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LIMITED RECOURSE GUARANTEE, SECURITY
AND PLEDGE AGREEMENT
Made as of August 7, 1997
Between
SEVEN SEAS PETROLEUM HOLDINGS INC.
as the "Guarantor"
and
MONTREAL TRUST COMPANY OF CANADA,
on behalf of the Holders
as the "Secured Party"
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TABLE OF CONTENTS
RECITALS...............................................................1
SECTION 1 -- INTERPRETATION
1.1 Certain Defined Terms............................................1
(1) Adverse Claim..............................................1
(2) Agreement..................................................2
(3) Collateral.................................................2
(4) Corporation................................................2
(5) Debenture Maturity Date....................................2
(6) Equity Securities..........................................2
(7) Event of Default...........................................2
(8) Governmental Body..........................................2
(9) Holders....................................................2
(10) Instruments................................................2
(11) Maturity Date..............................................2
(12) Note Maturity Date.........................................2
(13) Obligations................................................2
(14) Pledged Securities.........................................2
(15) Security Interest..........................................3
1.2 Indenture........................................................3
SECTION 2 -- LIMITED RECOURSE GUARANTEE
2.1 Limited Recourse Guarantee.......................................3
2.2 Realization on Security Interest.................................3
2.3 Need Not Exhaust Recourse........................................3
2.4 Continuing Agreement.............................................4
2.5 Additional Obligations...........................................4
2.6 Waiver of Subrogation............................................4
2.7 Obligations Not Affected.........................................4
SECTION 3 -- GRANT OF SECURITY INTEREST
3.1 Security Interest................................................6
3.2 Delivery of Pledged Securities...................................6
3.3 Attachment of Security Interest..................................7
3.4 Perfection of Personal Property..................................7
3.5 Termination of Security Interest. ...............................7
SECTION 4 -- REPRESENTATIONS, WARRANTIES AND COVENANTS
4.1 Representations and Warranties of the Guarantor..................7
4.2 Covenants of the Guarantor.......................................9
(i)
SECTION 5 -- DEALING WITH PLEDGED SECURITIES AND REALIZATION
5.1 Rights and Duties of the Secured Party..........................10
5.2 Voting Rights...................................................10
5.3 Payment of Dividends and Interest Payments. ...................10
5.4 Default.........................................................11
5.5 Remedies Upon an Event of Default...............................11
5.6 Remedies, etc., Cumulative......................................13
5.7 Consent. .......................................................13
5.8 Application of Proceeds.........................................13
5.9 Purchasers of Pledged Collateral................................13
5.10 Payment of Expenses.............................................13
SECTION 6 -- GENERAL
6.1 Benefit of the Agreement........................................13
6.2 Rights and Waivers..............................................14
6.3 Notice..........................................................14
6.4 Further Assurances..............................................15
6.5 Power of Attorney...............................................16
6.6 Additional Security and Merger..................................16
6.7 Complete Agreement..............................................16
6.8 Amendment.......................................................16
6.9 Severability....................................................16
6.10 Governing Law...................................................16
6.11 Paramountcy.....................................................17
SCHEDULES
SCHEDULE 1.1(j) Pledged Securities
SCHEDULE 3.2 Stock Power/Power of Attorney
SCHEDULE 5.2 Irrevocable Proxy
(ii)
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LIMITED RECOURSE GUARANTEE, SECURITY
AND PLEDGE AGREEMENT
This Agreement is made as of August 7, 1997, between
SEVEN SEAS PETROLEUM HOLDINGS INC., a Cayman
Islands corporation,
as "GUARANTOR"
and
MONTREAL TRUST COMPANY OF CANADA, on behalf of
the Holders,
as "SECURED PARTY"
RECITALS
A. Seven Seas Petroleum Inc., as issuer (the "ISSUER"), has entered into an
indenture made as of August 7, 1997 (as amended, supplemented, restated or
otherwise modified from time to time, the "INDENTURE") with the Secured Party.
B. To secure due repayment and satisfaction of all of the Issuer's present and
future liabilities and obligations under, in respect of or relating to the
Instruments and to secure due performance by the Issuer of all of its other
present and future obligations under the Indenture and the Instruments, whether
absolute or contingent, present or future, of the Issuer to Holders from time to
time outstanding (collectively, the "OBLIGATIONS"), the Guarantor has agreed to
guarantee the Obligations and, as security therefor, to grant a security
interest in and pledge the Collateral to the Secured Party pursuant to this
Agreement.
FOR VALUE RECEIVED, the parties agree as follows:
SECTION 1 -- INTERPRETATION
1.1 CERTAIN DEFINED TERMS. In this Agreement:
(1) ADVERSE CLAIM has the meaning given to it in Section 53(1) of the BUSINESS
CORPORATIONS ACT (Ontario).
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(2) AGREEMENT means this agreement and all amendments, restatements,
modifications and supplements and any exhibits or schedules to any of the
foregoing made hereto by written agreement between the Guarantor and the Secured
Party.
(3) COLLATERAL means (a) all of Guarantor's membership interest in Xxxxxxxxx
Limited Liability Company, an Oklahoma limited liability company, and all rights
to vote, approve or consent to any action or matter pertaining to the business
of Xxxxxxxxx Limited Liability Company; and (b) the Pledged Securities.
