PLEDGE AGREEMENT
Exhibit
10.6
THIS
PLEDGE AGREEMENT, made as of this 10th day of September, 2007 (this
“Agreement”), is between GULF WESTERN PETROLEUM
CORPORATION, a Nevada corporation (“GWPC”),
GULF WESTERN PETROLEUM LP, a Texas limited partnership
(“Gulf LP”), XXXXXXX RESOURCES LLC, a Delaware
limited liability company (“Xxxxxxx LLC”), XXXXXXX RESOURCES
CORP., a Delaware corporation (“Xxxxxxx Corp.”, together with
GWPC, Gulf LP, Xxxxxxx LLC and each other Person who becomes a party to this
Agreement by execution of an addendum in the form of Exhibit B attached hereto,
is hereinafter referred to collectively as “Pledgor”),
and METAGE FUNDS LIMITED (in its capacity as Collateral
Agent for the Buyers identified below (in such capacity, together with its
successors and assigns, the “Pledgee”).
WHEREAS:
A. GWPC
has executed and delivered to each of the Buyers those certain senior secured
convertible notes each made by GWPC and dated as of the date hereof in an
original aggregate principal amount of $3,700,000 (such
notes, together with any promissory notes or other securities issued in exchange
or substitution therefor or replacement thereof, and as any of the same may
be
amended, supplemented, restated or modified and in effect from time to time,
the
“Notes”). The Notes were issued pursuant to a
certain Securities Purchase Agreement dated as of even date herewith (as the
same may be amended, restated, supplemented or otherwise modified, the
“Purchase Agreement”), among GWPC and Metage Funds Limited and
NCIM Limited (together with their respective successors and assigns, the
“Buyers”), and pursuant to which the Buyers have made certain
loans (“Loans”) to GWPC.
B. Pursuant
to a Security Agreement of even date herewith by and among Pledgor and Pledgee
(as the same may be amended, restated, modified or supplement and in effect
from
time to time, the “Security Agreement”), Pledgor has granted
Pledgee, for its benefit and the benefit of the Buyers, a first priority
security interest in, lien upon and pledge of its rights in the Collateral
(as
defined in the Security Agreement).
C. To
induce the Buyers to make the Loans, and in order to secure the payment and
performance by Pledgor of the Liabilities (as defined in the Security
Agreement), Pledgor has agreed to pledge to Pledgee all of the capital stock
and
other equity interests and securities of the Xxxxxxx Corp., Xxxxxxx LLC and
Gulf
LP now or hereafter owned or acquired by Pledgor.
NOW,
THEREFORE, in consideration of the premises to induce the Buyers and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Pledgor hereby agrees with Pledgee as
follows:
1. Defined
Terms. Unless otherwise defined herein, all capitalized terms
used herein shall have the meanings given them in
the Purchase Agreement.
2. Pledge. Pledgor
hereby pledges, assigns, hypothecates, transfers, delivers and grants to
Pledgee, for the benefit of itself and the Buyers, a first lien on and first
priority perfected security interest in (i) all of the capital stock or other
equity interests of Xxxxxxx Corp., Xxxxxxx LLC and Gulf LP now owned or
hereafter acquired by Pledgor (collectively, the “Pledged
Shares”), (ii) all other property hereafter delivered to, or in the
possession or in the custody of, Pledgee, in substitution for or in addition
to
the Pledged Shares, (iii) any other property of Pledgor, as described in
Section 4 below or otherwise, whether now or hereafter delivered to, or
in the possession or custody of Pledgor, and (iv) all proceeds of the collateral
described in the preceding clauses (i), (ii) and (iii) (the
collateral described in clauses (i) through (iv) of this
Section 2 being collectively referred to as the “Pledged
Collateral”), as collateral security for the prompt and complete
payment and performance when due (whether at the stated maturity, by
acceleration or otherwise) of the Liabilities. All of the
Pledged Shares now owned by Pledgor which are presently represented by
certificates are listed on Exhibit A hereto, which certificates,
with undated assignments separate from certificates or stock powers duly
executed in blank by Pledgor and irrevocable proxies, are being delivered to
Pledgee simultaneously herewith. Upon the creation or acquisition of
any new Pledged Shares, Pledgor shall execute an Addendum in the form of
Exhibit B attached hereto (a “Pledge
Addendum”). Any Pledged Collateral described in a Pledge
Addendum executed by Pledgor shall thereafter be deemed to be listed on
Exhibit A hereto. Pledgee shall maintain actual physical
possession and custody of the certificates representing the Pledged Shares
and
any additional Pledged Collateral.
