EXHIBIT 10.8
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PLEDGE AND SECURITY AGREEMENT
Between
ST. MARY LAND & EXPLORATION COMPANY,
as Pledgor
and
WACHOVIA BANK, NATIONAL ASSOCIATION, as Administrative Agent,
as Secured Party
Effective as of January 27, 2003
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PLEDGE AND SECURITY AGREEMENT
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THIS PLEDGE AND SECURITY AGREEMENT is made effective as of January 27,
2003, by ST. MARY LAND & EXPLORATION COMPANY, a Delaware corporation with
principal offices at 1776 Lincoln Street, Suite 1100, Denver, Colorado 80203
("Pledgor"), in favor of WACHOVIA BANK, NATIONAL ASSOCIATION (formerly known as
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First Union National Bank), a national banking association with offices at 301
South College Street, Charlotte, North Carolina 28288, as Administrative Agent
(in such capacity, the "Secured Party") for the benefit of the several lenders
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now or hereafter parties to the hereinafter defined Credit Agreement
(individually, a "Lender" and collectively, the "Lenders").
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RECITALS
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A. Pledgor, Secured Party and the Lenders have executed a Credit Agreement
dated as of even date herewith (such agreement, as may from time to time be
amended or supplemented, being hereinafter called the "Credit Agreement")
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pursuant to which, upon the terms and conditions stated therein, the Lenders
agree to make loans to and extend credit on behalf of Pledgor.
B. The Lenders conditioned their obligations under the Credit Agreement
upon the execution and delivery by Pledgor of this Pledge and Security Agreement
and Pledgor has agreed to execute and deliver this Pledge and Security
Agreement.
C. Therefore, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Pledgor hereby agrees with Secured
Party as follows:
ARTICLE 1
SECURITY INTEREST
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Section 1.01 Pledge. Pledgor hereby pledges, assigns and grants to Secured
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Party a security interest in and right of set-off against the assets referred to
in Section 1.02 (the "Collateral") to secure the prompt payment and performance
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of the "Obligations" (as defined in Section 2.02) and the performance by Pledgor
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of this Pledge and Security Agreement.
Section 1.02 Collateral. The Collateral consists of the following types or
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items of property which are owned by Pledgor:
(a) The securities described or referred to in Exhibit A attached
hereto and made a part hereof.
(b) (i) The certificates or instruments, if any, representing such
membership interests and such units, (ii) all dividends (cash, stock or
otherwise), cash, instruments, rights to subscribe, purchase or sell and
all other rights and property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of such
membership interests or such units, (iii) all replacements and
substitutions for any of the property referred to in this Section 1.02,
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including, without limitation, claims against third parties, and (iv) the
proceeds, interest, profits and other income of or on any of the property
referred to in this Section 1.02.
It is expressly contemplated that additional securities or other property may
from time to time be pledged, assigned or granted to Secured Party as additional
security for the Obligations, and the term "Collateral" as used herein shall be
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deemed for all purposes hereof to include all such additional membership
interests, units and property, together with all other property of the types
described above related thereto.
Section 1.03 Transfer of Collateral. All certificates or instruments
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representing or evidencing the Pledged Securities shall be delivered to and held
pursuant hereto by Secured Party or a Person designated by Secured Party and
shall be in suitable form for transfer by delivery, or shall be accompanied by
duly executed instruments of transfer or assignment in blank, or (in the case of
either certificated or uncertificated securities) Secured Party shall have been
provided with evidence that the Pledged Securities have been otherwise delivered
to Secured Party in accordance with Section 8.301 of the Code, all in form and
substance satisfactory to Secured Party. Notwithstanding the preceding sentence,
at Secured Party's discretion, all Pledged Securities must be delivered or
transferred in such manner as to permit Secured Party to meet the requirements
of Section 8.303(a)(3) of the Code to the extent of its security interest.
Secured Party shall have the right, at any time in its discretion and without
notice to Pledgor, to transfer to or to register in the name of Secured Party or
any of its nominees any or all of the Pledged Securities, subject only to the
revocable rights specified in Section 4.02. In addition, Secured Party shall
have the right at any time to exchange certificates or instruments representing
or evidencing Pledged Securities for certificates or instruments of smaller or
larger denominations.
