SUBORDINATED PLEDGE AGREEMENT
EXHIBIT
10.9
THIS
SUBORDINATED PLEDGE AGREEMENT (this “Agreement”)
dated
as of January 3, 2008, is made by XXXXXXX DRILLING CORPORATION, a Nevada
corporation, (the “Pledgor”),
in
favor of Bank of the Ozarks (the “Trustee”).
WHEREAS,
concurrently herewith Pledgor and Trustee shall enter into that certain
subordinated indenture dated of even date hereof (the “Indenture”).
WHEREAS,
the Indenture requires that Pledgor shall have executed and delivered to Trustee
this Agreement to secure Pledgor’s obligations to Trustee and the holders of the
notes to be issued under the Indenture (individually, a “Note”
and,
collectively, the “Notes”) in the manner set forth herein.
WHEREAS,
Pledgor and Trustee, together with First Security Bank, have entered into an
Intercreditor Agreement (the “Intercreditor
Agreement”)
of
even date herewith and all provisions herein are subject to such
agreement.
NOW,
THEREFORE, in consideration of the Secured Obligations (as hereinafter defined)
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
1. Definitions.
Capitalized terms not otherwise defined herein which are defined in the Note
or
the Indenture shall have the meanings set forth therein or which are defined
in
the UCC shall have the meanings set forth therein. In addition to any other
terms defined elsewhere in this Agreement, the following terms shall have the
following meanings:
“Capital
Stock”
shall
mean all of the issued and outstanding shares of common stock of Xxxxxxx
Drilling, Inc., Xxxxxxx Tool & Supply, Inc. and Xxxxxxx Exploration &
Production, Inc., (each a “Subsidiary,”
and
all
referred to as “Subsidiaries”), and all of the issued and outstanding shares of
capital stock of each Subsidiary is owned by Pledgor.
“Collateral”
shall
have the meaning assigned to that term in Section
2
hereof.
“Equity
Rights”
shall
have the meaning assigned to that term in Section
2
hereof.
“Event
of Default”
shall
mean an Event of Default as defined under the Indenture.
“Pledged
Securities”
shall
have the meaning assigned to that term in Section
2
hereof.
“Proceeds”
shall
mean all proceeds as that term is defined in the UCC and, in addition, any
and
all amounts or items of property received when Collateral or proceeds thereof
are sold, exchanged, collected or otherwise disposed of, both cash and non-cash,
including proceeds of insurance, indemnity, warranty or guarantee paid or
payable on or in connection with any Collateral.
“Secured
Obligations”
shall
mean, collectively, (a) all liabilities, obligations and indebtedness (whether
actual or contingent, whether owed jointly or severally, whether for the payment
of money and, if for the payment of money, whether for principal, interest,
premium, fees, expenses or otherwise) now existing or hereafter incurred of
Pledgor to Trustee or the holders of Notes under the Notes, this Agreement,
the
Indenture or the Subordinated Security Agreement (as defined below), as the
same
may be amended, modified or supplemented from time to time, together with any
and all extensions, renewals, refinancings or refundings thereof in whole or
in
part, (b) all other liabilities, obligations and indebtedness (whether actual
or
contingent, whether owed jointly or severally, whether for the payment of money
and, if for the payment of money, whether for principal, interest, premium,
fees, expenses or otherwise) of Pledgor or any of its Subsidiaries to Trustee
or
the holders of Notes now existing or hereafter incurred, whether under other
financing arrangements whether related to the Notes, whether contemplated by
Trustee or the holders of Notes or Pledgor at the date hereof and whether
direct, indirect, matured or contingent, joint or several, or otherwise,
together with any and all extensions, renewals, refinancings or refundings
thereof in whole or in part, (c) all costs and expenses (including, without
limitation, to the extent permitted by law, reasonable attorneys' fees and
other
legal expenses) incurred by Trustee in the enforcement and collection of any
of
the liabilities, obligations or indebtedness referred to in clause (a) or (b)
above, and (d) all payments and advances made by Trustee for the maintenance,
preservation, protection or enforcement of, or realization upon, any property
or
assets now or hereafter made subject to any Lien granted pursuant to the
Indenture or the Subordinated Security Agreement or pursuant to any agreement,
instrument or note relating to any of the Secured Obligations (including,
without limitation, advances for taxes, insurance, storage, transportation,
repairs and the like).
“Senior
Pledge Agreement” shall mean the Senior Pledge Agreement, of even date herewith,
by and among the Pledgor, the Subsidiaries and First Security Bank
“Senior
Security Agreement” shall mean the Senior Security Agreement, of even date
herewith, by and among Pledgor, the Subsidiaries and First Security
Bank.
“Subordinated
Security Agreement” shall mean the Security Agreement, of even date herewith, by
and among Pledgor, the Subsidiaries and Trustee.
