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EXHIBIT 10(z)
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT is executed effective the 20th day
of December, 2000, by SEVEN SEAS PETROLEUM INC., a Yukon Territory, Canada
corporation (the "Borrower"), SEVEN SEAS PETROLEUM HOLDINGS INC., a Cayman
Islands corporation ("SSPH"), and SEVEN SEAS PETROLEUM COLUMBIA INC., a Cayman
Islands corporation ("SSPC" and jointly and severally with the Borrower and
SSPH, the "Debtors"), each having a notice address at 5555 San Felipe, Suite
1700, Houston, Texas 77056, in favor of STILLWATER NATIONAL BANK AND TRUST
COMPANY, N.A. (the "Secured Party"), having a notice address at 6305 Waterford
Boulevard, Suite 205, Oklahoma City, Oklahoma 73118.
WITNESSETH:
WHEREAS, the Borrower is liable to the Secured Party under
that certain Promissory Note of even date herewith in the principal amount of
Ten Million Dollars ($10,000,000.00) (the "Note"), in connection with that
certain Loan Agreement of even date herewith between the Borrower and the
Secured Party (the "Loan Agreement"); and
WHEREAS, each of SSPH and SSPC is a direct or indirect wholly
owned subsidiary of the Borrower and the Debtors have agreed to secure payment
of the Note and all other Obligations of the Borrower to the Secured Party by
granting the Secured Party a lien, security interest and pledge covering certain
assets of the Debtors.
NOW, THEREFORE, in consideration of the premises and the
agreements herein contained and for other good and valuable consideration, the
receipt and sufficiency of all of which are hereby acknowledged, the Debtors
hereby agree with the Secured Party as follows:
1. Definitions. Unless otherwise defined herein, all terms used herein which are
defined in the Loan Agreement will have the same meanings herein unless the
context otherwise requires and all terms used herein which are defined in the
Oklahoma Uniform Commercial Code (the "UCC") will have the same meanings herein
unless the context otherwise requires.
2. Security Interest. Each of the Debtors hereby grants to the Secured Party a
first and prior security interest in the stock currently owned by the Debtors
described in Schedule "A" attached hereto as a part hereof (the "Pledged
Stock"), together with all additions and substitutions of shares of the Pledged
Stock or certificates, all of the Debtors' interest and rights in the Pledged
Stock, whether now owned or hereafter acquired, all cash and stock dividends
attributable to the Pledged Stock, all increases relating to the Pledged Stock
as a result of stock splits, mergers or any other reorganization, all monies and
claims for monies due and to become due to the Debtors as dividends or arising
under accounts, contracts, agreements and general intangibles relating to the
Pledged Stock and all proceeds and products thereof (the Pledged Stock and the
foregoing items are hereafter called the "Collateral"). This Agreement is
intended for security only and is to secure the Obligations of the Debtors owing
to the Secured Party as herein described. It is understood that the Secured
Party does not hereby assume any of the obligations of the Debtors in connection
with the Collateral.
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2.1 Voting Rights. Absent an event of Default (as hereinafter
defined) under this Agreement or the other Loan Documents, the
Debtors will retain all voting rights with respect to the
Pledged Stock. On or after the occurrence of an event of
Default and without further notice to the Debtors, the Secured
Party will have the right to exercise all voting rights, all
conversion, exchange, subscription and other rights pertaining
to the Pledged Stock, whether or not the Pledged Stock has
been registered in the Secured Party's name. Each of the
Debtors hereby appoints the Secured Party as such Debtor's
lawful attorney-in-fact and proxy to exercise the foregoing
rights after the occurrence of an event of default. Each of
the Debtors agrees that the foregoing proxy is coupled with an
interest and is irrevocable.
2.2 Cash Dividends. Absent an event of Default, the Debtors will
have the right to receive and retain for the Debtors' use all
cash dividends paid on the Pledged Stock. On or after the
occurrence of an event of Default and without further notice
to the Debtors, the Secured Party will have the right to
receive such cash dividends and to apply the same toward
satisfaction of the Secured Indebtedness (as hereinafter
defined) or hold the same as part of the Collateral under this
Agreement.
