EXHIBIT 10.8
 
SENIOR PLEDGE AGREEMENT
 
THIS SENIOR PLEDGE AGREEMENT (this “Agreement”) dated as of January 3, 2008, is
made by FORSTER DRILLING CORPORATION, a Nevada corporation, (the “Pledgor”), in
favor of FIRST SECURITY BANK (the “Trustee”).
 
WHEREAS, concurrently herewith Pledgor and Trustee shall enter into that certain
subordinated indenture dated of even date hereof (the “Indenture”).
 
WHEREAS, the Indenture requires that Pledgor shall have executed and delivered
to Trustee this Agreement to secure Pledgor’s obligations to Trustee and the
holders of the notes to be issued under the Indenture (individually, a “Note”
and, collectively, the “Notes”) in the manner set forth herein.
 
WHEREAS, Pledgor and Trustee, together with Bank of the Ozarks, have entered
into an Intercreditor Agreement (the “Intercreditor Agreement”) of even date
herewith and all provisions herein are subject to such agreement.
 
NOW, THEREFORE, in consideration of the Secured Obligations (as hereinafter
defined) and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
 
1. Definitions. Capitalized terms not otherwise defined herein which are defined
in the Note or the Indenture shall have the meanings set forth therein or which
are defined in the UCC shall have the meanings set forth therein. In addition to
any other terms defined elsewhere in this Agreement, the following terms shall
have the following meanings:
 
“Capital Stock” shall mean all of the issued and outstanding shares of common
stock of Forster Drilling, Inc., Forster Tool & Supply, Inc. and Forster
Exploration & Production, Inc., (each a “Subsidiary,” and all referred to as
“Subsidiaries”), and all of the issued and outstanding shares of capital stock
of each Subsidiary is owned by Pledgor.
 
“Collateral” shall have the meaning assigned to that term in Section 2 hereof.
 
“Equity Rights” shall have the meaning assigned to that term in Section 2
hereof.
 
“Event of Default” shall mean an Event of Default as defined under the
Indenture.
 
“Pledged Securities” shall have the meaning assigned to that term in Section 2
hereof.
 
“Proceeds” shall mean all proceeds as that term is defined in the UCC and, in
addition, any and all amounts or items of property received when Collateral or
proceeds thereof are sold, exchanged, collected or otherwise disposed of, both
cash and non-cash, including proceeds of insurance, indemnity, warranty or
guarantee paid or payable on or in connection with any Collateral.
 

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“Secured Obligations” shall mean, collectively, (a) all liabilities, obligations
and indebtedness (whether actual or contingent, whether owed jointly or
severally, whether for the payment of money and, if for the payment of money,
whether for principal, interest, premium, fees, expenses or otherwise) now
existing or hereafter incurred of Pledgor to Trustee or the holders of Notes
under the Notes, this Agreement, the Indenture or the Senior Security Agreement
(as defined below), as the same may be amended, modified or supplemented from
time to time, together with any and all extensions, renewals, refinancings or
refundings thereof in whole or in part, (b) all other liabilities, obligations
and indebtedness (whether actual or contingent, whether owed jointly or
severally, whether for the payment of money and, if for the payment of money,
whether for principal, interest, premium, fees, expenses or otherwise) of
Pledgor or any of its Subsidiaries to Trustee or the holders of Notes now
existing or hereafter incurred, whether under other financing arrangements
whether related to the Notes, whether contemplated by Trustee or the holders of
Notes or Pledgor at the date hereof and whether direct, indirect, matured or
contingent, joint or several, or otherwise, together with any and all
extensions, renewals, refinancings or refundings thereof in whole or in part,
(c) all costs and expenses (including, without limitation, to the extent
permitted by law, reasonable attorneys' fees and other legal expenses) incurred
by Trustee in the enforcement and collection of any of the liabilities,
obligations or indebtedness referred to in clause (a) or (b) above, and (d) all
payments and advances made by Trustee for the maintenance, preservation,
protection or enforcement of, or realization upon, any property or assets now or
hereafter made subject to any Lien granted pursuant to the Indenture or the
Subordinated Security Agreement or pursuant to any agreement, instrument or note
relating to any of the Secured Obligations (including, without limitation,
advances for taxes, insurance, storage, transportation, repairs and the like).
 
“Senior Security Agreement” shall mean the Senior Security Agreement, of even
date herewith, by and among Pledgor, the Subsidiaries and Trustee.
 
“Subordinated Pledge Agreement” shall mean the Subordinated Pledge Agreement, of
even date herewith, by and among the Pledgor, the Subsidiaries and Bank of the
Ozarks.
 
