Exhibit 10.4
EXECUTION VERSION
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (this “
Pledge Agreement ”), dated as of
October 24, 2008, is by and among each of the subsidiaries of
Transmeridian Exploration Incorporated (“
Parent ”) listed on the signature pages hereof
(collectively, and together with the Additional Pledgors (as
defined in Section 23), the “ Pledgors
”), The Bank of New York Mellon (formerly known as The Bank
of New York), in its capacity as Collateral Agent for the benefit
of the Secured Parties referred to below (in such capacity, the
“ Collateral Agent ”), The Bank of New
York Mellon, in its capacity as trustee under the Original
Indenture referred to below (in such capacity, the “
Original Trustee ”), and The Bank of New York
Mellon, in its capacity as trustee under the New Indenture referred
to below (in such capacity, the “ New Trustee
”).
RECITALS
WHEREAS, pursuant to that certain Indenture, dated as of
December 12, 2005, as amended by the First, Second and Third
Supplemental Indentures thereto, dated as of December 22,
2005, May 24, 2006 and the date hereof, respectively, by
and among each Pledgor, Transmeridian Exploration Inc. (“
Issuer ”), the Original Trustee and the other
Guarantors from time to time party thereto (as further amended,
restated, supplemented or otherwise modified from time to time, the
“ Original Indenture ”), Issuer has
issued an aggregate $290 million principal amount of its senior
secured notes due 2010 (the “ Original Notes
”);
WHEREAS, pursuant to that certain Indenture, dated as of
the date hereof, by and among each Pledgor, Issuer, the New Trustee
and the other Guarantors from time to time party thereto (as
amended, restated, supplemented or otherwise modified from time to
time, the “ New Indenture ” and, together
with the Original Indenture, the “ Indentures
”), Issuer will issue its senior secured notes due 2010 (the
“ New Notes ” and, together with the
Original Notes, the “ Notes ”) in
exchange for all or a portion of the Original Notes;
WHEREAS, pursuant to the terms of the Original Indenture,
the Original Notes and each Pledgor’s payment obligations
under the Original Indenture, including obligations to the Original
Trustee, will be secured, in part, by a full and unconditional
guarantee by such Pledgor (with respect to each Pledgor, the
“ Original Guarantee ”) and, in turn, the
Original Guarantee will be secured by, in part, a pledge of all
existing and future intercompany indebtedness owed to each such
Pledgor by Parent, Issuer or any other Restricted
Subsidiary;
WHEREAS, pursuant to the terms of the New Indenture, the
New Notes and each Pledgor’s payment obligations under the
New Indenture, including obligations to the New Trustee, will be
secured, in part, by a full and unconditional guarantee by such
Pledgor (with respect to each Pledgor, the “ New
Guarantee ”) and, in turn, the New Guarantee will be
secured by, in part, a pledge of all existing and future
intercompany indebtedness owed to each such Pledgor by Parent,
Issuer or any other Restricted Subsidiary;
WHEREAS, pursuant to the terms of the Original Indenture
and the New Indenture, each Pledgor shall have granted the security
interests in the Pledged Collateral (as defined below) contemplated
under this Pledge Agreement in favor of the Collateral Agent for
the ratable benefit of the holders of the Original Notes, the
holders of the New Notes, the Original Trustee, the New Trustee and
the Collateral Agent (collectively, the “ Secured
Parties ”) to secure the Secured Obligations (as
defined below); and
WHEREAS, each Pledgor, the Collateral Agent, the Original
Trustee and the New Trustee have each agreed to enter into this
Pledge Agreement pursuant to the terms of the Original Indenture
and the New Indenture to provide that the security interests
granted by each Pledgor in the Pledged Collateral in favor of the
Collateral Agent shall be granted for the ratable benefit of the
Secured Parties, to secure, among other things, the obligations of
each Pledgor under each of the Indentures.
NOW, THEREFORE
, in consideration of these premises
and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
1. Definitions
. The following terms that are
defined in the Uniform Commercial Code from time to time in effect
in the State of New York (the “UCC”) are used herein as
so defined: Certificated Security, Control, Entitlement Order,
Financial Asset, Instrument (as defined in Section 9-102(47)
of the UCC), Investment Company Security, Securities Account,
Security, Security Entitlement, Securities Intermediary and
Uncertificated Security. As used herein, the following terms shall
have the meanings ascribed to such terms in each of the Indentures
(and for greater certainty, shall be inclusive of all such
meanings): “ Guarantor ”, “
Lien ”, “ Permitted Lien
”, “ Person ” and “
Restricted Subsidiary ”.