2.3 Stock Dividends. In the event any stock dividends are paid on
the Pledged Stock, or if any stock or other securities are
delivered to the Debtors in connection with any stock split,
merger or reorganization affecting the Pledged Stock, the
Debtors will immediately deliver to the Secured Party the
certificates representing such stock dividends, other stock or
securities, together with executed endorsements or appropriate
powers. Any such stock dividend, other stock or securities
will be held by the Secured Party as part of the Collateral
under the terms of this Agreement.
3. Secured Indebtedness. The security interest granted hereby in the Pledged
Stock is given to secure the Borrower's payment of: (a) the Note together with
interest thereon; (b) any and all other or additional Obligations of the
Borrower to the Secured Party; (c) all extensions, renewals, amendments,
modifications, substitutions and changes in form to the Note; (d) all costs and
expenses incurred in connection with the collection of the Note and any other
Obligations and enforcement of the Loan Documents and the Secured Party's rights
under this Agreement and all other Loan Documents including, without limitation,
the collection or enforcement of the Loan Documents whether by judicial
proceedings, proceedings under Chapter 7 or 11 of the Bankruptcy Code or any
successor statute thereto, or otherwise, and including attorneys' fees and
expenses; (e) all advances made by the Secured Party to protect the security
hereof, including advances made for or on account of levies, taxes and for
maintenance or recovery of the Pledged Stock, together with interest thereon at
the Default rate specified in the Note; (f) all future advances and any and all
other indebtedness, liabilities and obligations of the Borrower to the Secured
Party (whether primary, secondary, direct or indirect, absolute or contingent,
sole, joint, or several) whether now owing or hereafter incurred; and (g)
performance of the agreements herein set forth (the foregoing items (a) through
(g) are collectively referred to herein as the "Secured Indebtedness").
4. Debtors' Agreements. Until payment in full of the Secured Indebtedness, the
Debtors jointly and severally will perform or cause to be performed the
following agreements:
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4.1 Possession of Collateral. The Debtors agree to deliver the
Pledged Stock to the Secured Party, appropriately endorsed to
the Secured Party or with stock powers in form and substance
satisfactory to the Secured Party in favor of the Secured
Party. The Debtors will provide the name and address of the
stock transfer agent to the Secured Party. Regardless of the
form of any endorsement to the Secured Party, the Debtors
waive presentment, demand, notice of dishonor, protest, notice
of protest and all other notices with respect thereto.
4.2 Additional Documents. The Debtors agree to execute and deliver
any documents which are necessary in the judgment of the
Secured Party to obtain, maintain and perfect a security
interest under this Agreement and to enable the Secured Party
to comply with any foreign, federal or state law to obtain or
perfect the Secured Party's security interest in the
Collateral or otherwise applicable to the Secured Party.
4.3 Creation of Liens. The Debtors will not create, assume or
suffer to exist any claim, pledge, security interest,
encumbrance or other lien (including the lien of an
attachment, judgment or execution) affecting any or all of the
Collateral, excluding only liens held by the Secured Party.
5. Debtors' Representations and Covenants. The Debtors jointly and severally
hereby warrant, represent and agree as follows:
5.1 Principal Place of Business. The principal place of business
in the United States of each of the Debtors is 5555 San
Felipe, Suite 1700, Houston, Texas 77056.
5.2 Title. Each of the Debtors has absolute title to the Pledged
Stock owned by such Debtor free and clear of all liens,
encumbrances and security interests except for the security
interest hereby granted to the Secured Party and such other
rights, if any, of the Secured Party, and each of the Debtors
warrants and will defend the same unto the Secured Party
against the claims and demands of all persons and parties
whomsoever. The Debtors are not in default in the performance
of any obligation or the payment of any sum owing with respect
to the Pledged Stock. The Debtors will take all steps
necessary to cause or permit the Secured Party to cause the
Pledged Stock to be registered in the name of the Secured
Party and new share certificates to be issued.
