1
EXHIBIT 10.53
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT ("Agreement") is made as of the 13th day of
November, 1998, by GAINSCO, INC., a Texas corporation (hereinafter called
"Pledgor", whether one or more), in favor of BANK ONE, TEXAS, NATIONAL
ASSOCIATION ("Bank"). Pledgor hereby agrees with Bank as follows:
1. DEFINITIONS. As used in this Agreement, the following terms shall
have the meanings indicated below:
(a) The term "Borrower" shall mean GAINSCO, Inc., a Texas
corporation and GAINSCO Service Corp., a Texas corporation, or either
of them.
(b) The term "Code" shall mean the Uniform Commercial Code as in
effect in the State of Texas on the date of this Agreement or as it
may hereafter be amended from time to time.
(c) The term "Collateral" shall mean all property specifically
described on Schedule A attached hereto and made a part hereof. The
term Collateral, as used herein, shall also include (i) all
certificates, instruments and/or other documents evidencing the
foregoing, (ii) all renewals, replacements and substitutions of all of
the foregoing, (iii) all Additional Property (as hereinafter defined),
and (iv) all PRODUCTS and PROCEEDS of all of the foregoing. The
designation of proceeds does not authorize Pledgor to sell, transfer
or otherwise convey any of the foregoing property. The delivery at any
time by Pledgor to Secured Party of any property as a pledge to secure
payment or performance of any indebtedness or obligation whatsoever
shall also constitute a pledge of such property as Collateral
hereunder.
(d) The term "Indebtedness" shall mean all indebtedness,
obligations and liabilities of Borrower to Secured Party of any kind
or character, now existing or hereafter arising, whether direct,
indirect, related, unrelated, fixed, contingent, liquidated,
unliquidated, joint, several or joint and several, including without
limitation all indebtedness, obligations and liabilities of Borrower
to Secured Party now existing or hereafter arising by note, draft,
acceptance, guaranty, endorsement, letter of credit, assignment,
purchase, overdraft, discount, indemnity agreement or otherwise, (ii)
all accrued but unpaid interest on any of the indebtedness described
in (i) above, (iii) all obligations of Borrower to Secured Party under
any documents evidencing, securing, governing and/or pertaining to all
or any part of the indebtedness described in (i) and (ii) above, (iv)
all costs and expenses incurred by Secured Party in connection with
the collection and administration of all or any part of the
indebtedness and obligations described in (i), (ii) and (iii) above or
the protection or preservation of, or realization upon, the collateral
securing all or any part of such indebtedness and obligations,
including without limitation all reasonable attorneys' fees, and (v)
all renewals, extensions, modifications and rearrangements of the
indebtedness and obligations described in (i), (ii), (iii) and (iv)
above.
(e) The term "Loan Documents" shall mean all instruments and
documents evidencing, securing, governing, guaranteeing and/or
pertaining to the Indebtedness, including without limitation the
Revolving Credit Agreement dated as of November 13, 1998 (the "Credit
Agreement") among GAINSCO, Inc., GAINSCO Service Corp. and Bank.
(f) The term "Obligated Party" shall mean any party other than
Borrower who secures, guarantees and/or is otherwise obligated to pay
all or any portion of the Indebtedness.
(g) The term "Secured Party" shall mean Bank, its successors and
assigns, including without limitation, any party to whom Bank, or its
successors or assigns, may assign its rights and interests under this
Agreement.
All words and phrases used herein which are expressly defined in Section 1.201,
Chapter 8 or Chapter 9 of the Code shall have the meaning provided for therein.
Other words and phrases defined elsewhere in the Code shall have the
PLEDGE AGREEMENT - PAGE 1
----------------
GAINSCO, INC.
2
meaning specified therein except to the extent such meaning is inconsistent
with a definition in Section 1.201, Chapter 8 or Chapter 9 of the Code.
2. SECURITY INTEREST. As security for the Indebtedness, Pledgor, for
value received, hereby grants to Secured Party a continuing security interest
in the Collateral.
3. ADDITIONAL PROPERTY. Collateral shall also includes the following
property (collectively, the "Additional Property") which Pledgor becomes
entitled to receive or shall receive in connection with any other Collateral:
(a) any stock certificate, including without limitation, any certificate
representing a stock dividend or any certificate in connection with any
recapitalization, reclassification, merger, consolidation, conversion, sale of
assets, combination of shares, stock split or spin-off; (b) any option,
warrant, subscription or right, whether as an addition to or in substitution of
any other Collateral; (c) any dividends or distributions of any kind
whatsoever, whether distributable in cash, stock or other property; (d) any
interest, premium or principal payments; and (e) any conversion or redemption
proceeds; provided, however, that until the occurrence of an Event of Default
(as hereinafter defined), Pledgor shall be entitled to all cash dividends and
all interest paid on the Collateral (except interest paid on any certificate of
deposit pledged hereunder) free of the security interest created under this
Agreement. All Additional Property received by Pledgor (except for dividends
permitted to be retained by Pledgor pursuant to the immediately preceding
sentence) shall be received in trust for the benefit of Secured Party. All
Additional Property and all certificates or other written instruments or
documents evidencing and/or representing the Additional Property that is
received by Pledgor, together with such instruments of transfer as Secured
Party may request, shall immediately be delivered to or deposited with Secured
Party and held by Secured Party as Collateral under the terms of this
Agreement. If the Additional Property received by Pledgor shall be shares of
stock or other securities, such shares of stock or other securities shall be
duly endorsed in blank or accompanied by proper instruments of transfer and
assignment duly executed in blank with, if requested by Secured Party,
signatures guaranteed by a bank or member firm of the New York Stock Exchange,
all in form and substance satisfactory to Secured Party. Secured Party shall be
deemed to have possession of any Collateral in transit to Secured Party or its
agent.