2. Pledge and Grant of Security
Interest . Subject to the
terms and conditions of this Pledge Agreement and to secure the
performance of the Secured Obligations, each Pledgor hereby pledges
and grants to the Collateral Agent, for the ratable benefit of the
Secured Parties, a continuing security interest in any and all
right, title and interest of such Pledgor in and to the following,
whether now owned or existing or owned, acquired, or arising
hereafter (collectively, the “Pledged
Collateral”):
(a) Pledged Debt . All of the
existing and future indebtedness owed to such Pledgor by Parent,
Issuer or any Restricted Subsidiary, including all indebtedness
listed on Schedule 2(a) hereto and issued by the obligors named
therein, and any future indebtedness owed to such Pledgor by any
obligor listed on Schedule 2(a) hereto (collectively, together with
the other interests described in clauses (A) and (B) of this
Section 2(a), the “ Pledged Debt ”),
including, but not limited to, the following:
(A) the instruments, if any,
evidencing the Pledged Debt, and all interest, cash, instruments
and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all
of the Pledged Debt; and
(B) all additional indebtedness from
time to time owed to such Pledgor by any obligor listed on Schedule
2(a) or any other Restricted Subsidiary and the instruments, if
any, evidencing such indebtedness, and all interest, cash,
instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange
for any or all of such indebtedness, in each case whether or not
reflected on Schedule 2(a) and whether or not Schedule 2(a) is
amended to refer to such additional indebtedness.
(b) Proceeds . All proceeds
and products of the foregoing, however and whenever acquired and in
whatever form, subject to Section 10(d).
Without limiting the generality of
the foregoing, it is hereby specifically understood and agreed that
each Pledgor may from time to time hereafter pledge and deliver
additional indebtedness or instruments evidencing indebtedness, to
the Collateral Agent as collateral security for the Secured
Obligations. Upon such pledge and delivery to the Collateral Agent,
such additional indebtedness or debt instruments, as the case may
be, shall be deemed to be part of the Pledged Collateral and shall
be subject to the terms of this Pledge Agreement whether or not
Schedule 2(a) is amended to refer to such additional indebtedness
or instruments.
3. Security for Secured
Obligations . In the case
of each Pledgor, the security interest created hereby in the
Pledged Collateral of such Pledgor constitutes continuing
collateral security for all of the following, whether now existing
or hereafter incurred (the “ Secured
Obligations ”): (a) the
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Original Guarantee of such Pledgor and the
payment and performance by such Pledgor of all of its obligations
under the Original Guarantee; (b) the New Guarantee of such
Pledgor and the payment and performance by such Pledgor of all of
its obligations under the New Guarantee; (c) all expenses and
charges, legal and otherwise, incurred by the Collateral Agent, the
Original Trustee and/or the holders of the Original Notes in
enforcing such Pledgor’s obligations under the Original
Guarantee or in realizing on or protecting any security therefor,
including without limitation the security granted hereunder; and
(d) all expenses and charges, legal and otherwise, incurred by
the Collateral Agent, the New Trustee and/or the holders of the New
Notes in enforcing such Pledgor’s obligations under the New
Guarantee or in realizing on or protecting any security therefor,
including without limitation the security granted
hereunder.
4. Delivery of the Pledged
Collateral; Perfection of Security Interest . Each Pledgor hereby agrees that:
(a) Delivery of Instruments .
Such Pledgor shall deliver as security to the Collateral Agent,
(i) simultaneously with or prior to this Pledge Agreement
becoming effective, all instruments representing or evidencing the
Pledged Debt owned by such Pledgor (excluding, unless an Event of
Default (as defined below) has occurred and is continuing and the
Collateral Agent has requested such delivery, Pledged Debt in an
aggregate principal amount not in excess of $100,000), in each case
together with the delivery of signed, undated instruments of
transfer for the Pledged Debt to the Collateral Agent or its
designee; and (ii) promptly upon the receipt thereof by or on
behalf of such Pledgor, all other instruments constituting Pledged
Debt owned by such Pledgor (except, unless an Event of Default has
occurred and is continuing and the Collateral Agent has requested
such delivery, instruments representing Pledged Debt in an
aggregate principal amount not in excess of $100,000). Prior to
delivery to the Collateral Agent, all such instruments constituting
Pledged Debt of each Pledgor shall be held in trust by each such
Pledgor for the benefit of the Collateral Agent pursuant hereto.
All such instruments shall be delivered in suitable form for
transfer by delivery or shall be accompanied by duly executed
instruments of transfer or assignment in blank, in forms reasonably
acceptable to the Collateral Agent.