“UCC”
shall
mean the Uniform Commercial Code as in effect in any applicable
jurisdiction.
2. Grant
of Security Interest.
(a) Grant.
As security
for full and timely payment, observance and performance of the Secured
Obligations in accordance with the terms thereof, Pledgor hereby pledges,
assigns, hypothecates and transfers, and grants to and creates in favor of
Trustee a continuing security interest and lien under the UCC in all of its
right, title and interest in, to and under the following (all of which is
collectively referred to herein as the “Collateral”):
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(i) all
of
the issued and outstanding shares of Capital Stock (whether in certificated
or
uncertificated form) of the Subsidiaries of Pledgor listed on Schedule
I
attached
to this Agreement (the “Pledged
Securities”).
(ii) all
stock
rights, rights to subscribe, liquidating and other dividends and distributions,
stock dividends, dividends paid in stock, new securities, options, warrants,
other property, cash and any other rights to which Pledgor is or may hereafter
become entitled to receive, for any reason whatsoever, with respect to its
interest in the Pledged Securities, whether in certificated or uncertificated
form and whether in substitution or exchange or by reason of merger,
consolidation, reclassification, reorganization, liquidation or otherwise (the
“Equity
Rights”);
(iii) the
certificates and other instruments described on Schedule
I
currently evidencing the Pledged Securities and any and all other certificates
and instruments now or hereafter evidencing the Pledged Securities or the Equity
Rights, in each case duly endorsed in blank (or with appropriate irrevocable
stock powers duly executed in blank and undated); and
(iv) all
Proceeds of the foregoing.
(b) Relative
Priority of Security Interests.
In
furtherance of the intent of the parties hereto and the parties to the
Intercreditor Agreement, the security interests and liens granted hereunder
shall be treated as a severable second in priority security interest and lien
granted to Trustee as the collateral agent under the Indenture and the security
interests and liens granted by Pledgor under the Senior Pledge Agreement shall
be treated as a severable first in priority security interest, for the purpose
of determining the relative rights in the Collateral.
3. Delivery
of Collateral.
(a) Upon
the
execution and delivery of this Agreement, Pledgor shall deliver to First
Security Bank, subject to the Intercreditor Agreement, all items of Collateral
then owned by or held by Pledgor, and with respect to all items of Collateral
acquired by Pledgor hereafter, Pledgor shall promptly deliver such items of
Collateral to Trustee upon its receipt thereof. Each certificate or instrument
representing Collateral shall be delivered to First Security Bank duly endorsed
in blank or together with appropriate irrevocable stock powers undated and
duly
executed in blank sufficient to transfer title thereto.
(b) Solely
for the purposes of perfecting liens and security interests granted under this
Agreement securing the Secured Obligations, the Pledgor acknowledges and agrees
that any Collateral in the possession of the Trustee hereunder is held as
custodian pursuant to the terms of the Intercreditor Agreement.
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4. Dividends
and Other Distributions.
(a) Stock
Dividends and Other Distributions.
So
long as this Agreement is in effect, if Pledgor, by reason of ownership of
the
Collateral shall become entitled to receive, or shall receive, any Equity
Rights, Pledgor shall accept the same as Trustee's agent and hold the same
in
trust for Trustee and deliver the same forthwith to Trustee in the exact form
received, with the endorsement of Pledgor when requested by Trustee and/or
appropriate undated stock powers duly executed in blank, to be held by Trustee
as part of the Collateral. Any sums or property paid upon or in respect of
the
Collateral or any other securities received under this Section 4 upon the
reorganization, liquidation, or dissolution of the issuer of any of the
Collateral or any such other securities shall immediately be paid over to
Trustee to be held by Trustee as additional security for the payment of the
Secured Obligations. All sums of money and property so paid or distributed
in
respect of the Collateral and such other securities that are received by Pledgor
shall, until paid or delivered to Trustee, be segregated from the other property
or funds of Pledgor and held by Pledgor in trust as additional security for
the
payment of the Secured Obligations. Pledgor shall give Trustee immediate notice
of any such distribution.
(b) Cash
Dividends and Distributions.
Notwithstanding the provisions of Section 4(a) above, unless an Event of Default
shall have occurred and be continuing or shall exist, Pledgor shall be entitled
to receive and retain all cash dividends and distributions declared and paid
out
of earnings or earned surplus with respect to any Collateral to the extent
such
dividends and distributions are permitted under the Indenture. Upon the
occurrence and continuance or existence of any Event of Default or to the extent
not permitted under the Indenture, Trustee shall be entitled to receive any
and
all such cash dividends and distributions, and upon receipt, Pledgor shall
hold
any such cash dividends and distributions it receives in trust for Trustee
and
shall immediately deliver any such cash dividends or distributions to Trustee.
