Share Charge and to confer upon the Bank
the rights and interests in respect of such shares expressed to be
conferred thereby;
(iii) The execution and delivery of each of the Facility Letter, the
Share Charge and the Novation Agreement on behalf of TRI by the
relevant person(s) mentioned in the board resolutions referred to
in paragraph 1(e) above have been validly authorised by all
appropriate action of TRI;
(iv) The execution and delivery of each of the Facility Letter, the
Share Charge and the Novation Agreement by the relevant person(s)
mentioned in the board resolutions referred to in paragraph 1(e)
above constitute the assumption by TRI of all the obligations on
the part of TRI contained in each of the Facility Letter, the Share
Charge and the Novation Agreement, and such obligations (assuming
them to be valid and binding according to English law, to which the
Facility Letter, the Share Charge and the Novation Agreement are
expressed to be subject) are legally binding on and enforceable
against TRI under the law of the State of Colorado and United
States federal law and in the courts of the State of Colorado and
any federal courts in accordance with their respective terms.
(v) All acts, conditions and things required to be done and performed
in order:
(a) To enable TRI lawfully to enter into and perform the
obligations expressed to be assumed by it under each of the
Facility Letter, the Share Charge and the Novation Agreement;
(b) To ensure that the obligations expressed to be incurred by TRI
under each of the Facility Letter, the Share Charge and the
Novation Agreement are legal, valid and enforceable in
accordance with their terms;
(c) To make each of the Facility Letter, the Share Charge and the
Novation Agreement admissable in evidence in the State of
Colorado;
have been done, fulfilled and performed in strict compliance with
the Articles of Incorporation and Bye-Laws of Incorporation of TRI
and with all applicable laws of the State of Colorado and any
applicable United States federal laws;
(vi) the rights of the Bank under the Share Charge will constitute a
valid security in respect of all liabilities and obligations of TRI
under or in connection with the Facility Letter (both before and
after the novation described in the Novation Agreement) and will
assure the priority of the Bank in respect of the shares thereby
charged before all other creditors of TRI and/or any liquidator,
administrator, receiver, manager or trustee of TRI.
(vii) The execution and delivery of each of the Facility Letter, the
Share Charge and the Novation Agreement and the performance by TRI
of its obligations thereunder and compliance with the terms
thereof; do not and will not:
(a) Violate any provision of any law, decree, rule or regulation
or the Articles of Incorporation and Bye-Laws of Incorporation
of TRI; or
(b) Cause any limit of the borrowings of TRI (whether imposed by
law, regulation, regulatory requirement, agreement, its
Articles of Incorporation and Bye-Laws of Incorporation or
otherwise howsoever) to be exceeded.
(viii) All consents, approvals, exemptions and other requirements of all
governmental, regulatory, public and other bodies and authorities
required for or in connection with the execution, delivery and
performance by TRI of its obligations under each of the Facility
Letter, the Share Charge and the Novation Agreement, and the making
of all payments thereunder in the relevant currencies, have been
obtained and are in full force and effect, and no further consents,
approvals, exemptions or other requirements will be needed or will
need to be satisfied so as to enable TRI to perform its obligations
(including, but not limited to its payment obligations) under the
Facility Letter, the Share Charge and the Novation Agreement;
(ix) No stamp or other taxes or fees are required or imposed by the
State of Colorado, United States federal tax law or any political
subdivision or taxing authority thereof or therein with respect to
the preparation, execution, delivery, filing, recording,
registering or performance by any of the parties to the Facility
Letter, the Share Charge and the Novation Agreement of the
obligations thereunder or with respect to the enforcement against
TRI of such obligations;
(x) There is not in the State of Colorado nor under United States
federal tax law any withholding or other tax to be deducted or
levied from or in respect of any payment, whether of principal,
interest or otherwise, to be made by TRI pursuant to any of the
Facility Letter, the Share Charge and the Novation Agreement;
(xi) It is not necessary or advisable under the law or practice of the
State of Colorado or United States federal law for the Facility
Letter, the Share Charge and/or the Novation Agreement to be filed,
recorded or registered in any public office or elsewhere in the
State of Colorado or the United States, nor is it necessary or