3. Representations
and Warranties of Pledgor. Pledgor represents and
warrants to Pledgee, and covenants with Pledgee, that:
(a) Exhibit
A sets forth (i) the authorized capital stock or other equity interests
of
each Pledge Entity, (ii) the number of shares of capital stock or other equity
interests of each Pledge Entity that are issued and outstanding as of the date
hereof, and (iii) the percentage of the issued and outstanding shares of capital
stock or other equity interests of each Pledge Entity held by
Pledgor. Pledgor is the record and beneficial owner of, and has good
and marketable title to, the Pledged Shares, and such shares are and will remain
free and clear of all pledges, liens, security interests and other encumbrances
and restrictions whatsoever, except the liens and security interests in favor
of
Pledgee created by this Agreement;
(b) Except
as set forth on Exhibit A, there are no outstanding options, warrants or
other similar agreements with respect to the Pledged Shares or any of the other
Pledged Collateral;
(c) this
Agreement is the legal, valid and binding obligation of Pledgor, enforceable
against Pledgor in accordance with its terms, except to the extent that such
enforceability is subject to applicable bankruptcy, insolvency, reorganization,
fraudulent conveyance and moratorium laws and other laws of general application
affecting enforcement of creditors’ rights generally, or the availability of
equitable remedies, which are subject to the discretion of the court before
which an action may be brought;
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(d) the
Pledged Shares have been duly and validly authorized and issued, are fully
paid
and non-assessable, and the Pledged Shares listed on Exhibit A constitute
all of the issued and outstanding capital stock or other equity interests of
Xxxxxxx Corp., Xxxxxxx LLC and Gulf LP;
(e) except
for a UCC-1 financing statement filed by Pledgee pursuant to this Agreement
and
any subsequent amendments thereto, no consent, approval or authorization of
or
designation or filing with any governmental or regulatory authority on the
part
of Pledgor is required in connection with the pledge and security interest
granted under this Agreement;
(f) the
execution, delivery and performance of this Agreement will not violate any
provision of any applicable law or regulation or of any order, judgment, writ,
award or decree of any court, arbitrator or governmental authority, domestic
or
foreign, or of the articles or certificate of incorporation, bylaws or any
other
similar organizational documents of Pledgor or any Pledge Entity or of any
securities issued by Pledgor or any Pledge Entity or of any mortgage, indenture,
lease, contract, or other agreement, instrument or undertaking to which Pledgor
or any Pledge Entity is a party or which purports to be binding upon Pledgor
or
any Pledge Entity or upon any of the assets of Pledgor or any Pledge Entity,
and
will not result in the creation or imposition of any lien, charge or encumbrance
on or security interest in any of the assets of Pledgor or any Pledge Entity,
except as otherwise contemplated by this Agreement;
(g) the
pledge, assignment and delivery of the Pledged Shares and the other Pledged
Collateral pursuant to this Agreement creates a valid first lien on and
perfected first priority security interest in such Pledged Shares and upon
the
proper filing of a UCC-1 financing statement, the Pledged Collateral and the
proceeds thereof in favor of Pledgee, subject to no prior pledge, lien,
mortgage, hypothecation, security interest, charge, option or encumbrance or
to
any agreement purporting to grant to any third party a security interest in
the
property or assets of Pledgor which would include the Pledged Shares or any
other Pledged Collateral. Pledgor covenants and agrees that it will
defend, for the benefit of Pledgee, Pledgee’s right, title and security interest
in and to the Pledged Shares, the other Pledged Collateral and the proceeds
thereof against the claims and demands of all other persons or
entities;
(h) each
Pledged Share consisting of either (i) a membership interest in a Person that
is
a limited liability company or (ii) a partnership interest in a Person that
is a
partnership (if any) are “securities” governed by Article 8 of the
UCC. Certificates evidencing such membership interests or partnership
interests (if any) have been issued to Pledgor by the applicable Person and
will
be delivered to Pledgee. Pledgor will not cause and will not permit
GWPC to “opt-out” of Article 8 of the UCC. Pledgor will not take, and
will not permit Xxxxxxx Corp., Xxxxxxx LLC and Gulf LP to take, any actions
to
cause the capital stock, membership interests, partnership interests or similar
equity interests of Xxxxxxx Corp., Xxxxxxx LLC and Gulf LP (if any) to cease
to
be classified as “securities” governed by Article 8 of the UCC; and
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(i) no
Pledgor (i) will become a person whose property or interests in property are
blocked or subject to blocking pursuant to Section 1 of Executive Order 13224
of
September 23, 2001 Blocking Property and Prohibiting Transactions with Persons
Who Commit, Threaten to Commit or Support Terrorism (66 Fed. Reg. 49079(2001),
(ii) will engage in any dealings or transactions prohibited by Section 2 of
such
executive order, or (iii) will otherwise become a person on the list of
Specially Designated Nationals and Blocked Persons or subject to the limitations
or prohibitions under any other Office of Foreign Asset Control regulation
or
executive order.
4. Dividends,
Distributions, Etc. If, while this Agreement is in
effect, Pledgor shall become entitled to receive or shall receive any
certificate (including, without limitation, any certificate representing a
dividend or a distribution in connection with any reclassification, increase
or
reduction of capital, or issued in connection with any reorganization, merger
or
consolidation), or any options or rights, whether as an addition to, in
substitution for, or in exchange for any of the Pledged Shares or otherwise,
Pledgor agrees, in each case, to accept the same as Pledgee’s agent and to hold
the same in trust for Pledgee, and to deliver the same promptly (but in any
event within ten (10) business days) to Pledgee in the exact form received,
with
the endorsement of Pledgor when necessary and/or with appropriate undated
assignments separate from certificates or stock powers duly executed in blank,
to be held by Pledgee subject to the terms hereof, as additional Pledged
Collateral. Pledgor shall promptly deliver to Pledgee (i) a Pledge
Addendum with respect to such additional certificates, and (ii) any financing
statements or amendments to financing statements as requested by Pledgee.
Pledgor hereby authorizes Pledgee to attach each Pledge Amendment to this
Agreement. In case any distribution of capital shall be made on or in
respect of the Pledged Shares or any property shall be distributed upon or
with
respect to the Pledged Shares pursuant to the recapitalization or
reclassification of the capital of the issuer thereof or pursuant to the
reorganization thereof, the property so distributed shall be delivered to
Pledgee to be held by it as additional Pledged Collateral. Except as
provided in Section 5(b) below, all sums of money and property so paid or
distributed in respect of the Pledged Shares which are received by Pledgor
shall, until paid or delivered to Pledgee, be held by Pledgor in trust as
additional Pledged Collateral.
