BOX ENERGY CORPORATION
AMENDED AND RESTATED PLEDGE AGREEMENT
BETWEEN BOX ENERGY CORPORATION
AND BOX BROTHERS HOLDING COMPANY
Exhibit 10.18
AMENDED AND RESTATED PLEDGE AGREEMENT
This Amended and Restated Pledge Agreement ("Agreement") is made
and entered into as of the 3rd day of June, 1997, by and between BOX
ENERGY CORPORATION, a Delaware corporation ("Secured Party") and BOX
BROTHERS HOLDING COMPANY, a Delaware corporation ("Debtor").
For and in consideration of the mutual covenants and conditions
contained herein and good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Debtor and Secured Party
hereby agree as follows:
ARTICLE 1
DEFINITIONS
Unless the context otherwise requires, as used in this Agreement
and the Note, the following terms shall have the following meanings,
which meanings shall be equally applicable to both the singular and
plural form of such terms:
1.1 Additional Collateral. The term "Additional Collateral" shall
mean those Assets of Debtor subjected to a security interest or lien in
favor of Secured Party pursuant to the provisions of Section 3.3 hereof.
1.2 Additional Collateral Value. The term "Additional Collateral
Value" shall mean as of any date of determination an amount equal to the
Fair Market Value of all Collateral other than the Pledged Stock on the
date of determination.
1.3 Agreement. The term "Agreement" shall mean this Security
Agreement, with any and all exhibits and schedules attached hereto as
the same may be, subject to Section 8.2 hereof, amended, supplemented or
otherwise modified in writing from time to time.
1.4 Asset. The term "Asset" shall mean any interest or right in
any kind of property or asset, whether real, personal or mixed, owned or
leased, tangible or intangible, and whether now held or hereafter
acquired, including, without limitation (i) all of the issued and
outstanding shares of capital stock of any subsidiary of Debtor now
owned or hereafter acquired by Debtor and (ii) all of the issued and
outstanding shares of capital stock of Box Energy Corporation now owned
or hereafter acquired by Debtor.
1.5 Business Day. The term "Business Day" shall mean a day, other
than a Saturday or Sunday, or legal holiday in the State of Texas, on
which commercial banks are open for business with the public in Dallas,
Texas.
1.6 Class A Collateral Value. The term "Class A Collateral Value"
shall mean as of any date of determination an amount equal to the
product of (i) an amount equal to the greater of (x) the Trading Price
of the Class A Common Stock of Box Energy Corporation on such date and
(y) 90% of the average Trading Price of the Class A Common Stock of Box
Energy Corporation for the thirty (30) day period ending on (and
including) the date determination times (ii) the number of shares of
Class A Common Stock of Box Energy Corporation pledged by Debtor as
security for the Secured Obligations on such date.
1.7 Class A Shares. The term "Class A Shares" shall have the
meaning given it in Section 3.1(a) hereof.
1.8 Closing Date. The term "Closing Date" shall be the effective
date of this Agreement.
1.9 Collateral. The term "Collateral" shall have the meaning set
forth in Section 3.1 hereof.
1.10 Collateral Request. The term "Collateral Request" shall mean a
written request from Secured Party for "Additional Collateral", such
"Collateral Request" to be effective only upon a day when the Collateral
Value of all Collateral of Debtor in which Secured Party then has a
perfected security interest does not equal or exceed the Minimum
Collateral Value.
1.11 Collateral Value. The term "Collateral Value" shall mean, as
of any date of determination, the sum of (i) the Class A Collateral
Value as of such date plus (ii) the Fair Market Value of the common
stock of CKB Petroleum, Inc. and CKB & Associates, Inc. (the "Subsidiary
Stock").
1.12 Event of Default. The term "Event of Default" shall mean the
occurrence of any of the events set forth in Section 7.1 hereof.
1.13 Fair Market Value. The term "Fair Market Value" shall mean
that value assigned to an Asset(s) by Debtor at any time of
determination of the Collateral Value of the Additional Collateral
(other than freely tradable capital stock of Box Energy Corporation)
hereunder. Within thirty (30) calendar days after Debtor has notified
Secured Party in writing of the Fair Market Value it assigned to such
Asset(s), Secured Party shall notify Debtor in writing whether it agrees
or disagrees with the assigned Fair Market Value. If Secured Party
disagrees with such assigned Fair Market Value, representatives of
Debtor and representatives of Secured Party shall meet and endeavor to
agree in arm's length good faith negotiations on the Fair Market Value
of said Asset(s). If, after negotiation for a period not to exceed
thirty (30) calendar days from Secured Party's notification that it
disagrees with Debtor's assigned Fair Market Value, the parties cannot
agree on the Fair Market Value of a particular Asset(s), Debtor shall
select an independent appraiser from a list of three (3) such
independent appraisers provided by Secured Party, which appraiser shall
appraise the Asset(s) and determine its Fair Market Value. If the Fair
Market Value assigned to an Asset(s) by Debtor is overstated by an amount
equal to or greater than ten percent (10%) of the Fair Market Value
determined by the appraiser, Debtor shall bear one hundred percent
(100%) of the fees and expenses of the appraiser. Otherwise the fees and
expenses of the appraiser shall be borne by Secured Party.
1.14 Highest Lawful Rate. The term "Highest Lawful Rate" shall mean
the maximum nonusurious rate of interest, if any, that at any time or
from time to time may be contracted for, taken, reserved, charged or
received with respect to the Note or on other amounts, if any, due to
Secured Party pursuant to this Agreement or any other Operative
Document, under laws applicable to Secured Party.
1.15 Initial Collateral. The term "Initial Collateral" shall mean
the property identified in Section 3.1(a-c) herein.
1.16 Loan. The term "Loan" shall mean the aggregate of all amounts
due under this Agreement and the Note.
1.17 Maturity Date. May 29, 1998, or such earlier date as the
Secured Obligations shall become due through acceleration.
1.18 Minimum Collateral Value. The term "Minimum Collateral Value"
shall mean that amount of Collateral Value equal to two dollars ($2.00)
for each one dollar ($1.00) of unpaid Principal Debt.
1.19 Note. The term "Note" shall mean that promissory note dated
even date herewith by Debtor payable to the order of Secured Party in
the original principal amount of $6,950,000.
1.20 Operative Documents. The term "Operative Documents" shall mean
this Agreement and the Note.
1.21 Permitted Encumbrances. The term "Permitted Encumbrances"
shall mean:
(a) Liens for taxes, assessments or similar charges which are not
yet due, or liens for taxes, assessments or similar charges which are
past due for which adequate reserves with respect thereto are maintained
on its books in accordance with generally accepted accounting principles
and which are being diligently contested in good faith and have not
proceeded to judgment;
(b) imperfections and irregularities in title to any Asset which
in the aggregate do not materially impair the fair market value or use
of such Asset for the purposes for which it is or may reasonably be
expected to be held;
(c) non-consensual liens arising in the ordinary course of
business imposed by law (other than a lien imposed by ERISA), including
carrier's, mechanic's, materialmen's, landlord's, warehousemen's or
other similar liens, with respect to obligations not incurred in
connection with any violations of law and which are not delinquent or,
if delinquent, are being diligently contested in good faith and for
which adequate reserves with respect thereto are maintained on its books
in accordance with generally accepted accounting principles.