(b) Financing Statements; Other
Perfection Actions . Such Pledgor hereby agrees to prepare and
file such financing statements (including continuation statements)
or amendments thereof or supplements thereto or other instruments
as are necessary or appropriate in order to perfect and maintain
the security interests granted hereunder in accordance with the UCC
that specifically describes the Pledged Collateral in such manner
as is necessary or advisable. Each Pledgor shall also execute and
deliver to the Collateral Agent and/or file such agreements,
assignments or instruments (including affidavits, notices,
reaffirmations, amendments and restatements of existing documents
and, subject to the terms of each Indenture, any documents as may
be necessary if the law of any jurisdiction other than New York
becomes or is applicable to the Pledged Collateral or any portion
thereof, in each case, including as the Collateral Agent may
reasonably request) and do all such other things as are necessary
or appropriate (i) to assure to the Collateral Agent its
security interests hereunder are perfected, including such
financing statements (including continuation statements) or
amendments thereof or supplements thereto or other instruments,
including as the Collateral Agent may from time to time reasonably
request in order to perfect and maintain the security interests
granted hereunder in accordance with the UCC and any other personal
property security legislation in the appropriate jurisdictions,
(ii) to consummate the transactions contemplated hereby and
(iii) to otherwise protect and assure the Collateral Agent of
its rights and interests hereunder.
5. Representations and
Warranties . Each Pledgor
hereby represents and warrants to the Collateral Agent for the
benefit of the Secured Parties that:
(a) Authorization of Pledged
Collateral . The Pledged Debt pledged by such Pledgor hereunder
has been duly authorized, authenticated or issued and delivered, is
the legal, valid and binding obligation of the issuers thereof, is
evidenced by one or more promissory notes (which promissory notes,
to the extent required hereunder, have been delivered to the
Collateral Agent) and is not in default.
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(b) Title . Such Pledgor has
good and indefeasible title to the Pledged Collateral pledged by
such Pledgor hereunder and will at all times be the legal and
beneficial owner of such Pledged Collateral free and clear of any
Lien, other than Permitted Liens.
(c) Exercising of Rights .
The exercise by the Collateral Agent of its rights and remedies
hereunder will not violate any law or governmental regulation or
any material contractual restriction binding on or affecting such
Pledgor or any of its property.
(d) Pledgors’ Authority
. No authorization, approval or action by, and no notice or filing
with any governmental authority, the obligor of any Pledged Debt or
third party is required either (i) for the pledge made by such
Pledgor or for the granting of the security interest by such
Pledgor pursuant to this Pledge Agreement or (ii) for the
exercise by any Secured Party of its rights and remedies hereunder
(except as may be required by laws affecting the offering and sale
of securities) in respect of the Pledged Collateral pledged by such
Pledgor hereunder.
(e) Security
Interest/Priority . This Pledge Agreement creates a valid
security interest in favor of the Collateral Agent, for the ratable
benefit of the Secured Parties, in the Pledged Collateral pledged
by such Pledgor hereunder. The taking of possession by the
Collateral Agent of the instruments (if any) representing the
Pledged Collateral of such Pledgor and the relevant instruments of
transfer and all other instruments constituting Pledged Collateral
of such Pledgor will perfect and establish the first priority of
the Collateral Agent’s security interest in all such Pledged
Collateral consisting of Instruments. Upon the filing of a UCC
financing statement describing the Pledged Collateral in the
applicable filing office in the State of Texas or the District of
Columbia, as applicable, and the filing of such other documents
and/or the taking by such Pledgor of such other actions as may be
required in such Pledgor’s jurisdiction of organization
and/or in the jurisdiction of organization of any applicable
obligor, issuer, partnership or limited liability company in order
to perfect such security interest, the Collateral Agent shall have
a first priority perfected security interest in all Pledged Debt of
such Pledgor not evidenced by an Instrument. Except as set forth in
this Section 5(e), no action is necessary to perfect the
Collateral Agent’s security interest in respect of the
Pledged Collateral pledged by such Pledgor hereunder.
6. Covenants
. Each Pledgor hereby covenants and
agrees with the Collateral Agent that it shall:
(a) Defense of Title .
Warrant and defend title to and ownership of the Pledged Collateral
of such Pledgor at its own expense against the claims and demands
of all other parties claiming an interest therein; keep such
Pledged Collateral free from all Liens, other than Permitted Liens;
and not sell, exchange, transfer, assign, lease or otherwise
dispose of such Pledged Collateral or any interest therein, except
as permitted under the Indentures.
(b) Further Assurances .