advisable for any other document to be executed and delivered or
filed, registered or recorded as aforesaid;
(xii) The obligations of TRI under each of the Facility Letter and the
Novation Agreement constitute direct, unconditional and general
obligations of TRI and (with the exception of any indebtedness and
liabilities preferred by law) rank and will rank at least pari
passu with all other unsecured obligations and liabilities (actual
or contingent) of TRI;
(xiii) In any proceedings taken in relation to any of the Facility Letter,
the Share Charge and the Novation Agreement, TRI will not be
entitled to claim immunity from suit or legal process;
(xiv) The choice by TRI of English law as the governing law of each of
the Facility Letter, the Share Charge and the Novation Agreement
will be recognised and enforced in the State of Colorado and any
judgment obtained in England against TRI in relation to any
proceedings taken in relation to any of the Facility Letter, the
Share Charge and the Novation Agreement will be recognised and
enforceable in the State of Colorado;
(xv) It is not necessary or advisable under the laws of the State of
Colorado in order to enable the Bank to enforce its rights under
the Facility Letter, the Share Charge and the Novation Agreement or
by reason of the execution, delivery and performance of the
Facility Letter, the Share Charge and the Novation Agreement, that
TRI should be licensed, qualified or otherwise entitled to carry on
business in the State of Colorado.
In giving this opinion we express no opinion with regard to any laws other
than the laws of the State of Colorado and the federal law of the United
States of America.
This opinion is addressed to the Bank for its own use and benefit and for the
use and benefit of its legal advisers in connection with the Facility Letter,
the Share Charge and the Novation Agreement.
Yours faithfully
SOCIETE GENERALE
SHARE MORTGAGE
Date: [ ] 1998
1. DEFINITIONS
1.1 Mortgagor: Territorial Resources Inc., a company
incorporated in the State of Colorado,
USA with limited liability whose
registered office is at 000 Xxxxx Xxx
Xxxxxxx Xxxxxxx, Xxxxx 000, Xxxxxxx,
Xxxxx, 00000 XXX.
1.2 Bank: Societe Generale, a company incorporated
in France with limited liability whose
U.K. head office is at Xxxxxxxx Xxxxx,
Xxxxxxxx Xxxxxx, Xxxxxx XX0X 0XX
1.3 Facility Letter: The facility letter of even date between
the Bank and the Mortgagor for the
provision of a US$1,800,000 short-term
advances facility to the Mortgagor as the
same may be amended, supplemented or
novated from time to time
1.4 Interest: Interest at the rate or rates charged to
the Mortgagor by the Bank pursuant to the
Facility Letter
1.5 Shares: Six hundred thousand 20 xxxxx ordinary
shares in Soco International Plc
1.6 Security Assets: The Shares and all rights, assets or
property referred to in Clause 2(b) below
in respect of the Shares
1.7 Mortgagor's Obligations: All the Mortgagor's liabilities to the
Bank of any kind and in any currency or
currencies (whether present or future
actual or contingent whether incurred as
principal or surety and whether incurred
or outstanding alone or jointly with
another) including banking charges and
commission under or in connection with the
Facility Letter
1.8 Expenses: All expenses (on a full indemnity basis)
incurred by the Bank at any time in
connection with the Shares or the
Mortgagor's Obligations or in taking
perfecting enforcing or exercising any
power under this deed with
Interest from the date they are incurred
1.9 Required Currency: The currency or currencies in which the
Mortgagor's Obligations are expressed from
time to time
1.10 Address for Service: c/o Soco International Plc, Swan House,
00/00 Xxx Xxxx Xxxxxx, Xxxxxx X0X 0XX
2. CHARGE
In consideration of the Bank entering into the Facility Letter with the
Mortgagor and for the purpose of securing the discharge on demand of the
Mortgagor's Obligations together with Interest to the date of discharge and
Expenses the Mortgagor, with full title guarantee:-
a) mortgages and charges the Shares to the Bank, by way of first
legal mortgage and a first fixed charge;
b) mortgages and charges and agrees to mortgage and charge to the
Bank by way of a first legal mortgage and first fixed charge
all rights, moneys or property accruing or offered at any time
by way of redemption, bonus, preference, options, rights or
otherwise to or in respect of any of the Shares or in
substitution or exchange for any of the Shares; and
c) undertakes to deposit forthwith with the Bank and in such
manner as the Bank may direct all share certificates and other
documents in respect of the Security Assets and share transfer
forms executed in blank in respect of the Shares,
provided that upon irrevocable payment in full of the Mortgagor's Liabilities,
the Bank will at the request and expense of the Mortgagor release to the
Mortgagor all the right, title and interest of the Bank in or to the Security
Assets.