ARTICLE 2
DEFINITIONS
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Section 2.01 Terms Defined Above. As used in this Pledge and Security
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Agreement, the terms defined above shall have the meanings respectively assigned
to them.
Section 2.02 Certain Definitions. As used in this Pledge and Security
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Agreement, the following terms shall have the following meanings, unless the
context otherwise requires:
"Agreement" means this Pledge and Security Agreement, as the same may
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from time to time be amended, supplemented or otherwise modified.
"Code" means the Uniform Commercial Code as presently in effect in the
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State of Texas, Articles 1 through 9. Unless otherwise indicated by the
context herein, all uncapitalized terms which are defined in the Code shall
have their respective meanings as used in Articles 8 and 9 of the Code.
"Event of Default" means any event specified in Section 6.01.
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"Obligations" means the collective reference to (a) all indebtedness,
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obligations and liabilities of Pledgor under or in connection with the Loan
Documents, including, without limitation, the unpaid principal of and
interest on the Loans and the LC Exposure and all other obligations and
liabilities of Pledgor (including, without limitation, interest accruing at
the then applicable rate provided in the Credit Agreement after the
maturity of the Loans and the LC Exposure and interest accruing at the then
applicable rate provided in the Credit Agreement after the filing of any
petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to Pledgor, whether or not a
claim for post-filing or post-petition interest is allowed in such
proceeding) to Secured Party or any Lender (or, in the case of any Swap
Agreement referred to below, any Affiliate of any Lender), whether direct
or indirect, absolute or contingent, due or to become due, or now existing
or hereafter incurred, which may arise under, out of, or in connection
with, the Credit Agreement, the other Loan Documents or any Swap Agreement
entered into by Pledgor with any Lender (or any Affiliate of any Lender),
or any other document made, delivered or given in connection therewith, in
each case whether on account of principal, interest, reimbursement
obligations, fees, indemnities, costs, expenses or otherwise (including,
without limitation, all reasonable fees and disbursements of counsel to
Secured Party or to the Lenders that are required to be paid by Pledgor
pursuant to the terms of any of the foregoing agreements), and (b) all
obligations of Pledgor which may arise under or in connection with this
Agreement or any other Loan Document to which Pledgor is a party.
The term "Obligations" shall mean all indebtedness, obligations and
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liabilities described, referred to or mentioned in the immediately
preceding paragraph of this definition, and all renewals, rearrangements,
increases, substitutions and extensions for any period thereof and
amendments, supplements or modifications thereto, in whole or in part.
"Obligor" means any Person, other than Pledgor, liable (whether
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directly or indirectly, primarily or secondarily) for the payment or
performance of any of the Obligations whether as maker, co-maker, endorser,
guarantor, accommodation party, general partner or otherwise.
"Pledged Securities" means all of the securities and other property
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(whether or not the same constitutes a "security" under the Code) referred
to in Section 1.02(a) or 1.02(b) and all additional securities, if any,
constituting Collateral under this Agreement.
Section 2.03 Credit Agreement Terms. Unless otherwise defined herein, terms
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defined in the Credit Agreement and used herein shall have the meanings given to
them in the Credit Agreement.
Section 2.04 Section References. Unless otherwise provided for herein, all
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references herein to Sections are to Sections of this Agreement.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES
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In order to induce Secured Party to accept this Agreement, Pledgor
represents and warrants to Secured Party (which representations and warranties
will survive the creation and payment of the Obligations) that:
Section 3.01 Ownership of Collateral; Encumbrances. Except as otherwise
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permitted by the Credit Agreement, Pledgor is the record and beneficial owner of
the Collateral free and clear of any Lien except for the security interest
created by this Agreement, and Pledgor has full right, power and authority to
pledge, assign and grant a security interest in the Collateral to Secured Party.
Section 3.02 No Required Consent. No authorization, consent, approval or
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other action by, and no notice to or filing with, any governmental authority or
regulatory body (other than the filing of financing statements) is required for
(i) the due execution, delivery and performance by Pledgor of this Agreement,
(ii) the grant by Pledgor of the security interest granted by this Agreement or
(iii) the perfection of such security interest.