Trustee shall hold any such cash dividends and distributions as Collateral
pursuant to this Agreement or, at Trustee's election, shall apply any such
cash
dividends or distributions to the reduction of any Secured Obligations then
outstanding, in such order as Trustee may elect.
5. Voting
and Other Rights.
(a) Stock
Register.
At any
time and from time to time (i) whether before or after the occurrence of any
Event of Default, Trustee shall be entitled to register this Agreement on the
stock ledger and books of record of each of the issuers of the Collateral,
and
Pledgor agrees to cause this Agreement to be so registered, and (ii) after
the
occurrence of any Event of Default and the continuance thereof, Trustee shall
be
entitled to register any or all of the Collateral in its name or the name of
its
nominee, and Pledgor shall execute such assignments and other documents, and
take such other acts, all at Pledgor's expense, as Trustee may from time to
time
reasonably request to accomplish the foregoing.
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(b) Voting
Rights.
Unless
an Event of Default shall have occurred and be continuing, Pledgor shall be
entitled to vote the Collateral and to give consents, waivers and ratifications
with respect to the Collateral; provided that no vote shall be cast, or consent,
waiver or ratification given, or any action taken, that would impair the
Collateral or be inconsistent with or violate any provision of this Agreement,
the Indenture or the Note. Upon the occurrence and continuance or during the
existence of any Event of Default, Trustee shall have the right to vote the
Collateral, in all matters, and grant consents, waivers and ratifications with
respect thereto in its absolute discretion whether Trustee has transferred
the
Collateral to the registered ownership of Trustee or Trustee's
nominee.
6. Representations
and Warranties.
Pledgor
hereby represents, warrants, covenants and agrees that:
(a) Pledgor
is and shall be at all times the record and beneficial owner of each item of
its
Collateral, and has and shall have at all times good and marketable title
thereto, free and clear of any and all liens, charges, claims and encumbrances,
except the security interest granted under this Agreement, and Pledgor shall
use
its best efforts to defend such title against the claims and demands of all
Persons whomsoever. All the shares constituting the Pledged Securities are
duly
authorized, have been validly issued, and are fully paid and
nonassessable.
(b) This
Agreement constitutes the legal, valid and binding obligation of Pledgor,
enforceable against Pledgor in accordance with its terms except to the extent
that the enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws generally affecting
creditors’ rights and by equitable principles (regardless of whether enforcement
is sought in equity or at law). This Agreement creates a valid security interest
in the Collateral and, upon delivery of the Collateral to Trustee, shall
constitute a valid perfected lien on or security interest in the
Collateral.
(c) No
security agreement, financing statement, equivalent security or lien instrument,
or continuation statement covering all or any part of the Collateral, except
for
the pledge to First
Security Bank pursuant to the Senior Pledge Agreement and the Senior Security
Agreement, is on file or of record in any public office which has not been
properly terminated in accordance with the law of the applicable
jurisdiction.
(d) The
stock
certificates described on Schedule
I
hereto
evidence all of the issued and outstanding shares of Capital Stock of the
Subsidiaries of Pledgor which are owned by Pledgor as of the date of execution
of this Agreement, and Pledgor has delivered to Trustee or its agent all stock
certificates or other instruments evidencing any of the Pledged Securities,
in
each case duly endorsed in blank to Trustee or its agent (or with appropriate
irrevocable stock powers duly executed in blank and undated).
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(e) Pledgor's
place where its records concerning the Collateral are kept is 0000 Xxxxxxxxxxxx
Xxxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000, and Pledgor shall not change such
principal place of business or remove such records unless it has taken such
action as is necessary to cause the security interest of Trustee in the
Collateral to continue to be perfected. Pledgor shall not change its principal
place of business or the place where its records concerning the Collateral
are
kept without giving at least 30 days prior written notice thereof to
Trustee.
(f) Pledgor
assumes full responsibility for using its best efforts for taking any and all
steps to preserve rights with respect to the Collateral against all prior
parties. Trustee shall be deemed to have exercised reasonable care in the
preservation and custody of the portion of the Collateral as may be in Trustee's
possession if Trustee takes such action as is required by applicable law and
as
Pledgor shall reasonably request in writing; provided that such requested action
shall not, in the judgment of Trustee, impair Trustee's prior security interest
in such Collateral or its rights in or the value of such Collateral; and
provided further that such written request is received by Trustee in sufficient
time to permit Trustee to take the requested action. In the absence of such
written request, Trustee shall be deemed to have exercised reasonable care
in
the custody and preservation of the Collateral in its possession if the
Collateral is accorded treatment substantially equal to that which Trustee
accords its own property.