3. CONTINUING SECURITY
3.1 This deed shall be a continuing security and not satisfied by any
intermediate payment or satisfaction of the whole or any part of the
Mortgagor's Obligations but shall secure the ultimate balance of the
Mortgagor's Obligations.
3.2 The security hereby given shall be in addition to and shall not be
affected by any other mortgage or charge of any kind now or hereafter
held by the Bank for all or any of the Mortgagor's Obligations and shall
not merge with or prejudice any such other security or any contractual
or legal rights of the Bank.
3.3 The security hereby created shall not be affected by any other security
held by the Bank or any intended security in respect of the Mortgagor's
Obligations being void or unenforceable or not completed or perfected.
4. ARRANGEMENTS WITH THE MORTGAGOR AND OTHERS
4.1 The Bank may without the Mortgagor's consent and without releasing or
affecting
the security created by this deed or the obligations of the Mortgagor
hereunder do any of the following:-
4.1.1 Allow to the Mortgagor or any other person any time or indulgence
4.1.2 Vary, extend, compromise, renew or release or refuse or neglect
to perfect or enforce any terms of the Facility Letter or any
other rights or remedies against or securities granted by the
Mortgagor or any other person
4.1.3 Grant to the Mortgagor any new or increased facility and increase
any rate of interest or charge
4.1.4 Enter into renew vary or end any agreement or arrangement with or
liability of the Mortgagor or any other person
4.1.5 Renew vary refrain from enforcing or release any present or
future security or guarantee which the Bank holds from the
Mortgagor or any other person
4.1.6 Compound with the Mortgagor or any other person
4.2 The obligations of the Mortgagor hereunder and this security shall not
be affected by any act, omission or circumstances which but for this
provision might operate to release or otherwise exonerate the Mortgagor
from its obligations hereunder or affect such obligations including,
without limitation, and whether or not known to the Mortgagor or the
Bank:-
4.2.1 Any irregularity, invalidity or unenforceability of any
obligations of the Mortgagor under the Facility Letter or any
present or future law or order of any government or authority
purporting to reduce or otherwise affect any of such obligations,
to the intent that the Mortgagor's obligations hereunder shall
remain in full force and this deed shall be construed accordingly
as if there were no such irregularity, unenforceability,
invalidity, law or order
4.2.2 Any legal limitation, disability, incapacity or other
circumstances relating to the Mortgagor or any other person
4.2.3 Any incapacity or lack of powers, authority or legal personality
of or dissolution or change in the market or status of the
Mortgagor or any other person
4.2.4 Any failure by the Bank to take any security or the invalidity of
any security taken
4.3 The Bank shall not be concerned to see or investigate the powers or
authorities of the Mortgagor or its officers or agents and moneys
obtained or Mortgagor's Obligations incurred in purported exercise of
such powers or authorities shall be deemed to form part of the
Mortgagor's Obligations
5. PRESERVATION OF SECURITY
The Mortgagor shall remain liable under the security created by this deed
notwithstanding any settlement between the Bank and the Mortgagor or any release
given by the Bank to the Mortgagor until any security given or payment made to
the Bank by the Mortgagor or any other person cannot be avoided or reduced under
any law (whether English or foreign) relating to bankruptcy or liquidation (or
analogous circumstances) from time to time in force and the Bank shall be
entitled to retain this security until it is satisfied that it will not have to
make any repayment under such law
6. APPROPRIATION
6.1 Subject to Clause 6.2 the Bank may appropriate all payments received in
respect of the Mortgagor's Obligations in reduction of any part of the
Mortgagor's Obligations as the Bank decides
6.2 After the security created by this deed has been discontinued or upon
the Bank receiving actual or constructive notice of any charge or
