EXHIBIT 10.27
PLEDGE AND SECURITY AGREEMENT
From ("Debtors"): SUMMO USA CORPORATION, a Colorado
corporation ("SUMMO"), whose chief executive office
is at 0000 Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxx,
Xxxxxxxx 00000 and LISBON VALLEY MINING CO. LLC, a
Utah limited liability company (the "LLC"), whose
chief executive office is at 0000 Xxxxxxx Xxxxxx,
Xxxxx 000, Xxxxxx, Xxxxxxxx 00000.
To ("Secured Party"): ST. XXXX MINERALS INC., a Colorado corporation, whose
address is 0000 Xxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxx,
Xxxxxxxx 00000.
(A) Grant of Security Interest.
In consideration of financial accommodations given or to be given or
continued by Secured Party to Debtors and Summo Minerals Corporation, Debtors
hereby pledge, assign and grant to Secured Party a security interest in the
following collateral ("Collateral"):
1. All of Summo's right, title and interest (whether certificated or
uncertificated and whether now existing or hereafter acquired and
wherever located) in and to the LLC (including, without
limitation, Summo's membership interest in the LLC) and all
dividends and distributions on and all rights to payments and all
other rights in connection with such LLC interest and all
proceeds thereof (collectively, the "LLC Interest"); and
2. All of the LLC's right, title and interest (whether now existing
or hereafter acquired and wherever located) in and to (a) all
leasehold, possessory, exploration, development, oil, gas,
mineral and mining rights and claims and all leases and other
interests, rights and claims of any kind or nature whatsoever of
the LLC with respect to the properties located in San Xxxx
County, Utah (the "Utah Properties") which are described on
Exhibit A attached hereto and by this reference incorporated
herein, (b) all of the LLC's accounts, accounts receivable,
equipment, fixtures, leasehold rights and improvements, contract
rights and agreements, general intangibles, chattel paper,
instruments, documents and documents of title with respect to,
located at, used in connection with or in way related to the Utah
Properties, (c) all insurance proceeds of or relating to any of
the foregoing, (d) all books, records, computer programs and data
relating to any of the foregoing, and (e) all accessories and
additions to, substitutions for and replacements, products and
proceeds of, any of the foregoing; to secure payment and
performance of all of Summo's and Summo Minerals Corporation's
present and future debts and obligations ("Debt") to Secured
Party under that certain Convertible Promissory Note dated
effective as of October 1, 1997 ("Note") payable to Secured Party
in the principal amount
K:\COMMON\STMARY\SUMMO\Pledge and Security Agt.02.wpd
1
of $2,950,000 by Summo and Summo Minerals Corporation. Unless
otherwise defined herein, words used in this Agreement shall have
the meanings given them in the Uniform Commercial Code.
(B) Debtors' Representations and Agreements. Debtors warrant, represent and
agree that:
1. Summo will immediately pay: (a) any Debt when due; (b) Secured
Party's costs of collecting the Debt, of realization on any
Collateral, and any expenditure of Secured Party pursuant hereto,
including attorneys' fees and expenses, with interest from date
of expenditure at the maximum rate provided for by the Note; and
(c) any deficiency after realization on Collateral with interest
from date of expenditure at the maximum rate provided for by the
Note.
2. Subject to (a)the rights of Lisbon Copper Ltd. under that certain
Second Amendment of Option Agreement dated December 4, 1997, (b)
the rights of the lessors of the leases included in the
Collateral and (c) the paramount rights of the United States, one
or both of the Debtors own all Collateral absolutely and there
are no other liens or encumbrances on the Collateral and no other
person has or claims any interest in any Collateral except as
previously approved in writing by Secured Party. Nothing in this
Section (B)(2), however, shall be deemed to be a representation
or a warranty that any of the unpatented mining claims contains a
discovery of minerals. Debtors will defend any proceeding which
may affect title to or Secured Party's security interest in any
Collateral, and will indemnify Secured Party for all costs and
expenses of Secured Party's defense. The Collateral will not be
used in violation of any applicable statutes, regulations,
ordinances or laws.
3. Summo shall promptly endorse, in blank, each and every instrument
constituting the LLC Interest by signing a separate assignment or
other document of transfer, if and when required by Secured
Party, and will at any time or times hereafter perform such other
acts as Secured Party may request to establish, maintain, perfect
and enforce its security interest in the Collateral.
4. Debtors will keep the tangible Collateral, or cause it to be kept
at the Utah Properties or at their address set forth above.
Debtors will give Secured Party prompt written notice of any
change of location of the Collateral and of any change of any
Debtor's chief executive office or name. The Collateral is used
or bought primarily for use in business.
5. Debtors will pay when due all existing and future charges, liens
and encumbrances on and all taxes and assessments now or
hereafter levied or imposed on or affecting the Collateral.
6. Debtors at their expense at all times shall insure the Collateral
against loss or damage from such casualties as Secured Party may
require, with such insurance company or companies as may be
satisfactory to Secured Party, with loss payable to Secured
Party. Secured Party may apply any such insurance proceeds to any
of the Debt, whether or not then due and payable.
K:\COMMON\STMARY\SUMMO\Pledge and Security Agt.02.wpd
2
7. Debtors will provide Secured Party with any information regarding
the Collateral or Debtors which Secured Party may request from
time to time. All information at any time supplied to Secured
Party by Debtors (including, but not limited to, the value and
condition of Collateral, financial statements, financing
statements, and statements made in documentary Collateral), is
and shall be correct and complete when given, and Debtors will
notify Secured Party of any adverse change in such information.