Section 3.03 Pledged Securities. The Pledged Securities have been duly
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authorized and validly issued, and are fully paid and non-assessable.
Section 3.04 First Priority Security Interest. The pledge of Pledged
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Securities pursuant to this Agreement, the delivery to Secured Party of the
certificates representing the Pledged Securities accompanied by stock powers
duly executed in blank and the filing of appropriate financing statements in the
relevant locations create a valid and perfected first priority security interest
in the Collateral, enforceable against Pledgor and all third parties and
securing payment of the Obligations.
ARTICLE 4
COVENANTS AND AGREEMENTS
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Pledgor will at all times comply with the covenants and agreements
contained in this Article 4, from the date hereof and for so long as any part of
the Obligations (other than any indemnity which is not yet due and payable) are
outstanding.
Section 4.01 Sale, Disposition or Encumbrance of Collateral. Except as
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otherwise not prohibited by the Credit Agreement or this Agreement, Pledgor will
not in any way encumber any of the Collateral (or permit or suffer any of the
Collateral to be encumbered) or sell, pledge, assign, lend or otherwise dispose
of or transfer any of the Collateral to or in favor of any Person other than
Secured Party.
Section 4.02 Voting Rights; Dividends or Distributions. Until both (i) an
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Event of Default shall have occurred and be continuing and (ii) either (a) the
Loans have become due and payable at their stated maturity and have not been
paid, (b) the Loans have been declared due and payable pursuant to Article X of
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the Credit Agreement, or (c) Secured Party has given notice to Pledgor of
Secured Party's intent to exercise its rights under Section 6.02:
(a) Pledgor shall be entitled to exercise any and all voting,
management and/or other consensual rights and powers inuring to an
owner of the Collateral or any part thereof for any purpose not
inconsistent with the terms of this Agreement and the other Loan
Documents.
(b) Pledgor shall be entitled to receive and retain (free and
clear of and no longer subject to this Agreement or the Lien created
pursuant to this Agreement) any and all dividends, distributions and
interest paid in respect of the Collateral, provided, however, that
any and all
(i) dividends and interest paid or payable other than in
cash in respect of, and instruments and other property received,
receivable or otherwise distributed in respect of, or in exchange
for (including, without limitation, any certificate, share or
interest purchased or exchanged in connection with a tender offer
or merger agreement), any Collateral,
(ii) dividends and other distributions paid or payable in
cash in respect of any Collateral in connection with a partial or
total liquidation or dissolution, or reclassification, and
(iii) cash paid, payable or otherwise distributed in respect
of principal of, or in redemption of, or in exchange for, any
Collateral,
shall be, and shall be promptly delivered to Secured Party to hold as,
Collateral and shall, if received by Pledgor, be received in trust for the
benefit of Secured Party, be segregated from the other property or funds of
Pledgor, and be promptly delivered to Secured Party as Collateral in the same
form as so received (with any necessary endorsement) ), provided further,
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however, in no event shall the foregoing proviso be applicable to, or prevent
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the Pledgor from receiving and retaining any securities that are not pledged or
intended or required to be pledged to the Secured Party pursuant to any Security
Instrument, including this Agreement.
Section 4.03 Records and Information. Pledgor shall keep accurate and
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complete records of the Collateral (including proceeds, payments, distributions,
income and profits). Pledgor will promptly provide written notice to Secured
Party of all information which in any way affects the filing of any financing
statement or other public notices or recordings pertaining to the perfection of
a security interest in the Collateral, or the delivery and possession of items
of Collateral for the purpose of perfecting a security interest in the
Collateral.
Section 4.04 Certain Liabilities. Pledgor hereby assumes all liability for
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the Collateral, the security interest created hereunder and any use, possession,
maintenance, management, enforcement or collection of any or all of the
Collateral.
Section 4.05 Further Assurances. Upon the request of Secured Party, Pledgor
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shall (at Pledgor's expense) execute and deliver all such assignments,
certificates, instruments, securities, financing statements, notifications to
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financial intermediaries, clearing corporations, issuers of securities or other
third parties or other documents and give further assurances and do all other
acts and things as Secured Party may reasonably request to perfect Secured
Party's interest in the Collateral or to protect, enforce or otherwise effect
Secured Party's rights and remedies hereunder.
