EXHIBIT 10.5
PLEDGE AGREEMENT
This Pledge Agreement ("Agreement") is dated this 6th day of October,
1998 by and between Horizontal Ventures, Inc., a Colorado corporation
("Pledgor"), and International Publishing Holding, S.A., a Luxembourg
corporation ("Lender").
RECITALS
A. Pledgor is indebted to Lender in the amount of $500,000 pursuant to
a Promissory Note of even date herewith (the "Note") made by Pledgor to
Lender. The obligations of Pledgor under the Note, including any extensions,
renewals, amendments and replacements thereof are hereinafter referred to as
the "Obligations."
B. As security for the Obligations, Pledgor has agreed to pledge two-
thirds of the shares of Series A Convertible Preferred Stock of Saba Petroleum
Company (the "Shares") owned by it, pursuant to the terms and conditions of
this Agreement.
NOW, THEREFORE, it is hereby agreed as follows:
1. Pledge. Pledgor hereby delivers, deposits and pledges the Shares to
Lender and hereby grants and conveys to Lender a continuing security interest
in the Shares. Pledgor will duly endorse, in blank, each and every instrument
constituting the Shares by signing a separate assignment or other documents of
transfer, if and when required by Lender, and will at all times hereafter
perform such other acts as Lender may request to establish, maintain, perfect
and enforce Lender's security interest in the Shares and rights under this
Agreement.
2. Ownership and Liens. Pledgor represents and warrants to Lender that
it has good title to and will at all times keep the Shares free of all liens
and encumbrances, except the security interest created hereby and any
restrictive legend appearing on any instrument constituting the Shares, and
Pledgor has full power and authority to execute this Agreement and perform
Pledgor's obligations hereunder.
3. Voting Rights. Pledgor shall have the right to exercise any and all
voting rights with respect to the Shares prior to the occurrence of an Event
of Default (hereinafter defined), and from and after the occurrence of an
Event of Default, Lender shall have the right to exercise any voting rights
with respect to the Shares.
4. Dividends and Distributions. Pledgor shall have the right to
receive any and all dividends and distributions with respect to the Shares
prior to the occurrence of an Event of Default, and from and after the
occurrence of an Event of Default, Lender shall have the right to receive all
such dividends and distributions.
5. Lender's Obligations. Lender's duty of care with respect to the
Shares in its possession shall be deemed fulfilled if Lender exercises
reasonable care in physically safekeeping such Shares or, in the case of
Shares in the custody or possession of a bailee or other third party,
exercises reasonable care in the selection of the bailee or other third party,
and Lender need not otherwise preserve, protect, insure or care for the
Shares. Lender shall not be obligated to preserve any rights which Pledgor
may have against prior parties or to realize on the Shares at all or in any
particular manner or order.
6. Defense of Collateral. Lender in the name of Pledgor or otherwise,
whether or not an Event of Default has occurred, shall have the authority (but
shall not be obligated) to settle, prosecute and discontinue any suits or
proceedings in respect to any or all of the Shares; take any action which
Lender may deem necessary or desirable in order to realize on the Shares,
including, without limitation, the power to perform any contract; to transfer
any of the Shares into its name or out of its nominee; and to apply any
proceeds of any Shares against the Obligations, all at the expense of Pledgor.
7. Events of Default. The occurrence of any of the following events
shall constitute an event of default ("Event of Default") under this
Agreement: (a) failure of Pledgor, or any co-maker, endorser, surety or
guarantor to pay when due any of the Obligations; (b) failure to perform any
agreement of Pledgor contained herein; (c) any statement, representation or
warranty of Pledgor made herein or at any time furnished in writing to Lender
is untrue in any material respect as of the date made; or (d) the occurrence
of any default or event of default under the Note or under any other document
or instrument evidencing or securing all or any portion of the Obligations.
8. Acceleration. Whenever an Event of Default shall exist, Lender may,
at its option, declare all or any part of the Obligations immediately due and
payable, and Lender may exercise, in addition to the rights and remedies
granted hereby, all rights and remedies of a secured party under the Uniform
Commercial Code or any other applicable law, including the right (but not the
obligation) to exercise all voting and other rights as a holder of the Shares
and the right to offer and sell the Shares privately to purchasers who will
agree to take the Shares for investment and not with a view to distribution
and who will agree to the imposition of restrictive legends on the
certificates representing the Shares, and the right to arrange for a sale
which would otherwise qualify as exempt from registration under the Securities
Act of 1933, as amended.
9. Miscellaneous. Pledgor may not assign its rights or obligations
under this Agreement without the written consent of Lender. This Agreement
shall be binding upon and inure to the benefit of Pledgor and Lender and the
respective successors and permitted assigns. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York and,
unless the context otherwise requires, all terms used herein which are defined
in the Uniform Commercial Code, as in effect in New York, shall have the
meanings therein stated.
PLEDGOR:
HORIZONTAL VENTURES, INC.
/s/ Xxxxxxx Xxxxxx
By: ________________________________
Xxxxxxx Xxxxxx, Chairman and
Chief Executive Officer
LENDER:
INTERNATIONAL PUBLISHING HOLDING, S.A.
By: _________________________________
Title: ______________________________