interest affecting the Shares the Bank may open a new account or
accounts for the Mortgagor and whether or not the Bank opens any such
account no payment received by the Bank for the account of the Mortgagor
after such discontinuance or notice shall (if followed by any payment
out of or debit to the Mortgagor's account) be appropriated towards or
have the effect of discharging any part of the Mortgagor's Obligations
outstanding at the time of such discontinuance or notice
6.3 The Bank may place to the credit of a suspense account for so long as it
considers desirable any money received under this deed without any
obligation to apply it towards discharge of the Mortgagor's Obligations
7. UNDERTAKINGS BY MORTGAGOR
7.1 The Mortgagor undertakes to deposit with the Bank all documents relating
to any bonus or rights or other issue of shares in respect of the Shares
7.2 The Mortgagor undertakes to pay all calls or other payments due from
time to time in respect of the Shares
8. WARRANTIES BY THE MORTGAGOR
The Mortgagor hereby warrants, represents and undertakes that:-
8.1 it is the sole, absolute and beneficial owner of the Security Assets and
that it has not transferred, assigned, pledged or in any way encumbered
the Security Assets;
8.2 it will not assign, pledge or otherwise encumber hereafter the whole or
any part of the Security Assets to anyone other than the Bank
8.3 the Shares are fully paid and validly allotted and there are no calls or
other payments which may become due in respect of the Shares
9. POWERS OF THE BANK
9.1 Section 103 of the Law of Property Act 1925 shall not apply to this deed
and the Bank shall have power at its discretion to sell the Shares in
whole or in part at any time after the occurrence of an Event of Default
(as defined in the Facility Letter) and in particular (without
limitation) the Bank shall have power:-
9.1.1 to exercise at its discretion (in the name of the Mortgagor or
otherwise) and without any further consent or authority on the
part of the Mortgagor in respect of any of the Security Assets
any voting rights and any powers or rights which may be exercised
by the person or persons in whose name or names the Security
Assets are registered or who is the holder thereof under the
terms thereof or otherwise including, but without limitation, all
the powers given to trustees by section 10(3) and (4) of the
Xxxxxxx Xxx, 0000 in respect of securities or property subject to
a trust; and
9.1.2 to sell all or any of the Security Assets in any manner permitted
by law upon such terms as the Bank shall in its absolute
discretion determine; and
9.1.3 to collect, recover or compromise and to give a good discharge
for any moneys payable to the Mortgagor in respect of the
Security Assets or in connection therewith.
9.2 If the proceeds of sale of all or any of the Security Assets are not in
the Required Currency then the receipt shall take effect as a receipt by
the Bank of the amount in the Required Currency which the Bank is able
(in accordance with its usual practice and after deduction of the cost
to the Bank of making such purchase) to purchase with the amount so
received as soon as may be practicable
9.3 The Bank may at its discretion pay any calls or other payments due from
time to time in respect of the Shares or payable in respect of any
rights attaching to the Shares
9.4 Section 93(1) of the Law of Property Act 1925 shall not apply to this
deed
10. REGISTRATION
The Mortgagor hereby authorises the Bank on or after an Event of Default (as
defined in the Facility Letter) to arrange for the Shares to be registered (if
required by the Bank to perfect the Bank's security therein) and (under the
powers of realisation herein conferred) to transfer or cause the Security Assets
to be transferred to and registered in the name of any purchasers or transferees
from or nominees of the Bank and the Mortgagor undertakes from time to time on
or after an Event of Default (as defined in the Facility Letter) to execute and
sign all transfers, powers of attorney and other documents which the Bank may
reasonably require for perfecting its title to any of the Security Assets or for
vesting the same in itself or its nominees or in any purchasers or transferees.