4. VOTING RIGHTS. As long as no Event of Default shall have occurred
hereunder, any voting rights incident to any stock or other securities pledged
as Collateral may be exercised by Pledgor; provided, however, that Pledgor will
not exercise, or cause to be exercised, any such voting rights, without the
prior written consent of Secured Party, if the direct or indirect effect of
such vote will result in an Event of Default hereunder.
5. MAINTENANCE OF COLLATERAL. Other than the exercise of reasonable
care to assure the safe custody of any Collateral in Secured Party's possession
from time to time, Secured Party does not have any obligation, duty or
responsibility with respect to the Collateral. Without limiting the generality
of the foregoing, Secured Party shall not have any obligation, duty or
responsibility to do any of the following: (a) ascertain any maturities, calls,
conversions, exchanges, offers, tenders or similar matters relating to the
Collateral or informing Pledgor with respect to any such matters; (b) fix,
preserve or exercise any right, privilege or option (whether conversion,
redemption or otherwise) with respect to the Collateral unless (i) Pledgor
makes written demand to Secured Party to do so, (ii) such written demand is
received by Secured Party in sufficient time to permit Secured Party to take
the action demanded in the ordinary course of its business, and (iii) Pledgor
provides additional collateral, acceptable to Secured Party in its sole
discretion; (c) collect any amounts payable in respect of the Collateral
(Secured Party being liable to account to Pledgor only for what Secured Party
may actually receive or collect thereon); (d) sell all or any portion of the
Collateral to avoid market loss; (e) sell all or any portion of the Collateral
unless and until (i) Pledgor makes written demand upon Secured Party to sell
the Collateral, and (ii) Pledgor provides additional collateral, acceptable to
Secured Party in its sole discretion; or (f) hold the Collateral for or on
behalf of any party other than Pledgor.
6. REPRESENTATIONS AND WARRANTIES. Pledgor hereby represents and
warrants the following to Secured Party:
(a) Due Authorization. The execution, delivery and performance of
this Agreement and all of the other Loan Documents by Pledgor have
been duly authorized by all necessary corporate action of Pledgor, to
the extent Pledgor is a corporation, or by all necessary partnership
action, to the extent Pledgor is a partnership.
PLEDGE AGREEMENT - PAGE 2
----------------
GAINSCO, INC.
3
(b) Enforceability. This Agreement and the other Loan Documents
constitute legal, valid and binding obligations of Pledgor,
enforceable in accordance with their respective terms, except as
limited by bankruptcy, insolvency or similar laws of general
application relating to the enforcement of creditors' rights and
except to the extent specific remedies may generally be limited by
equitable principles.
(c) Ownership and Liens. Pledgor has good and indefeasible title to
the Collateral free and clear of all liens, security interests,
encumbrances or adverse claims, except for the security interest
created by this Agreement. No dispute, right of setoff, counterclaim
or defense exists with respect to all or any part of the Collateral.
Pledgor has not executed any other security agreement currently
affecting the Collateral and no financing statement or other
instrument similar in effect covering all or any part of the
Collateral is on file in any recording office except as may have been
executed or filed in favor of Secured Party.
(d) No Conflicts or Consents. Neither the ownership, the intended
use of the Collateral by Pledgor, the grant of the security interest
by Pledgor to Secured Party herein nor (except for restrictions
imposed by any applicable Insurance Holding Company Laws (as
hereinafter defined) the exercise by Secured Party of its rights or
remedies hereunder, will (i) conflict with any provision of (A) any
domestic or foreign law, statute, rule or regulation, (B) the articles
or certificate of incorporation, charter, bylaws or partnership
agreement, as the case may be, of Pledgor, or (C) any agreement,
judgment, license, order or permit applicable to or binding upon
Pledgor or otherwise affecting the Collateral, or (ii) result in or
require the creation of any lien, charge or encumbrance upon any
assets or properties of Pledgor or of any person except as may be
expressly contemplated in the Loan Documents. Except as expressly
contemplated in the Loan Documents, no consent, approval,
authorization or order of, and no notice to or filing with, any court,
governmental authority or third party is required in connection with
the grant by Pledgor of the security interest herein or the exercise
by Secured Party of its rights and remedies hereunder.
(e) Security Interest. Pledgor has and will have at all times full
right, power and authority to grant a security interest in the
Collateral to Secured Party in the manner provided herein, free and
clear of any lien, security interest or other charge or encumbrance.
This Agreement creates a legal, valid and binding security interest in
favor of Secured Party in the Collateral.
(f) Location. Pledgor's residence or chief executive office, as the
case may be, and the office where the records concerning the
Collateral are kept is located at its address set forth on the
signature page hereof.
(g) Solvency of Pledgor. As of the date hereof, and after giving
effect to this Agreement and the completion of all other transactions
contemplated by Pledgor at the time of the execution of this
Agreement, (i) Pledgor is and will be solvent, (ii) the fair saleable
value of Pledgor's assets exceeds and will continue to exceed
Pledgor's liabilities (both fixed and contingent), (iii) Pledgor is
and will continue to be able to pay its debts as they mature, and (iv)
if Pledgor is not an individual, Pledgor has and will have sufficient
capital to carry on Pledgor's businesses and all businesses in which
Pledgor is about to engage.
(h) Nature of Ownership. Pledgor is the registered owner of the
securities pledged as Collateral and a certificate has been issued in
Pledgor's name to evidence Pledgor's ownership in such securities.