Section 4.06 Rights to Sell. If Secured Party shall determine to exercise
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its rights to sell all or any of the Collateral pursuant to its rights
hereunder, Pledgor agrees that, upon request of Secured Party, Pledgor will, at
its own expense:
(a) execute and deliver, and use all reasonable efforts to cause each
issuer of the Collateral contemplated to be sold and the directors and
officers thereof to execute and deliver, all such instruments and
documents, and do or cause to be done all such other acts and things, as
may be necessary or, in the reasonable opinion of Secured Party, advisable
to register such Collateral under the provisions of the Securities Act of
1933, as from time to time amended (the "Securities Act"), if such
registration is, in the reasonable opinion of Secured Party, necessary or
advisable to effect a public distribution of the Collateral, and to cause
the registration statement relating thereto to become effective and to
remain effective for such period as prospectuses are required by law to be
furnished, and to make all amendments and supplements thereto and to the
related prospectus which, in the reasonable opinion of Secured Party, are
necessary or advisable, all in conformity with the requirements of the
Securities Act and the rules and regulations of the Securities and Exchange
Commission applicable thereto;
(b) use all reasonable efforts to qualify the Collateral under the
state securities or "Blue Sky" laws and to obtain all necessary
governmental approvals for the sale of the Collateral, as requested by
Secured Party;
(c) use all reasonable efforts to cause each such issuer to make
available to its security holders, as soon as practicable, an earnings
statement which will satisfy the provisions of Section 11(a) of the
Securities Act; and
(d) use all reasonable efforts to do or cause to be done all such
others acts and things as may be necessary to make such sale of the
Collateral or any part thereof valid and binding and in compliance with
applicable law.
Pledgor further acknowledges the impossibility of ascertaining the amount of
damages which would be suffered by Secured Party by reason of the failure by
Pledgor to perform any of the covenants contained in this Section 4.06 and
consequently agrees that if Pledgor shall fail to perform any of such covenants,
it shall pay (to the extent permitted by law), as liquidated damages, and not as
penalty, an amount (in no event to exceed the amount of Obligations then
outstanding) equal to the value of the Collateral affected by Pledgor's failure
to perform any of the covenants contained in this Section 4.06 on the date the
Secured Party shall demand compliance with this Section 4.06.
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ARTICLE 5
RIGHTS, DUTIES AND POWERS OF SECURED PARTY
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The following rights, duties and powers of Secured Party are applicable
irrespective of whether an Event of Default occurs and is continuing:
Section 5.01 Discharge Encumbrances. Secured Party may, at its option,
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three (3) Business Days after receipt by Pledgor of prior written notice from
Secured Party of its intent to do so, discharge any Liens at any time levied or
placed on the Collateral that are prohibited by the Credit Agreement and that
are not being contested in good faith by appropriate proceedings. Pledgor agrees
to reimburse Secured Party within five (5) days after demand for any payment so
made, plus interest thereon from the date of Secured Party's demand at the rate
per annum equal to 2% plus the rate applicable to ABR Loans as provided in
Section 3.02(a) of the Credit Agreement.
Section 5.02 Transfer of Collateral. Subject to the terms of the Credit
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Agreement, Secured Party may transfer any or all of the Obligations, and upon
any such transfer Secured Party may transfer its interest in any or all of the
Collateral and shall be fully discharged thereafter from all liability therefor.
Any transferee of the Collateral shall be vested with all rights, powers, duties
and remedies of Secured Party hereunder.
Section 5.03 Cumulative and Other Rights. The rights, powers and remedies
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of Secured Party hereunder are in addition to all rights, powers and remedies
given by law or in equity. The exercise by Secured Party of any one or more of
the rights, powers and remedies herein shall not be construed as a waiver of any
other rights, powers and remedies, including, without limitation, any other
rights of set-off.