5. Voting
Rights; Dividends; Certificates.
(a) So
long as no Event of Default (as defined in the Notes) has occurred and is
continuing, Pledgor shall be entitled (subject to the other provisions hereof,
including, without limitation, Section 8 below) to exercise its voting
and other consensual rights with respect to the Pledged Shares and otherwise
exercise the incidents of ownership thereof in any manner not inconsistent
with
this Agreement or the Purchase Agreement and the other Transaction
Documents. Pledgor hereby grants to Pledgee or its nominee, an
irrevocable proxy to exercise all voting and corporate rights relating to the
Pledged Shares in any instance, which proxy shall be effective, at the
discretion of Pledgee, upon the occurrence and only during the continuance
of an
Event of Default. Upon the request of Pledgee at any time,
Pledgor agrees to deliver to Pledgee such further evidence of such irrevocable
proxy or such further irrevocable proxies to vote the Pledged Shares as Pledgee
may request.
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(b) So
long as no Event of Default shall have occurred and be continuing, Pledgor
shall
be entitled to receive cash dividends or other distributions made in respect
of
the Pledged Shares, to the extent permitted to be made pursuant to the terms
of
the Notes. Upon the occurrence and during the continuance of an Event
of Default, in the event that Pledgor, as record and beneficial owner of the
Pledged Shares, shall have received or shall have become entitled to receive,
any cash dividends or other distributions in the ordinary course, Pledgor shall
deliver to Pledgee, and Pledgee shall be entitled to receive and retain, for
the
benefit of Pledgee and the Buyers, all such cash or other distributions as
additional security for the Liabilities.
(c) Subject
to any sale or other disposition by Pledgee of the Pledged Shares, any other
Pledged Collateral or other property pursuant to this Agreement, upon the
indefeasible full payment in cash, satisfaction and termination of all of the
Liabilities and the termination of this Agreement pursuant to Section 11
hereof and of the liens and security interests hereby granted, the Pledged
Shares, the other Pledged Collateral and any other property then held as part
of
the Pledged Collateral in accordance with the provisions of this Agreement
shall
be returned to Pledgor or to such other persons or entities as shall be legally
entitled thereto.
(d) Pledgor
shall cause all Pledged Shares that are certificated to remain certificated
at
all times while this Agreement is in effect.
6. Rights
of Pledgee. To the extend permitted by applicable
laws, Pledgee shall not be liable for failure to collect
or realize upon the Liabilities or any collateral security or guaranty therefor,
or any part thereof, or for any delay in so doing, nor shall Pledgee be under
any obligation to take any action whatsoever with regard thereto. Any
or all of the Pledged Shares held by Pledgee hereunder may, if an Event of
Default has occurred and is continuing, without notice, be registered in the
name of Pledgee or its nominee, and Pledgee or its nominee may thereafter
without notice exercise all voting and corporate rights at any meeting with
respect to any Pledge Entity and exercise any and all rights of conversion,
exchange, subscription or any other rights, privileges or options pertaining
to
any of the Pledged Shares as if it were the absolute owner thereof, including,
without limitation, the right to vote in favor of, and to exchange at its
discretion any and all of the Pledged Shares upon, the merger, consolidation,
reorganization, recapitalization or other readjustment with respect to any
Pledge Entity or upon the exercise by any Pledge Entity, Pledgor or Pledgee
of
any right, privilege or option pertaining to any of the Pledged Shares, and
in
connection therewith, to deposit and deliver any and all of the Pledged Shares
with any committee, depository, transfer agent, registrar or other designated
agency upon such terms and conditions as Pledgee may reasonably determine,
all
without liability except to account for property actually received by Pledgee,
but Pledgee shall have no duty to exercise any of the aforesaid rights,
privileges or options and shall not be responsible for any failure to do so
or
delay in so doing.