(4) CORPORATION means any of the corporations listed on Schedule 1.1(j) and
their respective successors.
(5) DEBENTURE MATURITY DATE has the meaning given to it in the Indenture.
(6) EQUITY SECURITIES means all shares, options, warrants, interests,
participations or other equivalents (regardless of how designated) of or in a
corporation, partnership, limited partnership or equivalent entity, whether
voting or non-voting or participating or non-participating.
(7) EVENT OF DEFAULT has the meaning given to it in Section 5.4 of this
Agreement.
(8) GOVERNMENTAL BODY means any government, parliament, legislature, regulatory
authority, agency, tribunal, department, commission, board or court or other
law, regulation or rule-making entity (including a Minister of the Crown),
national or supra-national, having or purporting to have jurisdiction on behalf
of any nation, state, province, municipality or district, or any subdivision
thereof, any federal, provincial, state, county, municipal or other Canadian
federal, provincial, state or local governmental or regulatory authority,
agency, board, body, commission, instrumentality, court or quasi-governmental
authority.
(9) HOLDERS has the meaning given to it in the Indenture.
(10) INSTRUMENTS has the meaning given to it under the Indenture.
(11) MATURITY DATE means the Note Maturity Date or the Debenture Maturity Date,
as applicable.
(12) NOTE MATURITY DATE has the meaning given to it in the Indenture.
(13) OBLIGATIONS means the obligations and liabilities under this Agreement of
the Guarantor to the Holders.
(14) PLEDGED SECURITIES means all issued and outstanding voting and/or Equity
Securities of the Corporations owned directly or indirectly by the Guarantor,
including, without limitation, the Equity Securities listed in Schedule 1.1(j).
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(15) SECURITY INTEREST means any mortgage, hypothec, security interest, pledge,
privilege, assignment, lien, charge, whether fixed or floating, encumbrance or
other security arrangement of any kind or nature whatsoever whether or not
filed, recorded or otherwise perfected under the applicable laws of any
jurisdiction.
1.2 INDENTURE. Capitalized terms not defined herein have the meanings given to
them in the Indenture
SECTION 2 -- LIMITED RECOURSE GUARANTEE
2.1 LIMITED RECOURSE GUARANTEE. The Guarantor hereby guarantees the payment, and
punctual and complete performance by the Issuer of the Obligations to the
Holders on demand, the liability of the Guarantor hereunder being limited to the
Collateral and any proceeds arising on realization of the Security Interest
constituted by Section 3.1 hereunder. Notwithstanding any other provision of
this Agreement, the Secured Party shall not have any recourse against the
Guarantor under this Agreement save and except for the right to enforce the
Security Interest constituted by Section 3.1 and any other rights and remedies
of the Secured Party contained herein or at law or equity with respect to the
enforcement of the Security Interest constituted by Section 3.1.
2.2 REALIZATION ON SECURITY INTEREST. The guarantee made by the Guarantor
hereunder is made for the sole purpose of enabling the Secured Party to obtain
an effective pledge and security interest in and to the Collateral, the
Agreement being security for payment of the obligations hereunder of the
Guarantor to the Holders. Notwithstanding any other provisions hereof:
(1) the liability of the Guarantor to the Holders is limited to the
extent such liability (if any) is required to permit the Secured
Party to realize upon the security granted by the Guarantor to the
Secured Party pursuant to the Agreement; and
(2) in the event that the Guarantor shall default in its obligations
hereunder, the sole recourse of the Secured Party against the
Guarantor shall be with respect to the security granted by the
Guarantor to the Secured Party pursuant to the terms of this
Agreement, or any amounts received upon the realization of such
security pursuant to the terms of this Agreement, and the Secured
Party shall not under any circumstances have any right to payment
from the Guarantor or against any of its other property or assets.
2.3 NEED NOT EXHAUST RECOURSE. The Secured Party shall not be bound to exhaust
its recourse against the Issuer or others or any security it may at any time
hold before being entitled to enforce its rights under this Agreement. The
Guarantor renounces all benefits of discussion and division.
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2.4 CONTINUING AGREEMENT. This Agreement shall be a continuing agreement and
shall cover all the Obligations and it shall apply to and secure any ultimate
unperformed portion of the Obligations determined without regard to any
compromise, arrangement, settlement or release of the Issuer, whether arising by
private agreement, pursuant to a reorganization, restructuring or arrangement
under applicable statute law, operation of law or otherwise. This Agreement
shall not be considered as wholly or partially satisfied by the payment or
liquidation at any time or times of any sum or sums of money for the time being
due or remaining unpaid to the Holders, and all dividends, compositions,
proceeds of security valued and payments received by the Secured Party or any of
the Holders from the Issuer or from others or from estates shall be regarded for
all purposes as payments in gross without any right on the part of the Guarantor
to claim in reduction of the liability under this Agreement the benefit of any
such dividends, compositions, proceeds or payments or any collateral held by the
Secured Party or any of the Holders or proceeds thereof. This Agreement shall
not be affected by the loss of capacity of the Guarantor or by any change in the
name of the Issuer, or by the acquisition of the Issuer's business by a
corporation, or by any change whatsoever in the objects, capital structure or
constitution of the Issuer, or by the Issuer's business being amalgamated with
any other corporation, but shall, notwithstanding the happening of any such
event, continue to apply in respect of all the Obligations and in this
instrument the word "ISSUER" shall include every such firm and corporation.