(i) Securities/100% Ownership. Any certificates evidencing
securities pledged as Collateral are valid and genuine and have not
been altered. All securities pledged as Collateral have been duly
authorized and validly issued, are fully paid and non-assessable, and
were not issued in violation of the preemptive rights of any party or
of any agreement by which Pledgor or the issuer thereof is bound. No
restrictions or conditions exist with respect to the transfer or
voting of any securities pledged as Collateral, except as has been
disclosed to Secured Party in writing. To the best of Pledgor's
knowledge, no issuer of such securities (other than securities of a
class which are publicly traded) has any outstanding stock rights,
rights to subscribe, options, warrants or convertible securities
outstanding or any other rights outstanding entitling any party to
have issued to such party capital stock of such issuer, except as has
been disclosed to
PLEDGE AGREEMENT - PAGE 3
----------------
GAINSCO, INC.
4
Secured Party in writing. Pledgor owns 100% of the issued and
outstanding shares of capital stock of each issuer listed on Schedule
A attached hereto.
(j) Chattel Paper, Documents and Instruments. The security interest
in chattel paper, documents and instruments of Pledgor granted
hereunder is valid and genuine, and all such chattel paper, documents
and instruments have only one original counterpart. No party other
than Pledgor or Secured Party is in actual or constructive possession
of any such chattel paper, documents or instruments.
(k) Surplus Debenture. With regard to the Surplus Debenture
described on Schedule A, as of the date hereof, the unpaid principal
balance of such Surplus Debenture is $2,600,000 and the payment of
interest thereon is current. No dispute, right of setoff, counterclaim
or defense exists with respect to such Surplus Debenture.
7. AFFIRMATIVE COVENANTS. Pledgor will comply with the covenants
contained in this Section at all times during the period of time this Agreement
is effective unless Secured Party shall otherwise consent in writing.
(a) Ownership and Liens. Pledgor will maintain good and
indefeasible title to all Collateral free and clear of all liens,
security interests, encumbrances or adverse claims, except for the
security interest created by this Agreement and the security interests
and other encumbrances expressly permitted by the other Loan
Documents. Pledgor will not permit any dispute, right of setoff,
counterclaim or defense to exist with respect to all or any part of
the Collateral. Pledgor will cause any financing statement or other
security instrument with respect to the Collateral to be terminated,
except as may exist or as may have been filed in favor of Secured
Party. Pledgor will defend at its expense Secured Party's right, title
and security interest in and to the Collateral against the claims of
any third party.
(b) Inspection of Books and Records. Pledgor will keep adequate
records concerning the Collateral and will permit Secured Party and
all representatives and agents appointed by Secured Party to inspect
Pledgor's books and records of or relating to the Collateral at any
time during normal business hours, to make and take away photocopies,
photographs and printouts thereof and to write down and record any
such information.
(c) Adverse Claim. Pledgor covenants and agrees to promptly notify
Secured Party of any claim, action or proceeding affecting title to
the Collateral, or any part thereof, or the security interest created
hereunder and, at Pledgor's expense, defend Secured Party's security
interest in the Collateral against the claims of any third party.
Pledgor also covenants and agrees to promptly deliver to Secured Party
a copy of all written notices received by Pledgor with respect to the
Collateral, including without limitation, notices received from the
issuer of any securities pledged hereunder as Collateral.
(d) Delivery of Instruments and/or Certificates. Contemporaneously
herewith, Pledgor covenants and agrees to deliver to Secured Party any
certificates, documents or instruments representing or evidencing the
Collateral, together with Pledgor's endorsement thereon and/or
accompanied by proper instruments of transfer and assignment duly
executed in blank with, if requested by Secured Party, signatures
guaranteed by a bank or member firm of the New York Stock Exchange,
all in form and substance satisfactory to Secured Party. If required
by Secured Party, Pledgor also covenants and agrees to cooperate with
Secured Party in registering the pledge of the securities pledged as
Collateral with the issuer of such securities.
(e) Further Assurances. Pledgor will from time to time at its
expense promptly execute and deliver all further instruments and
documents and take all further action necessary or appropriate or that
Secured Party may request in order (i) to perfect and protect the
security interest created or purported to be created hereby and the
first priority of such security interest, (ii) to enable Secured Party
to exercise and enforce its rights and remedies hereunder in respect
of the Collateral, and (iii) to otherwise effect the purposes of this
Agreement, including without limitation, executing and filing such
financing or continuation statements, or any amendments thereto.
PLEDGE AGREEMENT - PAGE 4
----------------
GAINSCO, INC.
5
(f) Chattel Paper, Documents and Instruments. Pledgor will take
such action as may be requested by Secured Party in order to cause any
chattel paper, documents or instruments to be valid and enforceable
and will cause all chattel paper to have only one original
counterpart. Upon request by Secured Party, Pledgor will deliver to
Secured Party all originals of chattel paper, documents or instruments
and will xxxx all chattel paper with a legend indicating that such
chattel paper is subject to the security interest granted hereunder.
8. NEGATIVE COVENANTS. Pledgor will comply with the covenants
contained in this Section at all times during the period of time this Agreement
is effective, unless Secured Party shall otherwise consent in writing.
(a) Transfer or Encumbrance. Pledgor will not (i) sell, assign (by
operation of law or otherwise) or transfer Pledgor's rights in any of
the Collateral, (ii) xxxxx x xxxx or security interest in or execute,
file or record any financing statement or other security instrument
with respect to the Collateral to any party other than Secured Party,
or (iii) deliver actual or constructive possession of any certificate,
instrument or document evidencing and/or representing any of the
Collateral to any party other than Secured Party.