6. Default. As used herein "Default" means the occurrence of any event of
Default under the Loan Agreement or the failure by any of the Debtors to keep,
observe, comply with and perform all of the obligations and undertakings under
this Agreement or any of the other Loan Documents or failure to pay any
principal or interest on the Note when due and, in any such event, the Secured
Party may, at its option and without notice to any party, declare all or any
portion of the Secured Indebtedness to be immediately due and payable and may
proceed to enforce payment of the same, to exercise any or all rights and
remedies provided herein, in the other Loan Documents, and by the UCC and
otherwise available at law or in equity. All remedies hereunder are cumulative,
and any indulgence or waiver by the Secured Party will not be construed as an
abandonment of any other right hereunder or of the power to enforce the same or
another right at a later time.
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7. Remedies. On the occurrence of an event of Default, the Secured Party may
take the following actions:
7.1 Remedy. The Secured Party may (a) exercise in respect of the
Collateral or any portion thereof all of the rights and
remedies of a secured party under the UCC, or (b) at any time
and from time to time sell, resell, assign and deliver, in the
Secured Party's discretion, all or any part of the Collateral,
in one or more parcels at the same or different times, and all
right, title and interest, claim and demand therein and right
of redemption thereof, at public or private sale on
commercially reasonable terms. In connection therewith, the
Secured Party may bid on such Collateral for its own account
and each of the Debtors hereby waives and releases any and all
equity or right of redemption. To effect any sale, transfer or
other disposal of any of the Collateral, the Secured Party has
the right, for and in the name, place and stead of the
Debtors, to execute endorsements, assignments or other
instruments of conveyance or transfer with respect to all or
any of the Collateral.
7.2 Sale Procedure. Except as expressly provided for herein, no
demand or advertisement, all of which are hereby expressly
waived by the Debtors, will be required in connection with any
sale or other disposition of any part of the Collateral which
threatens to decline speedily in value or which is of a type
customarily sold on a recognized market. In all other events,
the Secured Party will give the Debtors, at least ten (10)
days prior notice of the time and place of any public sale and
of the time after which any private sale or other disposition
is to be made, which notice the Debtors agree is reasonable,
all other demands and advertisements being hereby waived. The
Secured Party will not be obligated to make any sale of
Collateral, regardless of the fact that notice of sale may
have been given. The Secured Party may adjourn any public or
private sale or cause the same to be adjourned from time to
time by announcement at the time and place fixed for sale, and
such sale may be made at the time and place to which the same
was so adjourned. Upon each public or private sale of
Collateral, the Secured Party or any holder of the Note, or
any of their respective affiliates, may purchase all or any of
the Collateral being sold, free from any equity or right of
redemption, which is hereby waived and released by the
Debtors, and may make payment therefor in cash or, at the
Secured Party's or such holder's option (by endorsement
without recourse), by tendering or releasing principal or
accrued and unpaid interest on the Note, in lieu of cash, in a
face amount equal to the amount of the purchase price. The
Debtors agree to pay all reasonable costs and expenses of
every kind for sale or delivery, including brokers' and
attorneys' fees, and after deducting such costs and expenses
from the proceeds of sale, the Secured Party will apply any
residue to the payment of the Secured Indebtedness and the
Debtors will continue to be liable for any deficiency in
accordance with the Loan Documents. The balance, if any,
remaining after payment in full of all of the Secured
Indebtedness will be paid to the Debtors or as otherwise
directed by any court having appropriate jurisdiction.
