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EXHIBIT 10.5
COLLATERAL PLEDGE AND SECURITY AGREEMENT
COLLATERAL
PLEDGE
AND
SECURITY AGREEMENT
Dated
as of November __, 2007
between
PETROHUNTER
ENERGY CORPORATION
as
Pledgor
and
BRUCE
E. LAZIER
as
Collateral Agent
This
Collateral Pledge and Security Agreement (as supplemented from
time to time, this “ Pledge Agreement
”) is made and entered into as of November __, 2007
between PETROHUNTER ENERGY CORPORATION, a Maryland corporation
(the “ Pledgor ”), having its
principal offices at Suite 1400, 1875 Lawrence Street, Denver,
CO 80202, and BRUCE E. LAZIER as collateral agent for the
holders (the “ Holders ”) of the
Debentures (as defined herein) issued by the Pledgor (the
“ Collateral Agent
”).
W
I T N E S S E T H:
WHEREAS,
the Pledgor and Renaissance Capital Group, Inc. (the “
Initial Purchaser ”) are parties to a
Securities Purchase Agreement dated November __, 2007 (the
“ Purchase Agreement ”), pursuant
to which the Pledgor will issue and sell to the Initial
Purchasers and other purchasers $15 million aggregate
principal amount of Series A 8.50% Convertible Debentures
Debentures due November __, 2012 (the “
Debentures ”); and
WHEREAS,
pursuant to the Purchase Agreement, the Pledgor is required to
pledge to the Collateral Agent for the benefit of the Holders,
at the Closing Date (as defined in the Purchase Agreement) all
of its shares of stock of Sweetpea Petroleum Pty Ltd, a
company registered under the Corporations Act 2001
(Australia) (the “ Sweetpea Shares
”) to secure the repayment in full of the Debentures
(such obligation, together with the obligation to repay the
principal, premium, if any, interest (including Liquidated
Damages, if any), fees, expenses or otherwise on the
Debentures and under this Agreement and any other transaction
document related thereto in the event that the Debentures
become due and payable prior to such time as the Debentures
shall have been paid in full, being collectively referred to
herein as the “ Obligations ”);
and
WHEREAS,
it is a condition precedent to the purchase of the Debentures
by the Initial Purchasers pursuant to the Purchase Agreement
that the Pledgor deposit such Pledged Securities with the
Collateral Agent to be held subject to the terms of this
Pledge Agreement and shall have granted the assignment and
security interest and made the pledge and assignment
contemplated by this Pledge Agreement; and
WHEREAS,
the Pledgor has also agreed to pledge the Sweetpea Shares to
the Collateral Agent for the benefit of Global Project Finance
AG (“ Global ”), at the Closing
Date, to secure the repayment of up to $6.5 million (the
“ Secured Amount ”) advanced by
Global under Credit and Security Agreements dated January 9,
2007 and May 21, 2007;
NOW,
THEREFORE, in consideration of the premises herein contained,
and in order to induce the Initial Purchasers to purchase the
Debentures, the Pledgor and the Collateral Agent hereby agree,
for the benefit of the Initial Purchasers and for the ratable
benefit of the Holders, as follows:
SECTION 1. Definitions; Appointment; Deposit and
Investment.
1.1
Definitions.
(a)
Unless
otherwise defined in this Pledge Agreement, terms defined in
Article 8 or 9 of the Uniform Commercial Code in effect in the
State of Colorado (“ Colorado
Uniform
Commercial Code ”) from time to time are used in
this Pledge Agreement as such terms are defined in such Article 8
or 9.
(b)
In
this Pledge Agreement, the following terms have the following
meanings (such meanings to be equally applicable to both the
singular and plural forms of the terms defined):
“
Closing Date ” has the meaning
specified in the Purchase Agreement.
“
Collateral ” has the meaning specified
in Section 1.3 hereof.
“
Collateral Agent ” has the meaning
specified in the recitals of the parties hereto.
“
Colorado Uniform Commercial Code ” has
the meaning specified in Section 1.1(b).
“
Debentures ” has the meaning specified
in the recitals of the parties hereof.
