EXHIBIT 10.9
THIS AGREEMENT (the "AMENDMENT AGREEMENT") is entered into on 30th September,
2002 among:
(1) HARVEST NATURAL RESOURCES, INC., a corporation organised and existing
under the laws of State of Delaware in the United States of America,
with its registered office at Corporation Trust Centre, ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, County of Newcastle (the
"PLEDGOR"), represented by Dr. ▇▇▇▇▇ ▇▇▇▇, President and Chief
Executive Officer;
(2) EUROPEAN BANK FOR RECONSTRUCTION AND DEVELOPMENT, an international
finance institution with its headquarters at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ("EBRD"); and
(3) INTERNATIONAL MOSCOW BANK, a Closed Joint Stock Company organised and
existing under the laws of the Russian Federation and located at
119034, Prechistenskaya Embankment, Moscow, the Russian Federation
represented by the ▇▇. ▇▇. ▇. ▇▇▇▇▇▇▇▇, the member of its management
board, acting on the basis of the Charter and ▇▇. ▇. ▇. ▇▇▇▇▇, the
Chief Accountant, acting on the basis of the Federal Law No. 129-FZ on
Accounting dated 21st November, 1996 (as amended) ("IMB").
RECITALS:
(A) Pursuant to a credit agreement dated 21st November, 1996 between EBRD
and Limited Liability Company "Geoilbent" (formerly - Limited Liability
Company Joint Venture "Geoilbent Limited"), a legal entity organised
and existing under the laws of the Russian Federation, located at Purpe
Township, Purovsky District, Yamalo-Nenetsky Autonomous Region, Russian
Federation (the "COMPANY") (as amended from time to time, the "EBRD
CREDIT AGREEMENT") EBRD agreed to lend to the Company on a revolving
basis an amount not to exceed US$55,000,000;
(B) Pursuant to a credit agreement dated 9th April, 1997 between IMB and
the Company (as amended from time to time, the "IMB CREDIT AGREEMENT")
IMB agreed to lend to the Company on a revolving basis an amount not to
exceed US$10,000,000;
(C) On or about ▇▇▇▇ ▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇ Oil and Gas Company, EBRD and IMB
entered into the Agreement for Pledge of Shares in the Company (the
"ORIGINAL PLEDGE OF SHARES") pursuant to which the Pledgor has agreed
to pledge to EBRD and IMB the Pledged Assets (as defined therein) as
security for the fulfilment of the Company's obligations under the EBRD
Credit Agreement;
(D) On 19th February, 2002, the Board of Directors of ▇▇▇▇▇▇ Oil and Gas
Company has resolved to change its name to Harvest Natural Resources,
Inc.;
(E) On or prior to the date of this Amendment Agreement, the Company has
repaid to IMB all amounts owing to IMB under the IMB Credit Agreement;
(F) On 23rd September, 2002, the Company and EBRD have amended and restated
the EBRD Credit Agreement (the "AMENDED AND RESTATED EBRD CREDIT
AGREEMENT") to provide for, among other things, an increase in the
amount available to the Company to be drawn thereunder;
2
(G) To reflect the matters set out in recitals (D), (E) and (F) above, the
parties to this Amendment Agreement have agreed to amend the Original
Pledge of Shares on the terms and conditions set out in this Amendment
Agreement. For convenience, the parties have agreed to hereby specify
the provisions of the Original Pledge of Shares, as so amended, in
restated form as set out in the Schedule hereto;
(H) The amendments to the Original Pledge of Shares to be made pursuant to
this Agreement shall be effective from the Effective Date (as defined
below) and the Original Pledge of Shares remains in full force and
effect except, from the Effective Date, as amended pursuant to this
Agreement.
IT IS AGREED as follows:
1. INTERPRETATION
1.1 DEFINITIONS
In this Amendment Agreement, unless the contrary intention appears or
the context otherwise requires:
"AMENDED AND RESTATED PLEDGE OF SHARES"
means the Original Pledge of Shares, as amended and restated by this
Amendment Agreement, in the form of Schedule 1 (Restated Pledge of
Shares).
"EBRD CREDIT AGREEMENT AMENDMENT AGREEMENT"
means the agreement dated 23rd September, 2002 between the Company and
EBRD pursuant to which the Company and EBRD have agreed to amend and
restate the EBRD Credit Agreement.
"EFFECTIVE DATE"
has the meaning given to it in the EBRD Credit Agreement Amendment
Agreement.
"PARTIES"
means the parties to this Amendment Agreement and "PARTY" means a party
to this Amendment Agreement.
1.2 INTERPRETATION
Unless otherwise defined in this Amendment Agreement, capitalised terms
used in this Amendment Agreement shall have the meaning given to them
in the Amended and Restated EBRD Credit Agreement.
1.3 INCORPORATION
The provisions of Clause 1.3 (Construction), Clause 13 (Miscellaneous),
Clause 14 (Notices), Clause 15 (Counterparts), Clause 17 (Governing Law
and Dispute Resolution) other than
3
subclause (c) thereof and Clause 19 (Severability) of the Original
Pledge of Shares shall apply to this Amendment Agreement as if the same
had been set out in full herein.
2. AMENDMENT, CONFIRMATION AND DESIGNATION
2.1 EFFECTIVE DATE
With effect on and from the Effective Date, the Original Pledge of
Shares shall be deemed to be amended such that the provisions of the
Original Pledge of Shares, as so amended, will be as set forth in the
Schedule to this Agreement.
2.2 DESIGNATION
The Parties hereby confirm that this Amendment Agreement and the
Amended and Restated Pledge of Shares shall each constitute a Financing
Agreement for the purposes of the Amended and Restated EBRD Credit
Agreement.