11. LIABILITY TO PERFORM
The Bank shall not be required in any manner to perform or fulfil any
obligations of the Mortgagor in respect of the Security Assets, or to make
any payment, or to make an enquiry as to the nature or sufficiency of any
payment received by it or them, or to present or file any claim or take any
other action to collect or enforce the payment of any amount to which it may
have been or to which it may be entitled hereunder at any time or times.
12. FURTHER ASSURANCE
The Mortgagor further agrees that at any time and from time to time upon the
request of the Bank in writing it will promptly and duly execute and deliver
any and all such further instruments and documents as the Bank may deem
desirable for the purpose of obtaining the full benefit of this deed and of
the rights and powers herein granted.
13. POWER OF ATTORNEY
The Mortgagor hereby by way of security irrevocably appoints the Bank the
attorney of the Mortgagor on its behalf and in the name of the Mortgagor or
the Bank as the attorney(s) may decide, after the occurrence of an Event of
Default (as defined in the Facility Letter), to do all acts and execute all
documents which the Mortgagor could itself do in relation to the Security
Assets or in connection with any of the matters provided for in this deed
including without limitation the execution or completion of any transfer,
xxxx of sale or other assurance in respect of the Security Assets and in
particular:-
(a) to exercise all the rights and powers of the Mortgagor in respect of the
Security Assets;
(b) to ask, require, demand, receive, compound and give acquittances for any
and all moneys and claims for moneys due and to become due under or
arising out of such Security Assets;
(c) to endorse any cheques or other instruments or orders in connection
therewith; and
(d) to make any claims or to take any action or to institute any proceedings
which the Bank considers to be necessary or advisable to protect the
security hereby created.
14. PROTECTION OF PURCHASER
No purchaser or other person dealing with the Bank or with its attorneys or
agents shall be concerned to enquire:-
(a) whether any power exercised or purported to be exercised by it or them
has become exercisable;
(b) whether any money remains due on the security hereby created;
(c) as to the propriety or regularity of any of its or their actions; or
(d) as to the application of any money paid to it or them.
In the absence of mala fides on the part of such purchaser or other person
such dealing shall be deemed so far as regards the protection of such
purchaser or other person to be within he powers hereby conferred and to be
valid accordingly. The remedy of the Mortgagor in respect of any impropriety
or irregularity whatever in the exercise of such powers shall be in damages
only.
15. INDEMNITY
15.1 ATTORNEY
The Mortgagor will indemnify the Bank and every attorney appointed
pursuant hereto in respect of all liabilities and expenses incurred by
it, him or them in good faith in the execution or purported execution of
any rights, powers or discretions vested in it, him or them pursuant
hereto;
15.2 NON LIABILITY FOR LOSSES
The Bank shall not be liable for any losses arising in connection with
the exercise or purported exercise of any of its rights, powers and
discretions in good faith hereunder (save for negligence or default) and
in particular without limitation the Bank in possession shall not be
liable to account as mortgagee in possession or for anything except
actual receipts.
16. WAIVERS: REMEDIES CUMULATIVE
No waiver of any of the terms hereof shall be effective unless in writing
signed by the Bank. No delay or omission by the Bank shall constitute a
waiver. Any waiver may be on such terms as the Bank sees fit. The rights,
powers and discretions of the Bank herein are additional to and not exclusive
of those provided by law, by any agreement with or security in favour of the
Bank or otherwise.
17. MISCELLANEOUS
17.1 ENFORCEMENT EXPENSES
The Mortgagor will reimburse the Bank for all charges and expenses
incurred by the Bank in or in connection with the preservation of any
rights under this deed (including the fees and expenses of legal
advisers and any VAT thereon).
17.2 STAMP DUTY
The Mortgagor will pay or procure the payment when due of all present
and future registration fees, stamp duties and other imposts or
transactions taxes in relation to this deed and keep the Bank
indemnified against any failure or delay in paying the same.
17.3 ASSIGNMENT BY MORTGAGOR
The Mortgagor may not assign any of its rights under this deed.
17.4 ASSIGNMENT BY THE BANK
The Bank may assign and transfer all of its respective rights and
obligations hereunder.