2.5 ADDITIONAL OBLIGATIONS. The Guarantor's obligations hereunder shall not be
affected by any lack or limitation of status or of power, incapacity of the
Issuer or that the Issuer may not be a legal or suable entity, or any
irregularity, defect or informality in the borrowing or obtaining of such
monies, advances, renewals, credits or credit facilities, or any other reason,
similar or not, the whole whether or not known to any of the Holders or the
Secured Party.
2.6 WAIVER OF SUBROGATION. So long as any of the Obligations are outstanding,
the Guarantor waives any right it may have, now or in the future, to be
subrogated to the Holders' claims against the Issuer, however arising, whether
in law or in equity, by operation of law or otherwise, that might otherwise
arise if the security interests created by this Agreement are enforced in whole
or in part. The Guarantor confirms that it shall have no claim to any monies or
property received or recovered by the Secured Party or any of the Holders unless
and until the Obligations are fully and permanently satisfied and performed and
that its claims shall be restricted to its claims otherwise arising to any
surplus in the hands of the Secured Party or any of the Holders.
2.7 OBLIGATIONS NOT AFFECTED. The obligations of the Guarantor hereunder shall
not be affected or impaired by any act, omission, matter or thing whatsoever,
occurring before, upon or after any demand for payment hereunder (and whether or
not known to the Guarantor, the Secured Party or any of the Holders) which, but
for this provision, might constitute a whole or partial defence to a claim
against the Guarantor hereunder or might operate to release or otherwise
exonerate the Guarantor from any of its obligations hereunder or otherwise
affect such obligations, including, without limitation:
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(1) any limitation of status or power, disability, incapacity or other
circumstance relating to the Issuer or any other individual,
partnership, corporation, business trust, joint stock company,
trust, unincorporated association, joint venture, Governmental Body
or other entity of whatever nature (a "PERSON"), including any
insolvency, bankruptcy, liquidation, reorganization, readjustment,
composition, dissolution, winding-up or other proceeding involving
or affecting the Issuer, the Guarantor or any other Person;
(2) any irregularity, defect, unenforceability or invalidity in respect
of any indebtedness or other obligation of the Issuer, or any other
Person under the Indenture or any Instrument;
(3) any failure of the Issuer or any other Person, whether or not
without fault on their part, to perform or comply with any of the
provisions of the Indenture or the Instruments or to give notice
thereof to the Guarantor;
(4) the taking or enforcing or exercising or the refusal or neglect to
take or enforce or exercise any right or remedy against the Issuer,
or any other Person or their respective assets, or the release or
discharge of any such right or remedy;
(5) the granting of time, renewals, extensions, compromises,
concessions, waivers, releases, discharges (other than by a complete
irrevocable written discharge executed by the Secured Party) and
other indulgences to the Issuer or any other Person;
(6) any amendment, variation, modification, supplement or replacement of
the Indenture or any Instrument (other than this Agreement and then
only as expressly provided by such amendment, variation,
modification, supplement or replacement) or any other document or
instrument;
(7) any change in the ownership, control, name, objects, businesses,
assets, capital structure or constitution of the Issuer or any other
Person;
(8) any merger or amalgamation of the Issuer with any Person or Persons;
(9) the occurrence of any change in the laws, rules, regulations or
ordinances of any jurisdiction or by any present or future action of
any Governmental Body or court amending, varying, reducing or
otherwise affecting, or purporting to amend, vary, reduce or
otherwise affect, any of the obligations of the Issuer under the
Indenture or any Instrument or the obligations of the Guarantor
under this Agreement;
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(10) the existence of any claim, set-off or other rights which the
Guarantor may have at any time against the Issuer, the Holders or
the Secured Party, or any other person, or which the Issuer may have
at any time against any of the Holders or the Secured Party whether
in connection with the Indenture, the Instruments or otherwise; and
(11) any other circumstance (other than by complete and irrevocable
payment of the Obligations and by a complete irrevocable written
discharge executed by the Secured Party or the Holders) that might
otherwise constitute a legal or equitable discharge or defence of
the Issuer under the Indenture and the Instruments, or of the
Guarantor in respect of any guarantee hereunder.
SECTION 3 -- GRANT OF SECURITY INTEREST
3.1 SECURITY INTEREST. As general and continuing collateral security for the
payment and performance of all Obligations, the Guarantor hereby irrevocably
mortgages, charges, assigns, transfers, delivers, pledges, hypothecates and
grants a security interest to and in favour of the Secured Party in the
Collateral, including, without limitation:
(1) all Pledged Securities, together with any renewals thereof,
substitutions therefor and additions thereto and all certificates
and instruments evidencing or representing the Pledged Securities;
and
(2) any and all other Equity Securities issued by the Corporations that
may at any time be received or receivable by or otherwise
distributed to or acquired by the Guarantor in substitution for, or
in addition to, or in exchange for, any of the Pledged Securities,
including, without limitation, any shares or other securities
resulting from the subdivision, consolidation, change, conversion or
reclassification of any of the Pledged Securities, the
reorganization or amalgamation of any Corporation with any other
body corporate, the issuance by the Corporations of any additional
Equity Securities, or the occurrence of any event which results in
the substitution, addition to, or exchange of the Pledged
Securities.