Section 5.04 Disclaimer of Certain Duties. The powers conferred upon
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Secured Party by this Agreement are to protect its interest in the Collateral
and shall not impose any duty upon Secured Party to exercise any such powers.
Pledgor hereby agrees that Secured Party shall not be liable for, nor shall the
indebtedness evidenced by the Obligations be diminished by, Secured Party's
delay or failure to collect upon, foreclose, sell, take possession of or
otherwise obtain value for the Collateral.
Sectopm 5.05 Custody and Preservation of the Collateral. Secured Party
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shall be deemed to have exercised reasonable care in the custody and
preservation of the Collateral in its possession if the Collateral is accorded
treatment substantially equal to that which comparable secured parties accord
comparable collateral, it being understood and agreed, however, that Secured
Party shall not have responsibility for (i) ascertaining or taking action with
respect to calls, conversions, exchanges, maturities, tenders or other matters
relative to any Collateral, whether or not Secured Party has or is deemed to
have knowledge of such matters, or (ii) taking any necessary steps to preserve
rights against Persons or entities with respect to any Collateral.
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ARTICLE 6
EVENTS OF DEFAULT
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Section 6.01 Events. An "Event of Default" (as defined in the Credit
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Agreement) which has occurred and is continuing shall constitute an Event of
Default under this Agreement.
Section 6.02 Remedies. Upon the occurrence and during the continuance of
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any Event of Default, Secured Party may take any or all of the following actions
without notice or demand to Pledgor (except that Secured Party will not take any
action in the case of paragraphs (b) and (f) below until five (5) Business Days
after receipt by Pledgor of written notice from Secured Party of its intent to
do so):
(a) Subject to applicable provisions contained in the Credit
Agreement, declare all or part of the indebtedness pursuant to the
Obligations immediately due and payable and enforce payment of the same by
Pledgor or any Obligor.
(b) Sell, in one or more sales and in one or more parcels, or
otherwise dispose of any or all of the Collateral in any commercially
reasonable manner as Secured Party may elect, in a public or private
transaction, at any location as deemed reasonable by Secured Party either
for cash or credit or for future delivery at such price as Secured Party
may reasonably deem fair, and (unless prohibited by the Uniform Commercial
Code, as adopted in any applicable jurisdiction) Secured Party may be the
purchaser of any or all Collateral so sold and may apply upon the purchase
price therefor any Obligations secured hereby. Any such sale or transfer by
Secured Party either to itself or to any other Person shall be absolutely
free from any claim of right by Pledgor, including any equity or right of
redemption, stay or appraisal which Pledgor has or may have under any rule
of law, regulation or statute now existing or hereafter adopted. Upon any
such sale or transfer, Secured Party shall have the right to deliver,
assign and transfer to the purchaser or transferee thereof the Collateral
so sold or transferred. If Secured Party reasonably deems it advisable to
do so, it may restrict the bidders or purchasers of any such sale or
transfer to Persons or entities who will represent and agree that they are
purchasing the Collateral for their own account and not with the view to
the distribution or resale of any of the Collateral. Secured Party may, at
its discretion, provide for a public sale, and any such public sale shall
be held at such time or times within ordinary business hours and at such
place or places as Secured Party may fix in the notice of such sale.
Secured Party shall not be obligated to make any sale pursuant to any such
notice. Secured Party may, without notice or publication, adjourn any
public or private sale by announcement at any time and place fixed for such
sale, and such sale may be made at any time or place to which the same may
be so adjourned. In the event any sale or transfer hereunder is not
completed or is defective in the opinion of Secured Party, such sale or
transfer shall not exhaust the rights of Secured Party hereunder, and
Secured Party shall have the right to cause one or more subsequent sales or
transfers to be made hereunder. If only part of the Collateral is sold or
transferred such that the Obligations remain outstanding (in whole or in
part), Secured Party's rights and remedies hereunder shall not be
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exhausted, waived or modified, and Secured Party is specifically empowered
to make one or more successive sales or transfers until all the Collateral
shall be sold or transferred and all the Obligations are paid. In the event
that Secured Party elects not to sell the Collateral, Secured Party retains
its rights to dispose of or utilize the Collateral or any part or parts
thereof in any manner authorized or permitted by law or in equity, and to
apply the proceeds of the same towards payment of the Obligations.