“Subordinated Security Agreement” shall mean the Subordinated Security
Agreement, of even date herewith, by and among Pledgor, the Subsidiaries and
Bank of the Ozarks.
 
“UCC” shall mean the Uniform Commercial Code as in effect in any applicable
jurisdiction.
 
2. Grant of Security Interest.
 
(a) Grant. As security for full and timely payment, observance and performance
of the Secured Obligations in accordance with the terms thereof, Pledgor hereby
pledges, assigns, hypothecates and transfers, and grants to and creates in favor
of Trustee a continuing security interest and lien under the UCC in all of its
right, title and interest in, to and under the following (all of which is
collectively referred to herein as the “Collateral”):
 
 
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(i) all of the issued and outstanding shares of Capital Stock (whether in
certificated or uncertificated form) of the Subsidiaries of Pledgor listed on
Schedule I attached to this Agreement (the “Pledged Securities”).
 
(ii) all stock rights, rights to subscribe, liquidating and other dividends and
distributions, stock dividends, dividends paid in stock, new securities,
options, warrants, other property, cash and any other rights to which Pledgor is
or may hereafter become entitled to receive, for any reason whatsoever, with
respect to its interest in the Pledged Securities, whether in certificated or
uncertificated form and whether in substitution or exchange or by reason of
merger, consolidation, reclassification, reorganization, liquidation or
otherwise (the “Equity Rights”);
 
(iii) the certificates and other instruments described on Schedule I currently
evidencing the Pledged Securities and any and all other certificates and
instruments now or hereafter evidencing the Pledged Securities or the Equity
Rights, in each case duly endorsed in blank (or with appropriate irrevocable
stock powers duly executed in blank and undated); and
 
(iv) all Proceeds of the foregoing.
 
(b) Relative Priority of Security Interests. In furtherance of the intent of the
parties hereto and the parties to the Intercreditor Agreement, the security
interests and liens granted hereunder shall be treated as a severable first in
priority security interest and lien granted to Trustee as the collateral agent
under the Indenture and the security interests and liens granted by Pledgor
under the Subordinated Pledge Agreement shall be treated as a severable second
in priority security interest, for the purpose of determining the relative
rights in the Collateral.
 
3. Delivery of Collateral.
 
(a) Upon the execution and delivery of this Agreement, Pledgor shall deliver to
Trustee all items of Collateral then owned by or held by Pledgor, and with
respect to all items of Collateral acquired by Pledgor hereafter, Pledgor shall
promptly deliver such items of Collateral to Trustee upon its receipt thereof.
Each certificate or instrument representing Collateral shall be delivered to
Trustee duly endorsed in blank or together with appropriate irrevocable stock
powers undated and duly executed in blank sufficient to transfer title thereto.
 
(b) Solely for the purposes of perfecting liens and security interests granted
under this Agreement securing the Secured Obligations, the Pledgor acknowledges
and agrees that any Collateral in the possession of the Trustee hereunder is
held as custodian pursuant to the terms of the Intercreditor Agreement.
 
4. Dividends and Other Distributions.
 
(a) Stock Dividends and Other Distributions. So long as this Agreement is in
effect, if Pledgor, by reason of ownership of the Collateral shall become
entitled to receive, or shall receive, any Equity Rights, Pledgor shall accept
the same as Trustee's agent and hold the same in trust for Trustee and deliver
the same forthwith to Trustee in the exact form received, with the endorsement
of Pledgor when requested by Trustee and/or appropriate undated stock powers
duly executed in blank, to be held by Trustee as part of the Collateral. Any
sums or property paid upon or in respect of the Collateral or any other
securities received under this Section 4 upon the reorganization, liquidation,
or dissolution of the issuer of any of the Collateral or any such other
securities shall immediately be paid over to Trustee to be held by Trustee as
additional security for the payment of the Secured Obligations. All sums of
money and property so paid or distributed in respect of the Collateral and such
other securities that are received by Pledgor shall, until paid or delivered to
Trustee, be segregated from the other property or funds of Pledgor and held by
Pledgor in trust as additional security for the payment of the Secured
Obligations. Pledgor shall give Trustee immediate notice of any such
distribution.
 
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(b) Cash Dividends and Distributions. Notwithstanding the provisions of Section
4(a) above, unless an Event of Default shall have occurred and be continuing or
shall exist, Pledgor shall be entitled to receive and retain all cash dividends
and distributions declared and paid out of earnings or earned surplus with
respect to any Collateral to the extent such dividends and distributions are
permitted under the Indenture. Upon the occurrence and continuance or existence
of any Event of Default or to the extent not permitted under the Indenture,
Trustee shall be entitled to receive any and all such cash dividends and
distributions, and upon receipt, Pledgor shall hold any such cash dividends and
distributions it receives in trust for Trustee and shall immediately deliver any
such cash dividends or distributions to Trustee. Trustee shall hold any such
cash dividends and distributions as Collateral pursuant to this Agreement or, at
Trustee's election, shall apply any such cash dividends or distributions to the
reduction of any Secured Obligations then outstanding, in such order as Trustee
may elect.
 