(b) Impairment of Security Interest. Pledgor will not take or fail
to take any action which would in any manner impair the value or
enforceability of Secured Party's security interest in any Collateral.
(c) Dilution of Ownership. As to any securities pledged as
Collateral (other than securities of a class which are publicly
traded), Pledgor will not consent to or approve of the issuance of (i)
any additional shares of any class of securities of such issuer
(unless immediately upon issuance additional securities are pledged
and delivered to Secured Party pursuant to the terms hereof to the
extent necessary to give Secured Party a security interest after such
issuance in at least the same percentage of such issuer's outstanding
securities as Secured Party had before such issuance), (ii) any
instrument convertible voluntarily by the holder thereof or
automatically upon the occurrence or non-occurrence of any event or
condition into, or exchangeable for, any such securities, or (iii) any
warrants, options, contracts or other commitments entitling any third
party to purchase or otherwise acquire any such securities.
(d) Restrictions on Securities. Pledgor will not enter into any
agreement creating, or otherwise permit to exist, any restriction or
condition upon the transfer, voting or control of any securities
pledged as Collateral, except as consented to in writing by Secured
Party.
9. RIGHTS OF SECURED PARTY. Secured Party shall have the rights
contained in this Section at all times during the period of time this Agreement
is effective.
(a) Power of Attorney. Pledgor hereby irrevocably appoints Secured
Party as Pledgor's attorney-in-fact, such power of attorney being
coupled with an interest, with full authority in the place and stead
of Pledgor and in the name of Pledgor or otherwise, to take any action
and to execute any instrument which Secured Party may from time to
time in Secured Party's discretion deem necessary or appropriate to
accomplish the purposes of this Agreement, including without
limitation, the following action: (i) subject to any applicable
Insurance Holding Company Laws, transfer any securities, instruments,
documents or certificates pledged as Collateral in the name of Secured
Party or its nominee; (ii) use any interest, premium or principal
payments, conversion or redemption proceeds or other cash proceeds
received in connection with any Collateral to reduce any of the
Indebtedness; (iii) exchange any of the securities pledged as
Collateral for any other property upon any merger, consolidation,
reorganization, recapitalization or other readjustment of the issuer
thereof, and, in connection therewith, to deposit and deliver any and
all of such securities with any committee, depository, transfer agent,
registrar or other designated agent upon such terms and conditions as
Secured Party may deem necessary or appropriate; (iv) exercise or
comply with any conversion, exchange, redemption, subscription or any
other right, privilege or option pertaining to any securities pledged
as Collateral; provided, however, except as provided herein, Secured
Party shall not have a duty to exercise or comply with any such right,
privilege or option (whether conversion, redemption or otherwise) and
shall not be responsible for any delay or failure to do so; and (v)
file any claims or take any action or institute any
PLEDGE AGREEMENT - PAGE 5
----------------
GAINSCO, INC.
6
proceedings which Secured Party may deem necessary or appropriate for
the collection and/or preservation of the Collateral or otherwise to
enforce the rights of Secured Party with respect to the Collateral.
(b) Performance by Secured Party. If Pledgor fails to perform any
agreement or obligation provided herein, Secured Party may itself
perform, or cause performance of, such agreement or obligation, and
the expenses of Secured Party incurred in connection therewith shall
be a part of the Indebtedness, secured by the Collateral and payable
by Pledgor on demand.
(c) Notification of Account Debtors and Other Rights. With respect
to chattel paper or instruments which are Collateral, Secured Party,
without notice to Pledgor, shall have the right at any time and from
time to time after the occurrence and during the continuation of an
Event of Default to notify and direct the account debtor or obligor
thereon to thereafter make all payments on such Collateral directly to
Secured Party, regardless of whether Pledgor was previously making
collections thereon. Each account debtor and obligor making payment to
Secured Party hereunder shall be fully protected in relying on the
written statement of Secured Party that it then holds a security
interest which entitles it to receive such payment, and the receipt of
Secured Party for such payment shall be full acquittance therefor to
the party making such payment. Payments received by Secured Party
shall be held or disposed of by it in accordance with the terms of
this Agreement. Secured Party shall, however, never be obligated to
collect, or use any effort to collect, any such payments, its sole
liability to the Pledgor being to account for payments, if any,
actually received.
Notwithstanding any other provision herein to the contrary, Secured Party does
not have any duty to exercise or continue to exercise any of the foregoing
rights and shall not be responsible for any failure to do so or for any delay
in doing so.
10. EVENTS OF DEFAULT. Each of the following constitutes an "Event of
Default" under this Agreement:
(a) Non-Performance of Covenants. The failure of Pledgor or any
Obligated Party to timely and properly observe, keep or perform (i)
any covenant, agreement, warranty or condition contained in Sections
7(a), 7(e) or 8 or (ii) any other covenant, agreement, warranty or
condition required herein and, in the case of (ii), such failure shall
continue for fifteen (15) days; or
(b) Default Under other Credit Agreement. The occurrence of an
Event of Default under Article 8 of the Credit Agreement; or
(c) False Representation. Any representation contained herein or in
any of the other Loan Documents made by Borrower or any Obligated
Party is false or misleading in any material respect; or
(d) Execution on Collateral. The Collateral or any portion thereof
is taken on execution or other process of law in any action against
Pledgor; or
(e) Abandonment. Pledgor abandons the Collateral or any portion
thereof; or
(f) Action by Other Lienholder. The holder of any lien or security
interest on any of the Collateral (without hereby implying the consent
of Secured Party to the existence or creation of any such lien or
security interest on the Collateral), declares a default thereunder or
institutes foreclosure or other proceedings for the enforcement of its
remedies thereunder; or
(g) Dilution of Ownership. The issuer of any securities (other than
securities of a class which are publicly traded) constituting
Collateral hereafter issues any shares of any class of capital stock
(unless immediately upon issuance, additional securities are pledged
and delivered to Secured Party pursuant to the terms hereof to the
extent necessary to give Secured Party a security interest after such
issuance in at least the same percentage of such issuer's outstanding
securities as Secured Party had before such issuance) or any options,
warrants or other rights to purchase any such capital stock.