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7. Remedies. Upon
the occurrence and only during the continuance of an Event of Default, Pledgee
may exercise in respect of the Pledged Collateral, in addition to other rights
and remedies provided for herein or otherwise available to it, all the rights
and remedies of a Pledgee under the Uniform Commercial Code
(“UCC”) in effect in the State of Texas from time to time,
whether or not the UCC applies to the affected Pledged Collateral (or the
Uniform Commercial Code as in effect in any other relevant
jurisdiction). Pledgee also, without demand of performance or other
demand, advertisement or notice of any kind (except the notice specified below
of time and place of public or private sale) to or upon Pledgor or any other
person or entity (all and each of which demands, advertisements and/or notices
are hereby expressly waived), may forthwith collect, receive, appropriate and
realize upon the Pledged Collateral, or any part thereof, and/or may forthwith
date and otherwise fill in the blanks on any assignments separate from
certificates or stock power or otherwise sell, assign, give an option or options
to purchase, contract to sell or otherwise dispose of and deliver said Pledged
Collateral, or any part thereof, in one or more portions at one or more public
or private sales or dispositions, at any exchange or broker’s board or at any of
Pledgee’s offices or elsewhere upon such terms and conditions as Pledgee may
deem advisable and at such prices as it may deem best, for any combination
of
cash and/or securities or other property or on credit or for future delivery
without assumption of any credit risk, with the right to Pledgee upon any such
sale, public or private, to purchase the whole or any part of said Pledged
Collateral so sold, free of any right or equity of redemption in Pledgor, which
right or equity is hereby expressly waived or released. Pledgee shall
apply the net proceeds of any such collection, recovery, receipt, appropriation,
realization, sale or disposition, after deducting all reasonable and necessary
out of pocket costs and expenses of every kind incurred therein or incidental
to
the safekeeping of any and all of the Pledged Collateral or in any way relating
to the rights of Pledgee hereunder, including reasonable attorneys’ fees based
on reasonable rates customarily charged and legal expenses, to the payment,
in
whole or in part, of the Liabilities, in such order as Pledgee may
elect. Pledgor shall remain liable for any deficiency remaining
unpaid after such application. Only after so paying over such net
proceeds and after the payment by Pledgee of any other amount required by any
provision of law, including, without limitation, Section 9-608 of the UCC,
need
Pledgee account for the surplus, if any, to Pledgor. Pledgor agrees
that Pledgee need not give more than ten (10) days written notice of the time
and place of any public sale or of the time after which a private sale or other
intended disposition is to take place and that such notice is reasonable
notification of such matters. No notification need be given to
Pledgor if it has signed after default a statement renouncing or modifying
any
right to notification of sale or other intended disposition.
8. No
Disposition, Etc. Pledgor agrees that it will not
sell, assign, transfer, exchange, or otherwise dispose of, or grant any option
with respect to, the Pledged Shares or any other Pledged Collateral, nor will
Pledgor create, incur or permit to exist any pledge, lien, mortgage,
hypothecation, security interest, charge, option or any other encumbrance with
respect to any of the Pledged Shares or any other Pledged Collateral, or any
interest therein, or any proceeds thereof, except for the lien and security
interest of Pledgee provided for by this Agreement and the Security
Agreement.
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9. Sale
of Pledged Shares.
(a) Pledgor
recognizes that Pledgee may be unable to effect a public sale or disposition
(including, without limitation, any disposition in connection with a merger
of a
Pledge Entity) of any or all the Pledged Shares by reason of certain
prohibitions contained in the Securities Act of 1933, as amended (the
“1933 Act”), and applicable state securities laws, but may be
compelled to resort to one or more private sales or dispositions thereof to
a
restricted group of purchasers who will be obliged 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 and
agrees that any such private sale or disposition may result in prices and other
terms (including the terms of any securities or other property received in
connection therewith) less favorable to the seller than if such sale or
disposition were a public sale or disposition and, notwithstanding such
circumstances, agrees that any such private sale or disposition shall be deemed
to be reasonable and affected in a commercially reasonable
manner. Pledgee shall be under no obligation to delay a sale or
disposition of any of the Pledged Shares in order to permit Pledgor or a Pledge
Entity to register such securities for public sale under the 1933 Act, or under
applicable state securities laws, even if Pledgor or a Pledge Entity would
agree
to do so.
(b) Pledgor
further agrees to do or cause to be done all such other acts and things as
may
be reasonably necessary to make such sales or dispositions of the Pledged Shares
valid and binding and in compliance with any and all applicable laws,
regulations, orders, writs, injunctions, decrees or awards of any and all
courts, arbitrators or governmental instrumentalities, domestic or foreign,
having jurisdiction over any such sales or dispositions, all at Pledgor's
expense. Pledgor further agrees that a breach of any of the covenants
contained in Sections 4, 5(a), 5(b), 8, 9 and
24 will cause irreparable injury
to Pledgee and that Pledgee has no
adequate remedy at law in respect of such breach and, as a consequence, agrees,
without limiting the right of Pledgee to seek and obtain specific performance
of
other obligations of Pledgor contained in this Agreement, that each and every
covenant referenced above shall be specifically enforceable against Pledgor,
and
Pledgor hereby waives and agrees not to assert any defenses against an action
for specific performance of such covenants.
(c) Pledgor
further agrees to indemnify and hold harmless the Buyers, Pledgee and their
respective successors and assigns, their respective officers, directors,
employees, attorneys and agents, and any person or entity in control of any
thereof, from and against any loss, liability, claim, damage and expense,
including, without limitation, reasonable outside counsel fees based on
reasonable rates customarily charged and expenses (in this paragraph
collectively called the “Indemnified Liabilities”), under
federal and state securities laws or otherwise insofar as such Indemnified
Liability (i) arises out of or is based upon any untrue statement or alleged
untrue statement of a material fact contained in any registration statement,
prospectus or offering memorandum or in any preliminary prospectus or
preliminary offering memorandum or in any amendment or supplement to any thereof
or in any other writing prepared in connection with the offer, sale or resale
of
all or any portion of the Pledged Collateral unless such untrue statement of
material fact was provided by Pledgee, in writing, specifically for inclusion
therein, or (ii) arises out of or is based upon any omission or alleged omission
to state therein a material fact required to be stated or necessary to make
the
statements therein not misleading, such indemnification to remain operative
regardless of any investigation made by or on behalf of Pledgee or any successor
thereof, or any person or entity in control of any thereof. In
connection with a public sale or other distribution, Pledgor will provide
customary indemnification to any underwriters, their successors and assigns,
officers and directors and each person or entity who controls any such
underwriter (within the meaning of the 1933 Act). If and to the
extent that the foregoing undertakings in this paragraph may be unenforceable
for any reason, Pledgor agrees to make the maximum contribution to the payment
and satisfaction of each of the Indemnified Liabilities which is permissible
under applicable law. The obligations of Pledgor under this
paragraph (c) shall survive any termination of this
Agreement.