7. Records.
Pledgor
shall at all times maintain accurate and complete records with respect to each
item and category of the Collateral and shall furnish copies of such records
to
Trustee with reasonable promptness from time to time upon Trustee's
request.
8. Preservation
and Protection of Security Interest.
Pledgor
shall use its best efforts to preserve and protect Trustee's security interest
in the Collateral and shall, at its own cost and expense, cause such security
interest in the Collateral to be perfected and continue perfected so long as
the
Secured Obligations or any portion thereof are outstanding and unpaid under
the
Notes (by means including, without limitation, the execution and delivery of
all
instruments, documents and securities to Trustee with endorsements and documents
of transfer satisfactory to Trustee) and for such purposes Pledgor shall from
time to time at the request of Trustee file or record, or cause to be filed
or
recorded, such instruments, documents and notices (including, without
limitation, financing statements and continuation statements) or deliver to
Trustee such stock certificates or other instruments as Trustee may deem
necessary or advisable from time to time to perfect and continue perfected
such
security interests. Pledgor shall do all such other acts and things and shall
execute and deliver all such other instruments and documents (including, without
limitation, further security agreements, pledges, endorsements, assignments
and
notices) as Trustee may deem necessary or advisable from time to time to perfect
and preserve the priority of such security interests in the Collateral, as
a
perfected security interest in the Collateral, prior to the rights of any other
secured party or lien creditor, except for the pledge to First Security Bank
pursuant to the Senior Pledge Agreement and the Senior Security Agreement.
Trustee, and its officers, employees and authorized agents, or any of them,
are
hereby irrevocably appointed the attorneys-in-fact of Pledgor to do, at
Pledgor's expense, all acts and things which Trustee may deem necessary or
advisable to preserve, perfect and continue perfected Trustee's security
interests in the Collateral (including, without limitation, the signing of
financing, continuation or other similar statements and notices on behalf of
Pledgor), which appointment is irrevocable and coupled with an
interest.
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9. Covenants
of Pledgor.
Pledgor
covenants and agrees with Trustee that from and after the date of this Agreement
and until the Secured Obligations are fully satisfied:
(a) Limitation
on Disposition.
Except
for dispositions permitted by the Indenture, Pledgor shall not sell, assign,
exchange or otherwise transfer, or grant any options with respect to, any of
the
Collateral or any interest therein, or attempt or contract to do so (other
than
the pledge and security interest granted hereunder or granted for the benefit
of
First Security Bank pursuant to the Senior Pledge Agreement and the Senior
Security Agreement).
(b) Notices.
Pledgor
shall promptly give detail of (i) any lien, security interest, encumbrance
or
claim made or asserted against any of the Collateral, (ii) any material change
in the composition of the Collateral (including, without limitation, information
regarding the issuance or creation of Equity Rights) and (iii) the occurrence
of
any other event which might have a material adverse effect on the value of
the
Collateral or on the security interests created hereunder.
(c) Additional
Securities.
Pledgor
shall (i) prevent each of its Subsidiaries from issuing any Pledged Securities,
Equity Rights or other securities in addition to or in substitution for the
Pledged Securities, except to Pledgor or as permitted under the Indenture,
(ii) immediately upon its acquisition (directly or indirectly) thereof,
pledge to Trustee hereunder any and all additional shares of stock, other
securities or ownership interests issued by any of its Subsidiaries and (iii)
shall pledge to Trustee hereunder, immediately upon its acquisition (directly
or
indirectly) hereof, any and all shares of stock, other securities or ownership
interests of any entity which, after the date of this Agreement, becomes a
direct or indirect Subsidiary of Pledgor.
(d) Further
Assurances.
From
time to time upon the request of Trustee, Pledgor shall, and shall cause any
of
its Subsidiaries to, execute and deliver such further documents and do such
further acts and things as Trustee may reasonably request to effectuate the
provisions of this Agreement.
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10. Trustee's
Appointment as Attorney-in-Fact.