3.2 DELIVERY OF PLEDGED SECURITIES. All certificates, instruments and other
documents representing or evidencing the Pledged Securities, duly endorsed in
blank for transfer or accompanied by stock powers or powers of attorney duly
executed in blank (substantially in the form of the stock power/power of
attorney attached as Schedule 3.2) and otherwise in form satisfactory to the
Secured Party, shall, forthwith be delivered to and remain in the custody of the
Secured Party or its nominee. If at any time or from time to time after the date
of this Agreement the Guarantor shall be entitled to receive or shall receive
any Equity Securities in any of the Corporations (by purchase, stock dividend or
other distribution or as a result of any reclassification, increase or reduction
of capital or any reorganization or otherwise) in addition to or in substitution
or exchange for those described in Schedule 1.1(j), the Guarantor will forthwith
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deposit such Equity Securities with the Secured Party and deliver to the Secured
Party certificates, instruments or other documents representing such Equity
Securities, duly endorsed in blank for transfer or accompanied by a stock
power/power of attorney in respect of each such certificate duly executed in
blank by the Guarantor, and will at the same time deliver to the Secured Party a
certificate (which shall constitute a supplement to Schedule 1.1(j)) executed by
the Guarantor describing such Equity Securities and confirming that such
securities have been duly pledged to the Secured Party and are subject to the
Security Interest granted hereunder. Upon the occurrence of an Event of Default
which is continuing, all Pledged Securities may, at the option of the Secured
Party, be registered in the name of the Secured Party or its nominee.
3.3 ATTACHMENT OF SECURITY INTEREST. The Guarantor and the Secured Party hereby
acknowledge that (1) value has been given and (2) the Guarantor has rights in
the Collateral. The Guarantor and the Secured Party agree that the Secured
Party's Security Interest in the Collateral shall attach as of the date hereof.
3.4 PERFECTION OF PERSONAL PROPERTY. The Guarantor hereby authorizes the Secured
Party to file such financing statements, financing change statements and other
documents and do such acts, matters and things as the Secured Party may deem
appropriate to perfect on an ongoing basis and continue the Security Interest
constituted hereby, to protect and preserve the Collateral and after an Event of
Default to realize upon the same and the Guarantor hereby irrevocably
constitutes and appoints the officer or officers of the Secured Party from time
to time having responsibility for administration of the terms of the Indenture
the true and lawful attorney of the Guarantor with full power of substitution,
to do any of the foregoing in the name of the Guarantor whenever and wherever it
may be deemed necessary or expedient.
3.5 TERMINATION OF SECURITY INTEREST. This Agreement and the Security Interest
granted hereunder shall terminate upon final and irrevocable satisfaction of all
obligations, indebtedness and liabilities of the Issuer to the Holders under the
Indenture. As soon as practicable after such termination, any Collateral then in
custody of the Secured Party or its nominee shall be delivered to the Guarantor
with all certificates being duly endorsed in blank for transfer or accompanied
by a power of attorney/stock power in respect of each such certificate duly
executed in blank by the Secured Party.
SECTION 4 -- REPRESENTATIONS, WARRANTIES AND COVENANTS
4.1 REPRESENTATIONS AND WARRANTIES OF THE GUARANTOR. The Guarantor represents
and warrants to the Secured Party (upon each of which representations and
warranties the Secured Party specifically relies) as follows:
(1) The Guarantor is the sole legal and beneficial owner and the
registered holder of the Collateral, free and clear of any Adverse
Claims and any security interest, other than Security Interests
under this Agreement and any Security Interests which may arise at
law;
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(2) The Guarantor has full power and authority and legal right to enter
this Agreement and to grant the limited recourse guarantee and
Security Interests contained herein;
(3) no consent, approval, authorization or other order of any Person and
no consent, authorization, approval or other action by, and no
notice to or filing with, any Governmental Body is required to be
made or obtained by the Guarantor either (a) for the granting of the
Security Interest by the Guarantor in, to or of the Collateral
pursuant to this Agreement or for the execution, delivery or
performance of this Agreement by the Guarantor; or (b) for the
exercise by the Secured Party of the voting or other rights provided
for in this Agreement or the remedies in respect of the Collateral
pursuant to this Agreement, except as may be required in connection
with such disposition by laws affecting the offering and sale of
securities generally or as otherwise has been obtained;
(4) all Equity Securities of any Corporation forming part of the
Collateral are and will be, until the Maturity Date, validly issued,
fully paid and non-assessable;
(5) there is no existing agreement, option, right or privilege capable
of becoming an agreement or option pursuant to which the Guarantor
would be required to sell or otherwise dispose of any of the
Collateral;
(6) the Security Interest granted hereunder will constitute a valid
Security Interest in the Collateral upon delivery to the Secured
Party of the share certificates representing the Collateral or upon
registration of notice thereof in prescribed form under applicable
personal property security legislation, if such registration is
required in order to perfect a Security Interest in the Collateral,
which Security Interest ranks prior to the rights of all other
Persons; and
(7) this Agreement has been duly executed and delivered by the Guarantor
and constitutes a legal, valid and binding obligation of the
Guarantor enforceable against the Guarantor in accordance with its
terms, subject to (i) applicable bankruptcy, insolvency, moratorium
or similar laws affecting creditors' rights generally; and (ii) the
fact that specific performance and injunctive relief may be given at
the discretion of the court.