“
Holders ” has the meaning specified in
the recitals of the parties hereto.
“
Initial Purchasers ” has the meaning
specified in the recitals of the parties hereof.
“
Obligations ” has the meaning specified
in the recitals of the parties hereof.
“
Permitted Collateral Liens ” means the
Liens created hereunder in favor of the Collateral
Agent.
“
Purchase Agreement ” has the meaning
specified in the recitals of the parties hereof.
“
Pledged Securities ” has the meaning
specified in Section 1.3 hereof.
“
Pledgor ” has the meaning specified in
the recitals of the parties hereto.
“
Secured Amount ” has the meaning
specified in the recitals of the parties hereto.
“
Sweetpea Shares ” has the meaning
specifie din the recitals of the parties hereto.
“
Termination Date ” means the date of
the payment in full in cash of all obligations due and owing
under this Pledge Agreement and the Debentures.
1.2.
Appointment of the Collateral Agent.
The Pledgor hereby appoints the Collateral Agent as Collateral
Agent in accordance with the terms and conditions set forth herein
and the Collateral Agent hereby accepts such
appointment.
1.3.
Pledge and Grant of Security Interest.
As Security for the prompt and complete payment and performance
when due (whether at the stated maturity, by acceleration or
otherwise) of the Obligations, the Pledgor hereby assigns and
pledges to the Collateral Agent for the ratable benefit of the
Holders and hereby grants to the Collateral Agent for the ratable
benefit of the Holders, a lien on and security interest in all of
the Pledgor’s right, title and interest in, to and under the
following property: (a) 330,000 Ordinary Shares of stock of
Sweetpea Petroleum Pty Ltd, a company registered under the
Corporations Act 2001 (Australia) , ABN 42 074
750
879
(the “ Pledged Securities ”) and the
certificates representing the Pledged Securities (if any), (b) all
interest, dividends, cash, instruments and other property, if any,
from time to time received, receivable or otherwise distributed
in respect of or in exchange for any or all of the then
existing Collateral and (c) all proceeds of any and all of the
foregoing Collateral (including, without limitation, proceeds that
constitute property of the types described in clauses (a) and (b)
of this Section and, to the extent not otherwise included, all (i)
payments under insurance (whether or not any of the Holders or the
Collateral Agent is the loss payee thereof) or any indemnity,
warranty or guaranty, payable by reason of loss or damage to or
otherwise with respect to any of the foregoing Collateral and (ii)
cash proceeds of any and all of the foregoing Collateral (such
property described in clauses (a) through (c) of this Section 1.3
being collectively referred to herein as the “
Collateral ”). Without limiting the
generality of the foregoing, this Pledge Agreement secures the
payment of all amounts that constitute part of the Obligations and
would be owed by the Pledgor to the Holders under the Debentures,
this Pledge Agreement and any other transaction documents related
thereto but for the fact that they are unenforceable or not
allowable due to the existence of a bankruptcy, reorganization or
similar proceeding involving the Pledgor.
SECTION 2. Establishment and Maintenance of
Collateral.
(a) The
Collateral Agent shall cause the Collateral to be separate
from all other property maintained by the Collateral
Agent.
(b) The
Collateral Agent shall, in accordance with all applicable
laws, have sole dominion and control over the
Collateral.
(c) No
amount shall be released to or for the account of, or
withdrawn by or for the account of, the Pledgor or any other
Person except as expressly provided in this Pledge
Agreement.
SECTION 3. Delivery and Control of
Collateral. All certificates or instruments
representing or evidencing Collateral shall be delivered to and
held by or on behalf of the Collateral Agent pursuant hereto and
shall be in suitable form for transfer or delivery, or, at the
request of the Collateral Agent, shall be accompanied by duly
executed instruments of transfer or assignment in
blank. In addition, the Collateral Agent shall have the
right at any time to exchange certificates or instruments
representing or evidencing Collateral for certificates or
instruments of smaller or larger denominations.