(c) Apply proceeds of the disposition of the Collateral to the
Obligations in any manner elected by Secured Party and permitted by the
Code or otherwise permitted by law or in equity. Such application may
include, without limitation, the reasonable attorneys' fees and legal
expenses incurred by Secured Party.
(d) Appoint any Person as agent to perform any act or acts necessary
or incident to any sale or transfer by Secured Party of the Collateral.
(e) Receive, change the address for delivery, open and dispose of mail
addressed to Pledgor, and to execute, assign and endorse negotiable and
other instruments for the payment of money, documents of title or other
evidences of payment, shipment or storage for any form of Collateral on
behalf of and in the name of Pledgor.
(f) Exercise all other rights and remedies permitted by law or in
equity.
Section 6.03 Attorney-in-Fact. Pledgor hereby irrevocably appoints Secured
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Party 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 Secured
Party's discretion upon the occurrence and during the continuance of an Event of
Default, but at Pledgor's cost and expense, three (3) Business Days after
receipt by Pledgor of written notice from Secured Party of its intent to do so,
to take any action and to execute any assignment, certificate, financing
statement, stock power, notification, document or instrument which Secured Party
may deem 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 Collateral or any part thereof and to give full
discharge for the same.
Section 6.04 Liability for Deficiency. If any sale or other disposition of
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Collateral by Secured Party in compliance with the Loan Documents and applicable
law or any other action of Secured Party hereunder in compliance with the Loan
Documents and applicable law results in reduction of the Obligations, such
action will not release Pledgor from its liability to Secured Party for any
unpaid Obligations, including (to the extent permitted by law) costs, charges
and expenses incurred in the liquidation of Collateral, together with interest
thereon until paid at the rate per annum equal to 2% plus the rate applicable to
ABR Loans as provided in Section 3.02(a) of the Credit Agreement, and the same
shall be immediately due and payable to Secured Party at Secured Party's address
set forth in the opening paragraph hereof.
Section 6.05 Reasonable Notice. If any applicable provision of any law
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requires Secured Party to give reasonable notice of any sale or disposition or
other action, Pledgor hereby agrees that ten days' prior written notice shall
constitute reasonable notice thereof. Such notice, in the case of public sale,
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shall state the time and place fixed for such sale and, in the case of private
sale, the time after which such sale is to be made.
Section 6.06 Pledged Securities. Upon both (i) the occurrence and during
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the continuance of an Event of Default and (ii) either (a) the Loans becoming
due and payable at their stated maturity and not paid, (b) the Loans being
declared due and payable pursuant to Article X of the Credit Agreement, or (c)
Secured Party giving prior written notice to Pledgor of Secured Party's intent
to exercise its rights under Section 6.02:
(a) All rights of Pledgor to receive the dividends and interest
payments which it would otherwise be authorized to receive and retain
pursuant to Section 4.02 shall cease, and all such rights shall thereupon
become vested in Secured Party who shall thereupon have the sole right to
receive and hold as Collateral such dividends and interest payments, but
Secured Party shall have no duty to receive and hold such dividends and
interest payments and shall not be responsible for any failure to do so or
delay in so doing.
(b) All dividends and interest payments which are received by Pledgor
contrary to the provisions of this Section 6.06 shall be received in trust
for the benefit of Secured Party, shall be segregated from other funds of
Pledgor and shall be promptly paid over to Secured Party as Collateral in
the same form as so received (with any necessary endorsement).
(c) Secured Party may exercise any and all rights of conversion,
exchange, subscription or any other rights, privileges or options
pertaining to any of the Pledged Securities as if it were the absolute
owner thereof, including without limitation, the right to exchange at its
discretion, any and all of the Pledged Securities upon the merger,
consolidation, reorganization, recapitalization or other readjustment of
any issuer of such Pledged Securities or upon the exercise by any such
issuer or Secured Party of any right, privilege or option pertaining to any
of the Pledged Securities and in connection therewith, to deposit and
deliver any and all of the Pledged Securities with any committee,
depository, transfer agent, registrar or other designated agency upon such
terms and conditions as it may determine, all without liability except to
account for property actually received by it, but Secured Party 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.