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4.2 COVENANTS OF THE GUARANTOR. The Guarantor covenants to and in favour of the
Secured Party that, until all the Obligations are performed or paid in full, it
shall:
(1) assist in maintaining and preserving such Security Interest until
the Maturity Date;
(2) take all necessary actions which, in its reasonable opinion, are
necessary to ensure that the Corporations do not issue Equity
Securities to any person other than the Guarantor and use all
reasonable best efforts to maintain its current ownership interest
in Xxxxxxxxx Limited Liability Company;
(3) not (and not purport to) sell, give, assign, transfer, pledge,
mortgage, charge, hypothecate or otherwise dispose, encumber or deal
with, any of its interest in the Collateral or incur or permit to
exist any Security Interest on or in the Collateral other than the
Security Interest granted under this Agreement, any other Security
Interest granted in favour of a financial institution in respect of
the incurrence by the Issuer of Senior Debt, provided that (i) the
transferee of such Collateral becomes bound to the terms of this
Agreement, and (ii) does such other acts and delivers such other
documents and legal opinion as may reasonably be required by the
Secured Party to ensure that the Secured Party has a valid perfected
Security Interest in such Collateral, which Security Interest shall
rank prior to the rights of all Persons other than those Persons
specified in Section 3.1 of the Indenture and those Persons to whom
the Issuer has incurred obligations, indebtedness and liabilities
which constitute Senior Debt;
(4) ensure that at the request of the Secured Party all Collateral shall
be registered in the name of the Secured Party or its nominee upon
the occurrence of an Event of Default, that any certificates
representing the Collateral shall be forthwith delivered to and may
remain in the custody of the Secured Party or its nominee, and that
all certificates, instruments or other documents representing or
evidencing any Collateral acquired or obtained by the Guarantor
after the date of this Agreement shall forthwith (and in any event
within ten (10) Business Days) after the Guarantor acquires or
obtains such Collateral be delivered to, and may remain in the
custody of the Secured Party or its nominee; and
(5) ensure that such stock powers, powers of attorney, board resolutions
and similar documents with respect to the Collateral as the Secured
Party may reasonably request, satisfactory in form and substance to
the Secured Party, shall be delivered to the Secured Party or its
nominee from time to time upon request.
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SECTION 5 -- DEALING WITH PLEDGED SECURITIES AND REALIZATION
5.1 RIGHTS AND DUTIES OF THE SECURED PARTY.
(1) The Secured Party shall have and be entitled to exercise all such
powers hereunder as are specifically delegated to the Secured Party
by the terms hereof, together with such powers as are incidental
thereto. The Secured Party may execute any of its duties hereunder
by or through its employees and shall be entitled to retain counsel
and to act in reliance upon the advice of such counsel concerning
all matters pertaining to its duties hereunder.
(2) The Secured Party and any nominee on its behalf shall be bound to
exercise in the holding of the Collateral, the same degree of care
as it would exercise with respect to similar property of its own of
similar value held in the same place. Neither the Secured Party nor
any nominee acting on its behalf, nor any director, officer or
employee of the Secured Party shall be liable for any action taken
or omitted to be taken by it hereunder or in connection herewith,
except for its own gross negligence, wilful misconduct or bad faith.
the Secured Party is hereby released from all responsibilities for
any depreciation in or loss of value of any part of the Collateral.
5.2 VOTING RIGHTS. So long as no Event of Default has occurred and is
continuing, the Guarantor shall be entitled to exercise, in a manner which does
not contravene any provision of this Agreement, all voting power from time to
time exercisable in respect of the Collateral and any and all other rights with
respect to the Collateral, and give consents, waivers and ratification in
respect thereof. All such rights of the Guarantor to vote and to give consents,
waivers and ratifications shall cease upon the occurrence and during the
continuance of an Event of Default and Section 5.5 shall become applicable. The
Guarantor agrees following the occurrence of an Event of Default to grant an
irrevocable proxy (in the form of the proxy attached as Schedule 5.2) to vote
the Collateral from and after the occurrence of an Event of Default and while it
continues. Upon the occurrence of an Event of Default and while it continues,
the Guarantor shall be prohibited from exercising its voting rights with respect
to the Collateral and thereupon all such rights of the Guarantor to vote and
give consents, waivers and ratifications shall cease immediately.
5.3 PAYMENT OF DIVIDENDS AND INTEREST PAYMENTS.
(1) The Guarantor shall be entitled to receive any and all cash
dividends or interest payments on the Collateral; and if the
Collateral shall have been registered in the name of the Secured
Party or its nominee, the Secured Party shall execute and deliver
(or cause to be executed and delivered) to the Guarantor all such
dividend orders and other instruments as the Guarantor may request
for the purpose of enabling the Guarantor to receive the dividends
or other payments which the Guarantor is authorized to receive
pursuant to this Section 5.3(1).
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(2) The Secured Party shall be entitled to receive directly, and to
retain as part of the Collateral:
(a) all other or additional Equity Securities distributed by way
of dividend in respect of the Collateral;
(b) all other or additional Equity Securities distributed in
respect of the Collateral by way of stock-split, spin-off,
split-up, reclassification, combination of shares or similar
rearrangement; and
(c) all other or additional Equity Securities which may be
distributed in respect of the Collateral by reason of any
consolidation, merger, exchange of stock, conveyance of
assets, liquidation or similar corporate reorganization or
other disposition of Collateral.