8. Secured Party is irrevocably appointed each Debtor's attorney-in-
fact to do any act which either Debtor is obligated hereby to do,
to exercise such rights as either Debtor might exercise, to use
such equipment as either Debtor might use, to enter either
Debtor's premises to give notice of Secured Party's security
interest in, and to collect Collateral and proceeds and to
execute and file in each Debtor's name any financing statements
and amendments thereto required to perfect Secured Party's
security interest hereunder, all to protect and preserve the
Collateral and Secured Party's rights hereunder. Secured Party
may: (a) Endorse, collect and receive delivery or payment of
instruments and documents constituting Collateral; (b) Make
extension agreements with respect to or affecting Collateral,
exchange it for other Collateral, release persons liable thereon
or take security for the payment thereof, and compromise disputes
in connection therewith; (c) Use or operate Collateral for the
purpose of preserving Collateral or its value and for preserving
or liquidating Collateral.
9. Discharge of any Debtor or other obligor of the Debt ("Obligor")
except for full payment, or any extension or forbearance for the
benefit of any Debtor or Obligor, or any impairment or suspension
of Secured Party's rights against a Debtor or Obligor, shall not
affect the liability of or Secured Party's rights or remedies
against any other Debtor or Obligor or the Collateral. Until the
Debt shall have been paid or performed in full, Secured Party's
rights shall continue notwithstanding any change of rate of
interest, or acceptance, release or substitution of Collateral or
any transfer of a Debtor's interest to another, or any bar of
rights or remedies by statutes of limitation or otherwise.
Debtors waive (a) any right to require Secured Party to pursue
any remedy; (b) presentment, protest and notice of protest, sale,
and advertisement of sale; (c) any right to the benefit of or to
direct the application of any Collateral until the Debt shall
have been paid; and (d) any right of subrogation to Secured Party
until all Debt shall have been paid or performed in full.
(C) Defaults and Remedies; Non-waiver.
1. Each of the following shall constitute a default: (a) Any "Event
of Default" as defined in the Note; (b) Failure of any Debtor or
Summo Minerals Corporation to perform or comply with any
agreement, condition or provision in this agreement, the Note or
any other instrument or document between either Debtor, Summo
Minerals Corporation, Secured Party or St. Xxxx Xxxx &
Exploration Company; (c) Any adverse change in any Debtor's or
Obligor's financial condition which in Secured Party's judgment
impairs the prospect of payment or performance; (d) Any actual or
K:\COMMON\STMARY\SUMMO\Pledge and Security Agt.02.wpd
3
reasonably anticipated deterioration of the Collateral or in the
market price thereof which causes it in Secured Party's judgment
to become unsatisfactory as security.
2. Upon any default hereof, at Secured Party's sole option, without
demand or notice, all or any part of the Debt shall immediately
become due. Secured Party shall have all rights provided by this
agreement or provided by law, including the Uniform Commercial
Code, and may sell Collateral in one or more sales or exercise
its self- help right to repossess the Collateral. At Secured
Party's option, any such sale may be conducted in any locality
where Secured Party or any Debtor has an office. Sales for cash
or on credit to a wholesaler, retailer or user of the Collateral,
or at public or private auction, shall all be deemed commercially
reasonable. Secured Party may require either Debtor to assemble
the Collateral and make it available to Secured Party at a place
designated by Secured Party which is reasonably convenient to the
parties. Secured Party's acceptance of partial or delinquent
payments or failure of Secured Party to exercise any right or
remedy at any time shall not waive any obligation of any Debtor
or Obligor, or any right or remedy of Secured Party, or modify
this agreement, or waive any other similar default.
(D) General Provisions.
1. On transfer of all or any part of the Debt, Secured Party may
transfer all or any part of the security interest in the
Collateral. Secured Party may deliver all or any part of the
Collateral to any Debtor at any time. Any such transfer or
delivery shall discharge Secured Party from all liability and
responsibility with respect to such Collateral transferred or
delivered. This agreement benefits Secured Party's successors and
assigns and binds each Debtor's successors and assigns. Each
Debtor agrees not to assert against any assignee of Secured Party
any claim or defense it may have against Secured Party. Time is
of the essence. Debtors will execute any additional agreements,
assignments or documents which Secured Party reasonably may
request to effectuate this agreement or perfect any rights or
interests, including, without limitation, any mortgage or deed of
trust with respect to the Utah Property.
2. Captions, titles and section and paragraph divisions and
arrangements in this agreement and in any instruments and
documents heretofore or hereafter made or executed are for
convenience and for reference only, and shall not affect the
meaning, interpretation or construction thereof. Whenever the
context so requires the singular number shall include the plural
and the plural shall include the singular, as applicable.
3. This agreement shall be governed by and construed in accordance
with the laws of the State of Colorado.
K:\COMMON\STMARY\SUMMO\Pledge and Security Agt.02.wpd
4
Dated this 23rd day of November, 1998.
DEBTORS: SUMMO MINERALS CORPORATION,
a British Columbia corporation
By: /s/ XXXXXXX X. XXXX
--------------------
Xxxxxxx X. Xxxx, President and CEO
LISBON VALLEY MINING CO. LLC,
a Utah limited liability company
By: Summo USA Corporation,
its Managing member
By: ___________________________________
Xxxxxxx X. Xxxx, President and CEO
K:\COMMON\STMARY\SUMMO\Pledge and Security Agt.02.wpd
5