Section 6.07 Non-judicial Enforcement. To the extent permitted by law,
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Secured Party may enforce its rights hereunder without prior judicial process or
judicial hearing, and to the extent permitted by law Pledgor expressly waives
any and all legal rights which might otherwise require Secured Party to enforce
its rights by judicial process.
ARTICLE 7
MISCELLANEOUS PROVISIONS
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Section 7.01 Notices. Any notice required or permitted to be given under or
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in connection with this Agreement shall be in writing and shall be mailed by
first class or express mail, postage prepaid, or sent by telex, telegram,
telecopy or other similar form of rapid written transmission or personally
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delivered to the receiving party. All such communications shall be mailed, sent
or delivered at the address respectively indicated in the opening paragraph
hereof or at such other address as either party may have furnished the other
party in writing. Any communication so addressed and mailed shall be deemed to
be given three days after so mailed, any notice so sent by rapid written
transmission shall be deemed to be given when receipt of such transmission is
acknowledged by the receiving operator or equipment, and any communication so
delivered in person shall be deemed to be given when receipted for or actually
received by Pledgor or Secured Party, as the case may be.
Section 7.02 Amendments and Waivers. Secured Party's acceptance of partial
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or delinquent payments or any forbearance, failure or delay by Secured Party in
exercising any right, power or remedy hereunder shall not be deemed a waiver of
any obligation of Pledgor or any Obligor, or of any right, power or remedy of
Secured Party; and no partial exercise of any right, power or remedy shall
preclude any other or further exercise thereof. Secured Party may remedy any
Event of Default hereunder or in connection with the Obligations without waiving
the Event of Default so remedied. Pledgor hereby agrees that if Secured Party
agrees to a waiver of any provision hereunder, or an exchange of or release of
the Collateral, or the addition or release of any Obligor or other Person, any
such action shall not constitute a waiver of any of Secured Party's other rights
or of Pledgor's obligations hereunder. This Agreement may be amended only by an
instrument in writing executed jointly by Pledgor and Secured Party and may be
supplemented only by documents delivered or to be delivered in accordance with
the express terms hereof.
Section 7.03 Copy as Financing Statement. A photocopy or other reproduction
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of this Agreement may be delivered by Pledgor or Secured Party to any financial
intermediary or other third party for the purpose of transferring or perfecting
any or all of the Pledged Securities to Secured Party or its designee or
assignee.
Section 7.04 Possession of Collateral. Secured Party shall be deemed to
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have possession of any Collateral in transit to it or set apart for it (or, in
either case, any of its agents, affiliates or correspondents).
Section 7.05 Redelivery of Collateral. If any sale or transfer of
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Collateral by Secured Party results in full satisfaction of the Obligations, and
after such sale or transfer and discharge there remains a surplus of proceeds,
Secured Party will deliver to Pledgor such excess proceeds in a commercially
reasonable time; provided, however, that Secured Party shall not have any
liability for any interest, cost or expense in connection with any delay in
delivering such proceeds to Pledgor.
Section 7.06 Governing Law; Jurisdiction. This Agreement and the security
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interest granted hereby shall be construed in accordance with and governed by
the laws of the State of Texas (except to the extent that the laws of any other
jurisdiction govern the perfection and priority of the security interests
granted hereby).
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Section 7.07 Continuing Security Agreement.
(a) Except as otherwise provided by applicable law (including, without
limitation, Section 9.620 of the Code), no action taken or omission to act
by Secured Party hereunder, including, without limitation, any exercise of
voting or consensual rights pursuant to Section 6.06 or any other action
taken or inaction pursuant to Section 6.02, shall be deemed to constitute a
retention of the Collateral in satisfaction of the Obligations or otherwise
to be in full satisfaction of the Obligations, and the Obligations shall
remain in full force and effect, until Secured Party shall have applied
payments (including, without limitation, collections from Collateral)
towards the Obligations in the full amount then outstanding or until such
subsequent time as is hereinafter provided in subsection (b) below.