(a) Upon
the
occurrence and during the continuance or existence of any Event of Default,
Pledgor hereby irrevocably constitutes and appoints Trustee and any officer
or
agent thereof, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place and
stead of Pledgor and in the name of Pledgor or in its own name, from time to
time in Trustee's discretion, for the purpose of carrying out the terms of
this
Agreement, to take any and all appropriate action and to execute any and all
documents and instruments which may be necessary or desirable to accomplish
the
purposes of this Agreement. Without limiting the generality of the foregoing
and
subject to Pledgor's rights under Section
5
hereof,
Pledgor hereby gives Trustee and any officer or agent thereof, as such
attorney-in-fact, the power and right, on behalf of Pledgor, without notice
to
or assent by Pledgor, to do the following: (i) to direct any party liable for
any payment under any of the Collateral to make payment of any and all moneys
due and to become due thereunder directly to Trustee or as Trustee shall direct;
(ii) to receive payment of and receipt for any and all moneys, claims and other
amounts due and to become due at any time in respect of or arising out of any
Collateral; (iii) to endorse and collect any checks, drafts, notes, acceptances
or other instruments for the payment of moneys due under any Collateral; (iv)
to
commence and prosecute any suits, actions or proceedings at law or in equity
in
any court of competent jurisdiction to collect the Collateral or any portion
thereof and to enforce any other right in respect of the Collateral; (v) to
defend any suit, action or proceeding brought against Pledgor with respect
to
any Collateral; (vi) to pay or discharge taxes, liens, security interests or
other encumbrances levied or placed on or threatened against the Collateral;
(vii) to settle, compromise or adjust any suit, action or proceeding described
above and, in connection therewith, to give such discharges or releases as
Trustee may deem appropriate; (viii) to participate in any recapitalization,
reclassification, reorganization, consolidation, redemption, stock split, merger
or liquidation of any issuer of the Collateral and, in connection therewith,
may
deposit or surrender control of the Collateral in exchange therefor and take
such other action as deemed proper by Trustee in connection therewith; and
(ix)
generally, to sell, transfer, pledge, vote, make any agreement with respect
to
or otherwise deal with any of the Collateral as fully and completely as though
Trustee were the absolute owner thereof for all purposes, and to do, at
Trustee's option and Pledgor's expense, at any time, or from time to time,
all
acts and things which Trustee reasonably deems necessary to protect, preserve
or
realize upon the Collateral and Trustee's security interest therein, to effect
the intent of this Agreement, all as fully and effectively as Pledgor might
do.
(b) Any
and
all such amounts received by Trustee as attorney-in-fact for Pledgor may, in
the
sole discretion of Trustee, be held by Trustee as collateral security. Pledgor
hereby ratifies, to the extent permitted by law, all that such attorneys shall
lawfully do or cause to be done by virtue hereof. This power of attorney is
a
power coupled with an interest and shall be irrevocable.
(c) The
powers conferred on Trustee hereunder are solely to protect Trustee's interests
in the Collateral and shall not impose any duty upon it to exercise any such
powers. Trustee shall be accountable only for amounts that it actually receives
as a result of the exercise of such powers, and neither it nor any of its
officers, directors, employees or agents shall be responsible to Pledgor for
any
act or failure to act, except for its own gross negligence or willful
misconduct.
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(d) Pledgor
also authorizes Trustee, at any time and from time to time upon the occurrence
and during the continuance or existence of any Event of Default, to execute,
in
connection with the sale provided for in Section
12
of this
Agreement, any endorsements, assignments or other instruments of conveyance
or
transfer with respect to the Collateral.
11. Intercreditor
Agreement.
The
Trustee hereby acknowledges and agrees that the exercise of remedies pursuant
to
Section
12
and all
other provisions of this Agreement are, and shall at all times be, subject
to
the limitations on the Trustee's remedies set forth in the Intercreditor
Agreement.
12. Remedies
on Default.
(a) If
any
Event of Default shall occur and be continuing or shall exist, Trustee may
(i)
to the full extent permitted by law, take possession and control of all or
any
part of the Collateral and Proceeds thereof and books and records pertaining
thereto, with or without judicial process, and, (ii) after ten days prior
written notice, proceed to exercise one or more of the rights and remedies
accorded to a secured party by the UCC and otherwise by law or by the terms
of
the Indenture or this Agreement. Trustee's rights and remedies shall include,
without limitation, the power (i) to sell, lease, assign, give options to
purchase or otherwise dispose of and deliver all or any portion of the
Collateral at public or private sale or sales at such place and time and on
such
terms as Trustee may see fit (subject to the requirements of applicable law,
including commercial reasonableness) and (ii) to endorse in the name of the
Pledgor any instrument representing Collateral. Without precluding any other
methods sale, the sale of Collateral shall be deemed to have been made in a
commercially reasonable manner if conducted in conformity with reasonable
commercial practices of secured lenders disposing of similar property, but
in
any event, Trustee may sell the Collateral on such terms as Trustee may choose
without assuming any credit risk and without any obligation to advertise or
give
notice of any kind not expressly required under this Agreement or by the UCC
or
otherwise. All of the rights and remedies of Trustee under this Agreement shall
be cumulative and not exclusive of other rights and remedies which it otherwise
would have, whether under the Note, the UCC or otherwise. Trustee shall not
be
under any obligation to xxxxxxxx any assets in favor of Pledgor or any other
Person or against or in payment of all or any part of the Secured
Obligations.