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(d) Pledgor
further agrees to defer any and all rights of subrogation it may have against
a
Pledge Entity upon the sale or disposition of all or any portion of the Pledged
Collateral by Pledgee pursuant to the terms of this Agreement until the
irrevocable payment in full of the Liabilities.
(e) Pledgor
further waives any requirements pursuant to the terms of the agreement of
limited partnership for the delivery of an opinion of counsel with respect
to
the pledge of the partnership interests of Gulf LP.
10. No
Waiver; Cumulative Remedies. Pledgee shall not by any act, delay,
omission or otherwise be deemed to have waived any of its remedies hereunder,
and no waiver by Pledgee shall be valid unless in writing and signed by Pledgee,
and then only to the extent therein set forth. A waiver by Pledgee of
any right or remedy hereunder on any one occasion shall not be construed as
a
bar to any right or remedy which Pledgee would otherwise have on any further
occasion. No course of dealing between Pledgor and Pledgee and no
failure to exercise, nor any delay in exercising on the part of Pledgee or
the
Buyers of, any right, power or privilege hereunder or under the other
Transaction Documents shall impair such right or remedy or operate as a waiver
thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and
remedies herein provided are cumulative and may be exercised singly or
concurrently, and are not exclusive of any rights or remedies provided by law
or
in the Purchase Agreement.
11. Termination. This
Agreement and the liens and security interests granted hereunder shall terminate
and Pledgee shall return any Pledged Shares or other Pledged Collateral then
held by Pledgee in accordance with the provisions of this Agreement to Pledgor
upon the payment in full of all Liabilities or conversion of the indebtedness
under the Notes in accordance with the terms thereof.
12. Possession
of Collateral. Beyond the exercise of reasonable care
to assure the safe custody of the Pledged Shares in the physical possession
of
Pledgee pursuant hereto, neither Pledgee, nor any nominee of Pledgee, shall
have
any duty or liability to collect any sums due in respect thereof or to protect,
preserve or exercise any rights pertaining thereto (including any duty to
ascertain or take action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relating to the Pledged Collateral and
any
duty to take any necessary steps to preserve rights against any parties with
respect to the Pledged Collateral), and except as provided above, shall be
relieved of all responsibility for the Pledged Collateral upon surrendering
them
to Pledgor. Pledgor assumes the responsibility for being and keeping
itself informed of the financial condition of a Pledge Entity and of all other
circumstances bearing upon the risk of non-payment of the Liabilities, and
Pledgee shall have no duty to advise Pledgor of information known to Pledgee
regarding such condition or any such circumstance. Pledgee shall have
no duty to inquire into the powers of a Pledge Entity or its officers,
directors, managers, members, partners or agents thereof acting or purporting
to
act on its behalf.
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13. Taxes
and Expenses. Pledgor will upon demand pay to Pledgee, (a) any
taxes (excluding income taxes, franchise taxes or other taxes levied on gross
earnings, profits or the like of Pledgee) payable or ruled payable by any
Governmental Authority (as defined in the Security Agreement) in respect of
this
Agreement, together with interest and penalties, if any, and (b) all expenses,
including the reasonable fees and expenses of outside counsel for Pledgee,
at
reasonable rates customarily charged, that Pledgee may incur in connection
with
(i) the administration, modification or amendment of this Agreement, (ii) the
custody or preservation of, or the sale of, collection from, or other
realization upon, any of the Pledged Collateral, (iii) the exercise or
enforcement of any of the rights of Pledgee hereunder, or (iv) the failure
of
Pledgor to perform or observe any of the provisions hereof.
14. Pledgee
Appointed Attorney-In-Fact. Pledgor hereby irrevocably appoints
Pledgee as Pledgor’s attorney-in-fact, with full authority in the place and
stead of Pledgor and in the name of Pledgor or otherwise, from time to time
in
Pledgee’s discretion, to take any action and to execute any instrument that
Pledgee deems reasonably necessary or advisable to accomplish the purposes
of
this Agreement, including, without limitation, to receive, endorse and collect
all instruments made payable to Pledgor representing any dividend, interest
payment or other distribution in respect of the Pledged Collateral or any part
thereof and to give full discharge for the same, when and to the extent
permitted by this Agreement; provided that the power of attorney granted
hereunder shall only be exercised by Pledgee after the occurrence and only
during the continuance of an Event of Default.
15. Governing
Law; Jurisdiction; Jury Trial. All questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by the internal laws of the State of Texas, without giving effect
to
any choice of law or conflict of law provision or rule (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. Each party hereby
irrevocably submits to the non-exclusive jurisdiction of the state and federal
courts sitting in Houston, Texas, for the adjudication of any dispute hereunder
or in connection herewith or with any transaction contemplated hereby or
discussed herein, and hereby irrevocably waives, and agrees not to assert in
any
suit, action or proceeding, any claim that it is not personally subject to
the
jurisdiction of any such court, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding
is
improper. Each party hereby irrevocably waives personal service of
process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to such party at the address for such
notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law. Notwithstanding the foregoing, the
Pledgee may enforce its rights and remedies in any other jurisdiction applicable
to the Pledged Collateral. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY
RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION
OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS
AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
9
16. Counterparts. This
Agreement may be executed in two or more identical counterparts, all of which
shall be considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other party;
provided that a facsimile, .pdf or similar electronically transmitted signature
shall be considered due execution and shall be binding upon the signatory
thereto with the same force and effect as if the signature were an original
signature.
17. Headings. The
headings of this Agreement are for convenience of reference and shall not form
part of, or affect the interpretation of, this Agreement.
18. Severability. If
any provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction or
the
validity or enforceability of any provision of this Agreement in any other
jurisdiction.
19. Entire
Agreement; Amendments. This Agreement supersedes all other prior
oral or written agreements between each Pledgor, Pledgee, the Buyers and their
affiliates and persons acting on their behalf with respect to the matters
discussed herein, and this Agreement and the Transaction Documents and
instruments referenced herein and therein contain the entire understanding
of
the parties with respect to the matters covered herein and therein.
20. Notices. All
notices, approvals, requests, demands and other communications hereunder shall
be delivered or made in the manner set forth in, and shall be effective in
accordance with the terms of, the Purchase Agreement, in the case of
communications to the Collateral Agent, directed to the notice address set
forth
in the Security Agreement.
21. Successors
and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties and their respective successors and assigns,
including any Buyers of the Notes. Pledgor shall not assign this
Agreement or any rights or obligations hereunder without the prior written
consent of Pledgee. Pledgee may assign its rights hereunder with
Pledgor’s prior written consent if no Event of Default shall exist, but without
the consent of Pledgor if an Event of Default exists, in which event such
assignee shall be deemed to be Pledgee hereunder with respect to such assigned
rights.
10
22. No
Third Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person or entity.
23. Survival. All
representations, warranties, covenants and agreements of Pledgor and Pledgee
shall survive the execution and delivery of this Agreement.
24. Further
Assurances. Pledgor agrees that at any time and from time to time
upon the written request of Pledgee, Pledgor will execute and deliver all
assignments separate from certificates or stock powers, financing statements
and
such further documents and do such further acts and things as Pledgee may
reasonably request consistent with the provisions hereof in order to carry
out
the intent and accomplish the purpose of this Agreement and the consummation
of
the transactions contemplated hereby.
25. No
Strict Construction. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent,
and no rules of strict construction will be applied against any
party.
26. Pledgee
Authorized. Pledgor hereby authorizes Pledgee to file one or more
financing or continuation statements and amendments thereto (or similar
documents required by any laws of any applicable jurisdiction) indicating as
collateral covered thereunder all or any part of the Pledged Shares or other
Pledged Collateral without the signature of Pledgor.
27. Pledgee
Acknowledgement. Pledgee acknowledges receipt of an executed copy
of this Agreement. Pledgor waives the right to receive any amount
that it may now or hereafter be entitled to receive (whether by way of damages,
fine, penalty, or otherwise) by reason of the failure of the Pledgee to deliver
to the Pledgor a copy of any financing statement or any statement issued by
any
registry that confirms registration of a financing statement relating to this
Agreement.
28. Collateral
Agent and Buyer Indemnification.
(a) Each
Buyer hereby irrevocably appoints and authorizes the Pledgee to act as
collateral agent (the “Collateral Agent”) on its behalf under
this Agreement and to enter into each of the instruments, documents and
agreements, including any pledge agreement, guaranty, financing statements,
mortgage, Account Control Agreement or any other Security Documents (the
“Financing Documents”), to which Pledgee is a party (including
in its capacity as Collateral Agent) on such Buyer’s behalf and to take such
actions as Collateral Agent on such Buyer’s behalf and to exercise such powers
under the Financing Documents as are delegated to Collateral Agent or Pledgee
(as applicable) by the terms thereof, together with all such powers as are
reasonably incidental thereto. The Collateral Agent shall take such
action under this Agreement and/or any other Transaction Documents as the
Collateral Agent shall reasonably be directed by the Requisite Buyers in
accordance with the terms of the Transaction Documents. Pledgee is
authorized and empowered to amend, modify, or waive any provisions of this
Agreement or the other Financing Documents only with the consent of the
Requisite Buyers.
11
(b) Whether
or not the transactions contemplated hereby shall be consummated, upon demand
therefor the Buyers shall indemnify the Collateral Agent (to the extent not
reimbursed by or on behalf of Pledgor and without limiting the obligation of
Pledgor to do so), ratably from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses and disbursements of any kind whatsoever, including, for purposes
of
clarification, all Taxes, which may at any time (including at any time following
the payment in full of the Notes and the termination or resignation of the
Collateral Agent) be imposed on, incurred by or asserted against the Collateral
Agent in any way relating to or arising out of this Agreement, any other
Financing Document or any document contemplated hereby or referred to herein
or
the transactions contemplated hereby or thereby or any action taken or omitted
by the Collateral Agent under or in connection with any of the foregoing;
provided, however, that no Buyer shall be liable for the payment
to the Collateral Agent of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting solely from the Collateral Agent’s gross negligence or willful
misconduct. In addition, each Buyer shall reimburse the Collateral
Agent upon demand for its ratable share of any costs or out-of-pocket expenses
(including attorney costs) incurred by the Collateral Agent in connection with
the preparation, execution, delivery, administration, modification, amendment
or
enforcement (whether through negotiations, legal proceedings or otherwise)
of,
or legal advice in respect of rights or responsibilities under, this Agreement,
any other Transaction Document, or any document contemplated hereby or referred
to herein to the extent that the Collateral Agent is not reimbursed for such
expenses by or on behalf of Pledgor. Without limiting the generality
of the foregoing, if any Governmental Authority of any jurisdiction asserts
a
claim that the Collateral Agent did not properly withhold tax from amounts
paid
to or for the account of any Buyer (because the appropriate form was not
delivered, was not properly executed, or because such Buyer failed to notify
the
Collateral Agent of a change in circumstances which rendered the exemption
from,
or reduction of, withholding tax ineffective, or for any other reason) such
Buyer shall indemnify the Collateral Agent fully for all amounts paid, directly
or indirectly, by the Collateral Agent as tax or otherwise, including penalties
and interest, and including any taxes imposed by any jurisdiction on the amounts
payable to the Collateral Agent under this Section 28, together with all
related costs and expenses (including attorney costs). The
obligation of the Buyers in this Section 28 shall survive the payment of
all Liabilities hereunder.