5. Voting and Other Rights.
 
(a) Stock Register. At any time and from time to time (i) whether before or
after the occurrence of any Event of Default, Trustee shall be entitled to
register this Agreement on the stock ledger and books of record of each of the
issuers of the Collateral, and Pledgor agrees to cause this Agreement to be so
registered, and (ii) after the occurrence of any Event of Default and the
continuance thereof, Trustee shall be entitled to register any or all of the
Collateral in its name or the name of its nominee, and Pledgor shall execute
such assignments and other documents, and take such other acts, all at Pledgor's
expense, as Trustee may from time to time reasonably request to accomplish the
foregoing.
 
(b) Voting Rights. Unless an Event of Default shall have occurred and be
continuing, Pledgor shall be entitled to vote the Collateral and to give
consents, waivers and ratifications with respect to the Collateral; provided
that no vote shall be cast, or consent, waiver or ratification given, or any
action taken, that would impair the Collateral or be inconsistent with or
violate any provision of this Agreement, the Indenture or the Note. Upon the
occurrence and continuance or during the existence of any Event of Default,
Trustee shall have the right to vote the Collateral, in all matters, and grant
consents, waivers and ratifications with respect thereto in its absolute
discretion whether Trustee has transferred the Collateral to the registered
ownership of Trustee or Trustee's nominee.
 
 
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6. Representations and Warranties. Pledgor hereby represents, warrants,
covenants and agrees that:
 
(a) Pledgor is and shall be at all times the record and beneficial owner of each
item of its Collateral, and has and shall have at all times good and marketable
title thereto, free and clear of any and all liens, charges, claims and
encumbrances, except the security interest granted under this Agreement, and
Pledgor shall use its best efforts to defend such title against the claims and
demands of all Persons whomsoever. All the shares constituting the Pledged
Securities are duly authorized, have been validly issued, and are fully paid and
nonassessable.
 
(b) This Agreement constitutes the legal, valid and binding obligation of
Pledgor, enforceable against Pledgor in accordance with its terms except to the
extent that the enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws generally affecting
creditors’ rights and by equitable principles (regardless of whether enforcement
is sought in equity or at law). This Agreement creates a valid security interest
in the Collateral and, upon delivery of the Collateral to Trustee, shall
constitute a valid perfected lien on or security interest in the Collateral.
 
(c) No security agreement, financing statement, equivalent security or lien
instrument, or continuation statement covering all or any part of the
Collateral, except for the pledge to Bank of the Ozarks pursuant to the
Subordinated Pledge Agreement and the Subordinated Security Agreement, is on
file or of record in any public office which has not been properly terminated in
accordance with the law of the applicable jurisdiction.
 
(d) The stock certificates described on Schedule I hereto evidence all of the
issued and outstanding shares of Capital Stock of the Subsidiaries of Pledgor
which are owned by Pledgor as of the date of execution of this Agreement, and
Pledgor has delivered to Trustee or its agent all stock certificates or other
instruments evidencing any of the Pledged Securities, in each case duly endorsed
in blank to Trustee or its agent (or with appropriate irrevocable stock powers
duly executed in blank and undated).
 
(e) Pledgor's place where its records concerning the Collateral are kept is 2425
Fountainview Drive, Suite 305, Houston, Texas 77057, and Pledgor shall not
change such principal place of business or remove such records unless it has
taken such action as is necessary to cause the security interest of Trustee in
the Collateral to continue to be perfected. Pledgor shall not change its
principal place of business or the place where its records concerning the
Collateral are kept without giving at least 30 days prior written notice thereof
to Trustee.
 
(f) Pledgor assumes full responsibility for using its best efforts for taking
any and all steps to preserve rights with respect to the Collateral against all
prior parties. Trustee shall be deemed to have exercised reasonable care in the
preservation and custody of the portion of the Collateral as may be in Trustee's
possession if Trustee takes such action as is required by applicable law and as
Pledgor shall reasonably request in writing; provided that such requested action
shall not, in the judgment of Trustee, impair Trustee's prior security interest
in such Collateral or its rights in or the value of such Collateral; and
provided further that such written request is received by Trustee in sufficient
time to permit Trustee to take the requested action. In the absence of such
written request, Trustee 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 Trustee
accords its own property.
 