5.4 DEFAULT. An Event of Default as defined under the Indenture shall constitute
an Event of Default under this Agreement.
5.5 REMEDIES UPON AN EVENT OF DEFAULT. Upon the occurrence of an Event of
Default and while it continues, the Secured Party may, upon such notice to the
Guarantor as may be required by applicable law, take all or any of the following
actions:
(1) transfer all or any part of the Collateral into the name of the
Secured Party or its nominee;
(2) vote any or all of the Collateral (whether or not transferred to the
Secured Party or its nominee) and give or withhold all consents,
waivers and ratifications in respect thereof and otherwise act with
respect thereto as though it were the outright owner thereof;
(3) exercise any and all rights of conversion, exchange, subscription or
any other rights, privileges or options pertaining to any of the
Collateral as if it were the absolute owner thereof, including,
without limitation, the right to exchange at its discretion any and
all of the Collateral upon the merger, consolidation,
reorganization, recapitalization or other readjustment of any
Corporation or upon the exercise by any Corporation or the Secured
Party of any right, privilege or option pertaining to any shares of
the Collateral, and in connection therewith, to deposit and deliver
any and all of the Collateral with any committee, depositary,
transfer agent, registrar or other designated agency upon such terms
and conditions as it may determine, all without liability except to
account for property actually received by it;
(4) from time to time realize upon, collect, sell, transfer, assign,
give options to purchase, or otherwise dispose of and deliver the
Collateral or any part thereof, in
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such commercially reasonable manner as may seem to it advisable, and
for the purposes thereof each and every requirement relating thereto
and prescribed by law or otherwise is hereby waived by the Guarantor
to the extent permitted by law and the Guarantor agrees that in any
offer or sale of any of the Collateral the Secured Party is hereby
authorized to comply with any limitation or restriction in
connection with such offer or sale as it may be advised by counsel
is necessary in order to avoid any violation of applicable law
(including, without limitation, compliance with such procedures as
may restrict the number of prospective bidders and purchasers,
requiring that such prospective bidders and purchasers have certain
qualifications, and restricting such prospective bidders and
purchasers to persons who will represent their own account for
investment and not with a view to the distribution or resale of such
Collateral), or in order to obtain any required approval of the sale
of or the purchase by any Governmental Body or official, and the
Guarantor further agrees that such compliance shall not result in
such sale being considered or deemed not to have been made in a
commercially reasonable manner, nor shall the Secured Party be
liable in any way by reason of the fact that such Collateral is sold
in compliance with any such limitation or restriction; and
(5) purchase any or all of the Collateral, whether in connection with a
sale made under the power of sale herein contained or pursuant to
judicial proceedings or otherwise;
provided, however, that the Secured Party shall not be bound to deal with the
Collateral as aforesaid, and shall not be liable for any loss which may be
occasioned by any failure to do so and no action of the Secured Party permitted
hereunder shall impair or affect any rights of the Secured Party in and to the
Collateral.
The Guarantor recognizes that the Secured Party may be unable to
effect a public sale of any or all of the Collateral by reason of certain
prohibitions contained in the SECURITIES ACT (Ontario) (the "SECURITIES ACT")
and other applicable securities laws, but may be compelled to resort to one or
more private sales thereof to a restricted group of purchasers who will be
obliged to agree, among other things, to acquire such securities for their own
account for investment and not with a view to the distribution or resale
thereof. The Guarantor acknowledges and agrees that any such private sale may
result in prices and other terms less favourable to the seller than if such sale
were a public sale and notwithstanding such circumstances, agrees that any such
private sale shall be deemed to have been made in a commercially reasonable
manner. The Secured Party shall not be under any obligation to delay a sale of
any of the Collateral for the period of time necessary to permit the issuer of
such securities to register such securities for public sale under the Securities
Act, or under other applicable securities laws, even if the issuer would agree
to do so.
- 13 -
5.6 REMEDIES, ETC., CUMULATIVE. Each right, power and remedy of the Secured
Party provided for in this Agreement or now or hereafter existing at law or in
equity or by statute shall be cumulative and concurrent and shall be in addition
to every other such right, power or remedy. In addition to the rights and
remedies provided herein and in addition to any other rights the Secured Party
may have at law or in equity, the Secured Party has all the remedies of a
secured party under the PERSONAL PROPERTY SECURITY ACT (Ontario) (the "PPSA").
The exercise or beginning of the exercise by the Secured Party of any one or
more of the rights, powers or remedies provided for in this Agreement or now or
hereafter existing at law or in equity or by statute or otherwise shall not
preclude the simultaneous or later exercise by the Secured Party of all such
other rights, powers or remedies, and no failure or delay on the part of the
Secured Party to exercise any such right, power or remedy shall operate as a
waiver thereof.
5.7 CONSENT. The Guarantor hereby irrevocably approves, authorizes and consents
to any sale, transfer or other disposition of any or all of the Collateral by
the Secured Party in accordance with the terms of this Agreement.
5.8 APPLICATION OF PROCEEDS. After payment of expenses as provided in Section
5.10, the balance of any proceeds received by the Secured Party in connection
with realizing, collecting, selling, transferring, delivering or obtaining
payment of the Collateral or any part thereof shall be applied on account of the
obligations, indebtedness and liabilities of the Issuer to the Holders in
accordance with the Indenture.