3. REPRESENTATIONS AND WARRANTIES
The Pledgor makes the following representations and warranties to EBRD:
(a) It has the power to enter into and perform, and has taken all
necessary action to authorise the entry into, performance and
delivery of, this Amendment Agreement and the transactions
contemplated hereby.
(b) This Amendment Agreement constitutes its legal, valid and
binding obligation enforceable in accordance with its terms.
(c) The entry into and performance by it of, and the transactions
contemplated by, this Amendment Agreement do not:
(i) conflict with any law or regulation or judicial or
official order applicable to it; or
(ii) conflict with the constitutional documents of it; or
(iii) conflict with any document which is binding on it.
(d) All material authorisations required in connection with the
entry into, performance, validity and enforceability of and
the transactions contemplated by this Amendment Agreement have
been obtained or effected (as appropriate) and are in full
force and effect.
(e) The Pledgor shall also be deemed to make the representations
and warranties in the same terms as set out in Clause 4 of the
text of the Amended and Restated Pledge of Shares appended in
the Schedule hereto on the date of this Amendment Agreement
and on the Effective Date.
(f) The Pledgor acknowledges that it has made the representations
and warranties contained in paragraphs (a)-(e) of this Clause
3 above with the intention of inducing the EBRD to enter into
this Amendment Agreement and that EBRD has entered into this
Amendment Agreement on the basis of, and in full reliance on,
each of such
4
representations and warranties. The Pledgor warrants to EBRD
that each of such representations and warranties is true and
correct and that none of them omits any matter the omission of
which makes any of such representations and warranties
misleading.
4. GOVERNING LAW
This Amendment Agreement is governed by Russian law.
This Amendment Agreement has been entered into on the date stated at the
beginning of this Amendment Agreement.
5
SCHEDULE 1
RESTATED PLEDGE OF SHARES
AGREEMENT FOR PLEDGE OF SHARES IN LIMITED LIABILITY
COMPANY "GEOILBENT"
DATED 23RD JUNE, 1997
AS AMENDED AND RESTATED ON 30TH SEPTEMBER, 2002
BETWEEN
HARVEST NATURAL RESOURCES, INC.
AND
EUROPEAN BANK FOR RECONSTRUCTION AND DEVELOPMENT
▇▇▇▇▇ & ▇▇▇▇▇
LEGAL SERVICES
MOSCOW
6
CONTENTS
CLAUSE PAGE
1. Definitions and Interpretation.......................................................................7
2. Creation of Share Pledge.............................................................................9
3. Preservation of Security............................................................................10
4. Representations, Warranties and Undertakings........................................................11
5. Documents and Registration..........................................................................13
6. Powers of Pledgor...................................................................................13
7. Levy of Execution...................................................................................13
8. Application of Proceeds.............................................................................15
9. Expenses and Compensation...........................................................................15
10. Delegation..........................................................................................15
11. Release.............................................................................................16
12. Further Assurance...................................................................................16
13. Miscellaneous.......................................................................................16
14. Notices.............................................................................................16
15. Counterparts........................................................................................17
16. Waiver; Remedies Cumulative.........................................................................17
17. Governing Law and Dispute Resolution................................................................17
18. Successors and Assigns..............................................................................18
19. Severability........................................................................................18
SCHEDULES
1. Power of Attorney...................................................................................19
2. Procedure for the Levy of Execution.................................................................21
SIGNATORIES..................................................................................................23
7
THIS SHARE PLEDGE AGREEMENT is made on 23rd June, 1997 as amended and restated
by the Amendment Agreement dated 30th September, 2002, entered into BETWEEN:
(1) HARVEST NATURAL RESOURCES, INC., a corporation organised and existing
under the laws of State of Delaware in the United States of America,
with its registered office at Corporation Trust Centre, ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, County of Newcastle (the
"PLEDGOR"), represented by Dr. ▇▇▇▇▇ ▇▇▇▇, President and Chief
Executive Officer; and
(2) EUROPEAN BANK FOR RECONSTRUCTION AND DEVELOPMENT, an international
finance institution with its headquarters at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (the "PLEDGEE"),
(the Pledgor and the Pledgee are hereinafter sometimes together
referred to as the "PARTIES" and separately as a "PARTY").
RECITALS:
(A) The Company (as defined below) has entered into the Amended and
Restated EBRD Credit Agreement (as defined below) with the Pledgee
under which the Pledgee have agreed to make available to the Company
revolving credit facilities for the purpose of financing the Project.
(B) The Pledgor owns a participation interest in the Company, which is
equal to 34% of the charter capital of the Company with a nominal value
of 21,405,639 roubles and is named in the Charter (as defined below) as
the holder of that participation interest of the Company.
(C) It is a condition precedent to the availability of the revolving credit
facilities under the Amended and Restated EBRD Credit Agreement that
the Pledgor enters into this Agreement.
IT IS AGREED as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS
In this Agreement:
"CHARTER"
means the Amended and Restated Charter of the Limited Liability Company
"Geoilbent" dated 9th January, 2002 (as can be subsequently amended in
accordance with Russian law).
"COMPANY"
means a Limited Liability Company "Geoilbent ", a company duly
organised and existing under the laws of the Russian Federation. For
the purposes of Article 55 of the Law on Pledge (as defined below), the
Company is the debtor of the Pledgor, i.e., bears certain obligations
vis a vis the Pledgor by virtue of the Pledgor's ownership of the
Participation Interest (as defined below).
8
"CIVIL CODE"
means Part 1 of the Civil Code of the Russian Federation which came
into effect on 1st January, 1995, Part 2 of the Civil Code of the
Russian Federation which came into effect on 1st March, 1996 and Part 3
of the Civil Code of the Russian Federation which came into effect on
1st March, 2002.