 
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7. Records. Pledgor shall at all times maintain accurate and complete records
with respect to each item and category of the Collateral and shall furnish
copies of such records to Trustee with reasonable promptness from time to time
upon Trustee's request.
 
8. Preservation and Protection of Security Interest. Pledgor shall use its best
efforts to preserve and protect Trustee's security interest in the Collateral
and shall, at its own cost and expense, cause such security interest in the
Collateral to be perfected and continue perfected so long as the Secured
Obligations or any portion thereof are outstanding and unpaid under the Notes
(by means including, without limitation, the execution and delivery of all
instruments, documents and securities to Trustee with endorsements and documents
of transfer satisfactory to Trustee) and for such purposes Pledgor shall from
time to time at the request of Trustee file or record, or cause to be filed or
recorded, such instruments, documents and notices (including, without
limitation, financing statements and continuation statements) or deliver to
Trustee such stock certificates or other instruments as Trustee may deem
necessary or advisable from time to time to perfect and continue perfected such
security interests. Pledgor shall do all such other acts and things and shall
execute and deliver all such other instruments and documents (including, without
limitation, further security agreements, pledges, endorsements, assignments and
notices) as Trustee may deem necessary or advisable from time to time to perfect
and preserve the priority of such security interests in the Collateral, as a
perfected security interest in the Collateral, prior to the rights of any other
secured party or lien creditor, except for the pledge to Bank of Ozark pursuant
to the Subordinated Pledge Agreement and the Subordinated Security Agreement.
Trustee, and its officers, employees and authorized agents, or any of them, are
hereby irrevocably appointed the attorneys-in-fact of Pledgor to do, at
Pledgor's expense, all acts and things which Trustee may deem necessary or
advisable to preserve, perfect and continue perfected Trustee's security
interests in the Collateral (including, without limitation, the signing of
financing, continuation or other similar statements and notices on behalf of
Pledgor), which appointment is irrevocable and coupled with an interest.
 
9. Covenants of Pledgor. Pledgor covenants and agrees with Trustee that from and
after the date of this Agreement and until the Secured Obligations are fully
satisfied:
 
(a) Limitation on Disposition. Except for dispositions permitted by the
Indenture, Pledgor shall not sell, assign, exchange or otherwise transfer, or
grant any options with respect to, any of the Collateral or any interest
therein, or attempt or contract to do so (other than the pledge and security
interest granted hereunder or granted for the benefit of Bank of Ozark pursuant
to the Subordinated Pledge Agreement and the Subordinated Security Agreement).
 
(b) Notices. Pledgor shall promptly give detail of (i) any lien, security
interest, encumbrance or claim made or asserted against any of the Collateral,
(ii) any material change in the composition of the Collateral (including,
without limitation, information regarding the issuance or creation of Equity
Rights) and (iii) the occurrence of any other event which might have a material
adverse effect on the value of the Collateral or on the security interests
created hereunder.
 
 
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(c) Additional Securities. Pledgor shall (i) prevent each of its Subsidiaries
from issuing any Pledged Securities, Equity Rights or other securities in
addition to or in substitution for the Pledged Securities, except to Pledgor or
as permitted under the Indenture, (ii) immediately upon its acquisition
(directly or indirectly) thereof, pledge to Trustee hereunder any and all
additional shares of stock, other securities or ownership interests issued by
any of its Subsidiaries and (iii) shall pledge to Trustee hereunder, immediately
upon its acquisition (directly or indirectly) hereof, any and all shares of
stock, other securities or ownership interests of any entity which, after the
date of this Agreement, becomes a direct or indirect Subsidiary of Pledgor.
 
(d) Further Assurances. From time to time upon the request of Trustee, Pledgor
shall, and shall cause any of its Subsidiaries to, execute and deliver such
further documents and do such further acts and things as Trustee may reasonably
request to effectuate the provisions of this Agreement.
 