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7.3 Private Sales. The Debtors recognize that the Secured Party
may be unable to effect a public sale of all or part of the
Collateral by reason of certain prohibitions contained in the
Securities Act of 1933, as amended, as now or hereafter in
effect, or in applicable blue sky or other state securities
laws, as now or hereafter in effect, but may be compelled to
resort to one or more private sales to a restricted group of
purchasers who will be obliged to agree, among other things,
to acquire such Collateral for their own account, for
investment and not with a view to the distribution or resale
thereof. The Debtors agree that private sales so made may be
at prices and other terms less favorable to the Debtors than
if such Collateral were sold at public sales, and that the
Secured Party has no obligation to delay sale of any such
Collateral for the period of time necessary to permit the
issuer of such Collateral, even if such issuer would agree, to
register such Collateral for public sale under such applicable
securities laws. The Debtors agree that private sales, absent
other adverse circumstances, will not be deemed to have been
made in a commercially unreasonable manner. In connection with
the foregoing, the Secured Party may, at the Debtors' expense,
consult with counsel to determine whether a public or private
sale of Collateral is necessary or appropriate.
8. Miscellaneous. It is further agreed as follows:
8.1 Time. Time is of the essence of this Agreement and each
provision of this Agreement.
8.2 Notices. Any notice required or permitted to be given by this
Agreement will be deemed to have been given on the date such
notice is delivered personally or by telefacsimile to the
party designated to receive such notice, on the date sent by
overnight courier or on the date deposited in the United
States mail, postage prepaid, and directed to the notice
address specified in the initial paragraph of this Agreement,
the Loan Agreement or otherwise provided to the Secured Party
in writing.
8.3 Cumulative Remedies. No failure on the part of the Secured
Party to exercise, and no delay in exercising any right under
this Agreement will operate as a waiver thereof, nor will any
single or partial exercise by the Secured Party of any right
under this Agreement preclude any other or further right of
exercise thereof or the exercise of any other right except as
provided in the Loan Documents.
8.4 Construction. This Agreement is to be construed according to
the internal laws of the State of Oklahoma. All actions with
respect to this Agreement may be instituted in the Courts of
the State of Oklahoma or the United States District Court
sitting in Oklahoma County, Oklahoma and each of the Debtors
hereby consents to the jurisdiction and venue of any such
courts.
8.5 Amendment. Neither this Agreement nor any of the provisions
hereof can be changed, waived, discharged or terminated,
except by an instrument in writing signed by the party against
whom enforcement of the change, waiver, discharge or
termination is sought.
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8.6 Severability. The provisions of this Agreement are severable,
and if any clause or provision is held invalid, illegal or
unenforceable in any respect in any jurisdiction, the
validity, legality and enforceability of the remaining
provisions contained herein will not be in any way affected or
impaired thereby.
8.7 Binding Effect. This Agreement will be binding on the Debtors
and the Debtors' successors and permitted assigns, and will
inure to the benefit of the Secured Party and the Secured
Party's successors and assigns.
8.8 Continuing Agreement. This is a continuing Agreement and the
grant of a security interest hereunder will remain in full
force and effect and all the rights, powers and remedies of
the Secured Party hereunder will continue to exist until all
of the Secured Indebtedness is paid in full as the same
becomes due and payable and until the Secured Party, upon
request of the Debtors, has executed a written termination
statement, reassigned to the Debtors, without recourse, the
Collateral and all rights conveyed hereby and returned
possession of any Collateral in the Secured Party's possession
to the Debtors.
IN WITNESS WHEREOF, the Debtors and the Secured Party have
executed and delivered this Agreement effective the date first above written.
SEVEN SEAS PETROLEUM INC., a Yukon
Territory, Canada corporation
By /s/ LARRY A. RAY
-----------------------------------
Larry A. Ray, President
SEVEN SEAS PETROLEUM HOLDINGS INC., a
Cayman Islands corporation
By /s/ LARRY A. RAY
-----------------------------------
Name: Larry A. Ray
--------------------------------
Title: President
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SEVEN SEAS PETROLEUM COLOMBIA INC., a
Cayman Islands corporation
By /s/ LARRY A. RAY
---------------------------------------------
Name: Larry A. Ray
------------------------------------------
Title: President
-----------------------------------------
(jointly and severally, the "Debtors")
STILLWATER NATIONAL BANK AND TRUST
COMPANY, N.A.
By /s/ G.P. JOHNSON HIGHTOWER
---------------------------------------------
G.P. Johnson Hightower, Senior Vice President
(the "Secured Party")
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