SECTION 4. Disbursements. The
Collateral Agent shall hold the Collateral and release the same, or
a portion thereof, only as follows:
(a) If
(i) an Event of Default under the Debentures occurs and is
continuing and (ii) the Holders of a majority in aggregate
principal amount of the Debentures accelerate the Debentures
by declaring the principal amount of the Debentures to be
immediately due and payable in accordance with the provisions
of the Debentures, then the Collateral Agent shall promptly,
subject to applicable bankruptcy laws, release the cash
portion of the Collateral and, if the cash portion shall be
insufficient, the Pledged Securities of the Collateral, to the
Holders of the Debentures and Global ratably in accordance
with (1) the amount of any accrued and unpaid
interest
on the Debentures and the unpaid principal amount of the Debentures
in the case of the Holders and (2) the Secured Amount in the case
of Global.
(b) Upon
the release of the Collateral in accordance with the terms of
this Pledge Agreement, the security interest evidenced by this
Pledge Agreement in such released Collateral will
automatically terminate and be of no further force and
effect.
(c) The
Holders of a majority in aggregate principal amount of the
Debentures at the time outstanding may direct the time, method
and place of conducting any proceeding for any remedy
available to the Collateral Agent or of exercising any trust
or power conferred upon the Collateral
Agent. However, the Collateral Agent may refuse to
follow any direction that conflicts with law or this Pledge
Agreement or that the Collateral Agent determines in good
faith is prejudicial to the rights of other Holders or would
involve the Collateral Agent in personal liability unless the
Collateral Agent is offered indemnity satisfactory to it
against loss, liability or expense.
SECTION 5. Representations and
Warranties. The Pledgor hereby represents and
warrants, as of the date hereof, that:
(a) The
execution and delivery by the Pledgor of, and the performance
by the Pledgor of its obligations under, this Pledge Agreement
will not contravene any provision of applicable law or the
certificate of incorporation, bylaws or equivalent
organizational instruments of the Pledgor or any material
agreement or other material instrument binding upon the
Pledgor or any of its subsidiaries or any judgment, order or
decree of any governmental body, agency or court having
jurisdiction over the Pledgor or any of its subsidiaries, or
result in the creation or imposition of any Lien on any assets
of the Pledgor, except for the lien and security interests
granted under this Pledge Agreement; no consent, approval,
authorization or order of, or qualification with, and no
notice to or filing with, any governmental body or agency or
other third party is required (i) for the performance by the
Pledgor of its obligations under this Pledge Agreement, (ii)
for the pledge by the Pledgor of the Collateral pursuant to
this Pledge Agreement or for the execution, delivery or
performance of this Agreement by the Pledgor or (iii) for the
perfection or maintenance of the pledge, assignment and
security interest created hereby, or (iv) except for any such
consents, approvals, authorizations or orders required to be
obtained by the Collateral Agent (or the Holders) for reasons
other than the consummation of this transaction, for the
exercise by the Collateral Agent of the rights provided for in
this Pledge Agreement or the remedies in respect of the
Collateral pursuant to this Pledge Agreement.
(b) The
Pledgor is the legal and beneficial owner of the Collateral,
free and clear of any Lien or claims of any Person (except for
Permitted Collateral Liens). No effective financing
statement or other instrument similar in effect covering all
or any part of the Collateral is on file in any public office
other than the financing statements, if any, to be filed
pursuant to this Pledge Agreement.
(c) This
Pledge Agreement has been duly authorized, validly executed
and delivered by the Pledgor and (assuming the due
authorization and valid execution and delivery of this Pledge
Agreement by the Collateral Agent and enforceability of the
Pledge Agreement against the Collateral Agent in accordance
with its terms) constitutes a valid and binding agreement
of
the
Pledgor, enforceable against the Pledgor in accordance with its
terms, except as (i) the enforceability hereof may be limited by
bankruptcy, insolvency, fraudulent conveyance, preference,
reorganization, moratorium or similar laws now or hereafter in
effect relating to or affecting the rights or remedies of creditors
generally, (ii) the availability of equitable remedies may be
limited by equitable principles of general applicability and the
discretion of the court before which any proceeding therefor may be
brought, (iii) the exculpation provisions and rights to
indemnification hereunder may be limited by U.S. federal and state
securities laws and public policy considerations and (iv) the
waiver of rights and defenses contained in Section 15.11 and
Section 15.15 hereof may be limited by applicable law.