5.9 PURCHASERS OF PLEDGED COLLATERAL. Upon any sale of any of the Collateral
hereunder (whether by virtue of the power of sale herein granted, pursuant to
judicial process or otherwise), the receipt of the Secured Party or the officer
making the sale shall be a sufficient discharge to the purchaser or purchasers
of the Collateral so sold, and such purchaser or purchasers shall not be
obligated to see to the application of any part of the purchase money paid over
to the Secured Party or such officer or be answerable in any way for the
misapplication or non-application thereof.
5.10 PAYMENT OF EXPENSES. The Secured Party may charge on its own behalf and
also pay to others all out-of-pocket expenses of the Secured Party and others,
including the fees and disbursements of any experts or advisers (including,
without limitation, lawyers) retained by the Secured Party, incurred in
connection with selling, transferring, delivering or obtaining payment in
respect of the sale, transfer or delivery of the Collateral or any part thereof,
or in connection with the administration or amendment of this Agreement or
incidental to the care, safe keeping or otherwise of any and all of the
Collateral and may deduct the amount of such sums from any proceeds of the
Collateral.
SECTION 6 -- GENERAL
6.1 BENEFIT OF THE AGREEMENT. This Agreement shall be binding upon the Guarantor
and its heirs, executors, administrators, legal or personal representatives,
successors and permitted
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assigns and shall enure to the benefit of and be enforceable by the Secured
Party and its successors and assigns. In the event there has been an assignment
or transfer by the Secured Party to an assignee or a transferee in accordance
with the terms of the Indenture, the Secured Party is authorized to endorse all
or any part of the Collateral to such assignee or transferee and such assignee
or transferee of such endorsed Collateral shall be entitled to the benefits of
this Agreement. This Agreement and the rights of the Secured Party hereunder
shall also enure to the benefit of any of the Secured Party's nominees or
successors, including upon an Event of Default.
6.2 RIGHTS AND WAIVERS. The Guarantor hereby agrees that, without the necessity
of any reservation of rights against the Guarantor and without notice to or
further agreement by the Guarantor, any demand for payment of any of the
Obligations made by the Secured Party may be rescinded by the Secured Party and
the Obligations of the Guarantor or any other party upon or for any part
thereof, or any collateral security or guarantee therefor or right of set-off or
compensation with respect thereto, may, from time to time, in whole or in part,
be renewed, extended, amended, modified, accelerated, compromised, waived,
surrendered, or released by the Secured Party and any collateral security
documents or guarantees or documents in connection therewith may be amended,
modified, supplemented or terminated, in whole or in part, as the Secured Party
may deem advisable from time to time, and any collateral security at any time
held by the Secured Party for the payment of the Obligations may be released in
accordance with this Agreement all without the necessity of any reservation of
rights against the Guarantor and without notice to or further assent by the
Guarantor, which will remain bound hereunder, notwithstanding any such renewal,
extension, modification, acceleration, compromise, amendment, supplement,
termination, sale, exchange, waiver, surrender, pledge or release. The Guarantor
waives diligence, presentment, protest, demand for payment and notice of default
or non-payment to or upon the Guarantor with respect to the Obligations.
6.3 NOTICE.
(1) Any notice to the Guarantor under the provisions of this Agreement
shall be valid and effective if delivered, or sent by telecopier addressed to
the Guarantor at:
Seven Seas Petroleum Holdings Inc.
Suite 960
Three Post Oak Central
0000 Xxxx Xxx Xxxxxxxxx
Xxxxxxx, Xxxxx 00000 X.X.X.
Attention: Vice President - Finance
Telecopier No.: (000) 000-0000
with a copy to:
- 00 -
XxXxxxxx Xxxxx
Xxxxx 0000, Xxxxx Xxxxx
Xxxxx Bank Plaza
Toronto, Ontario
M5J 2J7
Attention: Xxxxx X. Xxxxxxxx
Telecopier No.: (000) 000-0000
and shall be deemed to have been effectively given on the date of delivery if
delivered, or the date of sending if sent by telecopier.
(2) Any notice to the Secured Party under the provisions of this Agreement
shall be valid and effective if delivered, or sent by telecopier addressed to
the Secured Party at:
Montreal Trust Company of Canada
000 - 000 0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Manager, Corporate Trust
Telecopier No.: (000) 000-0000
with a copy to:
Yorkton Securities Inc.
00xx Xxxxx
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX
X0X 0X0
Attention: Xxxxxx Xxxx
Telecopier No.: (000) 000-0000
and shall be deemed to have been effectively given on the date of delivery if
delivered, or the date of sending if sent by telecopier.
6.4 FURTHER ASSURANCES. The Guarantor shall at its expense from time to time,
do, execute and deliver, or cause to be done, executed and delivered, all such
financing statements, further assignments, documents, acts, matters and things
as may be required or deemed advisable by the Secured Party acting reasonably
for the purpose of giving effect to this Agreement or for the purpose of
establishing compliance with the representations, conditions and warranties and
covenants herein contained.