"AMENDED AND RESTATED EBRD CREDIT AGREEMENT"
means the agreement between EBRD and the Company dated 21st November,
1996, as amended and restated on 23rd September, 2002 by the Amended
and Restated EBRD Credit Agreement under which the Pledgee agrees to
make available to the Company a revolving credit facility for the
purpose of financing the Project.
"FINANCING COSTS"
means the aggregate of all interest, fees (including the Pledgee's fees
and the Pledgee's legal and consultation fees), principal, premia,
charges, commissions, costs and expenses in each case accrued or
payable by the Company under the Financing Agreements.
"GENERAL DIRECTOR"
has the meaning ascribed to that term in the Charter.
"GENERAL MEETING OF PARTICIPANTS"
has the meaning ascribed to that term in the Charter.
"LAW ON PLEDGE"
means the Law No. ▇▇▇▇-▇ "▇▇ ▇▇▇▇▇▇" dated 29th May, 1992 (as amended).
"PARTICIPANTS"
has the meaning ascribed to that term in the Charter, and "PARTICIPANT"
means any one of them.
"PLEDGED ASSETS"
means the Shares and all rights, assets or property referred to in
subclause 2(a) below.
"SECURED LIABILITIES"
means all present and future obligations and liabilities (whether
actual or contingent and whether owed jointly or severally or in any
other capacity whatsoever) of the Company to the Pledgee under each
Financing Agreement to which it is a party.
"SECURITY PERIOD"
means the period beginning on the date of this Agreement and ending on
the date when the Pledgee is satisfied that all the Secured Liabilities
have been unconditionally and irrevocably paid in full.
9
"SHARES"
means 34% of the total participation interests in the Company with a
nominal value of 21,405,639 Roubles held by the Pledgor.
1.2 INTERPRETATION
Save as expressly defined herein, capitalised terms defined in the
Amended and Restated EBRD Credit Agreement shall have the same meanings
in this Agreement as in the Amended and Restated EBRD Credit Agreement.
1.3 CONSTRUCTION
(a) Section 1.02 of the Amended and Restated EBRD Credit Agreement shall
apply to this Agreement as if the same had been set out in full herein.
(b) All Schedules, supplements and amendments to this Agreement shall form
an integral part of this Agreement.
(c) In this Agreement, unless a contrary intention appears, a reference to
a "certified copy" is a reference to a copy of a document signed by the
President or such other officer of the Pledgor duly authorised by the
President with a statement from the President or such other officer
that the document is a true and complete copy of the original, which
has not been amended, modified or cancelled and is in full force and
effect.
2. CREATION OF SHARE PLEDGE
(a) The Pledgor pledges, and agrees to pledge to the Pledgee as security
for the fulfilment of all the Secured Liabilities:
(i) the Shares and all rights related to the Shares under Russian
law, the Company's constitutional documents and the decisions
of the Company's management bodies;
(ii) all other securities, rights, assets or property accruing or
offered at any time (whether by way of redemption, preference,
option rights or otherwise), to or in respect of the Shares or
in substitution or exchange for or otherwise derived from the
Shares; and
(iii) all dividends, interest or other income paid or payable after
the date of this Agreement on all or any of the Shares and
other securities, rights, assets or property as specified in
this clause.
The Parties agree that the value of the Pledged Assets shall be
$49,014,762.
(b) For the purposes of Article 338 of the Civil Code and Article 5 of the
Law on Pledge the Pledged Assets shall be deemed to remain with the
Pledgor.
(c) For the purposes of Article 339 of the Civil Code and Article 10 of the
Law on Pledge, the aggregate value of the Secured Liabilities shall be
$65,000,000 of principal together with all Financing Costs and all
other amounts recoverable under a pledge in accordance with Russian
legislation.
10
(d) The security constituted by this Agreement is a first ranking security.
Subject to the terms of this Agreement, the Pledgor grants the Pledgee
the right to levy execution upon the Pledged Assets and receive
preferential satisfaction from the value of the Pledged Assets before
other creditors of the Pledgor and other Pledgee and mortgagees of the
property and/or rights belonging to the Pledgor, subject to the
requirements of Russian legislation.
(e) The establishment of the pledge under this Agreement shall be notified
to the Company by the Pledgor within [5] days from its creation and the
Pledgor shall procure that the Company shall within seven days of
receiving notification of the establishment of the pledge notify the
Pledgee, that it has received notification of the establishment of the
pledge and that it has received no prior notice of a pledge over the
Pledged Assets or any part thereof.
(f) The Pledgor, at its own expense, shall take whatever actions the
Pledgee may require for establishing or maintaining the pledge created
by this Agreement and facilitating the exercise of any right, power or
discretion exercisable by the Pledgee in respect of this Agreement or
the Pledged Assets.
(g) The Pledgor shall, at its own expense, register this Agreement at all
appropriate registries in accordance with all applicable laws of [the
Pledgor's country of incorporation], for the purpose of perfecting the
security created under this Agreement.
3. PRESERVATION OF SECURITY
(a) The security constituted by this pledge:
(i) shall be a continuing security, shall only be satisfied by the
satisfaction of the Secured Liabilities in accordance with the
Amended and Restated EBRD Credit Agreement and shall not be
satisfied by any intermediate payment by the Company to the
Pledgee or satisfaction of any part of the Secured
Liabilities;
(ii) shall be in addition to and shall not be affected by any other
security now or subsequently held by the Pledgee for all or
any of the Secured Liabilities; and
(iii) shall remain in force during any reorganisation, liquidation
or insolvency (bankruptcy) of the Pledgor or the Company.
(b) The obligations of the Pledgor under the security constituted by this
Agreement shall not be affected by any act, omission or circumstances
which, but for this provision, might operate to release or otherwise
exonerate the Pledgor from its obligations under this Agreement or
affect such obligations, including (but without limitation) and whether
or not known to the Pledgor or the Pledgee:
(i) any time or indulgence granted to or composition with the
Company or any other person;
(ii) the variation, extension, compromise, renewal or release of,
or refusal or neglect to perfect or enforce, any terms of any
of the Financing Agreements or any rights or remedies against,
or any security granted by, the Company or any other person;
(iii) any irregularity, invalidity or unenforceability of any
obligations of the Company under any of the Financing
Agreements or any present or future law or order of any
government or authority (whether of right or in fact)
purporting to reduce or
11
otherwise affect any of such obligations with the result that
the Pledgor's obligations under this Agreement and this
security shall remain in full force and this Agreement shall
be construed accordingly as if there were no such
irregularity, unenforceability, invalidity, law or order; or
(iv) any legal limitation, disability, incapacity or other
circumstances relating to the Company or any other person or
any amendment to or variation of the terms of any of the
Financing Agreements or any other document or security.
(c) The Pledgor waives any right it may at any time have or acquire of
first requiring the Pledgee to proceed against or claim payment from
the Company or enforce any other security before enforcing this
Agreement.
(d) The Pledgor shall not by virtue of any payment made, or security
realised, hereunder:
(i) be entitled or claim to rank as creditor in the bankruptcy,
liquidation or dissolution of the Company in competition with
the Pledgee; or
(ii) receive, claim or have the benefit of any payment or
distribution from or on account of the Company or exercise any
right of set-off as against the Company or claim the benefit
of any security or monies held by or for the account of the
Pledgee and the Pledgee shall be entitled to apply such
security and monies as it sees fit.
4. REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS
4.1 SHARES
The Pledgor represents and warrants that:
(a) the Shares are fully paid for;
(b) the Pledgor has sole and legally valid title and right of
ownership to the Shares and any other Pledged Assets; and
(c) the Shares and any other Pledged Assets are free from any Lien
other than that created in favour of the Pledgee.
4.2 AUTHORITY AND LEGAL VALIDITY
The Pledgor represents and warrants and covenants that:
(a) the Pledgor has the power to enter into and perform and has
taken all necessary action to authorise the entry into and
performance and delivery of this Agreement and the
transactions contemplated hereby;
(b) a resolution of the General Meeting of Participants has
approved the pledge of the Pledged Assets in accordance with
this Agreement and neither the Company nor its Participants
are required to provide any other consent or approval in
relation to the pledge of the Pledged Assets under the
constitutional documents of the Company or otherwise;
12
(c) the Company's constitutional documents do not contain a
prohibition of voting on behalf of the Participant on the
basis of the power of attorney or otherwise pursuant to the
rights granted to the Pledgee under this Agreement at a
General Meeting of Participants nor any other provisions which
might adversely affect the execution and performance of this
Agreement by it or the enforceability of this Agreement by the
Pledgee;
(d) there are no agreements, arrangements, provisions,
stipulations, conditions, rights or any other circumstances
that may in any way adversely affect the Pledged Assets other
than the Financing Agreements and the Project Agreements;
(e) the Company and the Pledgor have received no notification that
any third person contests or claims the ownership rights to
the Pledged Assets;
(f) the execution and delivery and the performance of this
Agreement will not violate any applicable law or regulation,
or any order or decree of any court, or any provision of the
charter of the Company or the Pledgor, or constitute a default
under any agreement or other instrument to which the Company
or the Pledgor are parties;
(g) the Pledgor will defend the Pledged Assets against all claims
and demands of all persons at any time claiming the same or
interest therein;
(h) the Pledgor shall immediately provide the Pledgee with any
information related to the Pledged Assets upon the written
request of the Pledgee;
(i) the Shares represent and will continue to represent 34 per
cent. of the total participation interests of the Company; and
(j) the Pledgee shall have the right, at any time when it thinks
necessary, to act as a third party in any judicial or
arbitration proceeding on any dispute in relation to the
Pledged Assets.
4.3 RESTRICTIONS ON DEALING
(a) The Pledgor shall not without the prior written consent of the Pledgee:
(i) except as permitted by the Shareholders Support Agreement,
sell, transfer or dispose of or assign, alienate, pledge or
otherwise encumber the whole or any part of the Shares of the
Company or any other Pledged Assets to or in favour of anyone
other than the Pledgee;
(ii) take or permit the taking of any action whereby the rights
attaching to any of the Pledged Assets are terminated, altered
or diluted or any securities are issued by the Company;
(iii) make changes or redeem, or permit changes to be made or any
redemption to occur, to the charter capital of the Company; or
(iv) vote at the General Meeting of Participants with the Shares,
give any consent, waiver or ratification in respect thereof or
exercise its other rights as a Participant of the Company in
any manner so as to authorise any corporate action which would
13
adversely affect, or be prohibited by or contrary to, any of
the provisions of any Financing Agreement or Project
Agreement.
(b) Unless the Pledgee otherwise agrees in writing, the Pledgor hereby
agrees, subject to this Agreement:
(i) to retain the legal and beneficial title to all rights, title
and right of ownership and interest in the Shares representing
34 per cent. of the charter capital of the Company, for so
long as the Pledgor and the Company shall have any outstanding
obligations under the Financing Agreements or the Shares of
the Company owned by the Pledgor remain pledged to the Pledgee
pursuant to this Agreement, whichever is longer; and
(ii) to exercise its voting rights in any General Meeting of
Participants of the Company in such a manner as to cause the
Company at all times to comply with all of its obligations
under the Financing Agreements and the Project Agreements.
4.4 CO-OPERATION
The Pledgor shall provide, and shall procure that the Company shall
provide, all assistance and co-operation as the Pledgee may require in
order to obtain any necessary consent, approval or other clearance from
any government body including the Ministry of the Russian Federation on
Antimonopoly Policy and Support of Entrepreneurship, for the
implementation of this Agreement, including without limitation, the
provisions of Clause 7 (Levy of Execution).
5. DOCUMENTS AND REGISTRATION
The Pledgor shall:
(a) immediately deposit with the Pledgee notarised copies of all
documents evidencing its entitlement to the Shares; and
(b) immediately on receipt of any document evidencing any
entitlement to any further or other Pledged Assets deposit the
notarised copy of such document with the Pledgee.
6. POWERS OF PLEDGOR
Unless and until an Event of Default or a Potential Event of Default
occurs:
(a) the Pledgor shall be entitled to receive all dividends,
interest and income from the Shares; and
(b) subject to Clause 4.3, vote the Shares and give consents,
waivers and satisfactions in respect thereof and exercise its
other rights as a Participant of the Company.
7. LEVY OF EXECUTION
7.1 LEVY OF EXECUTION
(a) Subject to sub-clause (e) below, if an Event of Default occurs under
the Amended and Restated EBRD Credit Agreement the Pledgee shall, in
accordance with the procedure
14
established by Russian law, be entitled to levy execution on the
Pledged Assets with all powers permitted by law or this Agreement
including, but without limitation:
(i) to sell all or any part of the Pledged Assets in any manner
permitted by law upon such terms as the Pledgee shall in their
absolute discretion determine in accordance with the
procedures established by the Pledgee pursuant to Schedule 2
(Procedure for the Levy of Execution); and
(ii) to collect, recover or compromise and to give a good discharge
for any monies payable to the Pledgor in respect of the
Pledged Assets.
(b) The Pledgee shall not be obliged to sell the Pledged Assets for more
than the value of the Secured Liabilities specified in subclause 2(c)
of this Agreement and if no offers are received at that price, may sell
the Pledged Assets for less.
(c) If the proceeds of sale of the Pledged Assets are not sufficient to
discharge the Secured Liabilities in full, the Pledgee shall have the
right to realise the outstanding amount from any other property of the
Company.
(d) If the proceeds from the sale of the Pledged Assets exceed the amount
of the Secured Liabilities, the difference shall be returned to the
Pledgor.
(e) If, at any time before the sale of the Pledged Assets through the
procedure established by this Agreement and Russian law, the Pledgor
establishes to the satisfaction of the Pledgee that the Event of
Default has been remedied, the Pledgee shall terminate any enforcement
action being taken in accordance with sub-clauses (a) to (d) above and
the Pledgor shall indemnify and reimburse the Pledgee for any and all
claims, costs and expenses made against or incurred by the Pledgee as a
result of taking such enforcement action and as a result of terminating
such enforcement action.
7.2 POWERS OF THE PLEDGEE
(a) At any time after the occurrence of an Event of Default or Potential
Event of Default under the Amended and Restated EBRD Credit Agreement,
and without any further consent or authority on the part of the
Pledgor, the Pledgee may exercise instead of the Pledgor at its
absolute discretion (in the name of the Pledgor) in respect of any of
the Pledged Assets any voting rights and any other powers or rights
which may be exercised by the person or persons who is the holder or
bearer of the Pledged Assets except, in the case of a Potential Event
of Default, the powers and rights set out in Clause 7.1. If the Pledgee
take any such action as is referred to in this Clause 7.2 it will give
notice to the Pledgor as soon as practicable.
(b) The Pledgor shall prior to the date of the first disbursement under the
Amended and Restated EBRD Credit Agreement grant the Pledgee a Power of
Attorney in the form set out in Schedule 1 to exercise the above rights
of a Participant of the Company and with full powers of substitution.
The Power of Attorney shall be issued for a period of three years from
its date of execution and shall be executed by the Pledgor in the
English language substantially in the form set out in Schedule 1 to
this Agreement, shall be notarised and apostilled (or legalized) in the
country of its preparation, after which it shall be translated into the
Russian language, which translation shall be notarised by a notary
public in Russia.
(c) The Pledgor agrees that it shall, no later than three months prior to
the expiry of the Power of Attorney referred to in paragraph (b) above,
issue to the Pledgee a replacement power of
15
attorney in a form and substance satisfactory to the Pledgee (including
an obligation to provide a replacement power of attorney on its
expiry). Failure to do so or the revocation of the Power of Attorney or
any replacement power of attorney shall, for the purposes of this
Agreement, be considered as an Event of Default under the Amended and
Restated EBRD Credit Agreement.
(d) If the Pledgor refuses to issue the above Power of Attorney or the
above replacement power of attorney on its expiry, the Pledgor shall
compensate the Pledgee or any other person appointed by the Pledgee for
all losses incurred due to such a refusal.
(e) The Pledgor agrees that the Pledgee shall not incur any liability in
connection with or arising from the lawful exercise of the Power of
Attorney or of the rights transferred to the Pledgee pursuant to this
Clause 7.2.
(f) The Pledgor hereby undertakes from time to time and at all times to
compensate the Pledgee against all costs, claims, expenses and
liabilities howsoever incurred by the Pledgee in connection with the
Power of Attorney and further undertakes to ratify and confirm
whatsoever the Pledgee shall lawfully do or cause to be done in or by
virtue of the Power of Attorney.
8. APPLICATION OF PROCEEDS
All monies received by the Pledgee in respect of the Pledged Assets
after this security has become enforceable shall be applied by the
Pledgee in or towards payment of the Secured Liabilities in such order
as the Pledgee sees fit (but without prejudice to the rights of the
Pledgee to recover any shortfall from the Company).
9. EXPENSES AND COMPENSATION
(a) The Pledgor shall compensate the Pledgee, and/or any attorney, manager,
agent or other person appointed by the Pledgee on demand for all
charges and expenses (including legal and notarial fees and expenses)
incurred in the negotiation, preparation, execution and enforcement of
this Agreement and all waivers, discharges, amendments and other
documents in connection with it.
(b) The Pledgor will pay or procure the payment when due of all present and
future registration fees, stamp duties and other imposts or transaction
taxes in relation to this Agreement and keep the Pledgee compensated
against any failure or delay in paying them.
(c) The Pledgee shall not be liable for any losses arising in connection
with the lawful exercise or purported exercise of any of its rights,
powers or discretions under this Agreement.
10. DELEGATION
(a) The Pledgee may at any time or times:
(i) delegate to any person or persons all or any of its rights,
powers and discretions under this Agreement on such terms
(including power to subdelegate) as it sees fit; and
(ii) employ agents, employees, advisers and others on such terms as
the Pledgee sees fit for any of the purposes set out in this
Agreement.
16
(b) The Pledgee shall not be in any way liable or responsible to the
Pledgor for any loss or liability arising from any act, default,
omission or misconduct on the part of any such delegate or sub-delegate
except where such delegate or sub-delegate acts unlawfully.
11. RELEASE
Upon the full payment of all sums which may be or become payable under
the Financing Agreements and the full performance of the Secured
Liabilities under such agreements to the Pledgee, the pledge
constituted by this Agreement shall be terminated and the Pledgee shall
at the request and expense of the Pledgor forthwith deliver to the
Pledgor any evidence of such termination and release of the Pledged
Assets from the pledge, and take such other actions, as the Pledgor may
require in order to terminate the pledge constituted by this Agreement.
12. FURTHER ASSURANCE
The Pledgor shall upon the request of the Pledgee promptly, at its own
expense, execute and deliver any and all such further instruments and
documents as the Pledgee may deem desirable for the purpose of
satisfaction of its claims under this Agreement and Amended and
Restated EBRD Credit Agreement from the value of the Pledged Assets and
obtaining the full benefit of this Agreement and of the rights and
powers granted under it.
13. MISCELLANEOUS
This Agreement and the other Financing Agreements shall contain the
entire agreement between the Pledgee and the Pledgor with respect to
the subject matter hereof. It supersedes all previous agreements and
understandings between the Pledgee and the Pledgor with respect thereto
and may not be modified except by an instrument in writing signed by
the duly authorised representative of the Pledgee and the Pledgor.
14. NOTICES
Any notice or other communication to be given or made under this
Agreement to the Pledgor or the Pledgee shall be in writing. Such
notice or other communication shall be deemed to have been duly given
or made when it shall be delivered by hand, airmail, telex or telefax
to the party to which it is required or permitted to be given or made
at such party's address specified below or at such other address as
such party shall have designated by notice to the party giving or
making such notice or other communication.
PLEDGOR: Harvest Natural Resources, Inc.
▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
U.S.A.
Attention: Chief Financial Officer
Fax: (+1) (▇▇▇) ▇▇▇ ▇▇▇▇
17
PLEDGEE: EUROPEAN BANK FOR RECONSTRUCTION AND DEVELOPMENT
Attention: Operation Administration ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telex: 881 2161 EBRD LG
Fax: (+44) (▇▇▇) ▇▇▇ ▇▇▇▇
15. COUNTERPARTS
This Agreement may be executed in any number of counterparts in the
English language each of which shall be deemed an original, but all of
which together shall constitute one and the same agreement.
16. WAIVER; REMEDIES CUMULATIVE
The rights of each party under this Agreement:
(a) are cumulative and not exclusive of its rights under the
applicable law; and
(b) may be waived only in writing and specifically.
Delay in exercising or non-exercise of any such right is not a waiver
of that right.
17. GOVERNING LAW AND DISPUTE RESOLUTION
(a) Any dispute, controversy or claim arising out of or relating to this
Agreement, or the breach, termination or invalidity thereof, shall be
settled by arbitration in accordance with the UNCITRAL Arbitration
Rules as at present in force. There shall be one arbitrator, and the
appointing authority shall be the London Court of International
Arbitration. Where the UNCITRAL Arbitration Rules do not provide for a
particular situation, the arbitral tribunal shall, in its absolute
discretion, determine what course of action should be followed and the
arbitral tribunal's decision shall be final. The place of arbitration
shall be London, England, and the English language shall be used
throughout the arbitral proceedings. Except as provided in subclause
(b) of this Clause the parties waive their rights to any form of appeal
or recourse from such arbitral proceedings to a court of law or other
judicial authority. The arbitral tribunal shall not be authorised to
take or provide, and the Pledgor shall not be authorised to seek from
any judicial authority, any interim measures of protection or any
pre-award relief against the Pledgee, any provisions of the UNCITRAL
Arbitration Rules notwithstanding. The arbitral tribunal shall have
authority to consider and include in any proceeding, decision or award,
any dispute properly brought before it by the Pledgee (but no other
party) insofar as such dispute arises out of this Agreement but,
subject to the foregoing, no other parties or other disputes shall be
included in, or consolidated with, the arbitral proceedings. In any
arbitral proceeding, the certificate of the Pledgee as to any amount
due to the Pledgee under any of the Financing Agreements shall be prima
facie evidence of such amount.
(b) Notwithstanding subclause (a) of this Clause, this Agreement, and any
rights of the Pledgee arising out of or relating to this Agreement may,
at the option of the Pledgee, be enforced by the Pledgee in the courts
of the Russian Federation or England or in any other courts having
18
jurisdiction. The Pledgor hereby irrevocably submits to the
jurisdiction of the courts of England with respect to any dispute,
controversy or claim arising out of or relating to this Agreement, or
the breach, termination or invalidity hereof. The Pledgor hereby
irrevocably designates, appoints and empowers Law Debenture Corporate
Services Limited at its registered office (being 5th floor, ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇) to act as its authorised agent to
receive service of process and any other legal summons in England for
purposes of any such action or proceeding. The Pledgor hereby
irrevocably consents to the service of process or any other legal
summons out of such courts by mailing copies thereof by registered
airmail postage prepaid to its address specified herein. The Pledgor
covenants and agrees that, so long as it has any obligations under this
Agreement, it shall maintain a duly appointed agent to receive service
of process and any other legal summons in any legal action or
proceeding brought by the Pledgee in England in respect of this
Agreement and shall keep the Pledgee advised of the identity and
location of such agent. Nothing herein shall affect the right of the
Pledgee to serve process upon the Pledgor in any manner authorised by
the laws of any relevant jurisdiction.
(c) This Agreement shall be governed by and construed in accordance with
the substantive law of the Russian Federation.
(d) Nothing in this Clause shall be construed as a waiver renunciation or
other modification of the privileges immunities and exemptions of the
Pledgee accorded under the Agreement Establishing the European Bank for
Reconstruction and Development, international convention or any
applicable laws.
18. SUCCESSORS AND ASSIGNS
This Agreement shall bind and inure to the benefit of the respective
successors and assigns of the parties hereto, except that the Pledgor
may not assign or otherwise transfer all or any part of its rights or
obligations under this Agreement without the prior consent of the
Pledgee.
19. SEVERABILITY
If any provision of this Agreement is prohibited or unenforceable in
any jurisdiction in relation to any party hereto, such a prohibition or
unenforceability shall not invalidate the remaining provisions hereof
or affect the validity or enforceability of such provision in any other
jurisdiction or in relation to any of the other parties hereto.
THIS AGREEMENT has been entered into on the date stated at the beginning of this
Agreement.
19
SCHEDULE 1
TO BE TYPED ON THE LETTERHEAD OF THE COMPANY
POWER OF ATTORNEY
This Power of Attorney is issued on [ ] in [ ], by HARVEST NATURAL RESOURCES,
INC. (the "PLEDGOR"), a corporation organised and existing under the laws of
State of Delaware in the United States of America, with its registered office at
Corporation Trust Centre, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, County
of Newcastle and which is a Participant of Limited Liability Company "Geoilbent"
(the "COMPANY") in favour of the EUROPEAN BANK FOR RECONSTRUCTION AND
DEVELOPMENT (the "PLEDGEE").
This Power of Attorney is granted pursuant to subclause 7.2 (Powers of the
Pledgee) of the agreement for pledge of shares in the Company, dated 23rd June,
1997, as amended and restated on 30th September, 2002 (the "SHARE PLEDGE
AGREEMENT") between the Pledgor and the Pledgee.
1. Words and expressions defined in the Share Pledge Agreement (and the
Amended and Restated EBRD Credit Agreement referred to therein) shall
have the same meaning when used in this Power of Attorney.
2. The Pledgor hereby grants to the Pledgee this Power of Attorney with
full power of substitution to exercise in the Pledgor's name all and
any right which the Pledgor, as a participant of the Company, has or
might have pursuant to the Company's constitutional documents and
Russian law.
3. In particular but without limitation the Pledgee shall have the
following rights:
(a) the right to demand an extraordinary General Meeting of
Participants to be convened by the General Director;
(b) the right to be informed about each annual and extraordinary
General Meeting of Participants called by the General Director
and to be present at any General Meeting of Participants;
(c) the right to vote by all Shares pledged for the benefit of the
Pledgee in such manner as the Pledgee in its absolute
discretion sees fit;
(d) the right to give any consent or authorisation that is
required from a Participant under Russian legislation; and
(e) the right to do all acts and things and execute all documents
which the Pledgor could itself do in relation to any of the
Pledged Assets or in connection with any of the matters
provided for in the Share Pledge Agreement.
4. The Pledgor hereby declares that all and every one of the acts and
things which shall be lawfully done by the Pledgee for the aforesaid
purposes should be as good, valid and effectual to all intents and
purposes whatsoever as if the same had been done by the Pledgor itself.
20
5. The Pledgee may delegate to any other person any of the rights granted
to it under this Power of Attorney.
6. This Power of Attorney is valid for a period of three years from the
date of signing and shall expire on [ ].
PLEDGOR
HARVEST NATURAL RESOURCES, INC.
By:
Name:
Title:
[THIS DOCUMENT MUST BE NOTARIZED AND APOSTILLED/LEGALIZED IN THE COUNTRY OF
PREPARATION]
21
SCHEDULE 2
PROCEDURE FOR THE LEVY OF EXECUTION
1. Subject the Clause 7.1(e) of this Agreement, if an Event of Default
occurs under the Amended and Restated EBRD Credit Agreement the Pledgee
shall, in accordance with the procedure established by Russian law, be
entitled to have its claims satisfied out of the Pledged Assets under
Clause 7.1 (Levy of Execution) of this Agreement. The Pledgee may
immediately exercise as the Pledgee sees fit in its absolute discretion
any and all rights, remedies and powers of enforcement as conferred by
law.
2. The claims of the Pledgee may be satisfied through selling the Pledged
Assets at public auctions organised by the Pledgee or its agent in
accordance with Russian legislation. In the event that the Pledged
Assets are not sold at the first such auction (for failure to reach the
reserve price or otherwise), a second such auction shall be held.
