Exhibit 10.4
PAYMENT OF THIS INSTRUMENT SHALL, TO THE EXTENT SET FORTH IN ANNEX II OF THE
AMENDED AND RESTATED SECOND LIEN TERM LOAN AGREEMENT DATED JULY 28, 2005 BY AND
AMONG PETROHAWK ENERGY CORPORATION, BNP PARIBAS, AS ADMINISTRATIVE AGENT AND THE
TERM LENDERS PARTIES THERETO, BE SUBORDINATE AND JUNIOR IN RIGHT OF PAYMENT TO
THE PRIOR PAYMENT IN FULL OF ALL SENIOR INDEBTEDNESS, THE PROVISIONS OF WHICH
ANNEX II OF SUCH AMENDED AND RESTATED SECOND LIEN TERM LOAN AGREEMENT BEING
INCORPORATED HEREIN AND BY THIS REFERENCE BEING MADE A PART HEREOF.
AMENDED AND RESTATED SECOND LIEN TERM LOAN AGREEMENT
AMENDED AND RESTATED GUARANTEE AND COLLATERAL AGREEMENT
made by
each of the Grantors (as defined herein)
in favor of
BNP PARIBAS,
as Administrative Agent
Dated as of July 28, 2005
TABLE OF CONTENTS
ARTICLE I DEFINITIONS...................................................... 1
Section 1.01 Definitions.............................................. 1
Section 1.02 Other Definitional Provisions; References................ 2
ARTICLE II GUARANTEE....................................................... 3
Section 2.01 Guarantee................................................ 3
Section 2.02 Payments................................................. 3
ARTICLE III GRANT OF SECURITY INTEREST..................................... 4
Section 3.01 Grant of Security Interest............................... 4
Section 3.02 Transfer of Pledged Securities........................... 5
Section 3.03 Grantors Remains Liable under Accounts, Chattel Paper
and Payment Intangibles.................................. 5
ARTICLE IV ACKNOWLEDGMENTS, WAIVERS AND CONSENTS........................... 5
Section 4.01 Acknowledgments, Waivers and Consents.................... 5
Section 4.02 No Subrogation, Contribution or Reimbursement............ 8
ARTICLE V REPRESENTATIONS AND WARRANTIES................................... 8
Section 5.01 Representations in Term Loan Agreement................... 8
Section 5.02 Benefit to the Guarantor................................. 9
Section 5.03 Solvency................................................. 9
Section 5.04 Title; No Other Liens.................................... 9
Section 5.05 Perfected Second Priority Liens.......................... 9
Section 5.06 Legal Name, Organizational Status, Chief Executive
Office................................................... 9
Section 5.07 Prior Names, Addresses, Locations of Tangible Assets..... 9
Section 5.08 Pledged Securities....................................... 10
Section 5.09 Goods.................................................... 10
Section 5.10 Instruments and Chattel Paper............................ 10
Section 5.11 Truth of Information; Accounts........................... 10
Section 5.12 Governmental Obligors.................................... 10
ARTICLE VI COVENANTS....................................................... 10
Section 6.01 Covenants in Term Loan Agreement......................... 11
Section 6.02 Maintenance of Perfected Security Interest; Further
Documentation............................................ 11
Section 6.03 Maintenance of Records................................... 12
Section 6.04 Right of Inspection...................................... 12
Section 6.05 Further Identification of Collateral..................... 12
Section 6.06 Changes in Locations, Name, etc.......................... 12
Section 6.07 Compliance with Contractual Obligations.................. 13
Section 6.08 Limitations on Dispositions of Collateral................ 13
Section 6.09 Pledged Securities....................................... 13
Section 6.10 Limitations on Modifications, Waivers, Extensions of
Agreements Giving Rise to Accounts....................... 14
Section 6.11 Analysis of Accounts, Etc................................ 15
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Section 6.12 Instruments and Tangible Chattel Paper.................. 15
Section 6.13 Maintenance of Equipment................................ 15
Section 6.14 Commercial Tort Claims.................................. 15
ARTICLE VII REMEDIAL PROVISIONS............................................ 16
Section 7.01 Pledged Securities...................................... 16
Section 7.02 Collections on Accounts, Etc............................ 17
Section 7.03 Proceeds................................................ 17
Section 7.04 Texas UCC and Other Remedies............................ 18