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(b) Pledgor
agrees that in any sale of any of the Collateral, Trustee is authorized to
comply with any limitation or restriction in connection with such sale which
it
is advised by its counsel is appropriate (i) to avoid violation of applicable
law (including, without limitation, procedures restricting the number of
prospective bidders and purchasers, requiring that prospective bidders and
purchasers have certain qualifications and restricting prospective bidders
and
purchasers to persons who shall represent and agree that they are purchasing
for
their own account for investment and not with a view to the distribution or
resale of any Pledged Securities or Equity Rights they purchase), or (ii) to
obtain any required approval of such sale or of a purchase of such sale by
any
governmental regulatory authority or official. Pledgor further agrees that
such
compliance shall not result in any such sale being deemed not to have been
made
in a commercially reasonable manner, nor shall Trustee be liable or accountable
to Pledgor for any discount allowed by reason of the fact that any Pledged
Securities or Equity Rights are sold in compliance with any such limitation
or
restriction. Trustee shall be under no obligation to delay the sale of any
of
the Collateral for the period of time necessary to permit either Pledgor or
any
Subsidiary to register securities for public sale under the Securities Act
of
1933, as amended from time to time, or under applicable state securities laws,
even if Pledgor would agree to do so.
(c) If
any
Event of Default shall occur and be continuing or shall exist, Trustee shall
have the right, in addition to all other rights and remedies available to it,
hereunder or otherwise, without notice to Pledgor to set-off against and to
appropriate and apply to the unpaid balance of the Notes and all other Secured
Obligations, any obligations owing to Pledgor by Trustee and any funds held
in
any manner for the account of Pledgor by Trustee, and Trustee is hereby granted
a security interest in and lien on all such obligations for such purpose. Such
set-off rights shall exist whether or not Trustee shall have made any demand
under this Agreement, the Notes or any other secured obligations and whether
the
Notes and such other obligations are matured or unmatured.
(d) Application
of Proceeds.
Subject
to the terms of the Intercreditor Agreement, any Collateral (including the
Proceeds thereof) held, received or realized upon at any time by Trustee shall
be applied in the manner set forth in the Note and the Indenture (or if not
so
set forth, in a manner acceptable to, and at the election of, the Trustee).
If
the Proceeds of the Collateral together with the proceeds of any other
collateral granted to Trustee pursuant to this Agreement to secure the Secured
Obligations, and any of the sales or other dispositions thereof, shall be
insufficient to pay the amounts secured hereby, Pledgor shall be liable for
the
deficiency, and, if a surplus exists after lawful application of such proceed,
Pledgor shall be entitled to any surplus.
13. Limitation
on Trustee's Duty in Respect of Collateral.
Trustee
shall use reasonable care with respect to the Collateral in its possession
or
under its control. Except as provided in the previous sentence, Trustee shall
not have any duty as to any Collateral in its possession or control or in the
possession or control of any agent or nominee of it or any income thereon or
as
to the preservation of rights against prior parties or any other rights
pertaining thereto. Upon request of Pledgor, Trustee shall account for any
money
received by it in respect of any foreclosure on or disposition of the
Collateral.
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14. Taxes
and Charges.
Pledgor
shall pay and discharge all taxes, levies and other impositions levied on
Collateral. If Pledgor shall fail to do so, Trustee may (but shall not be
obligated to) pay such taxes, levies or impositions for the account of Pledgor
(without waiving or releasing any obligation or defaults by Pledgor hereunder),
the amount thereof shall be added to the Secured Obligations and shall be
payable upon demand with interest accruing thereon at the default interest
rate
provided for in the Notes (the "Default
Interest Rate").
15. Continuing
Validity of Obligations.
(a) The
agreements and obligations of Pledgor hereunder are continuing agreements and
obligations and are absolute and unconditional irrespective of the genuineness,
validity or enforceability of the Notes or any other instrument or instruments
now or hereafter evidencing the Secured Obligations or any part thereof or
of
this Agreement or any other agreement or agreements now or hereafter entered
into by Trustee and Pledgor pursuant to which the Secured Obligations or any
part thereof is issued or of any other circumstance which might otherwise
constitute a legal or equitable discharge of such agreements and obligations
other than payment in full of the Secured Obligations and termination of
Trustee's commitment to lend to Pledgor.
(b) Without
limiting the foregoing, such agreements and obligations shall continue in full
force and effect as long as the Secured Obligations or any part thereof remains
outstanding and unpaid (whether or not any part of any Note is outstanding)
and
shall remain in full force and effect without regard to and shall not be
released, discharged or in any way affected by (i) any renewal, refinancing
or
refunding of the Secured Obligations in whole or in part, (ii) any extension
of
the time of payment of the Notes or other instrument or instruments now or
hereafter evidencing the Secured Obligations or any part thereof, (iii) any
amendment to or modification of the terms of the Notes or other instrument
or
instruments now or hereafter evidencing the Secured Obligations or any part
thereof or any other agreement or agreements now or hereafter entered into
by
Trustee and Pledgor pursuant to which the Secured Obligations or any part
thereof is issued or secured,
or (iv)
any substitution, exchange or release of, or failure to preserve, perfect or
protect, or other dealing in respect of, the Collateral or any other property
or
any security for the payment of the Secured Obligations or any part
thereof.