PLEDGE AGREEMENT - PAGE 6
----------------
GAINSCO, INC.
7
11. REMEDIES AND RELATED RIGHTS. If an Event of Default shall have
occurred, and without limiting any other rights and remedies provided herein,
under any of the other Loan Documents or otherwise available to Secured Party,
Secured Party may exercise one or more of the rights and remedies provided in
this Section.
(a) Remedies. Secured Party may from time to time at its
discretion, subject to compliance with any applicable Insurance
Holding Company Laws, without limitation and without notice except as
expressly provided in any of the Loan Documents:
(i) exercise in respect of the Collateral all the rights and
remedies of a secured party under the Code (whether or
not the Code applies to the affected Collateral);
(ii) reduce its claim to judgment or foreclose or otherwise
enforce, in whole or in part, the security interest
granted hereunder by any available judicial procedure;
(iii) sell or otherwise dispose of, at its office, on the
premises of Pledgor or elsewhere, the Collateral, as a
unit or in parcels, by public or private proceedings, and
by way of one or more contracts (it being agreed that the
sale or other disposition of any part of the Collateral
shall not exhaust Secured Party's power of sale, but
sales or other dispositions may be made from time to time
until all of the Collateral has been sold or disposed of
or until the Indebtedness has been paid and performed in
full), and at any such sale or other disposition it shall
not be necessary to exhibit any of the Collateral;
(iv) buy the Collateral, or any portion thereof, at any public
sale;
(v) buy the Collateral, or any portion thereof, at any
private sale if the Collateral is of a type customarily
sold in a recognized market or is of a type which is the
subject of widely distributed standard price quotations;
(vi) apply for the appointment of a receiver for the
Collateral, and Pledgor hereby consents to any such
appointment; and
(vii) at its option, retain the Collateral in satisfaction of
the Indebtedness whenever the circumstances are such that
Secured Party is entitled to do so under the Code or
otherwise.
Pledgor agrees that in the event Pledgor is entitled to receive any
notice under the Uniform Commercial Code, as it exists in the state
governing any such notice, of the sale or other disposition of any
Collateral, reasonable notice shall be deemed given five (5) days
after such notice is deposited in a depository receptacle under the
care and custody of the United States Postal Service, postage prepaid,
at Pledgor's address set forth on the signature page hereof, ten (10)
days prior to the date of any public sale, or after which a private
sale, of any of such Collateral is to be held. Secured Party shall not
be obligated to make any sale of Collateral regardless of notice of
sale having been given. 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. Pledgor further
acknowledges and agrees that the redemption by Secured Party of any
certificate of deposit pledged as Collateral shall be deemed to be a
commercially reasonable disposition under Section 9.504(c) of the
Code.
(b) Private Sale of Securities. Pledgor recognizes that Secured
Party may be unable to effect a public sale of all or any part of the
securities pledged as Collateral because of restrictions in applicable
federal and state securities laws and that Secured Party may,
therefore, determine to make one or more private sales of any such
securities to a restricted group of purchasers who will be obligated
to agree, among other things, to acquire such securities for their own
account, for investment and not with a view to the distribution or
resale thereof. Pledgor acknowledges that each any such private sale
may be at prices and other terms less favorable
PLEDGE AGREEMENT - PAGE 7
----------------
GAINSCO, INC.
8
then what might have been obtained at a public sale and,
notwithstanding the foregoing, agrees that each such private sale
shall be deemed to have been made in a commercially reasonable manner
and that Secured Party shall have no obligation to delay the sale of
any such securities for the period of time necessary to permit the
issuer to register such securities for public sale under any federal
or state securities laws. Pledgor further acknowledges and agrees that
any offer to sell such securities which has been made privately in the
manner described above to not less than five (5) bona fide offerees
shall be deemed to involve a "public sale" for the purposes of Section
9.504(c) of the Code, notwithstanding that such sale may not
constitute a "public offering" under any federal or state securities
laws and that Secured Party may, in such event, bid for the purchase
of such securities.
(c) Application of Proceeds. If any Event of Default shall have
occurred, Secured Party may at its discretion apply or use any cash
held by Secured Party as Collateral, and any cash proceeds received by
Secured Party in respect of any sale or other disposition of,
collection from, or other realization upon, all or any part of the
Collateral as follows in such order and manner as Secured Party may
elect:
(i) to the repayment or reimbursement of the reasonable costs
and expenses (including, without limitation, reasonable
attorneys' fees and expenses) incurred by Secured Party
in connection with (A) the administration of the Loan
Documents, (B) the custody, preservation, use or
operation of, or the sale of, collection from, or other
realization upon, the Collateral, and (C) the exercise or
enforcement of any of the rights and remedies of Secured
Party hereunder;
(ii) to the payment or other satisfaction of any liens and
other encumbrances upon the Collateral;
(iii) to the satisfaction of the Indebtedness;
(iv) by holding such cash and proceeds as Collateral;
(v) to the payment of any other amounts required by
applicable law (including without limitation, Section
9.504(a)(3) of the Code or any other applicable statutory
provision); and
(vi) by delivery to Pledgor or any other party lawfully
entitled to receive such cash or proceeds whether by
direction of a court of competent jurisdiction or
otherwise.