10. Trustee's Appointment as Attorney-in-Fact.
 
(a) Upon the occurrence and during the continuance or existence of any Event of
Default, Pledgor hereby irrevocably constitutes and appoints Trustee and any
officer or agent thereof, with full power of substitution, as its true and
lawful attorney-in-fact with full irrevocable power and authority in the place
and stead of Pledgor and in the name of Pledgor or in its own name, from time to
time in Trustee's discretion, for the purpose of carrying out the terms of this
Agreement, to take any and all appropriate action and to execute any and all
documents and instruments which may be necessary or desirable to accomplish the
purposes of this Agreement. Without limiting the generality of the foregoing and
subject to Pledgor's rights under Section 5 hereof, Pledgor hereby gives Trustee
and any officer or agent thereof, as such attorney-in-fact, the power and right,
on behalf of Pledgor, without notice to or assent by Pledgor, to do the
following: (i) to direct any party liable for any payment under any of the
Collateral to make payment of any and all moneys due and to become due
thereunder directly to Trustee or as Trustee shall direct; (ii) to receive
payment of and receipt for any and all moneys, claims and other amounts due and
to become due at any time in respect of or arising out of any Collateral; (iii)
to endorse and collect any checks, drafts, notes, acceptances or other
instruments for the payment of moneys due under any Collateral; (iv) to commence
and prosecute any suits, actions or proceedings at law or in equity in any court
of competent jurisdiction to collect the Collateral or any portion thereof and
to enforce any other right in respect of the Collateral; (v) to defend any suit,
action or proceeding brought against Pledgor with respect to any Collateral;
(vi) to pay or discharge taxes, liens, security interests or other encumbrances
levied or placed on or threatened against the Collateral; (vii) to settle,
compromise or adjust any suit, action or proceeding described above and, in
connection therewith, to give such discharges or releases as Trustee may deem
appropriate; (viii) to participate in any recapitalization, reclassification,
reorganization, consolidation, redemption, stock split, merger or liquidation of
any issuer of the Collateral and, in connection therewith, may deposit or
surrender control of the Collateral in exchange therefor and take such other
action as deemed proper by Trustee in connection therewith; and (ix) generally,
to sell, transfer, pledge, vote, make any agreement with respect to or otherwise
deal with any of the Collateral as fully and completely as though Trustee were
the absolute owner thereof for all purposes, and to do, at Trustee's option and
Pledgor's expense, at any time, or from time to time, all acts and things which
Trustee reasonably deems necessary to protect, preserve or realize upon the
Collateral and Trustee's security interest therein, to effect the intent of this
Agreement, all as fully and effectively as Pledgor might do.
 
 
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(b) Any and all such amounts received by Trustee as attorney-in-fact for Pledgor
may, in the sole discretion of Trustee, be held by Trustee as collateral
security. Pledgor hereby ratifies, to the extent permitted by law, all that such
attorneys shall lawfully do or cause to be done by virtue hereof. This power of
attorney is a power coupled with an interest and shall be irrevocable.
 
(c) The powers conferred on Trustee hereunder are solely to protect Trustee's
interests in the Collateral and shall not impose any duty upon it to exercise
any such powers. Trustee shall be accountable only for amounts that it actually
receives as a result of the exercise of such powers, and neither it nor any of
its officers, directors, employees or agents shall be responsible to Pledgor for
any act or failure to act, except for its own gross negligence or willful
misconduct.
 
(d) Pledgor also authorizes Trustee, at any time and from time to time upon the
occurrence and during the continuance or existence of any Event of Default, to
execute, in connection with the sale provided for in Section 12 of this
Agreement, any endorsements, assignments or other instruments of conveyance or
transfer with respect to the Collateral.
 
11. Intercreditor Agreement. The Trustee hereby acknowledges and agrees that the
exercise of remedies pursuant to Section 12 and all other provisions of this
Agreement are, and shall at all times be, subject to the limitations on the
Trustee's remedies set forth in the Intercreditor Agreement.
 
12. Remedies on Default.
 
(a) If any Event of Default shall occur and be continuing or shall exist,
Trustee may (i) to the full extent permitted by law, take possession and control
of all or any part of the Collateral and Proceeds thereof and books and records
pertaining thereto, with or without judicial process, and, (ii) after ten days
prior written notice, proceed to exercise one or more of the rights and remedies
accorded to a secured party by the UCC and otherwise by law or by the terms of
the Indenture or this Agreement. Trustee's rights and remedies shall include,
without limitation, the power (i) to sell, lease, assign, give options to
purchase or otherwise dispose of and deliver all or any portion of the
Collateral at public or private sale or sales at such place and time and on such
terms as Trustee may see fit (subject to the requirements of applicable law,
including commercial reasonableness) and (ii) to endorse in the name of the
Pledgor any instrument representing Collateral. Without precluding any other
methods sale, the sale of Collateral shall be deemed to have been made in a
commercially reasonable manner if conducted in conformity with reasonable
commercial practices of secured lenders disposing of similar property, but in
any event, Trustee may sell the Collateral on such terms as Trustee may choose
without assuming any credit risk and without any obligation to advertise or give
notice of any kind not expressly required under this Agreement or by the UCC or
otherwise. All of the rights and remedies of Trustee under this Agreement shall
be cumulative and not exclusive of other rights and remedies which it otherwise
would have, whether under the Note, the UCC or otherwise. Trustee shall not be
under any obligation to marshall any assets in favor of Pledgor or any other
Person or against or in payment of all or any part of the Secured Obligations.
 