(d) Liens consisting of pledges or deposits made in connection
with obligations under unemployment insurance, social security, workers'
compensation laws or similar legislation;
(e) Liens consisting of pledges or deposits of property to secure
insurance in the ordinary course of business, the performance of bids,
tenders, contracts (other than contracts for the payment of money),
leases, licenses, franchises, performance bonds and other obligations of
a like nature incurred in the ordinary course of business;
(f) Liens consisting of deposits of property to secure statutory
obligations of Debtor in the ordinary course of its business;
(g) all other non-consensual liens arising in the ordinary course
of Debtor's business or incidental to the ownership of Debtor's Assets;
provided, that no Permitted Encumbrance referred to in subclauses (a)
through (g) above shall (1) secure indebtedness, (2) in the aggregate
materially detract from the value of the material Assets of Debtor and
its Subsidiaries or materially impair the use thereof in the operation
of the business of Debtor and its Subsidiaries, or (3) be
disadvantageous in any material respect to Secured Party; and
(h) Liens on Assets of Debtor other than the Collateral, including
liens on Assets of Debtor that ultimately become Additional Collateral
to the extent that such liens arise prior to the date upon which such
Assets become Additional Collateral.
1.22 Person. The term "Person" shall mean an individual
corporation, partnership, association, joint stock company, trust or
trustee thereof, estate or executor thereof, unincorporated organization
or joint venture, court or governmental unit or any agency or
subdivision thereof, or any other legally recognizable entity.
1.23 Pledged Stock. The term "Pledged Stock" shall mean the issued
and outstanding shares of Class A Common Stock of Box Energy
Corporation, a Delaware corporation and the Subsidiary Stock owned
beneficially and of record by Debtor and pledged to Secured Party
pursuant to the provisions of this Agreement.
1.24 Potential Event of Default. The term "Potential Event of
Default" shall mean the occurrence of any breach of or failure to
perform in accordance with any of the covenants set forth in this
Agreement which, if not timely cured by Debtor within the specified cure
or grace periods, would become an Event of Default.
1.25 Principal Debt. The term "Principal Debt" shall mean the
aggregate unpaid principal balance of the Note due to Secured Party at
the time in question, whether matured, unmatured, due, not yet due, or
in default.
1.26 Secured Obligations. The term "Secured Obligations" shall mean
all obligations owing by Debtor to Secured Party under the Operative
Documents, including principal, interest, liabilities, obligations,
covenants, and duties owing to Secured Party or any of their respective
heirs, successors and assigns, present or future arising under this
Agreement or the Note, whether or not for the payment of money, whether
arising by reason of an extension of credit, loan, indemnification, or
in any other manner. The term includes, without limitation, all
reasonable charges, expenses, fees, attorneys' fees and disbursements
and any other sum chargeable to Debtor under this Agreement or any other
Operative Document.
1.27 Subsidiary Stock. The term "Subsidiary Stock" shall have the
meaning given it in Section 1.11 hereof.
1.28 ▇▇▇ Box Litigation. The term "▇▇▇ Box Litigation" shall mean
those two actions presently pending in which ▇▇▇ Box is the Plaintiff
and Debtor is, among others, the defendant, to wit: ▇▇▇ Box v. ▇▇▇▇
▇▇▇, ▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇, Box Brothers Holding Company, Inc. [sic] and Box
Energy Corporation, Cause No. 96-08451 pending in the ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ and ▇▇▇ Box v. ▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇ and ▇▇▇▇ ▇▇▇,
Defendants, and Box Brothers Holding Company, Inc. [sic], Cause No. 3-96
CV2362-X pending in the United States District Court for the Northern
District of Texas.
1.29 Stated Interest Rate. The term "Stated Interest Rate" shall
mean the rate of interest payable under the Note.
1.30 Trading Price. The term "Trading Price" shall mean the average
of the "high" and "low" price at the closing of trading on a given day,
as published in The Wall Street Journal. For purposes of determining
the "Trading Price," if no Class A shares have traded on a particular
day during a period for which the Trading Price is being calculated,
such day shall be excluded in calculating the Trading Price for such
period.
ARTICLE II
AMOUNT AND TERMS OF LOAN
2.1 Principal Debt. Debtor acknowledges an initial Principal Debt
of $6,950,000 to be due and owing to Secured Party as of the Closing
Date.
2.2 Note. The initial Principal Debt shall be evidenced by the
Note.
2.3 Interest Rate. The outstanding principal balance of the Note
shall bear interest at the Stated Interest Rate from the date of the
Note until maturity.
2.4 Computation of Interest. Subject to the provisions of Section
2.7 hereof, all interest payable hereunder shall be computed at the
Stated Interest Rate for the actual number of days elapsed during any
period for which interest is calculated.
2.5 Payments. All payment and prepayments of principal, interest
and other charges or fees hereunder shall be made in lawful currency of
the United States of America, in immediately available funds. All such
payments shall be payable at Secured Party's address set forth below or
at such other place or places as Secured Party may from time to time
designate in writing to Debtor. If any payment of principal or interest
on the Note, or if any other payment or fee provided for in the
Operative Documents, falls due on a day other than a Business Day, then
such due date will be extended to the next succeeding Business Day, and
interest will accrue through the actual date of such payment and be
payable by Debtor in respect of any such extension of principal. The
Secured Obligations shall be due and payable in accordance with the
terms of the Note. The entire Principal Debt, together with all accrued
but unpaid interest thereon, and together with all other sums (if any)
due and owing by Debtor to Secured Party pursuant to the Operative
Documents, shall be due and payable, if not sooner paid, or if not
otherwise renewed or extended, on or before the Maturity Date.
2.6 Voluntary Prepayments. Debtor may, at its option, voluntarily
prepay the Secured Obligations in whole or in part at any from time to
time, without notice, penalty or charge.
2.7 Maximum Interest; Controlling Agreement. It is the intention
of the parties hereto to conform strictly to the usury laws in force
that apply to this transaction. Accordingly, all agreements between
Secured Party and Debtor (including, without limitation, the Operative
Documents), whether now existing or hereafter arising and whether
written or oral, are hereby limited so that in no contingency, whether
by reason of acceleration of the maturity of the Secured Obligations or
otherwise, shall the interest (and all other sums that are deemed to be
interest) contracted for, charged or received by Secured Party with
respect to the Operative Documents, exceed the Highest Lawful Rate. If,
from any circumstance whatsoever, interest under the Operative Documents
would otherwise be payable in excess of the Highest Lawful Rate, and if
under any circumstance Secured Party shall ever receive anything of
value deemed interest by applicable law in excess of the Highest Lawful
Rate, then Secured Party's receipt of such excess interest shall be
deemed unintentional and the same shall, be in the first instance
credited to the unpaid principal of the Note with the excess thereof, if
any, refunded to Debtor. If the Secured Obligations are prepaid or the
maturity of the Secured Obligations (or any portion thereof) is
accelerated, then unearned interest, if any, shall be canceled and, if
theretofore paid, shall be in the first instance credited on the Secured
Obligations, with the excess thereof, if any, refunded to Debtor. All
interest paid or agreed to be paid to Secured Party shall, to the extent
allowed by applicable law, be amortized, prorated, allocated, and spread
throughout the full period until payment in full of the principal
(including the period of any renewal or extension) so that the interest
for such full period shall not exceed the Highest Lawful Rate.
Notwithstanding that the parties hereto in good faith deemed each and
every fee provided by this Agreement and the other Operative Documents
to a bona fide fee for services rendered and to be rendered separate and
apart from the lending of money or the provision of credit, if any such
fee is ever determined by a tribunal or by Secured Party to constitute
interest, then the treatment of such fee for usury purposes shall be
controlled by the provisions of this Section 2.7.