(b) To the extent that any payments on the Obligations or proceeds of
the Collateral are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, debtor in
possession, receiver or other Person under any bankruptcy law, common law
or equitable cause, then to such extent the Obligations so satisfied shall
be revived and continue as if such payment or proceeds had not been
received by Secured Party, and Secured Party's security interests, rights,
powers and remedies hereunder shall continue in full force and effect. In
such event, this Agreement shall be automatically reinstated if it shall
theretofore have been terminated pursuant to Section 7.08.
Section 7.08 Termination. The grant of a security interest hereunder and
all of Secured Party's rights, powers and remedies in connection therewith shall
remain in full force and effect until Secured Party has (i) retransferred and
delivered all Collateral in its possession to Pledgor, and (ii) executed a
written release or termination statement and reassigned to Pledgor without
recourse or warranty any remaining Collateral and all rights conveyed hereby.
Upon (i) the complete payment of the Obligations (other than any indemnity which
is not yet due and payable), (ii) the expiration of all outstanding Letters of
Credit, and (iii) the termination of the Commitments, Secured Party, at the
written request and expense of Pledgor, will release, reassign and transfer the
Collateral to Pledgor and declare this Agreement to be of no further force or
effect. Notwithstanding the foregoing, Section 4.04 and the provisions of
subsection 7.07(b) shall survive the termination of this Agreement.
Section 7.09 Counterparts; Effectiveness. This Agreement may be executed in
two or more counterparts. Each counterpart is deemed an original, but all such
counterparts taken together constitute one and the same instrument. This
Agreement becomes effective upon the execution hereof by Pledgor and delivery of
the same to Secured Party, and it is not necessary for Secured Party to execute
any acceptance hereof or otherwise signify or express its acceptance hereof.
Section 7.10 Limitation by Law. All rights, remedies and powers provided in
this Agreement may be exercised only to the extent that the exercise thereof
does not violate any applicable provision of law, and all the provisions of this
Agreement are intended to be subject to all applicable mandatory provisions of
law which may be controlling and to be limited to the extent necessary so that
they shall not render this Agreement invalid, unenforceable, in whole or in
part, or not entitled to be recorded, registered or filed under the provisions
of any applicable law.
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Section 7.11 Interest. It is the intention of the parties hereto to conform
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strictly to usury laws applicable to Secured Party or any Lender. Accordingly,
if the transactions contemplated hereby would be usurious under applicable state
or federal law, then, notwithstanding anything to the contrary in this Agreement
or in any other Loan Document, it is agreed as follows: (i) the aggregate of all
consideration which constitutes interest under law applicable to Secured Party
or any Lender that is contracted for, taken, reserved, charged or received under
the Obligations, this Agreement or under any other Loan Document or otherwise in
connection with the Obligations shall under no circumstances exceed the maximum
amount allowed by such applicable law, (ii) in the event that the maturity of
the Obligations is accelerated for any reason, or in the event of any required
or permitted prepayment, then such consideration that constitutes interest under
law applicable to Secured Party or any Lender may never include more than such
maximum amount, and (iii) excess interest, if any, provided for in this
Agreement, any other Loan Document or otherwise shall be cancelled automatically
and, if theretofore paid, shall be credited by Secured Party on the principal
amount of the Obligations (or, to the extent that the principal amount of the
Obligations shall have been or would thereby be paid in full, refunded by
Secured Party to Pledgor). The right to accelerate the maturity of the
Obligations does not include the right to accelerate any interest which has not
otherwise accrued on the date of such acceleration, and neither Secured Party
nor any Lender intend to collect any unearned interest in the event of
acceleration. All sums paid or agreed to be paid to Secured Party or any Lender
for the use, forbearance or detention of sums included in the initial
Obligations shall, to the extent permitted by applicable law, be amortized,
prorated, allocated and spread throughout the full term of the Obligations until
payment in full so that the rate or amount of interest on account of the initial
Obligations does not exceed the applicable usury ceiling, if any.
[Signatures begin on next page]
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PLEDGOR: ST. MARY LAND & EXPLORATION COMPANY
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By: /s/ MILAM RANDOLPH PHARO
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Milam Randolph Pharo
Vice President - Land & Legal
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