Subject to the terms of the Indentures, promptly execute and
deliver at its expense all further instruments and documents and
take all further action that may be necessary and desirable or that
the Collateral Agent may request in order to (i) perfect and
protect the security interest created hereby in the Pledged
Collateral of such Pledgor (including, without limitation, filing
of UCC financing statements and any and all other actions
reasonably necessary to satisfy the Collateral Agent that the
Collateral Agent has obtained a first priority perfected security
interest in all such Pledged Collateral) and (ii) enable the
Collateral Agent to exercise and enforce its rights and remedies
hereunder in respect of the Pledged Collateral pledged by such
Pledgor hereunder.
(c) Amendments . Not make or
consent to any amendment or other modification or waiver with
respect to any of the Pledged Collateral of such Pledgor or enter
into any agreement or allow to exist any restriction with respect
to any of such Pledged Collateral other than pursuant hereto or as
may be permitted under the Indentures.
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(d) Compliance with Securities
Laws . File all reports and other information now or hereafter
required to be filed by such Pledgor with the United States
Securities and Exchange Commission and any other state, federal or
foreign agency in connection with the ownership of the Pledged
Collateral of such Pledgor.
7. Performance of Obligations;
Advances by Collateral Agent . (a) On failure of any Pledgor to perform
any of the covenants and agreements contained herein, the
Collateral Agent may, at its sole option and in its sole
discretion, but shall not be required to, perform or cause to be
performed the same and in so doing may expend such sums as the
Collateral Agent may reasonably deem advisable in the performance
thereof, including, without limitation, the payment of any
insurance premiums, the payment of any taxes, a payment to obtain a
release of a Lien or potential Lien (other than in either case a
Permitted Lien), expenditures made in defending against any adverse
claim and all other expenditures which the Collateral Agent may
make for the protection of the security interest hereof or may be
compelled to make by operation of law. All such sums and amounts so
expended shall be repayable by the applicable Pledgor promptly upon
timely notice thereof and demand therefor and shall constitute
additional Secured Obligations. No such performance of any covenant
or agreement by the Collateral Agent on behalf of any Pledgor, and
no such advance or expenditure therefor, shall relieve any Pledgor
of any default under the terms of this Pledge Agreement or either
Indenture. The Collateral Agent may make any payment hereby
authorized in accordance with any bill, statement or estimate
procured from the appropriate public office or holder of the claim
to be discharged without inquiry into the accuracy of such bill,
statement or estimate or into the validity of any tax assessment,
sale, forfeiture, tax lien, title or claim except to the extent
such payment is being contested in good faith by the applicable
Pledgor in appropriate proceedings and against which adequate
reserves are being maintained in accordance with generally accepted
accounting principles in the United States of America, as in effect
from time to time.
(b) Each Pledgor covenants and
agrees to indemnify the Collateral Agent to the same extent as each
of the Original Trustee and the New Trustee is indemnified under
the terms of the applicable Indenture by Issuer, for any claims,
costs, liabilities or expense of any kind (including the fees and
expenses of counsel) arising out of or in connection with
performance of its duties hereunder or with respect to the Escrow
Agreement, dated as of December 12, 2005, among Issuer, the
Original Trustee and The Bank of New York, as escrow agent (as
amended, restated, supplemented or otherwise modified from time to
time), and such expenses shall, until paid in full, constitute
additional Secured Obligations.
8. Events of Default
. The occurrence of an event which
under the Original Indenture would constitute an “Event of
Default” (as defined in the Original Indenture), or the
occurrence of an event which under the New Indenture would
constitute an “Event of Default” (as defined in the New
Indenture), in each case shall be an event of default hereunder
(each such event, an “Event of Default”).
9. Remedies
.
(a) General Remedies . Upon
the occurrence of an Event of Default and during the continuation
thereof, the Collateral Agent shall have, in respect of the Pledged
Collateral, in addition to the rights and remedies provided herein
and in the applicable Indenture, the rights and remedies of a
secured party under the UCC or any other applicable law.
(b) Sale of Pledged
Collateral . Upon the occurrence of an Event of Default and
during the continuation thereof, without limiting the generality of
this Section 9 and without notice, the Collateral Agent may,
in its sole discretion, sell or otherwise dispose of or realize
upon the Pledged Collateral, or any part thereof, in one or more
parcels, at public or private sale, at any exchange or
broker’s board or elsewhere, at such price or prices and on
such other terms as the Collateral Agent may deem commercially
reasonable, for cash, credit or for future delivery or otherwise in
accordance with applicable law. To the extent permitted by law, any
holder of a Note may, in such event, bid for
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the purchase of such Pledged Collateral. Each
Pledgor agrees that, to the extent notice of sale shall be required
by law and has not been waived by such Pledgor, any requirement of
reasonable notice shall be met if notice, specifying the place of
any public sale or the time after which any private sale
i