 
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(b) Pledgor agrees that in any sale of any of the Collateral, Trustee is
authorized to comply with any limitation or restriction in connection with such
sale which it is advised by its counsel is appropriate (i) to avoid violation of
applicable law (including, without limitation, procedures restricting the number
of prospective bidders and purchasers, requiring that prospective bidders and
purchasers have certain qualifications and restricting prospective bidders and
purchasers to persons who shall represent and agree that they are purchasing for
their own account for investment and not with a view to the distribution or
resale of any Pledged Securities or Equity Rights they purchase), or (ii) to
obtain any required approval of such sale or of a purchase of such sale by any
governmental regulatory authority or official. Pledgor further agrees that such
compliance shall not result in any such sale being deemed not to have been made
in a commercially reasonable manner, nor shall Trustee be liable or accountable
to Pledgor for any discount allowed by reason of the fact that any Pledged
Securities or Equity Rights are sold in compliance with any such limitation or
restriction. Trustee shall be under no obligation to delay the sale of any of
the Collateral for the period of time necessary to permit either Pledgor or any
Subsidiary to register securities for public sale under the Securities Act of
1933, as amended from time to time, or under applicable state securities laws,
even if Pledgor would agree to do so.
 
(c) If any Event of Default shall occur and be continuing or shall exist,
Trustee shall have the right, in addition to all other rights and remedies
available to it, hereunder or otherwise, without notice to Pledgor to set-off
against and to appropriate and apply to the unpaid balance of the Notes and all
other Secured Obligations, any obligations owing to Pledgor by Trustee and any
funds held in any manner for the account of Pledgor by Trustee, and Trustee is
hereby granted a security interest in and lien on all such obligations for such
purpose. Such set-off rights shall exist whether or not Trustee shall have made
any demand under this Agreement, the Notes or any other secured obligations and
whether the Notes and such other obligations are matured or unmatured.
 
(d) Application of Proceeds. Subject to the terms of the Intercreditor
Agreement, any Collateral (including the Proceeds thereof) held, received or
realized upon at any time by Trustee shall be applied in the manner set forth in
the Note and the Indenture (or if not so set forth, in a manner acceptable to,
and at the election of, the Trustee). If the Proceeds of the Collateral together
with the proceeds of any other collateral granted to Trustee pursuant to this
Agreement to secure the Secured Obligations, and any of the sales or other
dispositions thereof, shall be insufficient to pay the amounts secured hereby,
Pledgor shall be liable for the deficiency, and, if a surplus exists after
lawful application of such proceed, Pledgor shall be entitled to any surplus.
 
13. Limitation on Trustee's Duty in Respect of Collateral. Trustee shall use
reasonable care with respect to the Collateral in its possession or under its
control. Except as provided in the previous sentence, Trustee shall not have any
duty as to any Collateral in its possession or control or in the possession or
control of any agent or nominee of it or any income thereon or as to the
preservation of rights against prior parties or any other rights pertaining
thereto. Upon request of Pledgor, Trustee shall account for any money received
by it in respect of any foreclosure on or disposition of the Collateral.
 
 
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14. Taxes and Charges. Pledgor shall pay and discharge all taxes, levies and
other impositions levied on Collateral. If Pledgor shall fail to do so, Trustee
may (but shall not be obligated to) pay such taxes, levies or impositions for
the account of Pledgor (without waiving or releasing any obligation or defaults
by Pledgor hereunder), the amount thereof shall be added to the Secured
Obligations and shall be payable upon demand with interest accruing thereon at
the default interest rate provided for in the Notes (the "Default Interest
Rate").
 
15. Continuing Validity of Obligations.
 
(a) The agreements and obligations of Pledgor hereunder are continuing
agreements and obligations and are absolute and unconditional irrespective of
the genuineness, validity or enforceability of the Notes or any other instrument
or instruments now or hereafter evidencing the Secured Obligations or any part
thereof or of this Agreement or any other agreement or agreements now or
hereafter entered into by Trustee and Pledgor pursuant to which the Secured
Obligations or any part thereof is issued or of any other circumstance which
might otherwise constitute a legal or equitable discharge of such agreements and
obligations other than payment in full of the Secured Obligations and
termination of Trustee's commitment to lend to Pledgor.
 