(c) The
Collateral Agent shall not be deemed to have knowledge or notice of the
occurrence of any Event of Default or any event that with the giving of notice
or passage of time would constitute an Event of Default unless the Collateral
Agent shall have received written notice from a Buyer describing such Event
of
Default or event that with the giving of notice or passage of time would
constitute an Event of Default and stating that such notice is a “notice of
default”. Upon the occurrence and continuance of an Event of Default,
or an event that with the giving of notice or passage of time would constitute
an Event of Default, the Collateral Agent shall take such action under this
Agreement and/or any other Transaction Documents with respect to such Event
of
Default or event that with the giving of notice or passage of time would
constitute an Event of Default as Collateral Agent shall reasonably be directed
by the Requisite Buyers in accordance with the terms of the Transaction
Documents, provided that unless and until the Collateral Agent shall have
received such directions, the Collateral Agent may (but shall not be obligated
to) take such action, or refrain from taking such action, with respect of such
Event of Default or event that with the giving of notice or passage of time
would constitute an Event of Default or as the Collateral Agent shall deem
advisable in the best interests of the Buyers. In taking such action
or refraining from taking such action without specific direction from the
Requisite Buyers, the Collateral Agent shall use the same degree of care and
skill as a prudent person would exercise or use under the circumstances in
the
conduct of such person’s own affairs.
12
(d) Nothing
in this Section 28 shall be deemed to limit or otherwise affect the
rights of Pledgee or Buyers to exercise any remedy provided in this Agreement
or
any other Transaction Document.
(e) The
Collateral Agent may resign from the performance of all of its functions and
duties hereunder and/or under the other Financing Documents at any time by
giving thirty (30) Business Days prior written notice to the
Buyers. Such resignation shall take effect upon the appointment of a
successor Collateral Agent pursuant to clause (f) below or as otherwise provided
below.
(f) Upon
(i) the Buyers’ receipt of a notice of resignation by the Collateral Agent in
accordance with clause (e) above, or (ii) written notice by the Requisite Buyers
to Collateral Agent of the Requisite Buyers’ election to remove the existing
Collateral Agent and appoint a successor Collateral Agent, the Requisite Buyers
shall have the right to appoint a successor Collateral Agent. Upon
the acceptance of a successor's appointment as Collateral Agent hereunder and
notice of such acceptance to the retiring Collateral Agent, such successor
shall
succeed to and become vested with all of the rights, powers, privileges and
duties of the retiring (or retired) Collateral Agent, the retiring Collateral
Agent's resignation shall become immediately effective and the retiring
Collateral Agent shall be discharged from all of its duties and obligations
hereunder and under the other Financing Documents (if such resignation was
not
already effective and such duties and obligations not already discharged, as
provided below in this paragraph). If no such successor shall have
been so appointed by Requisite Buyers and shall have accepted such appointment
within thirty (30) days after the retiring Collateral Agent gives notice of
its
resignation or the Requisite Buyers give notice of their election to replace
the
retiring Collateral Agent, then the retiring Collateral Agent may, on behalf
of
the Buyers (but without any obligation) appoint a successor Collateral Agent
without the consent of any Buyer. From and following the expiration
of such thirty (30) day period, Collateral Agent shall have the exclusive right
without any Person's consent, upon one (1) Business Days' notice to the Buyers,
to make its resignation or removal effective immediately. From and
following the effectiveness of such notice, (i) the retiring Collateral
Agent shall be discharged from its duties and obligations hereunder and under
the other Financing Documents and (ii) all actions, payments,
communications and determinations provided to be made by, to or through
Collateral Agent shall instead be made by or to each Buyer directly, until
such
time as Requisite Buyers appoint a Collateral Agent as provided for above in
this paragraph. The provisions of this Agreement shall continue in
effect for the benefit of any retiring Collateral Agent and its sub-agents
after
the effectiveness of its resignation or removal hereunder and under the other
Financing Documents in respect of any actions taken or omitted to be taken
by
any of them while the retiring Collateral Agent was acting or was continuing
to
act as Collateral Agent.