(d) Deficiency. In the event that the proceeds of any sale of,
collection from, or other realization upon, all or any part of the
Collateral by Secured Party are insufficient to pay all amounts to
which Secured Party is legally entitled, Borrower and any party who
guaranteed or is otherwise obligated to pay all or any portion of the
Indebtedness shall be liable for the deficiency, together with
interest thereon as provided in the Loan Documents.
(e) Non-Judicial Remedies. In granting to Secured Party the power
to enforce its rights hereunder without prior judicial process or
judicial hearing, Pledgor expressly waives, renounces and knowingly
relinquishes any legal right which might otherwise require Secured
Party to enforce its rights by judicial process. Pledgor recognizes
and concedes that non-judicial remedies are consistent with the usage
of trade, are responsive to commercial necessity and are the result of
a bargain at arm's length. Nothing herein is intended to prevent
Secured Party or Pledgor from resorting to judicial process at either
party's option.
(f) Other Recourse. Pledgor waives any right to require Secured
Party to proceed against any third party, exhaust any Collateral or
other security for the Indebtedness, or to have any third party joined
with Pledgor in any suit arising out of the Indebtedness or any of the
Loan Documents, or pursue any other remedy available to Secured Party.
Pledgor further waives any and all notice of acceptance of this
Agreement and of the creation, modification, rearrangement, renewal or
extension of the Indebtedness. Pledgor further waives
PLEDGE AGREEMENT - PAGE 8
----------------
GAINSCO, INC.
9
any defense arising by reason of any disability or other defense of
any third party or by reason of the cessation from any cause
whatsoever of the liability of any third party. Until all of the
Indebtedness shall have been paid in full, Pledgor shall have no right
of subrogation and Pledgor waives the right to enforce any remedy
which Secured Party has or may hereafter have against any third party,
and waives any benefit of and any right to participate in any other
security whatsoever now or hereafter held by Secured Party. Pledgor
authorizes Secured Party, and without notice or demand and without any
reservation of rights against Pledgor and without affecting Pledgor's
liability hereunder or on the Indebtedness, to (i) take or hold any
other property of any type from any third party as security for the
Indebtedness, and exchange, enforce, waive and release any or all of
such other property, (ii) apply such other property and direct the
order or manner of sale thereof as Secured Party may in its discretion
determine, (iii) renew, extend, accelerate, modify, compromise, settle
or release any of the Indebtedness or other security for the
Indebtedness, (iv) waive, enforce or modify any of the provisions of
any of the Loan Documents executed by any third party, and (v) release
or substitute any third party.
(g) Voting Rights. Upon the occurrence of an Event of Default,
Pledgor will not exercise any voting rights with respect to securities
pledged as Collateral. Pledgor hereby irrevocably appoints Secured
Party as Pledgor's attorney-in-fact (such power of attorney being
coupled with an interest) and proxy to exercise, subject to compliance
with any applicable Insurance Holding Company Laws, any voting rights
with respect to Pledgor's securities pledged as Collateral upon the
occurrence of an Event of Default.
(h) Dividend Rights and Interest Payments. Upon the occurrence of
an Event of Default:
(i) all rights of Pledgor to receive and retain the dividends
and interest payments which it would otherwise be
authorized to receive and retain pursuant to Section 3
shall automatically cease, and all such rights shall
thereupon become vested with Secured Party which shall
thereafter have the sole right to receive, hold and apply
as Collateral such dividends and interest payments; and
(ii) all dividend and interest payments which are received by
Pledgor contrary to the provisions of clause (i) of this
Subsection shall be received in trust for the benefit of
Secured Party, shall be segregated from other funds of
Pledgor, and shall be forthwith paid over to Secured
Party in the exact form received (properly endorsed or
assigned if requested by Secured Party), to be held by
Secured Party as Collateral.
(i) Insurance Holding Company Laws. Because of laws and regulations
governing change of control of insurance companies that may be
applicable (collectively, the "Insurance Holding Company Laws"),
certain purchasers of the Collateral at foreclosure may be required to
obtain regulatory approval prior to a final and binding acquisition of
the Collateral. The Pledgor acknowledges that such laws and
regulations may adversely affect the purchase price to be paid by a
purchaser of the Collateral, or any part thereof, at a private or
public foreclosure sale, and that the Bank may (and is hereby
authorized by the Pledgor to) modify the notices, advertisements,
terms and procedures of any foreclosure sale of the Collateral in
order to comply with Insurance Holding Company Laws. Without limiting
the foregoing, the Pledgor acknowledges that the Bank may accept bids
at foreclosure sale on a provisional basis, pending receipt by the
successful bidder of necessary regulatory approvals under the
Insurance Holding Company Laws. In addition, the Pledgor acknowledges
that the Bank may (but shall not be required to) limit bidding at
foreclosure sales to those parties which have demonstrated an ability
to comply with requirements of the Insurance Holding Company Laws.
Moreover, the Pledgor acknowledges that the Bank may require the
successful bidder at a foreclosure sale to execute a purchase
agreement, deposit a portion of the purchase price, and take other
actions reflecting the requirements of the Insurance Holding Company
Laws and the resulting delay in consummating a foreclosure sale.
12. INDEMNITY. Pledgor hereby indemnifies and agrees to hold harmless
Secured Party, and its officers, directors, employees, agents and
representatives (each an "Indemnified Person") from and against any and all
liabilities,
PLEDGE AGREEMENT - PAGE 9
----------------
GAINSCO, INC.