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6.5 POWER OF ATTORNEY. The Guarantor hereby irrevocably constitutes and appoints
the officer or officers of the Secured Party from time to time having
responsibility for administration of the terms of the Indenture the true and
lawful attorney of the Guarantor, as and from the happening of an Event of
Default and during the continuance thereof, with full power of substitution, to
do, make and execute all such statements, assignments, documents, acts, matters
or things with the right to use the name of the Guarantor whenever and wherever
such officer may deem necessary or expedient and from time to time to exercise
all rights and powers and to perform all acts of ownership in respect to the
Collateral in accordance with this Agreement.
6.6 ADDITIONAL SECURITY AND MERGER. The Security Interest constituted by this
Agreement is in addition and without prejudice to any other security now or
hereafter held by the Secured Party. Neither the taking and holding of the
Collateral nor the obtaining of any judgment by the Secured Party shall operate
as a merger of any Obligation or any other indebtedness or liability of the
Guarantor to the Secured Party or to any Holder or operate to prejudice the
security constituted by this Agreement.
6.7 COMPLETE AGREEMENT. This Agreement constitutes the complete agreement
between the parties with respect to the subject matter hereof and supersedes all
prior agreements, commitments, understandings or inducements, whether oral or
written, expressed or implied.
6.8 AMENDMENT. Neither this Agreement nor any provision hereof may be amended,
modified, waived, discharged or terminated orally nor may any of the Collateral
be released, except in accordance with this Agreement or except by an instrument
in writing duly signed by or on behalf of the Secured Party hereunder.
6.9 SEVERABILITY. Any provision in this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof or affecting the validity or enforceability of such
provision in any other jurisdiction.
6.10 GOVERNING LAW. This Agreement is governed by and will be construed and
interpreted in accordance with the laws of the Province of Ontario and the laws
of Canada applicable therein.
- 17 -
6.11 PARAMOUNTCY. To the degree that any provisions contained in this Agreement
are inconsistent with those in the Indenture, the provisions of the Indenture
shall prevail.
IN WITNESS WHEREOF the Guarantor has executed and delivered this Agreement as a
Deed and the Secured Party has executed this Agreement the day and year first
above written.
SEVEN SEAS PETROLEUM
HOLDINGS INC., as Guarantor
By: _________________________
Name: _______________________
Title: ______________________
By: _________________________
Name: _______________________
Title: ______________________
MONTREAL TRUST COMPANY OF
CANADA, as Secured Party
By: _________________________ C.S.
Name: _______________________
Title: ______________________
By: _________________________
Name: _______________________
Title: ______________________
- 18 -
SCHEDULE 1.1(J)
PLEDGED SECURITIES
NUMBER OF PERCENTAGE
TYPE OF PLEDGED PLEDGED EQUITY OF TOTAL
CORPORATION EQUITY SECURITIES SECURITIES OUTSTANDING CERTIFICATE NO.
Seven Seas Petroleum Common Shares, par 1 100 2
Columbia Inc. value US$1.00 each
- 19 -
SCHEDULE 3.2
STOCK POWER/POWER OF ATTORNEY
FOR VALUE RECEIVED, SEVEN SEAS PETROLEUM HOLDINGS INC. hereby sells,
assigns and transfers unto Montreal Trust Company of Canada ____________ shares
in the capital of ____________ standing in its name on the books of the said
Corporation represented by Certificate No. _____________, herewith, and
irrevocably constitutes and appoints _____________________________ as its
attorney to transfer such stock on the books of such Corporation with full power
of substitution in the premises.
EXECUTED this ____________ day of ___________, ___________.
SEVEN SEAS PETROLEUM HOLDINGS INC.
By:_________________________________ C.S.
Name:
Title:
By:_________________________________
Name:
Title:
- 20 -
SCHEDULE 5.2
IRREVOCABLE PROXY
The undersigned agrees to and hereby grants to MONTREAL TRUST
COMPANY OF CANADA (the "SECURED PARTY") an irrevocable proxy to vote, or to
execute and deliver written consents or otherwise act with respect to, all
[SHARES/MEMBERSHIP INTERESTS] in the capital (the "SHARES") of
______________________ now owned or hereafter acquired by the undersigned as
fully, to the same extent and with the same effect as the undersigned might or
could do under any applicable laws or regulations governing the rights and
powers of shareholders of a [CAYMAN ISLANDS CORPORATION/OKLAHOMA LIMITED
LIABILITY COMPANY]. The undersigned hereby affirms that this proxy is given
pursuant to a certain limited recourse guarantee, security and pledge agreement
dated as of the date hereof made by it in favour of the Secured Party (as
amended, supplemented, restated or otherwise modified from time to time, the
"PLEDGE") and as such is coupled with an interest and is irrevocable. It is
further understood by the undersigned that this proxy is exercisable by the
Secured Party only from and after the occurrence of and during the continuance
of an Event of Default (as defined in the Pledge) and ending on the Maturity
Date (as defined in the Pledge) or otherwise ending only when the Secured Party
shall have terminated this proxy in writing.
THIS PROXY SHALL REMAIN IN FULL FORCE AND EFFECT AND BE
ENFORCEABLE AGAINST ANY DONEE, TRANSFEREE OR ASSIGNEE OF THE
SHARES.
Dated as of this _____ day of ___________, ___________.
SEVEN SEAS PETROLEUM HOLDINGS INC.
By:_________________________________ C.S.
Name:
Title:
By:_________________________________
Name:
Title:
