PLEDGE AND SECURITY AGREEMENT
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(LLC Membership Interests)
This Pledge and Security Agreement (this "Agreement") is made effective as
of February 7, 2007 ("Effective Date"), by and between PETROSEARCH ENERGY
CORPORATION, a Nevada corporation ("Pledgor"), and RCH PETRO INVESTORS, LP, A
Delaware limited partnership ("Secured Party").
RECITALS:
A. Pledgor is a Nevada corporation in the business of acquiring,
developing and operating oil and gas properties in several states, including,
Texas, Oklahoma, North Dakota, and Mississippi. Pledgor owns 100% of the
membership interests of Exploration Holding Co., L.L.C. ("Exploration Holding").
Exploration Holding owns 100% of the membership interests of Xxxxxxx
Petrosearch, L.L.C. ("Xxxxxxx Petrosearch"). Each of Exploration Holding and
Xxxxxxx Petrosearch is a Texas limited liability company.
X. Xxxxxxx Petrosearch owns a 5.54455% limited partnership interest
in DDJET, Limited, LLP, a Texas limited liability limited partnership ("DDJET"
or "the Partnership"), organized on December 15, 2006, by Metroplex Xxxxxxx
Shale, LLC, a Delaware limited liability company, ("Metroplex") as General
Partner. Metroplex is a direct subsidiary of Exxon Mobil Corporation. Cinco
County Xxxxxxx Shale, LLC, a Texas limited liability company ("Cinco") is a
Limited Partner of the Partnership and Cinco is a direct subsidiary of Xxxxxxx
Company, a private Fort Worth based exploration company. Xxxxxxx Petrosearch is
also a Limited Partner of the Partnership. The Partnership was formed for the
purpose of acquiring, exploring, developing, owning and operating oil and gas
leases and other mineral interests in portions of Collin, Dallas, Denton, Ellis,
Hill, Johnson, Xxxxxxx and Xxxxxxx Counties, Texas and to acquire, construct,
own and operate pipeline assets for the evacuation of hydrocarbons produced from
these properties. The area and interests covered by the Partnership are situated
in a geologic region generally known as the Xxxxxxx Shale.
C. Pledgor has entered into a certain Note and Warrant Purchase
Agreement, dated as of February 1, 2007 with Secured Party (as such Note
Purchase may be hereafter amended, supplemented, modified, renewed or extended,
the "Purchase Agreement"), pursuant to and in accordance with which, Pledgor has
executed a certain 8% Senior Secured Convertible Note Due February 7, 2010 (as
such Note may be hereafter amended, modified, renewed or extended, the
"Convertible Note") in the original principal amount of TEN MILLION AND NO/100
DOLLARS ($10,000,000.00) for general working capital needs, which include the
payment of certain of Xxxxxxx Petrosearch's direct partnership financial
obligations related to the Xxxxxxx Shale Project.
D. Secured Party requires that 25% of the membership interests
(ownership interests) in Exploration Holding be pledged by Pledgor to Secured
Party as security for repayment of the Convertible Note and as security for
performance of the other obligations described in the Purchase Agreement , the
Convertible Note, and the associated transaction documents.
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D. It is a condition precedent to the effectiveness of the Purchase
Agreement that this Agreement shall have been executed and delivered by Pledgor
and shall be in full force and effect; and
E. Pledgor has determined that Pledgor's execution, delivery and
performance of this Agreement may reasonably be expected to provide substantial
benefit to Pledgor, directly or indirectly, and to be in the best interests of
Pledgor.
NOW, THEREFORE, FOR VALUE RECEIVED, the sufficiency of which is
acknowledged by the parties, the parties hereto agree as follows:
ARTICLE I
SECURITY INTEREST AND PLEDGE
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Section 1.01. DEFINED TERMS AND RELATED MATTERS.
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(a) Capitalized terms used and not otherwise defined herein that are
defined in the Convertible Note shall have the meanings specified therein.
Capitalized terms used and not otherwise defined herein or in the Convertible
Note that are defined in the Purchase Agreement shall have the meanings
specified therein. Terms defined in the singular include the plural and terms
defined in the plural include the singular.
(b) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement.
(c) Unless otherwise defined herein or in the Purchase Agreement, the
terms defined in Articles 8 and 9 of the Uniform Commercial Code as enacted in
the State of Texas as in effect from time to time (the "Code"), are used herein
as therein defined.
(d) "Pledged Securities" means any and all limited liability company
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interests and other capital securities (including, without limitation, any
warrants, options or other rights to purchase limited liability company
interests of Exploration Holding) constituting, but not exceeding, a twenty-five
percent (25%) ownership interest in Exploration Holding, whether now owned or
hereafter acquired by Pledgor, including the limited liability company interests
identified on Schedule A hereto as Pledged Securities, as such Schedule A may be
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updated and supplemented from time to time in accordance with Section 3.04(b)
hereof.
Section 1.02 SECURITY INTEREST AND PLEDGE. Subject to the terms of
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this Agreement, Pledgor hereby pledges and delivers to the Secured Party, and
hereby grants to the Secured Party, a lien on and security interest all of
Pledgor's rights, titles, interests and privileges in and with respect to the
Pledged Securities, whether now owned or hereafter acquired, including, without
limitation: (a) all limited liability company interests of Exploration Holding
and all securities convertible or exchangeable into, and all warrants, options
or other rights to purchase limited liability company interests of Exploration
Holding (but not exceeding the twenty-five percent (25%) amount of all
membership interests contemplated by the definition of Pledged Securities); (b)
all certificates or
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instruments representing Pledged Securities and all proceeds, income and profits
thereon, and all interest, dividends and other payments, property, revenues, and
distributions with respect thereto; (c) all proceeds received or receivable by
Pledgor in cash, stock or otherwise, from any recapitalization,
reclassification, merger, dissolution, liquidation or other termination of the
existence of Exploration Holding relating to the Pledged Securities; and (d) all
other proceeds or assets received or receivable by Pledgor in respect of its
status as a member of Exploration Holding with respect to the Pledged Securities
(all such property, collectively, the "Collateral"); provided, that the
inclusion of proceeds in this Agreement does not authorize Pledgor to sell,
dispose of or otherwise use the Collateral in any manner not specifically
authorized hereby.
Section 1.03. OBLIGATIONS SECURED. This Agreement secures: (a) the
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full and prompt payment of the principal of, interest on, and all other amounts
due with respect to the Convertible Note from time to time outstanding, as and
when such amounts shall become due and payable, whether by lapse of time, upon
redemption, prepayment or purchase, by extension or by acceleration or
declaration or otherwise (including, without limitation, interest due at the
Default Rate on overdue payments of principal, interest or any other amount due
hereunder, under the Convertible Note, the Purchase Agreement or under any of
the other Transaction Documents (as such term is defined in the Purchase
Agreement)); (b) the full and prompt payment, performance and observance by
Pledgor of all obligations, covenants, conditions and agreements contained in
any of the Transaction Documents; and (c) the full and prompt payment, upon
demand by the Secured Party or any holder of the Convertible Note, of all costs
and expenses (including, without limitation, reasonable attorneys' fees), if
any, as shall have been expended or incurred by such holder or the Secured Party
in the protection or enforcement of any right or privilege under the Convertible
Note, the Purchase Agreement or any of the other Transaction Documents, or in
the protection or enforcement of any rights, privileges or liabilities
thereunder or in any consultation or action in connection therewith (all such
obligations, covenants, conditions and agreements described in the foregoing
clauses (a), (b) and (c) being hereinafter collectively referred to as the
"Obligations".
Section 1.04. FORMALITIES. (a) All certificates and instruments
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representing the Pledged Securities have been, or, in the case of all Pledged
Securities hereafter acquired, immediately upon acquisition shall be, delivered
to and shall be held by or on behalf of the Secured Party pursuant hereto in
suitable form for transfer by delivery, or accompanied by undated stock powers
or other instruments of transfer or assignment, duly executed in blank, all in
form and substance satisfactory to the Secured Party.
(b) Notwithstanding anything to the contrary contained in clause (a)
above, if any Pledged Securities (whether now owned or hereafter acquired) are
uncertificated securities, Pledgor shall promptly notify the Secured Party
thereof, and shall promptly take all actions required to perfect the security
interest of the Secured Party under applicable law (including, in any event,
under the provisions of Article 8 or 9 of the Code, if applicable). Pledgor
further agrees to take such actions as the Secured Party deems necessary or
desirable to effect the foregoing and to permit the Secured Party to exercise
any of its rights and remedies hereunder, and agrees, promptly upon the request
of the Secured Party, to provide an opinion of counsel, in form and substance
satisfactory to the Secured Party, as to the validity and enforceability of the
security interest created
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by this Agreement with respect to such uncertificated securities, the perfection
of the Secured Party's security interest therein and such other matters as may
be reasonably requested by the Secured Party.
(c) The Secured Party shall have the right, at any time in its
reasonable discretion and without notice to any Pledgor, to (i) transfer to any
of its nominees any or all of the Collateral, subject only to the revocable
rights set forth in Section 4.01 hereof and applicable law, and (ii) so long as
an Event of Default shall have occurred and be continuing, to register any or
all of the Collateral in its own name. In addition, the Secured Party 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.
(d) Each Pledgor hereby authorizes the Secured Party, at the expense of
Pledgor (including the fees and expenses of counsel to the Secured Party), to
file one or more financing or continuation statements, and amendments thereto,
relating to all or any part of the Collateral without the signature of Pledgor
where permitted by law. A photocopy or other reproduction of this Agreement or
any financing statement covering the Collateral or any part thereof shall be
sufficient as a financing statement where permitted by law. Pledgor understands
and agrees that even though the Secured Party has no obligation to do so, with
respect to any financing statement, the Secured Party intends to file (at the
expense of Pledgor, including the fees and expenses of counsel to the Secured
Party) any continuation statement or amendment where failure to so file could
reasonably be expected to result in the lapse of such financing statement at any
time within three months of any such proposed filing.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
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Section 2.01 REPRESENTATIONS AND WARRANTIES. Pledgor represents, warrants,
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and covenants to Secured Party as follows:
(a) The Pledged Securities outstanding on the date hereof: (i) are
described in Schedule A hereto; (ii) have been duly and validly issued and all
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contributions required to be made by Pledgor under the limited liability company
agreement of Exploration Holding have been made; and (iii) are subject to no
options, warrants, calls or commitments of any character whatsoever relating
thereto.
(b) Any instruments of transfer or assignment relating to certificates
representing or evidencing the Pledged Securities, executed in blank and
delivered by Pledgor to the Secured Party herewith, have been duly executed by
Pledgor and vest in the Secured Party the authority that they purport to confer.
(c) Upon (i) the pledge, assignment and delivery to the Secured Party
by Pledgor of the Collateral pursuant to this Agreement and (ii) the filing of
UCC 1 financing statements and other necessary or appropriate registrations and
recordings in the Office of the Secretary of State of the State of Texas, all
filings, registrations and recordings necessary or appropriate to create,
preserve, protect and perfect the security interest granted by Pledgor to the
Secured Party hereby in respect of
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the Collateral will have been accomplished, and the security interest granted by
Pledgor to the Secured Party pursuant to this Agreement in and to the Collateral
will constitute a perfected security interest therein superior and prior to the
rights of all other Persons therein and subject to no other liens and security
interests (other than the liens and security interests created hereunder), and
will be entitled to all the rights, priorities and benefits afforded by the Code
or other relevant law as enacted in any relevant jurisdiction to perfected
security interests.
(d) The principal place of business and chief executive office of
Pledgor and the sole location where the records of Pledgor with respect to the
Collateral are kept are located at the address set forth on Schedule B attached
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hereto. Pledgor shall not move its chief executive office, principal place of
business, or such location of records unless (i) it shall have given to the
Secured Party not less than 60 days' prior written notice of its intention so to
do, clearly describing such new location and providing such other information in
connection therewith as the Secured Party may reasonably request and (ii) with
respect to such new location, it shall have taken all action required by
Sections 1.04, 2.01, and 3.04 with respect to such new jurisdiction and all
other action, reasonably satisfactory to the Secured Party, to maintain the
security interest of the Secured Party in the Collateral intended to be granted
hereby at all times fully perfected and in full force and effect.
(e) The jurisdiction of organization and organizational number of
Pledgor is as set forth on Schedule B attached hereto. As of the date hereof,
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Pledgor does not have or operate under, nor has it had or operated under, in any
jurisdiction at any time prior to the date hereof, any name except its legal
name as set forth on the signature pages hereto, nor has Pledgor ever been
organized under the laws of any jurisdiction other than the jurisdiction
specified on Schedule B attached hereto. Pledgor shall not change its legal
name, assume or operate in any jurisdiction under any trade, fictitious or other
name or change its jurisdiction of organization unless (i) it shall have given
to the Secured Party not less than 60 days' prior written notice of its
commencing to do so, clearly describing such new name and the jurisdictions in
which such new name shall be used or such new jurisdiction of organization and
providing such other information in connection therewith as the Secured Party
may reasonably request and (ii) with respect to such new name or jurisdiction of
organization, it shall have taken all reasonable action, reasonably satisfactory
to the Secured Party, to maintain the security interest of the Secured Party in
the Collateral intended to be granted hereby at all times fully perfected and in
full force and effect. As of the date hereof, Pledgor has no trade names.
(f) Pledgor is the legal and beneficial owner of the Collateral free
and clear of any lien or security interest (except the liens and security
interests), and Pledgor has not sold, granted any option with respect to,
assigned, transferred or otherwise disposed of any of its rights or interests in
or to such Collateral.
(g) No effective financing statement or other document similar in
effect covering all or any part of Pledgor's portion of the Collateral is on
file in any recording office, except such as may have been filed in favor of the
Secured Party relating to this Agreement, and Pledgor has not authorized the
filing of any such financing statement or other document. Pledgor will not,
without the prior written consent of the Secured Party, authorize or
authenticate any such financing statements after the date hereof, and there will
not ever be on file in any public office, any
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enforceable financing statement or statements covering any or all of the
Collateral, except financing statements filed or to be filed in favor of the
Secured Party.
(h) No consent, authorization, approval or other action by, and no
notice to or filing with, any governmental authority or any other Person is
required: (i) for the valid execution, delivery and performance by Pledgor of
this Agreement; (ii) for the pledge by Pledgor of a security interest in the
Collateral or for the granting, perfection and maintenance of the liens and
security interests created hereby and the first priority nature of such liens
and security interests (other than the timely and proper filing of financing
statements and continuation statements related thereto); or (iii) for the
exercise by the Secured Party of the voting or other rights provided for in this
Agreement or the remedies in respect of Pledgor's portion of the Collateral
pursuant to this Agreement (except as may be required in connection with such
disposition by laws affecting the offering and sale of securities generally).
(i) This Agreement has been duly authorized, executed and delivered by
Pledgor and constitutes a legal, valid and binding obligation of Pledgor,
enforceable against Pledgor in accordance with its terms, except to the extent
that the enforceability hereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally and by equitable principles (regardless of whether
enforcement is sought in equity or at law).
(j) The execution, delivery and performance of this Agreement is not in
conflict with and does not violate any instrument or agreement to which Pledgor
is a party or by which Pledgor is bound, including without limitation, the
organizational agreements of Exploration Holdings.
(k) Pledgor covenants and agrees that it will defend the Secured
Party's right, title and security interest in and to the Collateral and the
proceeds thereof against the claims and demands of all persons whomsoever, and
Pledgor covenants and agrees that it will have like title to and right to pledge
any other property at any time hereafter pledged by Pledgor to the Secured Party
as Collateral hereunder and will likewise defend the right thereto and the
security interest therein of the Secured Party.
(l) Pledgor is not currently, and at no time in the past has been, in
default or violation of any provisions of Exploration Holding's limited
liability company agreement or otherwise in default or violation thereunder.
None of the Pledged Securities is subject to any defense, offset or
counterclaim, nor have any of the foregoing been asserted or alleged against
Pledgor by any Person with respect thereto. As of the date of this Agreement,
there are no certificates, instruments, documents or other writings, other than
the certificates delivered to the Secured Party and Exploration Holding's
limited liability company agreement, held by Pledgor which evidence any
ownership interest in Exploration Holding, other than a certificate representing
a 75% membership interest in Exploration Holding, which is in the possession of
Pledgor (and is not pledged hereunder).
(m) Except as permitted by the Secured Party, Pledgor will not sell,
assign, or otherwise dispose of, grant any option with respect to, or pledge,
grant a security interest in or otherwise
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encumber any of the Collateral or any interest therein, or suffer any of the
same to exist, and any sale, assignment, option, pledge, security interest or
other encumbrance or disposition of any nature whatsoever made in violation of
this covenant shall be a nullity and of no force and effect, and upon demand of
the Secured Party, shall forthwith be canceled or satisfied by an appropriate
instrument in writing.
(n) Pledgor shall give the Secured Party prompt notice of any claim
relating to Pledgor's portion of the Collateral. Pledgor shall deliver to the
Secured Party a copy of each written demand, notice or document received by it
which may adversely affect the Secured Party's interest in Pledgor's portion of
the Collateral promptly upon, but in any event within five days after, Pledgor's
receipt thereof.
(o) Pledgor has received all consents and approvals, if any, required
by the terms of any of Pledgor's portion of the Collateral to the sale or
transfer hereunder of such Collateral, or Pledgor's interest and rights therein,
to the Secured Party (except as may be required in connection with such
disposition by laws affecting the offering and sale of securities generally).
(p) No Pledgor shall withdraw as a member of Exploration Holding, or
file or pursue or take any action which may, directly or indirectly, cause a
dissolution or liquidation of or with respect to Exploration Holding or seek a
partition of any property of Exploration Holding, except as permitted by the
Note Agreement.
The representations and warranties set forth in this Section 2.01 shall survive
the execution and delivery of this Agreement.
ARTICLE III
AFFIRMATIVE AND NEGATIVE COVENANTS
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Pledgor covenants and agrees with Secured Party that until the Obligations
are satisfied and performed in full:
Section 3.01 [Intentionally Left Blank].
Section 3.02. ENCUMBRANCES. Pledgor shall not create, permit, or
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suffer to exist, and shall defend the Collateral against, any lien, security
interest, or other encumbrance on the Collateral except the pledge and security
interest of Secured Party hereunder and the pledge and security interests
referenced in Section 1.02 above, and shall defend Pledgor's rights in the
Collateral and Secured Party's security interest in the Collateral against the
claims of all persons.
Section 3.03. SALE OF COLLATERAL. Pledgor shall not sell, assign, or
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otherwise dispose of the Collateral or any part thereof without the prior
written consent of Secured Party.
Section 3.04. FURTHER ASSURANCES. (a) At any time and from time to
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time, upon the request of Secured Party, and at the sole expense of Pledgor,
Pledgor shall promptly execute and
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deliver all such further instruments and documents and take such further action
as Secured Party may deem necessary or desirable to preserve and perfect its
security interest in the Collateral and carry out the provisions and purposes of
this Agreement, including, without limitation, the execution and/or filing of
such financing statements as Secured Party may require (and any such filing is
hereby authorized by Pledgor). A carbon, photographic, or other reproduction of
this Agreement or of any financing statement covering the Collateral or any part
thereof shall be sufficient as a financing statement and may be filed as a
financing statement.
(b) In addition to performing its obligations under Section 3.04 (a)
above, Pledgor will, acquiring any additional Pledged Securities, promptly (and
in any event within ten days) deliver to the Secured Party a Supplement to
Pledge Agreement, duly executed by such Pledgor, in substantially the form of
Annex A hereto (each, a "Supplement to Pledge Agreement"), identifying such
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additional Pledged Securities. Pledgor hereby authorizes the Secured Party to
attach each Supplement to Pledge Agreement to this Agreement and agrees that all
additional Pledged Securities listed on any Supplement to Pledge Agreement
(including any schedules(s) thereto) delivered to the Secured Party shall for
all purposes hereunder constitute Collateral. Pledgor will, at the request of
the Secured Party, deliver an opinion of counsel, in form and substance
reasonably satisfactory to the Secured Party, as to the validity and perfection
of the security interest granted in the Collateral identified in any Supplement
to Pledge Agreement (including any schedule(s) thereto) and the proceeds
thereof.
Section 3.05. OBLIGATIONS. Pledgor shall duly and punctually pay and
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perform the Obligations, including without limitation, the obligations of
Pledgor under this Agreement.
Section 3.06. NOTIFICATION. Pledgor shall promptly notify Secured
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Party of (i) any lien, security interest, encumbrance or claim made or
threatened against the Collateral, (ii) any material change in the Collateral,
including, without limitation, any material decrease in the value of the
Collateral, and (iii) the occurrence or existence of any Event of Default
(hereinafter defined) or the occurrence or existence of any condition or event
that, with the giving of notice or lapse of time or both, would be an Event of
Default.
Section 3.07. COMPLIANCE WITH LAWS. Pledgor shall comply with all
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applicable laws, rules, regulations, and orders of any court or governmental
authority.
ARTICLE IV
RIGHTS OF SECURED PARTY AND PLEDGOR
-----------------------------------
Section 4.01. VOTING RIGHTS. So long as no Event of Default (as
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hereinafter defined) shall have occurred and be continuing and this Agreement is
in force and effect, Pledgor shall be entitled to exercise any voting and other
consensual rights relating or pertaining to the Collateral or any part thereof
provided, however, that no vote shall be cast or consent, waiver or ratification
given or action taken that would be inconsistent with or violate any provision
of this Agreement or any other Transaction Document. Upon the occurrence and
during the continuance of an Event of Default, at the sole option of the Secured
Party, all voting rights shall thereupon become vested in the Secured
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Party or its assignee, who shall thereupon have the sole right to exercise or to
assign the right to exercise such voting and other consensual rights.
Section 4.02 DIVIDENDS; DISTRIBUTIONS. Until an Event of Default occurs
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and is continuing, Pledgor shall be entitled to receive, retain and use any and
all dividends, distributions and other payments paid in respect of the
Collateral to the extent not otherwise prohibited hereby or by the Purchase
Agreement or the other Transaction Documents; provided, however, that any and
all
(A) dividends, distributions and other amounts paid or payable
other than in cash in respect of, and instruments and other property (including,
without limitation, limited liability company interests in Exploration Holdings)
received, receivable or otherwise distributed in respect of, or in exchange for,
any of the Collateral;
(B) dividends or distributions hereafter paid or payable in cash
in respect of any of the Collateral in connection with a partial or total
liquidation or dissolution; and
(C) cash paid, payable or otherwise distributed in redemption of,
or in exchange for, any Pledgor's portion of the Collateral;
shall be, and shall be forthwith delivered to the Secured Party to hold as,
Collateral and shall, if received by such Pledgor, be received in trust for the
benefit of the Secured Party, be segregated from the other property or funds of
such Pledgor and be forthwith delivered to the Secured Party as Collateral in
the same form as so received (with any necessary endorsement).
4.03. EXERCISE OF RIGHTS. Upon the occurrence and during the continuance
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of an Event of Default:
(i) the Secured Party shall, without notice to Pledgor, transfer or
register in the name of the Secured Party or any of its nominees any or all
certificates, if any, of the Collateral held by the Secured Party hereunder, and
the Secured Party or its nominee may thereafter, after delivery of notice to
each Pledgor, exercise all voting and limited liability company rights with
respect to the Collateral (in each such case whether exercisable at any meeting
of the Company or by written consent or otherwise) and any and all rights of
conversion, exchange, subscription or any other rights, privileges or options
pertaining to any of the Collateral, as if it were the absolute owner thereof,
including, without limitation, the right to exchange at its discretion any and
all of the Collateral upon the merger, consolidation, reorganization,
recapitalization or other readjustment of the Company or upon the exercise by
the applicable Pledgor or the Secured Party of any right, privilege or option
pertaining to any certificates of the Collateral, and in connection therewith,
to deposit and deliver any and all of the Collateral with any committee,
depositary, transfer agent, registrar or other designated agency upon such terms
and conditions as it may determine, all without liability except to account for
property actually received by it, but the Secured Party shall have no duty to
exercise any of the aforesaid rights, privileges or options, and the Secured
Party shall not be responsible for any failure to do so or delay in so doing..
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(ii) All rights of each Pledgor to exercise the voting and other
consensual rights which it would otherwise be entitled to exercise pursuant to
Section 4.01 hereof and to receive the dividends, distributions and other
payments which it would otherwise be authorized to receive and retain pursuant
to Section 4.02 hereof shall cease, and all such rights shall thereupon become
vested in the Secured Party which shall thereupon have the sole right to
exercise such voting and other consensual rights and to receive and hold as
Collateral such dividends, distributions and other payments.
(iii) All dividends, distributions or other payments which are received
by Pledgor contrary to the provisions of this Article shall be received in trust
for the benefit of the Secured Party, shall be segregated from other funds of
Pledgor, and shall be forthwith paid over to the Secured Party as Collateral in
the same form as so received (with any necessary endorsement).
(iv) Pledgor shall execute and deliver (or cause to be executed and
delivered) to the Secured Party all such instruments as the Secured Party or the
holder of the Convertible Note may reasonably request for the purpose of
enabling the Secured Party to exercise the voting and other rights which it is
entitled to exercise pursuant to this Article and to receive the dividends,
distributions or other payments which it is entitled to receive and retain
pursuant to this Article.
Section 4.05. SECURED PARTY APPOINTED ATTORNEY-IN-FACT. Pledgor hereby
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irrevocably designates, makes, constitutes and appoints the Secured Party
Pledgor's attorney-in-fact, with full authority in the place and stead of
Pledgor and in the name of Pledgor or otherwise, from time to time in the
Secured Party's discretion, to take any action and to execute any agreement,
document or instrument which the Secured Party may deem necessary or advisable
to accomplish the purposes of this Agreement, including, without limitation:
(a) upon the occurrence and during the continuance of an Event of
Default, to ask, demand, collect, xxx for, recover, compromise, receive and give
acquittance and receipts for monies due and to become due under or in connection
with the Collateral;
(b) upon the occurrence and during the continuance of an Event of
Default, to receive, indorse and collect any drafts or other instruments,
documents and chattel paper, in connection therewith; and
(c) upon the occurrence and during the continuance of an Event of
Default, to file any claims or take any action or institute any proceedings that
the Secured Party may deem necessary or desirable for the collection of any of
the Collateral or otherwise to enforce the rights of the Secured Party with
respect to any of the Collateral.
Section 4.06 PERFORMANCE BY SECURED PARTY OF PLEDGOR'S OBLIGATIONS. If
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Pledgor fails to perform or comply with any of the agreements contained herein
and Secured Party itself shall cause performance of or compliance with such
agreement, the expenses of Secured Party, together with interest thereon at the
Default Rate (as defined in the Convertible Note) shall be payable by Pledgor to
Secured Party on demand and shall constitute Obligations secured by this
Agreement.
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Section 4.08. POSSESSION; REASONABLE CARE. The powers conferred on the
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Secured Party hereunder are solely to protect its interest in the Collateral and
shall not impose any duty upon it to exercise any such powers. Except for the
safe custody of any Collateral in its possession and the accounting for monies
actually received by it hereunder, the Secured Party shall have no duty as to
any Collateral or as to the taking of any necessary steps to preserve rights
against prior parties or any other rights pertaining to any Collateral. The
Secured Party shall hold in its possession all Collateral pledged, assigned or
transferred hereunder, except as from time to time any documents or instruments
may be required for recordation or for the purpose of enforcing or realizing
upon any right or value thereby represented. The Secured Party may, from time
to time, in its sole discretion, appoint one or more agents (which in no case
shall be a Pledgor or an affiliate of a Pledgor) to hold physical custody, for
the account of the Secured Party, of any or all of the Collateral. The Secured
Party shall be deemed to have exercised reasonable care in the custody and
preservation of any Collateral in its possession if such Collateral is accorded
treatment substantially equal to that which the Secured Party accords its own
property, it being understood that the Secured Party shall not have any
responsibility for (a) ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative to any
Collateral, whether or not the Secured Party has or is deemed to have knowledge
of such matters, or (b) taking any necessary steps to preserve rights against
any parties with respect to any Collateral.
Section 4.09 RELEASE OF COLLATERAL. Secured Party shall release the
----------------------
Collateral upon the terms and conditions set forth in the Convertible Note and
the Purchase Agreement.
ARTICLE V
DEFAULT
-------
Section 5.01. EVENTS OF DEFAULT. Each of the following shall be deemed
-----------------
an "Event of Default":
(a) an Event of Default occurs under terms of the Convertible Note or
the Purchase Agreement;
(b) Any representation or warranty made or deemed made by Pledgor in
this Agreement or in any certificate, report, notice, or statement
furnished at any time in connection with this Agreement or the Convertible
Note is false, misleading, or erroneous in any material respect on the date
when made or deemed to have been made.
(c) Pledgor shall fail to perform, observe, or comply with any
covenant, agreement or term contained in this Agreement and such failure
continues, without cure, for twenty (20) days after written notice to
Pledgor.
(d) Pledgor or Exploration Holding (or any of same) shall commence a
voluntary proceeding seeking liquidation, reorganization, or other relief
with respect to itself or its debts under any bankruptcy, insolvency or
other similar law now or hereafter in effect or seeking the appointment of
a trustee, receiver, liquidator, custodian, or other similar official
11
of it or a substantial part of its property or shall consent to any such
relief or to the appointment of or taking possession by any such official
in an involuntary case or other proceeding commenced against it or shall
make a general assignment for the benefit of creditors or shall generally
fail to pay its debts as they become due or shall take any corporate action
to authorize any of the foregoing.
(e) An involuntary proceeding shall be commenced against Pledgor or
Exploration Holding seeking liquidation, reorganization, or other relief
with respect to it or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or
a substantial part of its property, and such involuntary proceeding shall
remain undismissed and unstayed for a period of thirty (30) days.
Section 5.02. RIGHTS AND REMEDIES. Upon the occurrence of an Event of
-------------------
Default, and subject to the notice and opportunity to cure required by the
Convertible Note (if any), Secured Party shall have all of the rights and
remedies set forth in the Convertible Note, the Purchase Agreement and any other
Transaction Document and additionally shall have following rights and remedies:
(i) Secured Party may declare the Obligations or any part thereof
immediately due and payable, without demand, presentment, notice of
dishonor, notice of acceleration, notice of intent to accelerate, notice of
intent to demand, protest, or any other notice whatsoever, all of which are
hereby expressly waived by Pledgor; provided, however, that upon the
occurrence of an Event of Default under Section 5.01(d) or Section 5.01(e)
of this Agreement, the Obligations shall become immediately due and payable
without demand, presentment, notice of dishonor, notice of acceleration,
notice of intent to accelerate, notice of intent to demand, protest, or any
other notice whatsoever, all of which are hereby expressly waived by
Pledgor;
(ii) In addition to all other rights and remedies granted to
Secured Party in this Agreement and in any other instrument or agreement
securing, evidencing, or relating to the Obligations, Secured Party shall
have all of the rights and remedies of a secured party under the Uniform
Commercial Code in force in the State of Texas as of the date of this
Agreement. Without limiting the generality of the foregoing, Secured Party
may (A) without demand or notice to Pledgor, collect, receive, or take
possession of the Collateral or any part thereof, (B) sell or otherwise
dispose of the Collateral, or any part thereof, in one or more parcels at
public or private sale or sales, at Secured Party's offices or elsewhere,
for cash or on credit, and/or (C) bid and become a purchaser at any sale
free of any right or equity of redemption in Pledgor, which right or equity
is hereby expressly waived and released by Pledgor. Upon the request of
Secured Party, Pledgor shall assemble the Collateral and make it available
to Secured Party at any place designated by Secured Party. Pledgor agrees
that Secured Party shall not be obligated to give more than five (5) days
written notice of the time and place of any public sale or of the time
after which any private sale may take place and that such notice shall
constitute reasonable notice of such matters. The Secured Party shall not
be obligated to make any sale of the Collateral
12
regardless of notice of sale having been given. The Secured Party may
adjourn any public or private sale from time to time by announcement at the
time and place fixed therefor, and such sale may, without further notice,
be made at the time and place to which it was so adjourned. Any cash held
by the Secured Party as Collateral and all cash proceeds received by the
Secured Party in respect of any sale of, collection from, or other
realization upon all or any part of the Collateral may, in the discretion
of the Secured Party, be held by the Secured Party as collateral for,
and/or be applied then or at any time thereafter to the Obligations in the
order and manner as Secured Party may elect. Any surplus of such cash or
cash proceeds held by the Secured Party and remaining after payment in full
of all the Obligations shall be paid over to Pledgor or to whomever may be
lawfully entitled to receive such surplus. Pledgor shall be liable for all
expenses of retaking, holding, preparing for sale, or the like, and all
attorneys' fees and other expenses incurred by Secured Party in connection
with the collection of the Obligations and the enforcement of Secured
Party's rights under this Agreement, all of which expenses and fees shall
constitute additional Obligations secured by this Agreement. Pledgor shall
remain liable for any deficiency if the proceeds of any sale or disposition
of the Collateral are insufficient to pay the Obligations;
(iii) Secured Party may cause any or all of the Collateral held by
it to be transferred into the name of Secured Party or the name or names of
Secured Party's nominee or nominees;
(iv) Secured Party shall be entitled to receive all cash and
non-cash dividends payable in respect of the Collateral;
(v) Secured Party shall have the right, but shall not be obligated
to, exercise or cause to be exercised all voting rights and corporate
powers in respect of the Collateral, and Pledgor shall deliver to Secured
Party, if requested by Secured Party, irrevocable proxies with respect to
the Collateral in form satisfactory to Secured Party;
(vi) Pledgor hereby acknowledges and confirms that Secured Party
may be unable to effect a public sale of any or all of the Collateral by
reason of certain prohibitions contained in the Securities Act of 1933, as
amended, and applicable state securities laws and may be compelled to
resort to one or more private sales thereof to a restricted group of
purchasers who will be obligated to agree, among other things, to acquire
any shares of the Collateral for their own respective accounts for
investment and not with a view to distribution or resale thereof. Pledgor
further acknowledges and confirms that any such private sale may result in
prices or other terms less favorable to Pledgor or other seller than if
such sale were a public sale and, notwithstanding such circumstances, agree
that any such private sale shall be deemed to have been made in a
commercially reasonable manner, and Secured Party shall be under no
obligation to take any steps in order to permit the Collateral to be sold
at a public sale. Secured Party shall be under no obligation to delay a
sale of any of the Collateral for any period of time necessary to permit
any issuer thereof to register such Collateral for public sale under the
Securities Act of 1933, as amended, or under applicable state securities
laws. Pledgor hereby waives any claims against the Secured Party arising by
reason of the fact that the price at which the Collateral may have been
sold at
13
such private sale was less than the price which might have been obtained at
a public sale or was less than the Obligations even if the Secured Party
accepts the first offer received and does not offer the Collateral to more
than one offeree (and the Secured Party or an affiliate of the Secured
Party may be the only offeree and the purchaser of the Collateral); and
(vii) On any sale of the Collateral, Secured Party is hereby
authorized to comply with any limitation or restriction compliance with
which is necessary, in the view of Secured Party's counsel, in order to
avoid any violation of applicable law or in order to obtain any required
approval of the purchaser or purchasers by any applicable governmental
authority.
Section 5.03. SECURITY INTEREST ABSOLUTE. All rights of the Secured
-----------------------------
Party hereunder and in and to the Collateral, and all obligations of Pledgor
hereunder, shall be absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of the Convertible
Note, any agreement with respect to any of the Obligations or any other
agreement or instrument relating to any of the foregoing;
(b) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Obligations or any other amendment or
waiver of or any consent to any departure from this Agreement or any other
agreement or instrument; or
(c) any sale, exchange, release or nonperfection of any other
collateral, or any release of any guarantor or any person liable in any
manner for the collection of any of the Obligations or any amendment or
waiver of or consent to or departure from the Convertible Note or any
guaranty for all or any of the Obligations.
Section 5.04. WAIVER AND CONSENT.
---------------------
(a) Pledgor consents and agrees that the Secured Party may in its
absolute and sole discretion, at any time and from time to time, without
notice or demand, and without affecting the enforceability or security
hereof: (i) create new Obligations or supplement, modify, amend, extend,
increase, decrease, renew, accelerate or otherwise change the Obligations
or any of their terms; (ii) supplement, modify, amend, or waive any
provision of, or enter into or give any agreement, approval or consent with
respect to the Convertible Note; (iii) accept new or additional
instruments, documents or agreements in exchange for or relative to any of
the Obligations or any part thereof or for the Convertible Note; (iv)
accept payments on the Obligations; (v) receive and hold additional
security or guaranties for the Obligations or any part thereof; (vi)
release, reconvey, terminate, waive, abandon, fail to perfect, subordinate,
exchange, substitute, transfer or enforce any security or guarantees and
apply any security and direct the order or manner of sale thereof; (vii)
release any person from any personal liability with respect to the
Obligations or any part thereof; and (viii) settle, release on terms
satisfactory to the Secured Party or by operation of
14
applicable laws or otherwise liquidate or enforce any Obligations and any
security or guaranty in any manner, and consent to the transfer of any
security.
(b) Upon the occurrence and during the continuance of an Event of
Default, and subject to the notice and opportunity to cure required by the
Convertible Note, the Secured Party may enforce this Agreement
independently from any other document and independently of any other
remedy, security or guaranty the Secured Party at any time may have or hold
in connection with the Obligations, and it shall not be necessary for the
Secured Party to marshal assets in favor of Pledgor or any other person or
to proceed upon or against and/or exhaust my other security or remedy
before proceeding to enforce this Agreement. Pledgor expressly agrees that
the Secured Party may proceed against any or all of the Collateral or
guaranties for the Obligations in such order and in such manner as it shall
determine in its sole and absolute discretion. The Secured Party may file a
separate action or actions against Pledgor, whether action is brought or
prosecuted with respect to any other security or against any other person,
or whether any other person is joined in any such action or actions.
Pledgor agrees that the Secured Party and other guarantor, if any, of the
Obligations ("Other Guarantor") may deal with each other in connection with
the Obligations or otherwise, or alter any contracts or agreements now or
hereafter existing between or among any of them, in any manner whatsoever,
all without in any way altering or affecting the security of this
Agreement. Pledgor expressly waives the benefit of any statute(s) of
limitations affecting its liability hereunder or the enforcement of the
Obligations or the lien or security interest created or granted herein. The
Secured Party's rights hereunder shall be reinstated and revived, and the
enforceability of this Agreement shall continue, with respect to any amount
at any time paid on account of the Obligations that thereafter shall be
required to be restored or returned by the Secured Party upon the
bankruptcy, insolvency or reorganization of Pledgor, or Exploration
Holding, or other any other Person, all as though such amount had not been
paid.
(c) Pledgor expressly waives any and all defenses now or hereafter
arising or asserted by reason of (i) any disability or other defense of any
Other Guarantor with respect to the Obligations (ii) the failure of
priority of any security for the Obligations (iii) the cessation from any
cause whatsoever of the liability of any Other Guarantor (other than by
reason of the full payment and performance of all Obligations, (iv) any
failure of the Secured Party to give notice of sale or other disposition of
any property securing the Obligations to Pledgor or any other person or any
defect in any notice that may be given in connection with any sale or
disposition of any property securing the Obligations, (v) any failure of
the Secured Party to comply with applicable laws in connection with the
sale or other disposition of any property securing the Obligations,
including, without limitation, any failure of the Secured Party to conduct
a commercially reasonable sale or other disposition of any property
securing the Obligations, (vi) any act or omission of the Secured Party or
others that directly or indirectly results in or aids the discharge or
release of any Other Guarantor or the Obligations or any other security or
guaranty therefor by operation of law or otherwise, (vii) any law that
provides that the obligation of a surety or guarantor must neither be
larger in amount nor in other respects more burdensome than that of the
principal or that reduces a surety's or guarantor's obligation in
proportion to the principal's obligation,
15
(viii) any failure of the Secured Party to file or enforce a claim in any
bankruptcy or other proceeding with respect to any person, (xi) the
election by the Secured Party, in any bankruptcy proceeding of any person,
of the application or nonapplication of Section 1111(b)(2) of the United
States Bankruptcy Code, (x) any extension of credit or the grant of any
lien under Xxxxxxx 000 xx xxx Xxxxxx Xxxxxx Bankruptcy Code, (xi) any use
of cash collateral under Section 363 of the United States Bankruptcy Code,
(xii) any agreement or stipulation with respect to the provision of
adequate protection in any bankruptcy proceeding of any person, (xiii) the
avoidance of any bankruptcy, insolvency, reorganization, arrangement,
readjustment of debt, liquidation or dissolution proceeding of any Person,
including any discharge of, or bar or stay against collecting, all or any
of the Obligations in or as a result of any such proceeding, or (xiv) any
action taken by the Secured Party that is authorized by this Section or any
-------
other provision of the Convertible Note.
ARTICLE VI
MISCELLANEOUS
-------------
Section 6.01. EXPENSES; INDEMNIFICATION. Pledgor agrees to pay on
--------------------------
demand all costs and expenses incurred by Secured Party in connection with the
preparation, negotiation, and execution of this Agreement and any and all
amendments, modifications, and supplements hereto. Pledgor agrees to pay and to
hold Secured Party harmless from and against all excise, sales, stamp, or other
taxes and all fees payable in connection with this Agreement or the transactions
contemplated hereby, and agree to hold Secured Party harmless from and against
any and all present or future claims or liabilities with respect to or resulting
from Pledgor performing or delaying in performing their obligations under this
Agreement.
Section 6.02. NO WAIVER; CUMULATIVE REMEDIES. No failure on the part
-------------------------------
of Secured Party to exercise and no delay in exercising, and no course of
dealing with respect to, any right, power, or privilege under this Agreement
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, power, or privilege under this Agreement preclude any other or
further exercise thereof or the exercise of any other right, power, or
privilege. The rights and remedies provided for in this Agreement are
cumulative and not exclusive of any rights and remedies provided by law.
Section 6.03. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
----------------------
upon and inure to the benefit of Pledgor and Secured Party and their respective
heirs, successors, and assigns, except that Pledgor may not assign any of its
rights or obligations under this Agreement without the prior written consent of
Secured Party in its sole discretion. Secured Party may assign this Agreement
to any assignee or transferee to which the Convertible Note is assigned or
transferred, in compliance with the terms of the Convertible Note.
Section 6.04. AMENDMENT; ENTIRE AGREEMENT. This Agreement embodies the
---------------------------
entire agreement among the parties hereto and supersedes all prior agreements
and understandings, if any, relating to the subject matter hereof. The
provisions of this Agreement may be amended or waived only by an instrument in
writing signed by the parties hereto.
16
Section 6.05. NOTICES. Any notice, consent, or other communication
-------
required or permitted to be given under this Agreement to Secured Party or
Pledgor must be in writing and delivered in person, or mailed by registered or
certified mail, return receipt requested, postage prepaid, or sent by facsimile
transmission with evidence of receipt if also sent by registered or certified
mail, return receipt requested, postage prepaid as follows:
To Secured Party: RCH Petro Investors, LP
c/o RR Advisors, LLC
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, XX 00000-0000
Attn: Xxxxxx Xxxxxxx
FAX (000) 000-0000
To Pledgor: Petrosearch Energy Corporation
000 Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
FAX: (000) 000-0000
Any such notice, consent, or other communication shall be deemed given when
delivered in person, or if sent by facsimile transmission as provided above, on
the day the transmission was received if before 5:00 p.m. local time that day
(or on the next day, if received after 5:00 p.m. local time) or, if mailed, when
duly deposited in the mails.
Section 6.06 CHOICE OF LAW. This Agreement shall be governed by, and
---------------
construed in accordance with, the laws of the State of Texas, without regard to
principles of conflict of laws. In any action between or among any of the
parties, whether arising out of this Agreement or otherwise, each of the parties
irrevocably consents to the exclusive jurisdiction and venue of the federal and
state courts located in Xxxxxx County, Texas.
Section 6.07. HEADINGS. The headings, captions, and arrangements used
--------
in this Agreement are for convenience only and shall not affect the
interpretation of this Agreement.
Section 6.08. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
----------------------------------------------
representations and warranties made in this Agreement or in any certificate
delivered pursuant hereto shall survive the execution and delivery of this
Agreement, and no investigation by Secured Party shall affect the
representations and warranties made by Pledgor or the right of Secured Party to
rely upon them.
Section 6.09. EXECUTION. This Agreement may be executed in two or more
---------
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission or by e-mail delivery of a ".pdf" format
data file, such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed) with the same
force and effect as if such facsimile or ".pdf" signature page were an original
thereof.
17
Section 6.10. SEVERABILITY. Any provision of this Agreement which is
------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Agreement, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE.]
18
Executed as of the Effective Date above written.
"Pledgor"
PETROSEARCH ENERGY CORPORATION
By: /s/ Xxxxxxx Xxxx
-------------------------------------
Xxxxxxx Xxxx, President and CEO
"Secured Party"
RCH PETRO INVESTORS, LP
By: RR Advisors, LLC, its general partner
By: /s/ Xxxxxx Xxxxxxx
-------------------------------------
Xxxxxx Xxxxxxx, Sole Member
ACCEPTANCE AND ACKNOWLEDGMENT
-----------------------------
Exploration Holding Co., L.L.C. hereby accepts and acknowledges Secured
Party as the assignee, pursuant to this Agreement, of the 25% membership
interests in Exploration Holding Co., L.L.C. owned by Pledgor, and Exploration
Holding Co., L.L.C. agrees that the interests of Secured Party shall be promptly
and duly registered in the books and records of Exploration Holding Co., L.L.C.
EXPLORATION HOLDING CO., L.L.C.
By: /s/ Xxxxxxx Xxxx
-------------------------------------
Xxxxxxx Xxxx, President
SCHEDULE A
----------
Pledged Securities
------------------
PLEDGED OUTSTANDING MEMBERSHIP INTERESTS REPRESENTING LIMITED LIABILITY COMPANY
INTERESTS
Percentage of Ownership Certificate
of Interests No(s)., if any
------------------------ --------------
25% 2
Schedule A to Pledge Agreement
SCHEDULE B
----------
Principal Place of Business; Chief Executive Office; Location of Records;
-------------------------------------------------------------------------
Jurisdiction of Organization; Organizational Number; and Other Names
--------------------------------------------------------------------
Principal Place of Business, Chief Executive Office and Location of
Records:
000 Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Jurisdiction of Organization: Nevada
Organizational Number: 00-0000000
Other Names: Petrosearch Corporation
Annex A
-------
SUPPLEMENT TO PLEDGE AGREEMENT
This Supplement to Pledge Agreement, dated as of ____________ ___ 20___, is
delivered pursuant to Section __ of the Pledge Agreement referred to below.
RECITALS
--------
A. PETROSEARCH ENERGY CORPORATION, a Nevada corporation (the
"PLEDGOR"), has executed and delivered that certain Pledge and Security
Agreement, dated as of February __, 2007, in favor of RCH PETRO INVESTORS, LP,
as Secured Party (as the same may be amended, supplemented or otherwise modified
from time to time, including without limitation by this and any other
Supplements to Pledge Agreement executed from time to time, the "AGREEMENT").
Capitalized terms used but not defined herein have the meanings assigned to such
terms in the Agreement.
B. Pursuant to Section 3.04(b) of the Agreement, Pledgor has agreed,
upon obtaining any additional Pledged Securities, to promptly execute and
deliver a Supplement to Pledge Agreement in order to identify such additional
Pledged Securities which have been pledged pursuant to the Agreement.
C. The undersigned desires to execute and deliver this Supplement to
Pledge Agreement to satisfy such requirement.
NOW, THEREFORE, IT IS AGREED:
1. Collateral. The undersigned agrees that the securities listed on
----------
Schedule A attached hereto are part of the Collateral and are subject to the
---------
pledge and security interest created by the Agreement.
2. Representations and Warranties. The undersigned hereby certifies
--------------------------------
that the representations and warranties set forth in Article II of the Agreement
are true and correct as to the Pledged Securities listed on Schedule A hereto on
----------
and as of the date hereof.
PETROSEARCH ENERGY CORPORATION
By: /s/ Xxxxxxx X. Xxxx
-----------------------------------------
Name: Xxxxxxx X. Xxxx
---------------------------------------
Title: Chief Executive Officer and President
--------------------------------------
Annex A to Pledge Agreement
SCHEDULE A TO SUPPLEMENT TO PLEDGE AGREEMENT
Pledged Securities
------------------
---------- -------- -------------- ---------
Percentage
of Class of Certificate Number of
Ownership Interest No(s)., if any Interests
---------- -------- -------------- ---------
Schedule A -- Annex A to Pledge Agreement
