EXHIBIT (10)(K)
ESCROW AGREEMENT FOR A NATURAL RESOURCE COMPANY
THIS AGREEMENT made in triplicate this 26th day of July 1996 AMONG:
Those parties listed on
Schedule `A' hereto
(hereinafter jointly and
severally called the
"Vendors")
and
Montreal Trust Company of Canada
000, 000-0xx Xxxxxx, X.X., Xxxxxxx,
XX, X0X 0X0 (hereinafter called the
"Trustee")
and
Seven Seas Petroleum Inc. of
00-000 Xxxx Xxxxxxx Xxxxxx,
Xxxxxxxxx, XX X0X 0X0
(hereinafter called the
"Issuer")
WHEREAS the Vendors or predecessors in title of one or more of them and the
Issuer (among others) entered into an agreement dated as of the 26th day of
July, 1996, whereby the Vendors or such predecessors agreed to sell or otherwise
transfer certain working interests in the Dindal and Rio Seco association
contracts located in Colombia (the "Property") to a wholly-owned subsidiary of
the Issuer, the consideration for such property being at least in part the
issuance of securities by the Issuer or the transfer of securities of the Issuer
to the Vendors or such predecessors, the number of securities subject to this
agreement (the "escrowed securities") and the names of the Vendors presently
owning or to receive such securities, being respectively and more particularly
described in Schedule "A" attached to and forming part of this agreement;
AND WHEREAS in furtherance of complying with the requirements of the SECURITIES
ACT, the Vendors are desirous of depositing in escrow certain securities in the
Issuer owned or to be received by them;
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AND WHEREAS the Trustee has agreed to undertake and perform its duties according
to the terms and conditions hereof;
NOW THEREFORE this agreement witnesseth that in consideration of the aforesaid
agreements and other good and valuable consideration (the receipt and
sufficiency of which parties do hereby respectively acknowledge each to the
other), the Vendors jointly and severally covenant and agree with the Issuer and
with the Trustee and the Issuer and the Trustee covenant and agree each with the
other and with the Vendors jointly and severally as follows:
(1) Each of the Vendors hereby places and deposits in escrow those of the
Vendor's securities of the Issuer which are represented by the certificates
described or referred to in Schedule "A" hereto, with the Trustee and hereby
undertakes and agrees forthwith to deliver those certificates (including any
replacement securities or certificates if and when such are issued or allotted)
to the Trustee for deposit in escrow.
(2) The parties hereby agree that the securities and the beneficial ownership of
or any interest in them and the certificates representing them (including any
replacement securities or certificates) shall not be sold, assigned,
hypothecated, alienated, released from escrow, transferred within escrow or
otherwise in any manner dealt with, except in accordance with the terms of this
agreement or any written consent, order or direction in writing of the Ontario
Securities Commission (hereinafter referred to as the "Commission") or except as
may be required by reason of the death or bankruptcy of any Vendor, in which
cases the Trustee shall hold the said certificates, subject to this agreement,
for whatever person, firm or corporation shall be legally entitled to be or
become the registered owner thereof.
(3) The Vendors hereby direct the Trustee to retain their respective securities
and the certificates (including any replacement securities or certificates)
representing the same and not to do or cause anything to be done to release the
same from escrow or to allow any transfer, hypothecation or alienation thereof
except in accordance with the terms of this agreement or any written consent,
order or direction of the Commission. The Trustee hereby accepts the
responsibilities placed on it hereby and agrees to perform the same in
accordance with the terms hereof and any written consent, orders or directions
of the Commission. Nothing in this agreement shall prevent the Vendors from
exchanging the escrowed securities (which, initially, shall be special warrants
or convertible securities of the Issuer) in accordance with their terms for
common shares of the Issuer and the Trustee shall take such steps and perform
such acts as may be
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necessary in order to effect any such exchange upon receipt of a written
direction from the Vendor or the Vendor's representative in respect of its
escrowed securities provided that the Issuer's common shares delivered to the
Trustee in exchange for the escrowed securities shall be held by the Trustee in
accordance with the terms of this agreement as if they were the escrowed
securities.