(b) Without limiting the foregoing, such agreements and obligations shall
continue in full force and effect as long as the Secured Obligations or any part
thereof remains outstanding and unpaid (whether or not any part of any Note is
outstanding) and shall remain in full force and effect without regard to and
shall not be released, discharged or in any way affected by (i) any renewal,
refinancing or refunding of the Secured Obligations in whole or in part, (ii)
any extension of the time of payment of the Notes or other instrument or
instruments now or hereafter evidencing the Secured Obligations or any part
thereof, (iii) any amendment to or modification of the terms of the Notes or
other instrument or instruments now or hereafter evidencing the Secured
Obligations or any part thereof or any other agreement or agreements now or
hereafter entered into by Trustee and Pledgor pursuant to which the Secured
Obligations or any part thereof is issued or secured, or (iv) any substitution,
exchange or release of, or failure to preserve, perfect or protect, or other
dealing in respect of, the Collateral or any other property or any security for
the payment of the Secured Obligations or any part thereof.
 
(c) To the extent that Pledgor makes a payment or payments to Trustee or Trustee
receives any payment or proceeds of the Collateral, which payment or proceeds or
any part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, receiver or any
other party under any bankruptcy law, state or federal law, common law or
equitable cause of action, then, to the extent of such payment or proceeds, the
Secured Obligations or portion thereof intended to be satisfied and this
Agreement shall be revived and continue in full force and effect, as if such
payment or proceeds had not been received by such party.
 
 
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16. Defeasance. Upon payment in full of the Secured Obligations, this Agreement
shall terminate and be of no further force and effect (except for the provisions
of Sections 18 hereof which shall survive), and in such event Trustee shall, at
Pledgor's expense, redeliver and reassign to Pledgor its remaining Collateral
and take all action necessary to terminate the security interest of Trustee in
the Collateral. This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns.
 
17. Indemnification and Expenses. Pledgor shall indemnify and hold harmless
Trustee from and against any and all claims and losses arising out of or
attributable to this Agreement, except claims and losses arising from Trustee's
breach hereof or Trustee's gross negligence or willful misconduct. Pledgor shall
pay Trustee on demand the amount of any out-of-pocket expenses (including,
without limitation, reasonable attorneys’ fees and other legal expenses)
incurred by Trustee in connection with the enforcement of this Agreement and as
otherwise provided in this Agreement with interest accruing thereon at the
Default Interest Rate.
 
18. Specific Performance. In addition to all other rights and remedies granted
to Trustee in this Agreement and the Indenture, Trustee shall be entitled to
specific performance and injunctive and other equitable relief, and Pledgor
waives any requirement for the securing or posting of any bond or other security
in connection with the obtaining of any such specific performance and injunctive
or other equitable relief.
 
19. Modifications, Amendments or Waivers. The provisions of this Agreement may
be modified, amended or waived, but only by a written instrument signed by
Pledgor and Trustee.
 
20. No Implied Waivers; Cumulative Remedies; Writing Required. No delay or
failure of Trustee in exercising any right, power or remedy under this Agreement
shall affect or operate as a waiver thereof, nor shall any single or partial
exercise thereof or any abandonment or discontinuance of steps to enforce such a
right, power or remedy preclude any further exercise thereof or of any other
right, power or remedy. The rights and remedies of Trustee under this Agreement
are cumulative and not exclusive of any rights or remedies which it would
otherwise have, including without limitation any rights and remedies under any
other agreement. Any waiver, permit, consent or approval of any kind or
character on the part of Trustee of any breach or default or any such waiver of
any provision or condition of this Agreement must be in writing and shall be
effective only to the extent in such writing specifically set forth.
 
21. Notices. All notices, requests, demands, waivers and other communication
required or permitted to be given under this Agreement shall be in writing and
shall be deemed to have been duly given if (a) delivered personally, (b) mailed
by first-class, certified mail, return receipt, postage prepaid, or (c) sent by
next-day or overnight mail or delivery or (d) sent by telecopy (with electronic
confirmation of receipt) or telegram.
 
If to the Trustee:

First Security Bank
Attention: Trust Department
314 N. Spring Street
Searcy, AR 72143
 
 
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with a copy, which will
not constitute notice to
the Trustee, to:

Jack Nelson Jones Fink Jiles & Gregory, P.A.
425 West Capitol Avenues, Suite 3400
Little Rock, AR 72201
Attention: Joe Gregory
 
If to Pledgor:

Forster Drilling Corporation
Attn: W. Scott Thompson
2425 Fountainview Drive, Suite 305
Houston, Texas 77057

with a copy, which will 
not constitute notice to 
Pledgor, to:

Brewer & Pritchard, PC
Attn: Thomas C. Pritchard
3 Riverway, Suite 1800
Houston, Texas 77056

or, in each case, at such other address as may be specified in writing to the
other parties.
 