[Signature
Page Follows]
13
IN
WITNESS WHEREOF, the parties hereto have caused this Pledge Agreement to be
duly
executed and delivered by their duly authorized officers on the date first
above
written.
|
PLEDGOR:
|
||||
|
GULF
WESTERN PETROLEUM
|
||||
| CORPORATION, a Nevada corporation | ||||
|
By:
|
/s/ Xxxxxx
X. Xxxxxx
|
|||
|
Name:
|
Xxxxxx
X. Xxxxxx
|
|||
|
Title:
|
CFO
|
|||
|
GULF
WESTERN PETROLEUM LP,
|
||||
|
a
Texas limited partnership
|
||||
|
By:
|
Xxxxxxx
Resources, LLC,
|
|||
|
a
Delaware limited liability company,
|
||||
|
its
general partner
|
||||
|
By:
|
/s/
Xxxxxx X. Xxxxxx
|
|||
|
Name:
|
Xxxxxx
X. Xxxxxx
|
|||
|
Title:
|
CFO
|
|||
|
XXXXXXX
RESOURCES LLC,
|
||||
|
a
Delaware limited liability company
|
||||
|
By:
|
/s/ Xxxxxx
X. Xxxxxx
|
|||
|
Name:
|
Xxxxxx
X. Xxxxxx
|
|||
|
Title:
|
CFO
|
|||
|
|
||||
|
XXXXXXX
RESOURCES CORP.,
|
||||
|
a
Delaware corporation
|
||||
|
By:
|
/s/ Xxxxxx
X. Xxxxxx
|
|||
|
Name:
|
Xxxxxx
X. Xxxxxx
|
|||
|
Title:
|
CFO
|
|||
Signature
Page to Pledge Agreement
|
PLEDGEE:
|
|||
|
METAGE
FUNDS LIMITED,
|
|||
|
in
its capacity as Collateral Agent for the Buyers
|
|||
|
By:
|
/s/ Xxx
Xxxxx
|
||
|
Name:
|
Xxx
Xxxxx
|
||
|
Title:
|
Investment
Manager
|
||
Signature
Page to Pledge
Agreement
IN
WITNESS WHEREOF, the parties hereto have caused this Pledge Agreement to be
duly
executed and delivered as of the day and year first above written.
|
BUYERS:
|
|||
|
Solely
for the purposes of Section 28
|
|||
|
NCIM
LIMITED, as a Buyer
|
|||
|
By:
|
/s/ X.X.
Xxxxxxx
|
||
|
Name:
|
X.X.
Xxxxxxx
|
||
|
Title:
|
Manager
|
||
|
METAGE
FUNDS, LIMITED, as a Buyer
|
|||
|
By:
|
/s/ Xxx
Xxxxx
|
||
|
Name:
|
Xxx
Xxxxx
|
||
|
Title:
|
Investment
Manager
|
||
Signature
Page to Pledge
Agreement
EXHIBIT
A
DESCRIPTION
OF PLEDGED SHARES
|
Name of
Entity
|
Class of Stock or
Other
Equity Interests
|
Authorized
No. of
Shares or
Units
|
Issued and
Outstanding
Shares or
Units
|
Percentage of
Shares or Units
Beneficially
Owned
by
Pledgor
|
|
Xxxxxxx
Resources Corp.
|
Common
Stock
|
100
|
100
|
100%
|
|
Xxxxxxx
Resources LLC
|
LLC
Xxxx
|
0
|
0
|
000%
|
|
Xxxx
Xxxxxxx Xxxxxxxxx, XX
|
Partnership
Interest
|
100
|
100
|
100%
|
DESCRIPTION
OF PLEDGED SHARES OR UNITS
|
Nam
Pledge
Entity
|
Class of Stock or
Other
Equity Interests
|
Stock or Unit
Certificate No.
|
No. of Shares or Units
Represented by
Certificate
|
|
Xxxxxxx
Resources Corp.
|
Common
Stock
|
1
|
1
|
|
Xxxxxxx
Resources LLC
|
LLC
Xxxx
|
0
|
0
|
|
Xxxx
Xxxxxxx Xxxxxxxxx, XX
|
General
Partnership Interest
|
1
|
1
|
|
Gulf
Western Petroleum, LP
|
Limited
Partnership Interest
|
2
|
99
|
EXHIBIT
B
Addendum
to Pledge Agreement
The
undersigned, being the Pledgor pursuant to that certain Pledge Agreement dated
as of September 10, 2007 (as amended, restated, supplemented or
otherwise modified from time to time, the “Pledge Agreement”)
in favor of Metage Funds Limited as Collateral Agent
(“Pledgee”), by executing this Addendum, hereby acknowledges
that Pledgor has acquired and legally and beneficially owns all of the issued
and outstanding [ shares of capital stock ] of [__________________, a _______
corporation ] (“Company”) described below (the
“Shares”). Pledgor hereby agrees and acknowledges
that the Shares shall be deemed Pledged Shares pursuant to the Pledge
Agreement. Pledgor hereby represents and warrants to Pledgee that (i)
all of the [ capital stock ] of the Company now owned by Pledgor is presently
represented by the certificates listed below, which certificates, with undated
assignments separate from certificate or stock powers duly executed in blank
by
Pledgor, are being delivered to Pledgee, simultaneously herewith (or have been
previously delivered to Pledgee), and (ii) after giving effect to this addendum,
the representations and warranties set forth in Section 3 of the Pledge
Agreement are true, complete and correct as of the date hereof.
Pledged
Shares
|
Name of
the Pledged Entity
|
Class of Equity Interest
|
Certificate No.
|
No. of Shares
Represented by
Certificate
|
IN
WITNESS WHEREOF, Pledgor has executed this Addendum this _____ day of
______.
|
PLEDGOR:
|
|||
|
GULF
WESTERN PETROLEUM
|
|||
| CORPORATION, a Nevada corporation | |||
|
By:
|
|||
|
Name:
|
|||
|
Title:
|
|||