18. CERTIFICATE OF MORTGAGOR'S OBLIGATIONS
A certificate signed by an official or manager of the Bank as to the amount
of the Mortgagor's Obligations or the amount due from the Mortgagor under
this deed shall be conclusive evidence save in the case of manifest error or
on any question of law
19. NOTICES
19.1 Any notice or demand by the Bank may be sent by post telex or facsimile
transmission or delivered to the Mortgagor at the above address or the
Mortgagor's address last known to the Bank or the address stated in
Clause 20.4 or if the Mortgagor is a company may be served personally on
any director or the secretary of the Mortgagor
19.2 A notice or demand by the Bank by post shall be deemed served on the day
after posting
19.3 A notice or demand by the Bank by telex or facsimile transmission shall
be deemed served at the time of sending
20. GOVERNING LAW AND JURISDICTION
20.1 This deed shall be governed by and construed in accordance with the laws
of England
20.2 For the benefit of the Bank the Mortgagor irrevocably submits to the
jurisdiction of the English Courts and the Mortgagor irrevocably agrees
that a judgment in any proceedings in connection with this deed by the
English Courts shall be conclusive and binding upon the Mortgagor and
may be enforced against the Mortgagor in the Courts of any other
jurisdiction. The Bank shall also be entitled to take proceedings in
connection with this deed against the Mortgagor in the Courts of any
country in which the Mortgagor has assets or in any other Courts of
competent jurisdiction
20.3 The Mortgagor irrevocably waives:-
20.3.1 Any objection which the Mortgagor may now or in the future
have to the English Courts or other Courts referred to in
Clause 20.2 as a venue for any proceedings in connection with
deed and
20.3.2 Any claim which the Mortgagor may now or in the future be able
to make that any proceedings in the English Courts or other
Courts referred to in
Clause 20.2 have been instituted in an inappropriate forum
20.4 The Address for Service (or such other address in England or Wales as
the Mortgagor may from time to time nominate in writing to the Bank for
the purpose) shall be an effective address for service of any notice or
proceedings in the English Courts to or against the Mortgagor
21. MORTGAGOR'S CONSTITUTION AND POWERS
The Mortgagor warrants to the Bank that:-
21.1 The Mortgagor is a corporation duly constituted and in good standing
under the law of the country in which it is incorporated and the
Mortgagor has appropriate power and authority to own its property and
assets and carry on its business as now conducted
21.2 The Mortgagor has appropriate power to enter into and perform the terms
and conditions of this deed and has taken all necessary action to
authorize the execution delivery and performance of this deed
21.3 No permit licence approval or authorization of any government judicial
or other authority or other third party is required or desirable in
connection with the execution performance validity or enforceability of
this deed
21.4 The Mortgagor will on demand obtain or pay to the Bank the cost incurred
by the Bank in obtaining at any time a written opinion from a legal firm
acceptable to the Bank confirming Clauses 21.1 21.2 and 21.3 of this
deed and any other matters relevant to this deed as the Bank may require
22. MERGER OR AMALGAMATION
The Mortgagor's Obligations shall include all liabilities of the Mortgagor to
the Bank notwithstanding the Bank's absorption by or amalgamation with any other
bank or banks and all liabilities of the Mortgagor past and future to such
absorbing or amalgamated bank as though such absorbing or amalgamated bank were
named in and referred to in this deed in addition to the Bank
23. INTERPRETATION
23.1 The expressions "Mortgagor" and "Bank" where the context admits include
their respective successors in title and assigns
23.2 Interest will be calculated both before and after demand or judgment on
a daily basis and on the basis of a 360 or 365 day year according to the
practice of the Bank and compounded according to agreement between the
Bank and the Mortgagor or in the absence of agreement monthly on such
days as the Bank may select
23.3 Each of the provisions of this deed shall be severable and distinct from
one another and if one or more of such provisions is invalid or
unenforceable the remaining
provisions shall not in any way be affected
IN WITNESS whereof this deed has been duly executed and is intended to be and is
hereby delivered on the date first above written
EXECUTED AND DELIVERED as a deed )
by the Mortgagor )
Director
Secretary/Director