3. The Pledgee shall be entitled (in such manner as the Pledgee sees fit
in its absolute discretion) to:
(a) determine the date, time and place of the auctioning;
(b) establish the procedure for the holding of each public
auction;
(c) make all arrangements for the holding of each public auction,
including, without limitation, such arrangements as the
Pledgee consider appropriate for advertising;
(d) approve the results of the public auction(s) and notify the
Pledgor and any other interested persons of the same;
(e) engage an agent to assist the Pledgee in exercising the powers
contained in (a) to (d) above and delegate its powers to the
agent;
(f) engage professional advisers, including valuers, surveyors,
engineers, lawyers and accountants in connection with the
auction(s) and the exercise of the Pledgee's rights; and
(g) to incur and pay costs and expenses of holding the auction(s)
and of its agents and advisers engaged pursuant to (e) and (f)
above, together with notarisation, registration and other
costs and expenses in relation to transfer of title and right
of ownership to the Pledged Assets to the purchaser or to
itself.
4. The reserve sale price of the Pledged Assets shall be determined by
court's decision.
5. The Pledgee may sell the Pledged Assets for less than the value of the
Secured Liabilities specified in subclause 2(c) of this Agreement. The
Pledgee shall not be obliged to delay the auction in order to receive a
better price.
6. In addition to repayment of all the Secured Liabilities, the Pledgee
shall be entitled to deduct from the proceeds of sale of the Pledged
Assets all costs and expenses of the Pledgee and/or its agent (which
are additional to the Secured Liabilities including, without
limitation, all
22
costs and expenses pursuant to Clause 3 above) incurred in connection
with this Agreement and the auction(s).
7. All proceeds from the sale of the Pledged Assets (after deduction of
costs and expenses pursuant to Clause 6 (above) shall be applied
towards the repayment of the Secured Liabilities.
8. The Pledgee shall be entitled on their own behalf as agent for and on
behalf of the Pledgor to transfer good title and right of ownership to
the Pledged Assets to a purchaser free and clear of all rights and
interests of the Pledgee and the Pledgor, and to give good discharge to
the purchaser for payment of the purchase price, and the signature of
an officer of the Pledgee shall suffice for such purposes.
9. If the proceeds from the sale of the Pledged Assets are insufficient to
repay the Secured Liabilities, the Pledgee shall have the right to
receive the outstanding amount out of any other property of the
Company.
10. The Pledgee shall be entitled to proceed with the second public auction
if the reserve price set for the first public auction is not reached or
payment of the price for the Pledged Assets is not received in full by
the Pledgee within 5 days from the date of the first public auction or
the Pledgee otherwise (in their absolute discretion) consider the first
public auction to have been unsatisfactory.
11. If the reserve price set for the second public auction is not reached
or payment of the price of the Pledged Assets is not received in full
by the Pledgee within 5 days from the date of the second public auction
or the Pledgee otherwise (in their absolute discretion) consider the
second public auction to have been unsatisfactory, the Pledgee shall be
entitled, by notice to the Pledgor in writing to declare the public
auction to have been unsuccessful and to assume ownership of the
Pledged Assets and upon service of the notice shall have good title and
right of ownership to the Pledged Assets free and clear of all rights
and interests of the Pledgor without any other additional agreements.
12. The Pledgor shall provide, and shall procure that the Company shall
provide, all assistance and co-operation as the Pledgee may require in
order to obtain any necessary consent, approval or other clearance from
any government body including the Ministry of the Russian Federation on
Antimonopoly Policy and Support of Entrepreneurship, for the transfer
of good title and right of ownership to the Pledged Assets to a
purchaser upon the result of the first or second public auctions.
13. All costs and expenses incurred by the Pledgee and/or their agent
(including, without limitation, all costs and expenses pursuant to
Clause 3 above) in connection with this Agreement, the auction(s) which
are not recovered from the sale proceeds of the Pledged Assets shall be
reimbursed by the Pledgor together with all other claims by the Pledgee
secured by this Agreement.
23
SIGNATORIES
PLEDGOR
HARVEST NATURAL RESOURCES, INC.
By:
---------------------------------
Name:
Title:
PLEDGEE
EUROPEAN BANK FOR RECONSTRUCTION AND DEVELOPMENT
By:
---------------------------------
Name:
Title:
24
SIGNATORIES
PLEDGOR
HARVEST NATURAL RESOURCES, INC.
By:
---------------------------------
Name:
Title:
EBRD
EUROPEAN BANK FOR RECONSTRUCTION AND DEVELOPMENT
By:
---------------------------------
Name:
Title:
IMB
INTERNATIONAL
MOSCOW BANK
By:
---------------------------------
Name:
Title:
AMENDMENT AGREEMENT
DATED 30TH SEPTEMBER, 2002
AMONG
HARVEST NATURAL RESOURCES, INC.
AND
EUROPEAN BANK FOR
RECONSTRUCTION AND DEVELOPMENT
AND
INTERNATIONAL
MOSCOW BANK
AMENDING AND RESTATING
THE AGREEMENT FOR PLEDGE OF SHARES
IN LIMITED LIABILITY COMPANY "GEOILBENT "
DATED 23RD JUNE, 1997
▇▇▇▇▇ & ▇▇▇▇▇
LEGAL SERVICES
MOSCOW
CONTENTS
CLAUSE PAGE
1. Interpretation.......................................................................................2
2. Amendment, Confirmation and Designation..............................................................3
3. Representations and Warranties ......................................................................3
4. Governing Law........................................................................................4
SCHEDULE
1. Restated Pledge of Shares............................................................................5
SIGNATORIES..................................................................................................24