(c) To
the
extent that Pledgor makes a payment or payments to Trustee or Trustee receives
any payment or proceeds of the Collateral, which payment or proceeds or any
part
thereof are subsequently invalidated, declared to be fraudulent or preferential,
set aside or required to be repaid to a trustee, receiver or any other party
under any bankruptcy law, state or federal law, common law or equitable cause
of
action, then, to the extent of such payment or proceeds, the Secured Obligations
or portion thereof intended to be satisfied and this Agreement shall be revived
and continue in full force and effect, as if such payment or proceeds had not
been received by such party.
-11-
16. Defeasance.
Upon
payment in full of the Secured Obligations, this Agreement shall terminate
and
be of no further force and effect (except for the provisions of Sections
18 hereof
which shall survive), and in such event Trustee shall, at Pledgor's expense,
redeliver and reassign to Pledgor its remaining Collateral and take all action
necessary to terminate the security interest of Trustee in the Collateral.
This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns.
17. Indemnification
and Expenses.
Pledgor
shall indemnify and hold harmless Trustee from and against any and all claims
and losses arising out of or attributable to this Agreement, except claims
and
losses arising from Trustee's breach hereof or Trustee's gross negligence or
willful misconduct. Pledgor shall pay Trustee on demand the amount of any
out-of-pocket expenses (including, without limitation, reasonable attorneys’
fees and other legal expenses) incurred by Trustee in connection with the
enforcement of this Agreement and as otherwise provided in this Agreement with
interest accruing thereon at the Default Interest Rate.
18. Specific
Performance.
In
addition to all other rights and remedies granted to Trustee in this Agreement
and the Indenture, Trustee shall be entitled to specific performance and
injunctive and other equitable relief, and Pledgor waives any requirement for
the securing or posting of any bond or other security in connection with the
obtaining of any such specific performance and injunctive or other equitable
relief.
19. Modifications,
Amendments or Waivers.
The
provisions of this Agreement may be modified, amended or waived, but only by
a
written instrument signed by Pledgor and Trustee.
20. No
Implied Waivers; Cumulative Remedies; Writing Required.
No
delay or failure of Trustee in exercising any right, power or remedy under
this
Agreement shall affect or operate as a waiver thereof, nor shall any single
or
partial exercise thereof or any abandonment or discontinuance of steps to
enforce such a right, power or remedy preclude any further exercise thereof
or
of any other right, power or remedy. The rights and remedies of Trustee under
this Agreement are cumulative and not exclusive of any rights or remedies which
it would otherwise have, including without limitation any rights and remedies
under any other agreement. Any waiver, permit, consent or approval of any kind
or character on the part of Trustee of any breach or default or any such waiver
of any provision or condition of this Agreement must be in writing and shall
be
effective only to the extent in such writing specifically set
forth.
21. Notices.
All
notices, requests, demands, waivers and other communication required or
permitted to be given under this Agreement shall be in writing and shall be
deemed to have been duly given if (a) delivered personally, (b) mailed by
first-class, certified mail, return receipt, postage prepaid, or (c) sent by
next-day or overnight mail or delivery or (d) sent by telecopy (with electronic
confirmation of receipt) or telegram.
-12-
If
to
the Trustee:
Bank
of
the Ozarks
00000
Xxxxxx Xxxxxxx
Xxxxxx
Xxxx, XX 00000
Attention:
Xxxxxx Xxxxxx,
Xx.
Vice
President –Trust Department
with
a
copy, which will
not
constitute notice to
the
Trustee, to:
Xxxx
Xxxxxx Xxxxx Xxxx Xxxxx & Xxxxxxx, P.A.
000
Xxxx
Xxxxxxx Xxxxxxx, Xxxxx 0000
Xxxxxx
Xxxx, XX 00000
Attention:
Xxx Xxxxxxx
If
to
Pledgor:
Xxxxxxx
Drilling Corporation
Attn:
W.
Xxxxx Xxxxxxxx
0000
Xxxxxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx,
Xxxxx 00000
with
a
copy, which will
not
constitute notice to
Pledgor,
to:
Xxxxxx
& Xxxxxxxxx, PC
Attn:
Xxxxxx X. Xxxxxxxxx
0
Xxxxxxxx, Xxxxx 0000
Xxxxxxx,
Xxxxx 00000
or,
in
each case, at such other address as may be specified in writing to the other
parties.