All such notices, requests, demands, waivers and other communications shall be
deemed to have been received (a) if by personal delivery on the date after such
delivery, (b) if by certified mail, on the seventh business day after the
mailing thereof, (c) if by next-day or overnight mail or delivery, on the day
delivered, (d) if by telecopy or telegram, on the next day following the day on
which such telecopy or telegram was sent, provided that a copy is also sent by
certified or registered mail.
 
22. Survival. All representations, warranties, covenants and agreements of
Pledgor contained herein or made in writing in connection herewith shall survive
the execution and delivery of this Agreement and the issuance of the Notes.
 
23. Governing Law; Waivers and Jurisdiction.
 
(a) Governing Law. This Agreement shall in all respects be governed by, and
construed and enforced in accordance with, the laws of the State of Texas
without giving effect to any choice of law or conflict of law rules or
provisions (whether of the State of Texas or any other jurisdiction) that would
cause the application of the laws of any jurisdiction other than the State of
Texas, except that the filing, perfection, effect of perfection and enforcement
of security interests and liens in other jurisdictions shall be governed by the
laws of the applicable jurisdictions in accordance with the UCC.
 
 
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(b) Waivers. To the extent permitted by law, Pledgor hereby waives personal
service of any and all process upon it and consents that all such service of
process be made by certified mail (with return receipt) directed to it at its
addresses set forth in Section 21 hereof, and service so made shall be deemed to
be completed the seventh Business Day after the same shall have been deposited
in the U.S. mails, postage prepaid. In addition, Pledgor hereby waives, to the
extent permitted by law, trial by jury, any objections based on
forum non conveniens and any objections to venue of any action arising out of,
connected with, related to or incidental to the transactions contemplated by or
the relationships established in connection with this Agreement.
 
(c) Exclusive Jurisdiction. All disputes among or between Trustee and Pledgor
arising out of, connected with, related to or incidental to the transactions
contemplated by or the relationship established between them in connection with
this Agreement, and whether arising in contract, tort, equity or otherwise,
shall be resolved only by state or federal courts located in the State of Texas,
County of Harris, and Pledgor hereby consents and submits to the jurisdiction of
any state or federal court located within such county and state. Trustee and
Pledgor acknowledge, however, that any appeals from those courts may be required
to be heard by a court located outside of the State of Texas, County of Harris.
Pledgor waives in all disputes any objections that they may have to the location
of the court considering the dispute. Nothing in this Section 23 shall affect
the right of Trustee to serve legal process in any other manner permitted by law
or affect the right of Trustee to bring any action or proceeding against Pledgor
or its property in the courts of any other jurisdiction.
 
24. Herein, etc. Words such as “herein,” “hereunder,” “hereof” and the like
shall be deemed to refer to this Agreement as a whole and not to any particular
document or Article, Section or other portion of a document.
 
25. Severability. Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any prevision of this Agreement is held to be prohibited by or invalid
under applicable law in any jurisdiction, such provision shall be ineffective
only to the extent of such prohibition or invalidity, without invalidating any
other provision of this Agreement.
 
26. Headings. Section and subsection headings in this Agreement are included for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose.
 
27. Counterparts. This Agreement may be executed in any number of counterparts
and by either party hereto on separate counterparts, each of which, when so
executed and delivered, shall be an original, but all such counterparts shall
together constitute one and the same instrument.
 
 
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28. Further Funding; Expansion Debt. Section 4.09 of the Indenture provides that
Pledgor may incur certain additional debt (herein called Expansion Debt as also
defined in the Indenture) for the purpose of acquiring or constructing certain
additional assets (herein called Expansion Assets as also defined in the
Indenture). In the event that such Expansion Debt is incurred in accordance with
the limitations of Section 4.09 of the Indenture but not issued in a manner that
makes it part of the Indenture, as amended or modified, or issued under the
Indenture but otherwise incurred with a separate lender, then Trustee agrees to
release the Collateral but only to the extent related to the Secondary Equipment
(defined in the Senior Security Agreement) and Secondary Inventory (as defined
in the Senior Security Agreement) being released.
 
 
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IN WITNESS WHEREOF, Pledgor has executed this Agreement as of the date first
above written.
 

 
FORSTER DRILLING CORPORATION
         
By:
/s/ Fred Forster III
 
Its:
President
         
Agreed and Accepted:
     
FIRST SECURITY BANK
         
By:
/s/ Frank Faust
 
Its:
Sr. Vice President

Signature Page to Senior Pledge Agreement
 

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