(4) If during the period in which any of the said securities are retained in
escrow pursuant hereto, any dividend is received by the Trustee in respect of
the escrowed securities, any such dividend shall be forthwith paid or
transferred to the respective registered owner entitled thereto.
(5) All voting rights attached to the escrowed securities shall at all times be
exercised by the respective registered owners thereof.
(6) The Vendors and the Issuer hereby jointly and severally agree to and do
hereby release and indemnify and save harmless the Trustee from and against all
claims, suits, demands, costs, damages and expenses which may be occasioned by
reason of the Trustee's compliance in good faith with the terms hereof.
(7) The Issuer hereby acknowledges the terms and conditions of this agreement
and agrees to take all reasonable steps to facilitate its performance and to pay
the Trustee's proper charges for its services as trustee of this escrow.
(8) The written consent, order or direction of the Commission as to a release
from escrow of all or part of the said securities, shall terminate this
agreement only in respect to those securities so released.
(9) Subject to any other release consented to by the Commission, the escrowed
securities shall be released from the terms of this agreement on the earlier of:
a. on each of the first three anniversaries of the date of the
initial issuance of the escrowed securities: one third of the
escrowed securities so that after the third anniversary of
such date all of the escrowed securities shall be released
from the terms of this agreement; and
b. such date, from time to time, as a Vendor or the Issuer
provides staff of the Commission with technical reports
acceptable to the Director that establish a determinate value
for the Property (as at April 25, 1996) of U.S. $118,908,000
or more;
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provided that proportionate releases from escrow will be
permitted based on interim technical reports that establish a
determinate value of less than U.S. $118,908,000.
(10) If the Trustee should wish to resign, it shall give at least six months
notice to the Issuer, who may, with the written consent of the Commission, by
writing appoint another Trustee in its place and such appointment shall be
binding on the Vendors and the new Trustee shall assume and be bound by the
obligations of the Trustee hereunder.
(11) This agreement may be executed in several parts in the same form and such
parts as so executed shall together form one original agreement, and such parts
if more than one shall be read together and construed as if all the signing
parties hereto had executed one copy of this agreement.
(12) Wherever the singular or masculine are used throughout this agreement, the
same shall be construed as being the plural or feminine or neuter where the
context so requires.
(13) This agreement shall enure to the benefit of and be binding upon the
parties hereto, their and each of their heirs, executors, administrators,
successors and assigns.
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IN WITNESS WHEREOF the parties hereto have executed these presents the day and
year first above written.
Seven Seas Petroleum Inc.
By:
SIGNED, SEALED AND DELIVERED by )
Xxxxxx X. Xxxxxx, III for and )
on behalf of: )
XXXX XXXXXXXXX XXXXXXX XXXXXXX )
FRANCISCO XXXXXX XXXXX CALLE )
XXXXXX XXXXX )
FAR RIVER CORPORATION )
XXXXXXXX XXXX XX XXXXXX )
SOUTHAMERICAN HOLDING, CORP. )
ENCHANTED INTERNATIONAL INC. )
NAKURU HOLDINGS, INC. )
XXXXXXXX XXXX-XXXXXXXX XXXXXX )
XXXXXX, X.X. )
SHARMOR, INC. )
XXXXXXXX XXXX )
)
)
Witness ) BY XXXXXX X. XXXXXX, III
as attorney
)
Witness ) XXXXXX X. XXXXXX, III
The GHK Corporation
By:
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SIGNED, SEALED AND DELIVERED BY )
Xxxxxx X. Xxxxxx, III for and )
on behalf of: )
XXXXXX X. XXXX )
PETROLEUM PROPERTIES )
MANAGEMENT COMPANY )
XXXX X. XXXXX )
XXXX XXXXXXX BT. )
XXXXXXX X. ISRAEL )
XXXXXX X. ISRAEL )
)
)
Witness BY XXXXXX X. XXXXXX, III
as attorney