(d) Upon
the delivery to the Collateral Agent of the Collateral in
accordance with the terms hereof, the pledge of and grant of a
security interest in the Collateral securing the payment of
the Obligations for the benefit of the Holders will constitute
a valid, first priority, perfected security interest in such
Collateral, enforceable as such against all creditors of the
Pledgor and any persons purporting to purchase any of the
Collateral from the Pledgor.
(e) There
are no legal or governmental proceedings pending or, to the
best of the Pledgor’s knowledge, threatened to which the
Pledgor or any of its subsidiaries is a party or to which any
of the properties of the Pledgor or any of its subsidiaries is
subject that would materially adversely affect the power or
ability of the Pledgor to perform its obligations under this
Pledge Agreement or to consummate the transactions
contemplated hereby.
(f) The
pledge of the Collateral pursuant to this Pledge Agreement is
not prohibited by law or governmental regulation applicable to
the Pledgor.
(g) No
Event of Default exists.
(h) The
chief place of business and chief executive office of the
Pledgor are located at the address first specified above for
the Pledgor.
SECTION 6. Further Assurances. The Pledgor will,
promptly upon the reasonable request by the Collateral Agent (which
request the Collateral Agent may submit at the direction of the
Holders of a majority in aggregate principal amount of the notes
then outstanding), execute and deliver or cause to be executed and
delivered, or use its commercially reasonable efforts to procure,
all assignments, instruments and other documents, deliver any
instruments to the Collateral Agent and take any other actions that
are necessary or desirable to perfect, continue the perfection of,
or protect the first priority of the Holders’ security
interest in and to the Collateral, to protect the Collateral
against the rights, claims or interests of third persons (other
than any such rights, claims or interests created by or arising
through the Collateral Agent) or to effect the purposes of this
Pledge Agreement. The Pledgor will promptly pay all
reasonable costs incurred in connection with any of the foregoing
within 45 days of receipt of an invoice therefor. The
Pledgor also agrees, whether or not requested by the Collateral
Agent, to use its commercially reasonable efforts to perfect or
continue the perfection of, or to protect the first priority of,
the Holders’ security interest in and to the Collateral, and
to protect the Collateral against the rights, claims or interests
of third persons (other than any such rights, claims or interests
created by or arising through the Collateral Agent).
SECTION 7. Covenants. The Pledgor
covenants and agrees with the Collateral Agent and the Holders that
from and after the date of this Pledge Agreement until the
Termination Date:
(a) it
will not (i) (and will not purport to) sell or otherwise
dispose of, or grant any option or warrant with respect to,
any of the Collateral nor (ii) create or permit to exist any
Lien upon or with respect to any of the Collateral (except for
Permitted Collateral Liens and any Lien created by or arising
through the Collateral Agent) and at all times will be the
sole beneficial owner of the Collateral;
(b) it
will not (i) enter into any agreement or understanding that
restricts or inhibits or purports to restrict or inhibit the
Collateral Agent’s rights or remedies hereunder,
including, without limitation, the Collateral Agent’s
right to sell or otherwise dispose of the Collateral or (ii)
fail to pay or discharge any tax, assessment or levy of any
nature with respect to its beneficial interest in the
Collateral not later than three Business Days prior to the
date of any proposed sale under any judgment, writ or warrant
of attachment with respect to the Collateral;
(c) it
will keep its chief place of business and chief executive
office at the location therefor specified in Section 5(h) or
upon 30 days’ prior written notice to the Collateral
Agent, at such other locations in a jurisdiction where all
actions required by Section 6 have been taken with respect to
the Collateral.
SECTION 8. Power of Attorney; Agent May
Perform. (a) Subject to the terms of
this Pledge Agreement, the Pledgor hereby appoints and constitutes
the Collateral Agent as the Pledgor’s attorney-in-fact (with
full power of substitution) to exercise to the fullest extent
permitted by law all of the following powers upon and at any time
after the occurrence and during the continuance of an Event of
Default:
(i) collection
of proceeds of the Collateral;
(ii) &nbs
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