10
obligations, claims, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature (collectively, the
"Claims") which may be imposed on, incurred by, or asserted against, any
Indemnified Person (whether or not caused by any Indemnified Person's sole,
concurrent or contributory negligence) arising in connection with the Loan
Documents, the Indebtedness or the Collateral (including without limitation,
the enforcement of the Loan Documents and the defense of any Indemnified
Person's actions and/or inactions in connection with the Loan Documents),
except to the limited extent the Claims against an Indemnified Person are
proximately caused by such Indemnified Person's gross negligence or willful
misconduct. If Pledgor or any third party ever alleges such gross negligence or
willful misconduct by any Indemnified Person, the indemnification provided for
in this Section shall nonetheless be paid upon demand, subject to later
adjustment or reimbursement, until such time as a court of competent
jurisdiction enters a final judgment as to the extent and effect of the alleged
gross negligence or willful misconduct. The indemnification provided for in
this Section shall survive the termination of this Agreement and shall extend
and continue to benefit each individual or entity who is or has at any time
been an Indemnified Person hereunder.
13. MISCELLANEOUS.
(a) Entire Agreement. This Agreement contains the entire agreement
of Secured Party and Pledgor with respect to the Collateral. If the
parties hereto are parties to any prior agreement, either written or
oral, relating to the Collateral, the terms of this Agreement shall
amend and supersede the terms of such prior agreements as to
transactions on or after the effective date of this Agreement, but all
security agreements, financing statements, guaranties, other contracts
and notices for the benefit of Secured Party shall continue in full
force and effect to secure the Indebtedness unless Secured Party
specifically releases its rights thereunder by separate release.
(b) Amendment. No modification, consent or amendment of any
provision of this Agreement or any of the other Loan Documents shall
be valid or effective unless the same is in writing and signed by the
party against whom it is sought to be enforced.
(c) Actions by Secured Party. The lien, security interest and other
security rights of Secured Party hereunder shall not be impaired by
(i) any renewal, extension, increase or modification with respect to
the Indebtedness, (ii) any surrender, compromise, release, renewal,
extension, exchange or substitution which Secured Party may grant with
respect to the Collateral, or (iii) any release or indulgence granted
to any endorser, guarantor or surety of the Indebtedness. The taking
of additional security by Secured Party shall not release or impair
the lien, security interest or other security rights of Secured Party
hereunder or affect the obligations of Pledgor hereunder.
(d) Waiver by Secured Party. Secured Party may waive any Event of
Default without waiving any other prior or subsequent Event of
Default. Secured Party may remedy any default without waiving the
Event of Default remedied. Neither the failure by Secured Party to
exercise, nor the delay by Secured Party in exercising, any right or
remedy upon any Event of Default shall be construed as a waiver of
such Event of Default or as a waiver of the right to exercise any such
right or remedy at a later date. No single or partial exercise by
Secured Party of any right or remedy hereunder shall exhaust the same
or shall preclude any other or further exercise thereof, and every
such right or remedy hereunder may be exercised at any time. No waiver
of any provision hereof or consent to any departure by Pledgor
therefrom shall be effective unless the same shall be in writing and
signed by Secured Party and then such waiver or consent shall be
effective only in the specific instances, for the purpose for which
given and to the extent therein specified. No notice to or demand on
Pledgor in any case shall of itself entitle Pledgor to any other or
further notice or demand in similar or other circumstances.
(e) Costs and Expenses. Pledgor will upon demand pay to Secured
Party the amount of any and all costs and expenses (including without
limitation, attorneys' fees and expenses), which Secured Party may
incur in connection with (i) the transactions which give rise to the
Loan Documents, (ii) the preparation of this Agreement and the
perfection and preservation of the security interests granted under
the Loan Documents, (iii) the administration of the Loan Documents,
(iv) the custody, preservation, use or operation of, or the sale of,
collection from, or other realization upon, the Collateral, (v) the
exercise or enforcement of any
PLEDGE AGREEMENT - PAGE 10
----------------
GAINSCO, INC.
11
of the rights of Secured Party under the Loan Documents, or (vi) the
failure by Pledgor to perform or observe any of the provisions hereof.
(f) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND
APPLICABLE FEDERAL LAWS, EXCEPT TO THE EXTENT PERFECTION AND THE
EFFECT OF PERFECTION OR NON-PERFECTION OF THE SECURITY INTEREST
GRANTED HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL, ARE
GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF TEXAS.
(g) Venue. This Agreement has been entered into in the county in
Texas where Bank's address for notice purposes is located, and it
shall be performable for all purposes in such county. Courts within
the State of Texas shall have jurisdiction over any and all disputes
arising under or pertaining to this Agreement and venue for any such
disputes shall be in the county or judicial district where this
Agreement has been executed and delivered.
(h) Severability. If any provision of this Agreement is held by a
court of competent jurisdiction to be illegal, invalid or
unenforceable under present or future laws, such provision shall be
fully severable, shall not impair or invalidate the remainder of this
Agreement and the effect thereof shall be confined to the provision
held to be illegal, invalid or unenforceable.
(i) No Obligation. Nothing contained herein shall be construed as
an obligation on the part of Secured Party to extend or continue to
extend credit to Borrower.
(j) Notices. All notices, requests, demands or other communications
required or permitted to be given pursuant to this Agreement shall be
in writing and given by (i) personal delivery, (ii) expedited delivery
service with proof of delivery, or (iii) United States mail, postage
prepaid, registered or certified mail, return receipt requested, sent
to the intended addressee at the address set forth on the signature
page hereof or to such different address as the addressee shall have
designated by written notice sent pursuant to the terms hereof and
shall be deemed to have been received either, in the case of personal
delivery, at the time of personal delivery, in the case of expedited
delivery service, as of the date of first attempted delivery at the
address and in the manner provided herein, or in the case of mail,
five (5) days after deposit in a depository receptacle under the care
and custody of the United States Postal Service. Either party shall
have the right to change its address for notice hereunder to any other
location within the continental United States by notice to the other
party of such new address at least thirty (30) days prior to the
effective date of such new address.