ARTICLE III
SECURITY AGREEMENT
3.1 Security Interest. Upon the terms hereof, Debtor hereby grants
to Secured Party a security interest in and to, and lien on, the rights,
titles, and interests of Debtor in and to all of the following Assets
(all of the following Assets being herein sometimes collectively called
the "Collateral"):
(a) 1,840,525 shares of the issued and outstanding Class A
(Voting) Common Stock of Box Energy Corporation, a Delaware corporation,
as evidenced by certificate no. BEA 977 issued in the name of Debtor
(the "Class A Shares");
(b) 800,000 shares of Common Stock, par value $.01, of CKB
Petroleum, Inc., a Texas corporation, as evidenced by certificates nos.
1 and 2 issued in the name of Debtor;
(c) 800,000 shares of Common Stock, par value $.01 of CKB &
Associates, Inc., a Texas corporation, as evidenced by certificate no. 8
issued in the name of Debtor;
(d) all Additional Collateral when and as delivered by Debtor to
Secured Party pursuant to the provisions of Section 3.3 of this
Agreement;
(e) all stock or other securities or property which are issued
pursuant to conversion, exercise of rights, stock splits,
recapitalization, stock dividends, subscriptions, warrants, rights or
options, or other corporate acts which are referable to, or issued in
connection with, the Collateral (such distributions herein called the
"Additional Pledged Securities") and all distributions, whether cash or
non-cash, in the nature of a partial or complete liquidation,
dissolution or winding up which are referable to the Collateral (such
distributions herein called the "Liquidating Distributions"); and
(f) all substitutions for and replacements of, and proceeds and
products of any and all of the foregoing Collateral.
3.2 Delivery of Pledged Stock. On the Effective Date, Debtor shall
place the Initial Collateral in pledge by delivering the Certificates
evidencing the Initial Collateral to, and depositing them with Secured
Party. Debtor shall deliver to Secured Party, concurrently herewith,
undated assignments separate from the Certificates duly executed in
blank together with all other documents and assignments deemed
appropriate by Secured Party in form suitable to enable Secured Party to
effect the transfer of all or any portion of the Collateral to the
extent hereinafter provided.
3.3 Additional Collateral. (a) If Secured Party determines at any
time prior to maturity, that the Collateral held by Secured Party does
not have a Collateral Value equal to or in excess of the Minimum
Collateral Value, then Debtor shall promptly, upon receipt of Secured
Party's Collateral Request, grant to Secured Party a security interest
(subject to Permitted Encumbrances) in such of the Additional Collateral
(in the order and as designated by Debtor) as is required such that the
Collateral Value of all Collateral held by Secured Party equals or
exceeds the Minimum Collateral Value. Within five (5) Business Days
after receipt of Secured Party's Collateral Request, Debtor shall
execute and deliver security agreements in form and content (i)
satisfactory to Secured Party and (ii) consistent with this Agreement,
along with such UCC 1 Financing Statements, blank stock powers, and
other documents reasonably required by Secured Party, including without
limitation, notice of the Collateral Value of such Additional Collateral
(other than Class A Common Stock of Box Energy Corporation).
3.4 Obligations Secured. The security interests and liens herein
granted shall secure the payment in full and the performance of the
Secured Obligations and any and all renewals, extensions, increases or
modifications of any of the foregoing.
3.5 Partial Release of Security Interests. If and to the extent
that Secured Party shall hold security interests in any Collateral whose
aggregate Collateral Value exceeds the Minimum Collateral Value, then,
upon Debtor's written request, Secured Party shall promptly release its
security interests in such of the aggregate excess Collateral (i) as
shall be designated by Debtor; provided, that all Additional Collateral
(other than the Class A Common Stock of Box Energy Corporation) shall be
released prior to the designation by Debtor of any Class A Common Stock
of Box Energy Corporation and (ii) as shall leave pledged to Secured
Party Collateral having an aggregate Collateral Value equal to or in
excess of the Minimum Collateral Value. Secured Party's release of its
security interests in the such Additional Collateral shall be
accomplished by Secured Party's prompt execution and delivery to Debtor
of collateral release forms furnished by Secured Party in form and
content consistent with this Agreement, along with such UCC-3 and other
documents reasonably requested by Debtor.
3.6 Intentions of the Parties Regarding Additional Collateral. It
is the intention of the parties that, so long as any of the Secured
Obligations remain outstanding, Secured Party shall have the benefit of,
and be secured by, a pledge of, or security interest in, Collateral
having a Collateral Value equal to, but not less or more than the
Minimum Collateral Value. Therefore, as Collateral Value may vary from
time to time, adjustment in the aggregate Collateral held by Secured
Party may be appropriate, either by increasing or decreasing the
security interest held by Secured Party. No limitation of the right of
either Secured Party or Debtor to cause such adjustment is intended by
this Agreement, except that neither party may request an adjustment (i)
more often than thirty (30) calendar days from the date of the last
request from either party or (u) for dollar amounts of less than
$100,000. The method of such adjustment(s) is detailed in Sections 3.3
and 3.5 hereof.
3.7 No Further Financing Statements. Without the prior written
consent of Secured Party, Debtor will not affirmatively permit any
financing statement to be filed in any public office involving any of
the Collateral unless such financing statement relates to a Permitted
Encumbrance, which consent shall not be unreasonably withheld.
ARTICLE IV
DEBTOR'S COVENANTS AND AGREEMENTS
Debtor hereby covenants and agrees that, so long as this Agreement
is in effect and until all Secured Obligations are satisfied in full,
unless compliance shall have been waived in writing by Secured Party,
Debtor will do the following:
4.1 Reports. Debtor shall furnish an annual financial statement to
Secured Party as soon as available and in any event within sixty (60)
calendar days after the end of each fiscal year. Each annual financial
statement shall either be audited, compiled or reviewed by independent
certified public accountants selected by Debtor. Each annual financial
statement shall contain a balance sheet as of the end of such fiscal
year and statements of income and cash flows, for such fiscal year, each
setting forth in comparative form, to the extent possible, the
corresponding figures for the preceding fiscal year.
4.2 Notice of Change. Debtor will promptly notify Secured Party in
writing of (i) any change of location of its principal offices, (ii) any
significant acquisition, disposition or reorganization of any corporate
subsidiary or Affiliate and (iii) change of Debtor's name (corporate
names and assumed names).
4.3 Records and Inspections. Debtor will at all times keep
complete and accurate records pertaining to the Collateral, which
records shall be current and located at Debtor's principal place of
business. Upon reasonable written notice, Secured Party shall have the
right to enter any such location, at any reasonable time or times during
regular business hours, for reasonable periods, to inspect the
Collateral and to inspect and to make copies or extractions from
Debtor's books and records which directly pertain to the Collateral, all
at Secured Party's expense. Unless there is an Event of Default, Secured
Party may not conduct more than two (2) inspections covering a period of
not more than two (2) Business Days each per year.
4.4 Protection of Business Records. Debtor hereby agrees to take
the reasonable protective actions to preserve its business records.
4.5 Opinion of Counsel. Upon the Closing Date, Debtor shall
deliver to Secured Party an opinion of counsel, in form and content
satisfactory to Secured Party containing such matters concerning Debtor
and the perfection of Secured Party's secured interests in the
Collateral as Secured Party may request.
4.6 Further Assurances.
(a) Debtor covenants and agrees to from time to time promptly
execute and deliver to Secured Party all such other security agreements,
assignments, certificates, writings and financing statements as Secured
Party reasonably requests in order to perfect or evidence the liens and
security interests herein granted. Debtor further agrees that if Debtor
shall at any time acquire any Additional Pledged Securities or
Liquidating Distributions, and whether such acquisition shall be by
purchase, exchange, reclassification, stock dividend, or otherwise,
Debtor shall forthwith (and without the necessity for any request or
demand by Secured Party) deliver the certificates representing such
shares to Secured Party, in the same manner and with the same effect as
described in Section 3 hereof. Upon delivery, such shares shall
thereupon constitute "Collateral" and shall be subject to the liens and
security interests herein created, for the purposes and upon the terms
and conditions set forth in this Agreement and the other Operative
Documents. Debtor agrees that, in lieu of filing a separate financing
statement, Secured Party may file this Agreement as a financing
statement, at Secured Party's cost.