All
such
notices, requests, demands, waivers and other communications shall be deemed
to
have been received (a) if by personal delivery on the date after such delivery,
(b) if by certified mail, on the seventh business day after the mailing thereof,
(c) if by next-day or overnight mail or delivery, on the day delivered, (d)
if
by telecopy or telegram, on the next day following the day on which such
telecopy or telegram was sent, provided that a copy is also sent by certified
or
registered mail.
22. Survival.
All
representations, warranties, covenants and agreements of Pledgor contained
herein or made in writing in connection herewith shall survive the execution
and
delivery of this Agreement and the issuance of the Notes.
-13-
23. Governing
Law; Waivers and Jurisdiction.
(a) Governing
Law.
This Agreement shall in all respects be governed by, and construed and enforced
in accordance with, the laws of the State of Texas without giving effect to
any
choice of law or conflict of law rules or provisions (whether of the State
of
Texas or any other jurisdiction) that would cause the application of the laws
of
any jurisdiction other than the State of Texas, except that the filing,
perfection, effect of perfection and enforcement of security interests and
liens
in other jurisdictions shall be governed by the laws of the applicable
jurisdictions in accordance with the UCC.
(b) Waivers.
To the extent permitted by law, Pledgor hereby waives personal service of any
and all process upon it and consents that all such service of process be made
by
certified mail (with return receipt) directed to it at its addresses set forth
in Section
21
hereof, and service so made shall be deemed to be completed the seventh Business
Day after the same shall have been deposited in the U.S. mails, postage prepaid.
In addition, Pledgor hereby waives, to the extent permitted by law, trial by
jury, any objections based on forum
non conveniens
and any objections to venue of any action arising out of, connected with,
related to or incidental to the transactions contemplated by or the
relationships established in connection with this
Agreement.
(c) Exclusive
Jurisdiction.
All disputes among or between Trustee and Pledgor arising out of, connected
with, related to or incidental to the transactions contemplated by or the
relationship established between them in connection with this Agreement, and
whether arising in contract, tort, equity or otherwise, shall be resolved only
by state or federal courts located in the State of Texas, County of Xxxxxx,
and
Pledgor hereby consents and submits to the jurisdiction of any state or federal
court located within such county and state. Trustee and Pledgor acknowledge,
however, that any appeals from those courts may be required to be heard by
a
court located outside of the State of Texas, County of Xxxxxx. Pledgor waives
in
all disputes any objections that they may have to the location of the court
considering the dispute. Nothing in this Section
23
shall affect the right of Trustee to serve legal process in any other manner
permitted by law or affect the right of Trustee to bring any action or
proceeding against Pledgor or its property in the courts of any other
jurisdiction.
24. Herein,
etc.
Words
such as “herein,” “hereunder,” “hereof” and the like shall be deemed to refer to
this Agreement as a whole and not to any particular document or Article, Section
or other portion of a document.
25. Severability.
Whenever possible, each provision of this Agreement shall be interpreted in
such
manner as to be effective and valid under applicable law, but if any prevision
of this Agreement is held to be prohibited by or invalid under applicable law
in
any jurisdiction, such provision shall be ineffective only to the extent of
such
prohibition or invalidity, without invalidating any other provision of this
Agreement.
-14-
26. Headings.
Section
and subsection headings in this Agreement are included for convenience of
reference only and shall not constitute a part of this Agreement for any other
purpose.
27. Counterparts.
This
Agreement may be executed in any number of counterparts and by either party
hereto on separate counterparts, each of which, when so executed and delivered,
shall be an original, but all such counterparts shall together constitute one
and the same instrument.
28. Further
Funding; Expansion Debt.
Section
4.09 of the Indenture provides that Pledgor may incur certain additional debt
(herein called Expansion Debt as also defined in the Indenture) for the purpose
of acquiring or constructing certain additional assets (herein called Expansion
Assets as also defined in the Indenture). In the event that such Expansion
Debt
is incurred in accordance with the limitations of Section 4.09 of the Indenture
but not issued in a manner that makes it part of the Indenture, as amended
or
modified, or issued under the Indenture but otherwise incurred with a separate
lender, then Trustee agrees to release the Collateral but only to the extent
related to the Secondary Equipment (defined in the Subordinated Security
Agreement) and Secondary Inventory (as defined in the Subordinated Security
Agreement) being released.
-15-
IN
WITNESS WHEREOF,
Pledgor
has executed this Agreement as of the date first above written.
|
By:
|
/s/
Xxxx Xxxxxxx III
|
|
Its:
|
President
|
|
Agreed
and Accepted:
|
|
|
BANK
OF THE OZARKS
|
|
|
/s/
Xxxxxx Xxxxxx
|
|
|
Its:
|
Sr.
Vice President
|
Signature
Page to Subordinated Pledge Agreement