(k) Binding Effect and Assignment. This Agreement (i) creates a
continuing security interest in the Collateral, (ii) shall be binding
on Pledgor and the heirs, executors, administrators, personal
representatives, successors and assigns of Pledgor, and (iii) shall
inure to the benefit of Secured Party and its successors and assigns.
Without limiting the generality of the foregoing, Secured Party may
pledge, assign or otherwise transfer the Indebtedness and its rights
under this Agreement and any of the other Loan Documents to any other
party, subject to any rights of Pledgor hereunder. Pledgor's rights
and obligations hereunder may not be assigned or otherwise transferred
without the prior written consent of Secured Party.
(l) Termination. It is contemplated by the parties hereto that from
time to time there may be no outstanding Indebtedness, but
notwithstanding such occurrences, this Agreement shall remain valid
and shall be in full force and effect as to subsequent outstanding
Indebtedness. Upon (i) the satisfaction in full of the Indebtedness,
(ii) the termination or expiration of any commitment of Secured Party
to extend credit to Borrower, (iii) written request for the
termination hereof delivered by Pledgor to Secured Party, and (iv)
written release delivered by Secured Party to Pledgor, this Agreement
and the security interests created hereby shall terminate. Upon
termination of this Agreement and Pledgor's written request, Secured
Party will, at Pledgor's sole cost and expense, return to Pledgor such
of the Collateral as shall not have been sold or otherwise disposed of
or applied pursuant to the terms hereof and execute and deliver to
Pledgor such documents as Pledgor shall reasonably request to evidence
such termination.
PLEDGE AGREEMENT - PAGE 11
----------------
GAINSCO, INC.
12
(m) JURY TRIAL WAIVER. PLEDGOR AND BANK EACH HEREBY WAIVE ANY RIGHT
TO A JURY TRIAL WITH RESPECT TO ANY MATTER ARISING OR RELATING TO THIS
AGREEMENT OR THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY.
(n) Cumulative Rights. All rights and remedies of Secured Party
hereunder are cumulative of each other and of every other right or
remedy which Secured Party may otherwise have at law or in equity or
under any of the other Loan Documents, and the exercise of one or more
of such rights or remedies shall not prejudice or impair the
concurrent or subsequent exercise of any other rights or remedies.
(o) Gender and Number. Within this Agreement, words of any gender
shall be held and construed to include the other gender, and words in
the singular number shall be held and construed to include the plural
and words in the plural number shall be held and construed to include
the singular, unless in each instance the context requires otherwise.
(p) Descriptive Headings. The headings in this Agreement are for
convenience only and shall in no way enlarge, limit or define the
scope or meaning of the various and several provisions hereof.
[SIGNATURE PAGE FOLLOWS]
PLEDGE AGREEMENT - PAGE 12
----------------
GAINSCO, INC.
13
EXECUTED as of the date first written above.
Pledgor's Address: PLEDGOR:
000 Xxxxxxxx Xxxxxx GAINSCO, INC.
Xxxx Xxxxx, Xxxxx 00000
By: /s/ XXXXX X. XXXXXXXX
-------------------------------------
Xxxxx X. Xxxxxxxx,
President and Chief Executive Officer
Secured Party's Address:
Bank One, Texas, N.A.
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000
PLEDGE AGREEMENT - PAGE 13
----------------
GAINSCO, INC.
14
SCHEDULE A TO
PLEDGE AGREEMENT
BY GAINSCO, INC.
The following property is a part of the Collateral as defined in Subsection
1(c):
(a) All shares of capital stock of GAINSCO Service Corp., a Texas
corporation, owned by Pledgor, including without limitation 1,000
shares of common stock evidenced by share certificate no. 2 issued in
the name of Pledgor.
(b) All shares of capital stock of Agents Processing Systems, Inc., a
Texas corporation, owned by Pledgor, including without limitation
50,000 shares of common stock evidenced by share certificate nos. 1
and 2 issued in the name of Pledgor.
(c) All shares of capital stock of General Agents Insurance Company of
America, Inc., an Oklahoma corporation, owned by Pledgor, including
without limitation 3,000,000 shares of common stock evidenced by share
certificate nos. 1-5 issued in the name of Pledgor.
(d) All shares of capital stock of General Agents Premium Finance Company,
a Texas corporation, owned by Pledgor, including without limitation
1,000 shares of common stock evidenced by share certificate no. 1
issued in the name of Pledgor.
(e) All shares of capital stock of Risk Retention Administrators, Inc., a
Nevada corporation, owned by Pledgor, including without limitation
10,000 shares of common stock evidenced by share certificate no. 1
issued in the name of Pledgor.
(f) All shares of capital stock of National Specialty Lines, Inc., a
Florida corporation, owned by Pledgor, including without limitation
21.0526 shares of common stock evidenced by share certificate no. 8
issued in the name of Pledgor.
(g) All shares of capital stock of De La Torre Insurance Adjusters, Inc.,
a Florida corporation, owned by Pledgor, including without limitation
228.57099 shares of common stock evidenced by share certificate no. 9
issued in the name of Pledgor.
(h) All shares of capital stock of Lalande Financial Group, Inc., a
Florida corporation, owned by Pledgor, including without limitation
200 shares of common stock evidenced by share certificate no. 5 issued
in the name of Pledgor.