(b) Debtor will promptly execute and deliver or cause the
execution and delivery of, all applications, certificates, instruments,
registration statements, and all other documents and papers Secured
Party may reasonably request in connection with properly documenting the
transactions contemplated hereby or effectuating any of the transactions
described herein, including, without limitation, the obtaining of any
consent, approval, registration, qualification, or authorization of any
other Person necessary or appropriate for the effective exercise of any
rights under this Agreement. Without limiting the generality of the
foregoing, Debtor agrees that in the event Secured Party shall exercise
any rights to sell, transfer, or otherwise dispose of, or vote, consent,
or take any other action in connection with any of the Collateral
pursuant to this Agreement, Debtor shall execute and deliver all
applications, certificates, and other documents as Secured Party may
reasonably request and shall otherwise promptly, fully and diligently
cooperate with Secured Party and any other necessary Persons, in making
any application for the prior consent or approval of any other Person to
the exercise by Secured Party of any rights relating to all or any of
the Collateral.
(c) Subject to the Permitted Encumbrances, Debtor will preserve,
warrant, and defend the liens and security interests created hereby in
the Collateral against the claims of all Persons whomsoever; will
maintain and preserve such liens and security interests at all times as
contemplated by the Operative Documents; will not at any time assign,
transfer, or otherwise dispose of its right, title and interest in and
to any of the Collateral; will not at any time directly or indirectly
create, assume, or suffer to exist any lien, warrant, put, option, or
other rights of third Persons and restrictions in the Collateral, other
than the liens and security interests created by this Agreement and any
Permitted Encumbrance; and will not do or suffer any matter or thing
whereby the liens and security interests created by this Agreement in
and to the Collateral might or could be impaired.
4.7. Conversions; etc. Should the Pledged Stock, or any other
securities comprising a part of the Collateral, or any part thereof,
ever be in any manner converted by issuers into another property of the
same or another type or any money or other proceeds other than dividends
ever be paid or delivered to Debtor as a result of Debtor's rights in
the Pledged Stock, or any other securities comprising a part of the
Collateral, then in any such event (except as otherwise provided
herein), all such property, money and other proceeds shall be and/or
become part of the Collateral, and Debtor covenants forthwith to pay or
deliver to Secured Party all of the same which is susceptible of
delivery; and at the same time, if Secured Party deems it necessary and
so requests, Debtor will properly endorse or assign the same to Secured
Party. Without limiting the generality of the foregoing, Debtor hereby
agrees that the shares of capital stock of the surviving corporation in
any merger or consolidation involving issuers of any of any securities
comprising a part of the Collateral shall be deemed to constitute the
same property as the Collateral. With respect to any such property of a
kind requiring an additional security agreement, financing statement or
other writing to perfect a security interest therein in favor of Secured
Party, Debtor will forthwith execute and deliver to Secured Party
whatever Secured Party shall reasonably deem necessary or proper for
such purpose.
4.8. No Duty to Fix or Preserve Rights. Secured Party shall have
no duty to fix or preserve against prior parties to the Collateral nor
shall Secured Party ever be liable for failure to use diligence to
collect any amount payable with respect to the Collateral, or any part
thereof, but shall be liable only to account to Debtor for what Secured
Party may actually collect or receive thereon.
ARTICLE V
REPRESENTATION AND WARRANTIES
5.1 Representations and Warranties. Debtor represents and warrants
to Secured Party as follows:
A. Debtor is a corporation duly organized, validly existing
and is in good standing under the laws of the State of Delaware, is duly
qualified to do business and is in good standing as a foreign
corporation in all states where such qualification is required and has
all necessary corporate power and authority to enter into this
Agreement, to execute each of the Operative Documents and to pledge the
Collateral for the purposes and upon the terms set forth herein and to
perform all of its obligations hereunder and thereunder and to operate
its businesses.
B. Debtor has taken all requisite corporate action to
authorize the execution and delivery of and performance of its
obligations under the Operative Documents. Each of the Operative
Documents and all other documents required by this Agreement constitutes
the legal, valid and binding obligation of Debtor enforceable against
Debtor in accordance with its terms.
C. The execution, delivery and performance by Debtor of the
Operative Documents to which Debtor is a party, the compliance by Debtor
with the terms and provisions thereof and the consummation of each of
the transactions contemplated thereby, do not and shall not, by the
lapse of time, the giving of notice or otherwise, (i) constitute a
violation of any federal, state or local law, rule or regulation, order,
writ, judgment, injunction, or decree presently binding on Debtor or a
breach of any provision contained in the certificate of incorporation or
bylaws of Debtor, (ii) constitute a breach of any material provision
contained in any indenture, loan or credit agreement, mortgage or deed
of trust, or any other material agreement, lease or instrument to which
Debtor is a party or by which Debtor or its Assets are bound, (iii)
constitute a tortious interference with any material contractual
obligation of Debtor or (iv) result in or require the creation or
imposition of any lien, security interest charge or other encumbrance
whatsoever upon any of the Assets of Debtor (other than Permitted
Encumbrances and liens in favor of Secured Party arising pursuant to the
provisions of this Agreement).
D. No consent, approval, license, exemption of or filing or
registration with, giving of notice, to, or other authorization of or
by, any court, administrative agency or other governmental authority is
or will be required in connection with the execution, delivery or
performance by Debtor of this Agreement and the other Operative
Documents or for the valid consummation of the Transactions contemplated
by this Agreement and the other Operative Documents.
E. Neither this Agreement nor any statement or document
referred to herein or delivered to Secured Party by or on behalf of
Debtor contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements made herein or
therein not misleading. Except for the ▇▇▇ Box Litigation, there is no
fact peculiar to Debtor which materially and adversely affects or is
likely to materially and adversely affect the business, conditions or
operations (financial or otherwise) of Debtor taken as a whole, which
has not been set forth in this Agreement or in other documents,
certificates and written statements furnished or otherwise available to
Secured Party by or on behalf of Debtor contemporaneously with the
transactions contemplated hereby.
F. Debtor presently has good and marketable title to and
ownership of the Collateral, free and clear of all liens, claims,
security interests and encumbrances except those of Secured Party and
any Permitted Encumbrances.
G. The pledge, assignment and delivery of the Initial
Collateral pursuant to this Agreement creates in favor of Secured Party
a valid first priority security interest in the Initial Collateral which
security interest is perfected and senior to any liens, security
interest, encumbrances, warrants, options, puts, calls or other such
rights of third persons and adverse claims. As of the Closing Date, the
Collateral Value of the Initial Collateral is greater than $13,900,000.
The certificate(s) representing the Initial Collateral have been
delivered to and are in the physical possession of Secured Party and a
duly executed blank stock power for each such certificate has been
delivered to Secured Party.
H. Debtor is in compliance with all laws, rules,
regulations, order and decrees that are applicable to Debtor or the
Collateral or any of its respective Assets.
I. All of the Collateral consisting of Pledged Stock has
been offered, issued, sold and delivered in compliance with, or are
exempt from, all federal and state laws and rules and regulations of
federal and state regulatory bodies governing the offering, issuance,
sale and delivery of securities. Each security which is part of the
Collateral has been duly authorized, validly issued and fully paid and
is nonassessable and has not been issued in violation of any preemptive
or similar right.
J. Debtor is generally able to pay its obligations as they
become due, has sufficient capital to carry on its business and
transactions and all businesses and transactions in which it intends to
engage, and the current value of Debtor's Assets, at fair market value,
exceeds the sum of its liabilities (including contingent, unliquidated
and unmatured liabilities). Debtor will not be rendered insolvent by the
execution and delivery of the Operative Documents and the consummation
of the transactions contemplated thereby and the capital remaining in
Debtor is not now and will not foreseeably become unreasonably small to
permit Debtor to carry on its current business and transactions, as well
as all businesses and transactions in which it intends to engage. Debtor
does not intend to, nor does it reasonably believe it will, incur debts
beyond its ability to repay the same as they mature.
K. No event has occurred and is continuing that constitutes
an Event of Default or, except for the ▇▇▇ Box Litigation, Potential
Event of Default. Debtor is not in default or in violation under any
charter document or indenture, or under any credit or loan agreement,
indenture, lease, franchise, marketing agreement, license, mortgage,
deed of trust, or any other material agreement, undertaking or
arrangement (written or oral) to which it is a party or under which it
or any of its Assets may be bound.
L. Except as disclosed to Secured Party and except for the
▇▇▇ Box Litigation, there are no material actions, suits or proceedings
pending, or, to the best knowledge of Debtor, threatened against or
affecting the Assets of Debtor, or the consummation of the transactions
contemplated hereby, at law or in equity or before or by any
governmental authority or instrumentality or before any arbitrator of
any kind, and, to the best knowledge of Debtor, there is no valid basis
for any such action, proceeding or investigation. Debtor is not subject
to any judgment, order, writ, injunction or decree of any court or
governmental agency. There is not a reasonable likelihood of an adverse
determination of any pending proceeding which would, individually or in
the aggregate, have a material adverse effect on the business or
operations or financial condition of Debtor.
M. Except as disclosed to Secured Party, Debtor (i) has no
contingent or direct liabilities or unrealized or anticipated losses
which in the aggregate are material; (ii) has no material commitments of
an unusual or burdensome character, and (iii) is not a party to, or
bound by, any contract or agreement or subject to any charter or other
corporate restriction having a material adverse effect on the financial
condition or business operations of Debtor.
N. Debtor is not a party to any reorganization, arrangement,
composition, readjustment, dissolution, rehabilitation, liquidation, or
similar proceeding under any provision of any law, nor has it consented
to the filing of any petition against it under any such law.
O. None of the transactions contemplated in connection with
this Agreement and for its duration violate any provision of the
securities laws of the United States, including the Securities Act of
1933, as amended, and the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder by the Securities
Exchange Commission, or the securities and "blue sky" laws of the
various states.
P. There are no material labor disputes (a) pending or (b)
to the best knowledge of Debtor, threatened or anticipated between
Debtor and any group or groups of its employees.
Q. All tax returns of Debtor required by law to be filed
have been filed and all taxes imposed upon Debtor or its Assets, which
are due and payable, have been paid, or otherwise dealt with under the
Plan; and no amounts of taxes not reflected on such returns are
presently payable by Debtor other than taxes which are being or will be
diligently contested in good faith by appropriate legal proceedings,
none of which, individually or collectively, will have a material and
adverse effect on the financial condition or business operation of
Debtor.
R. The securities constituting the Class A Shares are and
will be freely marketable and subject to a shelf registration that will
permit Secured Party to freely transfer the securities without any
further registration in the event Secured Party forecloses on the
Collateral following an Event of Default.
ARTICLE VI
COVENANTS AND OTHER AGREEMENTS
6.1 Affirmative Covenants. During the term of this Agreement and
so long as any of the Secured Obligations remain unpaid, Debtor agrees
and covenants that:
A. Debtor will timely (i) file all required tax returns; and
(ii) pay or contest all taxes, assessments and other government
charges or levies imposed upon it or upon its income, profits or Assets.
B. Debtor will maintain, preserve and protect the Collateral
and its other Assets.
C. Debtor will carry on and conduct its business in the same
manner and the same fields of enterprise as it is presently engaged,
and, using its business judgment, Debtor will do all things necessary to
preserve its respective existence, good standing or qualifications as a
domestic corporation in the jurisdiction of its incorporation and as a
foreign corporation in every jurisdiction in which the character of its
Assets or the nature of the business transacted by it at any time makes
qualification as a corporation necessary, provided, however, nothing
herein shall be construed to prevent Debtor from modifying or otherwise
dealing with its business and its Assets in the good faith exercise of
its business judgment.
D. Debtor shall conduct its business and affairs in
compliance with all Laws, regulations, and orders applicable thereto
which are material to Debtor, to Secured Party, or to any Collateral.
E. Debtor shall maintain the free marketability of the
securities constituting the Class A Shares and shall maintain in effect
a shelf registration that will permit Secured Party to freely transfer
such securities without any further registration in the event Secured
Party forecloses on such securities following an Event of Default.
6.2 Negative Covenants. During the term of this Agreement and so
long as any of the Secured Obligations remain unpaid, Debtor covenants
and agrees that it shall not, without Secured Party's prior written
consent do any of the following:
A. Substantially change its method of accounting except
approved by its independent certified public accountants.
B. Enter into any material agreement or arrangement that
would be violated or breached by the performance of its obligations
under the Operative Documents.
C. Fail to maintain the free marketability of the securities
constituting the Collateral and/or fail to maintain in effect a shelf
registration that will permit Secured Party to freely transfer such
securities without any further registration in the event Secured Party
forecloses on such securities following an Event of Default.
D. After the occurrence of an Event of Default, pay any
dividends, or return any capital to its stockholders or authorize or
make any other distribution, payment or delivery of property or cash to
stockholders as such, or redeem, retire, purchase or otherwise acquire
directly or indirectly, for a consideration any shares of any class of
its capital stock now or hereafter outstanding, or set aside any funds
for any of the foregoing purposes. Without Secured Party's consent,
which shall not be unreasonably withheld, wind up, liquidate, dissolve
the affairs of Debtor or enter into any transaction or merger or
consolidation, or convey, sell, lease, or otherwise dispose of (or agree
to do nay of the foregoing at any future time) all or substantially all
or a substantial part of its property or assets or any part of such
property or assets essential to the conduct of its business
substantially as now conducted, or any of its notes receivable,
installment or conditional sales agreements, or accounts receivable.
E. Make any investments in any of its existing direct or
indirect subsidiaries or any new direct or indirect subsidiaries of
Debtor. Lend money or credit or make advances to any Person except
advances made to employees of the Debtor for the payment by them of
items for which an expense report or voucher will be filed and which
items will constitute ordinary and necessary business expenses of
Debtor.
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
7.1 Events of Default. The occurrence of any one or more of the
following events shall constitute an Event of Default;
A. Subject to paragraph 7.2, if any payment of principal or
interest under the Note is not paid within ten (10) calendar days of its
due date; or
B. If Debtor fails or neglects to perform, keep or observe
any of the material and substantial terms, provisions, conditions or
covenants contained in this Agreement, the Note or any other Operative
Document executed in connection with the transactions contemplated by
this Agreement (other than the payments referred to in section 7.1 A
above), which are required to be performed, kept or observed by Debtor
and such failure or neglect shall not have been remedied within
forty-five (45) calendar days after written notice thereof from Secured
Party received by Debtor, or
C. If any representation, warranty or certification made by
Debtor herein or in any certificate or other writing, delivered in
connection with the transactions contemplated by the Operative Documents
shall prove to be false, incorrect or incomplete in any material
respect; or
D. If the validity or enforceability of any lien, charge,
security interest, mortgage, pledge or other encumbrance granted to
Secured Party to secure the Secured Obligations shall be determined by
counsel to Secured Party (and so stated in a written opinion of such
counsel), to be materially impaired in any respect or, if any other
lien, charge, security interest, mortgage, pledge or other encumbrance,
other than a Permitted Encumbrance, shall be created or imposed upon the
Collateral; or
E. If Debtor shall suspend or discontinue its business
operations for a period in excess of thirty (30) calendar days or shall
totally abandon its business; or
F. There shall be commenced against Debtor an involuntary
proceeding to appoint a receiver, custodian, liquidator, trustee or
other officer with similar liquidation powers of Debtor or of the whole
or any substantial part of Debtor's Assets and an order, judgment or
decree approving the petition in any such proceeding shall be entered
and such order, judgment or decree shall continue undischarged for a
period of ninety (90) calendar days or more and, as a result of the
entry of such order, judgment or decree, the prospect of repayment of
the obligation evidenced by the Note shall become impaired; or
G. An involuntary case shall be commenced against Debtor
under any chapter of the United States Bankruptcy Code and relief is
ordered against Debtor and the petition is controverted but is not
dismissed within ninety (90) calendar days after the commencement of the
case; or
H. If Debtor shall (i) be unable or admit in writing its
inability to pay, or shall generally fail to pay, its debts as they
become due; (ii) file (or take any action for the purpose of filing) a
petition commencing a voluntary case concerning Debtor under any
chapter of the United States Bankruptcy Code or a petition to take
advantage of any insolvency act or other act for the relief or aid of
debtors; (iii) make an assignment for the benefit of its creditors; (iv)
file a petition or answer seeking for itself reorganization,
arrangement, composition, readjustment, liquidation, dissolution or
similar relief under the federal bankruptcy laws or any other applicable
law, (v) become insolvent (howsoever such insolvency may be evidenced),
be adjudicated insolvent; or (vi) shall petition or apply to any
tribunal for the appointment of any receiver, liquidator or trustee of
or for it or any substantial part of its Assets; or
I. If a court of competent jurisdiction shall enter an order
which enjoins, restrains or affirmatively prevents Debtor from
conducting all or any material part of its business affairs in the
ordinary course of business and such order shall remain undischarged or
unstayed for a period in excess of thirty (30) calendar days.
7.2 Debtor's Right to have Collateral Sold. At any time, upon
Secured Party's receipt of a written request from Debtor, Debtor may
designate a specific portion of the Collateral held by Secured Party to
be sold to Debtor's designee as promptly as market conditions will allow
in order to maximize the value of the designated Collateral, provided,
however, that after giving pro forma effect to the proposed sale of
Collateral and the proposed prepayment of the Secured Obligations, the
Collateral Value of the remaining Collateral shall equal or exceed the
Minimum Collateral Value. Following Secured Party's receipt of such
request and designation, Debtor and Secured Party shall cooperate in the
sale(s) of Collateral, the net proceeds of which sale(s) shall be paid
to Secured Party, as received, and shall be credited to the next
installments due on the Note in the order of their maturities.
7.3 Rights of Parties Before and After the Occurrence of an Event
of Default.
(a) Exercising Shareholder Rights Prior to an Event of Default.
Unless and until an Event of Default shall occur,
(i) Debtor shall be entitled to receive all cash dividends
paid to Debtor in respect of or attributable to the securities
comprising a part of the Collateral. Notwithstanding the foregoing,
Secured Party shall be entitled to receive, whether or not an Event of
Default has occurred, any and all other Additional Pledged Securities
and Liquidating Distributions. All such sums, stock dividends,
distributions, proceeds, or other property which constitute Additional
Pledged Securities or Liquidating Distributions shall, if received by
any entity other than Secured Party, be held in trust for the benefit of
Secured Party and shall forthwith be delivered to Secured Party
(accompanied by proper instruments of assignment and/or stock and/or
bond powers executed by Debtor in accordance with Secured Party's
instructions) to be held subject to the terms of this Agreement. Any
cash proceeds of the Collateral, other than cash dividends which Debtor
is then permitted to receive and retain under this Agreement, which come
into the possession of Secured Party shall be applied by Secured Party
to the Secured Obligations then due or, if no Secured Obligation is then
due, to the installment(s) due under the Note in the inverse order of
maturity.
(ii) Debtor shall have the right to vote and give consents
with respect to all of the securities comprising a part of the
Collateral and to consent to, ratify, or waive notice of any and all
meetings; provided that such right shall in no case be exercised for
any purpose contrary to, or in violation of, any of the terms or the
provisions of this Agreement or any other Operative Document.
(b) Exercising Shareholder Rights After the Occurrence of an Event
of Default. Upon the occurrence and during the continuance of an Event
of Default, Secured Party, with respect to the Collateral but without
the consent of Debtor, may:
(i) At any time vote or consent in respect of any of the
securities compromising part of the Collateral and authorize any such
securities to be voted and such consents to be given, ratify and waive
notice of any and all meetings, and take such other action as shall seem
desirable to Secured Party, in its discretion, to protect or further the
interests of Secured Party in respect of any of the Collateral as though
it were the outright owner thereof, and, Debtor hereby irrevocably
constitutes and appoints Secured Party its sole proxy and
attorney-in-fact, with full power of substitution to vote and act with
respect to any and all such pledged securities standing in the name of
Debtor or with respect to which Debtor is entitled to vote and act. The
proxy and power of attorney herein granted are coupled with interests,
are irrevocable, and shall continue throughout the term of this
Agreement.
(ii) In respect of any securities comprising a part of the
Collateral, join in and become a party to any plan of recapitalization,
reorganization, or readjustment (whether voluntary or involuntary) as
shall seem desirable to Secured Party in respect of any such pledged
securities, and deposit any such pledged securities under any such plan;
make any exchange, substitution, cancellation, or surrender of such
pledged securities required by any such plan and take such action with
respect to any such pledged securities as may be required by any such
plan or for the accomplishment thereof; and no such disposition,
exchange, substitution, cancellation, or surrender shall be deemed to
constitute a release of pledged securities from the security interest of
this Agreement;
(iii) Receive all payments of whatever kind made upon or
with respect to any securities comprising a part of the Collateral; and
(iv) In furtherance of Secured Party's rights and remedies
under subparagraphs (i), (ii) and (iii) above, Secured Party at its
option, may have any or all of the Collateral registered in its name or
that of its nominee, and Debtor hereby covenants that, upon Secured
Party's request, Debtor will cause the issuer of the Collateral to
effect such registration.
(c) Right of Sale After the Occurrence of an Event of Default.
Upon the occurrence and during the continuance of an Event of Default,
Secured Party may sell, without recourse to judicial proceedings, with
the right (except at private sale) to bid for and buy, free from any
right of redemption, the Collateral or any part thereof, upon five (5)
days notice (which notice is agreed to be reasonable notice for the
purposes hereof) to Debtor of the time and place of any public sale or
the time after which any private sale is to be made, for cash, upon
credit or for future delivery, at Secured Party's option and in Secured
Party's complete discretion:
(i) At public sale, including a sale at any broker's board or
exchange;
(ii) At private sale in any manner which will not require the
securities comprising a part of the Collateral or any part thereof, to
be registered in accordance with The Securities Act of 1933, as amended,
or the rules and regulations promulgated thereunder, or any other law or
regulation, at their best price reasonably obtainable by Secured Party
at any such private sale or other disposition in the manner mentioned
above. Secured Party is also hereby authorized, but not obligated, to
take such actions, give such notices, obtain such consents, and do such
other things as Secured Party may deem required or appropriate in the
event of sale or disposition of any of the Collateral. Debtor
understands that, with respect to securities comprising a part of the
Collateral which are not publicly traded, Secured Party may in its
discretion approach a restricted number of potential purchasers and that
a sale under such circumstances may yield a lower price for such
Collateral, or any portion thereof, than would otherwise be obtainable
if the same were registered and sold in the open market. Debtor agrees
(a) that in the event Secured Party shall so sell such Collateral, or
any portion thereof, at such private sale or sales, Secured Party shall
have the right to rely upon the advice and written opinion of any member
firm of a national securities exchange as to the best price reasonably
obtainable upon such a private sale thereof (any expense borne by
Secured Party in obtaining such advice to be paid by Debtor as an
expense related to the exercise by Secured Party of its rights
hereunder), and (B) that such reliance shall be conclusive evidence
that Secured Party handled such matter in a commercially reasonable
manner.
In case of any sale by the Secured Party of the Collateral on
credit or for future delivery (it being understood however that Secured
Party is taking the credit risk with respect to any such sale on
credit), the Collateral sold may be retained by Secured Party until the
selling price is paid by the purchaser, but Secured Party shall incur no
liability in case of failure of the purchaser to take up and pay for the
Collateral so sold. In case of any such failure, such Collateral so sold
may be again similarly sold.
In connection with the sale of any non-publicly traded securities
comprising a part of the Collateral, Secured Party is authorized, but
not obligated, to limit prospective purchasers to the extent deemed
necessary or desirable by Secured Party to render such sale exempt from
the registration requirements of The Securities Act of 1933, as amended,
and any applicable state securities laws, and no sale so made in good
faith by Secured Party shall be deemed not to be "commercially
reasonable" because so made.
(d) After the occurrence of an Event of Default, Secured Party
shall have and may exercise the following rights and remedies, which
individual remedies shall not be exclusive and which shall be cumulative
and in addition to each and every other remedy set forth herein and in
the Note and the other agreements and documents executed in connection
with the transactions contemplated:
(i) The right to (i) accelerate the entire outstanding
Principal Debt, together with all accrued but unpaid interest and all
other sums due and payable by Debtor to Secured Party, without
presentment or protest, both of which Debtor hereby expressly waives,
and (ii) immediately, without further extensions or periods of grace,
enforce payment of the Secured Obligations by exercising any and all of
the rights granted herein.
(ii) All of the rights and remedies available to a secured
party under the Uniform Commercial Code as enacted in the State of Texas
or other applicable jurisdiction, as amended (the "UCC"), or other
applicable law, or otherwise existing at law or in equity.
(iii) The right to: (i) to the fullest extent permitted by
applicable law, enter upon the premises of Debtor, or any other place or
places where the Collateral is located, and remove the Collateral
therefrom to premises controlled by Secured Party, in order to
effectively collect, preserve, protect and liquidate the Collateral;
and/or (ii) require Debtor to assemble the Collateral and make it
available to Secured Party at a place other than one controlled by
Debtor to be designated by Secured Party in its sole discretion.
7.4 No Waiver. No delay, failure or omission of Secured Party to
exercise any right upon the occurrence of an Event of Default shall
impair any such right or shall be construed to be a waiver of any such
Event of Default or an acquiescence therein. Secured Party may, from
time to time, in a writing waive compliance by the other parties with
any of the terms of this Agreement and its rights and remedies upon any
Event of Default and Debtor agrees that no such waiver by Secured Party
shall ever be legally effective unless such item of waiver shall be
acknowledged in writing by Secured Party. No waiver of any Event of
Default shall impair any right or remedy of Secured Party. No single,
partial or full exercise of any right of Secured Party shall preclude
any other or further exercise thereof. The acceptance by Secured Party
at any time or from time to time of a partial payment or partial
performance of any of Debtor's obligations set forth herein shall not be
deemed a waiver, reduction, or modification or release from any Event of
Default then existing. No waiver by Secured Party of any Event of
Default shall be deemed to be a waiver of any then existing or
subsequent Event of Default.
7.5 Application of Proceeds. All amounts realized by Secured Party
with respect to the Collateral or the Secured Obligations, including
amounts realized with respect to the sale of the Collateral under or by
virtue of the Operative Documents, including any sums which may be held
by Secured Party, or the proceeds of any thereof, shall be applied (i)
first, to the payment of the reasonable costs and expenses owing
hereunder, under the Note or under any other Operative Document,
including reasonable reimbursement to Secured Party, and its agents and
attorneys, of all expenses, liabilities and advances made or furnished
or incurred by or on behalf of Secured Party, in enforcing collection of
the Secured Obligations or for the acquisition, protection, sale and
delivery of the Collateral; (ii) second, to the payment of accrued and
unpaid interest on and the outstanding principal of the Note; (iii) to
the payment of all other amounts payable by Debtor under the Operative
Documents; and (iv) fourth the surplus, if any, to Debtor, or to
whomever shall be lawfully entitled to receive the same, plus interestt
the Stated Interest Rate from three (3) Business Days following the date
of sale or other disposition.
7.6 Notification of Sale. Reasonable notification of the time and
place of any public sale of the Collateral, or reasonable notification
of the time after which private sale or other intended disposition of
the Collateral is to be made, shall be sent to Box Brothers Holding
Company, c/o ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, Founders Square, ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, and to any other person
entitled under the UCC to notice; provided that if any of the Collateral
threatens to decline speedily in value or is of the type customarily
sold on a recognized market, Secured Party may sell or otherwise dispose
of the Collateral upon such notice as is reasonable under the
circumstances. It is agreed that notice sent or given not less than five
(5) calendar days prior to the taking of the action to which the notice
relates is reasonable notification and notice for the purposes of this
paragraph.
ARTICLE VIII
MISCELLANEOUS
8.1 Secured Party's Expenses and Attorneys Fees. Secured Party
shall be entitled to recover from Debtor all reasonable costs incurred
by Secured Party in enforcing or protecting the security interests or
any of its rights or remedies with respect of the Collateral under this
Agreement or any other Operative Document or collecting or enforcing the
Secured Obligations, including, without limitation, all court costs,
attorneys' fees, and other out-of-pocket expenses. If, at any time or
times hereafter, Secured Party employs an attorney or attorneys to file
a petition or to take any other litigation action with respect to
collection of the Secured Obligations, or to protect, sell, take
possession of, or liquidate any of the Collateral or to attempt to
enforce any security interest or lien in the Collateral, or any other
right or remedy under the Operative Documents, all of the reasonable
attorney's fees arising from such collection effort, and any expenses,
costs and charges relating thereto, shall constitute part of the Secured
Obligations secured by the Collateral, all of which shall be payable on
demand, plus interest thereon at the Stated Interest Rate from thirty
(30) calendar days following Secured Party's receipt of Debtor's written
demand for payment.
8.2 Notices. Etc. Unless otherwise set forth herein, all notices,
demands, requests and other communications hereunder shall be given in
writing (including telecopy) and mailed, telecopied or delivered:
If to Secured Party: Box Energy Corporation
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Debtor: Box Brothers Holding Company
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Don D. Box
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP
Founders Square
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
If any such communication is given by mail it will be effective on the
earlier of receipt or the third calendar day after deposit in the United
States mail with first class or airmail postage prepaid; if given by
telecopier, when received; or if given by personal delivery, when
delivered. Any party to this Agreement shall have the right to change
its or his address for the purpose of this Agreement by giving at least
three (3) Business Days written notice of any such change to each other
party hereto.
8.3 Prior Agreements Superseded; Modification. Any agreement
previously executed between Debtor and Secured Party concerning the
subject matter of the Operative Documents, other than the Operative
Documents shall, upon the execution of this Agreement, be of no further
force or effect. No modification of or supplement to this Agreement or
any other written agreement between the parties hereto shall be valid or
effective (or serve as a basis of reliance by way of estoppel) unless
the same is in writing and signed by the party against whom it is sought
to be enforced. In the event of any conflict between the provisions of
this Agreement and the Note, the terms of this Agreement shall control.
8.4 Survival of Agreements. All of the various representations,
warranties, covenants and agreements in the Operative Documents shall
survive the execution and of this Agreement and the Note and the
performance hereof and thereof, including, without limitation, the
making or granting of the security interests and the delivery of the
Note, and shall survive until all of the Secured Obligations is paid in
full.
8.5 No Obligation Beyond Maturity. Debtor agrees and acknowledges
that upon the maturity of the Loan, Secured Party shall have no
obligation to renew, extend, modify or rearrange the Loan and shall have
the right to require all amounts due and owing under the Loan to be paid
in full on the Maturity Date.
8.6 Parties Bound. This Agreement and the Note shall be binding
upon and inure to the benefit of Debtor and Secured Party, and their
respective heirs, legal representatives, successors and assigns,
provided, that Debtor may not, without the prior written consent of
Secured Party, assign any of its rights, powers, duties or obligations
hereunder.
8.7 Number and Gender. Whenever used herein, the singular number
shall include the plural and the plural the singular, and the use of any
gender shall be applicable to all genders. The duties, covenants,
obligations and warranties of Debtor and of Secured Party in this
Agreement shall be the several obligations of Debtor and of Secured
Party and of either of them if either is more than one entity.
8.8 No Third Party Beneficiary. This Agreement, when executed, is
for the sole benefit of Secured Party and Debtor and is not for the
benefit of any third party.
8.9 Execution in Counterparts. This Agreement may be executed in
any number of counterparts and by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be
deemed to be an original, and all of which taken together shall
constitute but one and the same instrument.
8.10 Severability of Provisions. Any non-material provision of this
Agreement which is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability, without invalidating the remaining
provisions hereof or affecting the validity or enforceability of such
provision in any other jurisdiction.
8.11 Time of the Essence. All parties hereto hereby agree that in
this Agreement and all agreements executed pursuant hereto that time
shall be considered of the essence.
8.12 Termination Reinstatement.
(a) Debtor agrees that this Agreement and the security
interests granted hereunder shall terminate only when all Secured
Obligations have been fully paid and performed, at which time Secured
Party upon Debtor's request shall reassign and redeliver (or cause to be
reassigned and redelivered) to Debtor, or to such Person or Persons as
Debtor shall designate in writing, against receipt, such of the
Collateral (if any) as shall not have been sold or otherwise applied by
Secured Party pursuant to the terms hereof and shall still be held by it
hereunder. Any such reassignment shall be without recourse upon, or
representation or warranty by, Secured Party (other than that Secured
Party has not sold, encumbered or otherwise transferred any interest in
the Collateral except as provided in this Agreement) and shall be at the
sole cost and expense of Debtor.
(b) This Agreement shall continue to be effective or be
reinstated, as the case may be, if at any time any amount received by
Secured Party in respect of the Secured Obligations is rescinded or must
otherwise be restored or returned by Secured Party upon the filing of
any bankruptcy proceeding by or of Debtor or upon the appointment of any
intervenor or conservator of, or trustee or similar official for, Debtor
or any substantial part of its assets, or otherwise, all as though such
payments had not been made.
8.13 Remedies Cumulative. The rights and remedies provided herein
and in the Note and all of the other agreements, instruments and
documents constituting the Operative Documents, are cumulative and are
in addition to and not exclusive of any rights or remedies provided by
law, including, but without limitation, the rights and remedies of a
secured party under the Uniform Commercial Code.
8.14 Release of Claims. Debtor, by its execution of this Agreement,
hereby declares that it has no setoffs, counterclaims, defenses or other
causes of action against Secured Party arising out of the Loan and/or
any documents mentioned herein or otherwise; and, to the extent any such
setoffs, counterclaims, defenses or other causes of action may exist,
whether known or unknown, such items are hereby expressly waived and
released by Debtor.
8.15 Secured Party Not a Joint Venture. Notwithstanding anything to
the contrary contained in this Agreement or any Operative Document,
Secured Party, by entering into this Agreement or by any action taken
pursuant hereto, will not be deemed a partner or joint venturer with
Debtor, and Debtor will indemnify, and hold Secured Party harmless from
any and all claims, demands, losses, damages and expenses made or
incurred resulting from or arising out of any such construction or
alleged construction of any agreement between Secured Party and Debtor
or their relationship.
8.16 GOVERNING LAW/VENUE. THIS AGREEMENT AND THE NOTE SHALL BE
DEEMED CONTRACTS AND INSTRUMENTS MADE UNDER THE LAWS OF THE STATE OF
TEXAS AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF TEXAS AND THE LAWS OF THE UNITED
STATES OF AMERICA. EXCEPT WITH RESPECT TO SPECIFIC LIENS, OR THE
PERFECTION THEREOF. EVIDENCED BY THIS AGREEMENT COVERING PERSONAL
PROPERTY WHICH BY THE LAWS APPLICABLE THERETO ARE REQUIRED TO BE
CONSTRUED UNDER THE LAWS OF ANOTHER JURISDICTION. EXCLUSIVE JURISDICTION
AND VENUE FOR ALL DISPUTES ARISING UNDER THIS AGREEMENT SHALL RESIDE IN
A COURT OF COMPETENT JURISDICTION LOCATED IN DALLAS, DALLAS COUNTY,
TEXAS. DEBTOR AGREES TO SUBMIT ITSELF TO THE JURISDICTION OF THE TEXAS
COURTS AND AGREES THAT IN THE EVENT DEBTOR FAILS TO DESIGNATE A
REGISTERED AGENT IN THE STATE OF TEXAS, DEBTOR MAY BE SERVED BY SERVICE
UPON THE TEXAS SECRETARY OF STATE IN ACCORDANCE WITH SECTION 17.044 OF
THE TEXAS CIVIL PRACTICE AND REMEDIES CODE.
8.17 ENTIRETY; WRITTEN LOAN AGREEMENT. THIS AGREEMENT AND THE NOTE
EMBODY THE ENTIRE AGREEMENT BETWEEN THE PARTIES AND SUPERSEDE ALL PRIOR
AGREEMENTS AND UNDERSTANDINGS, IF ANY, RELATING TO THIS SUBJECT MATTER
HEREOF. THIS AGREEMENT AND THE NOTE REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE
NO ORAL AGREEMENTS BETWEEN THE PARTIES. IN THE EVENT OF ANY CONFLICT
BETWEEN THE TERMS HEREOF AND OF THE NOTE, THE TERMS HEREOF SHALL
CONTROL.
8.18 Amendment and Restatement. This Agreement is a renewal,
amendment and restatement of the Pledge Agreement ("Original Pledge
Agreement") dated as of April 29, 1997 by Debtor in favor of Secured
Party and, as such, all of the terms and provisions herein supersede in
their entirety the terms and provisions of the Original Pledge
Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the
day and year first above written.
DEBTOR:
BOX BROTHERS HOLDING COMPANY,
a Delaware corporation
By: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
SECURED PARTY:
BOX ENERGY CORPORATION,
a Delaware corporation
By: /S/ ▇▇▇▇▇ ▇. ▇▇▇▇
--------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: President