Section 7.05 Private Sales of Pledged Securities..................... 19
Section 7.06 Waiver; Deficiency...................................... 19
Section 7.07 Non-Judicial Enforcement................................ 19
ARTICLE VIII THE ADMINISTRATIVE AGENT...................................... 20
Section 8.01 Administrative Agent's Appointment as Attorney-in-Fact,
Etc..................................................... 20
Section 8.02 Duty of Administrative Agent............................ 21
Section 8.03 Execution of Financing Statements....................... 22
Section 8.04 Authority of Administrative Agent....................... 22
ARTICLE IX SUBORDINATION OF INDEBTEDNESS................................... 22
Section 9.01 Subordination of All Guarantor Claims................... 22
Section 9.02 Claims in Bankruptcy.................................... 23
Section 9.03 Payments Held in Trust.................................. 23
Section 9.04 Liens Subordinate....................................... 23
Section 9.05 Notation of Records..................................... 23
ARTICLE X MISCELLANEOUS.................................................... 24
Section 10.01 Waiver.................................................. 24
Section 10.02 Notices................................................. 24
Section 10.03 Payment of Expenses, Indemnities, Etc................... 24
Section 10.04 Amendments in Writing................................... 25
Section 10.05 Successors and Assigns.................................. 25
Section 10.06 Invalidity.............................................. 25
Section 10.07 Counterparts............................................ 25
Section 10.08 Survival................................................ 25
Section 10.09 Captions................................................ 25
Section 10.10 No Oral Agreements...................................... 25
Section 10.11 Governing Law; Submission to Jurisdiction............... 26
Section 10.12 Acknowledgments......................................... 26
Section 10.13 Additional Grantors..................................... 27
Section 10.14 Set-Off................................................. 27
Section 10.15 Releases................................................ 28
Section 10.16 Reinstatement........................................... 28
Section 10.17 Acceptance.............................................. 29
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SCHEDULES:
1. Notice Addresses of Guarantors
2. Description of Pledged Securities
3. Filings and Other Actions Required to Perfect Security Interests
4. Legal Name, Location of Jurisdiction of Organization, Organizational
Identification Number, Taxpayor Identification Number and Chief
Executive Office
5. Prior Names, Prior Chief Executive Office, Location of Tangible Assets
ANNEX:
I. Form of Assumption Agreement
iii
This AMENDED AND RESTATED GUARANTEE AND COLLATERAL AGREEMENT, dated as of
July 28, 2005, is made by Petrohawk Energy Corporation, a corporation duly
formed and existing under the laws of the State of Delaware (the "Borrower"),
and each of the other signatories hereto other than the Administrative Agent
(the Borrower and each of the other signatories hereto other than the
Administrative Agent, together with any other Subsidiary of the Borrower that
becomes a party hereto from time to time after the date hereof, the "Grantors"),
in favor of BNP Paribas, as administrative agent (in such capacity, together
with its successors in such capacity, the "Administrative Agent"), for the banks
and other financial institutions (the "Lenders") from time to time parties to
the Amended and Restated Second Lien Term Loan Agreement, dated as of July 28,
2005 (as amended, supplemented or otherwise modified from time to time, the
"Term Loan Agreement"), among the Borrower, the Administrative Agent and the
Lenders.
NOW, THEREFORE, in consideration of the premises and to induce the
Administrative Agent and the Lenders to enter into the Term Loan Agreement and
to induce the Lenders to make their respective extensions of credit to the
Borrower thereunder, each Grantor hereby agrees with the Administrative Agent,
for the ratable benefit of the Lenders, as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Definitions.
(a) As used in this Agreement, each term defined above shall have the
meaning indicated above. Unless otherwise defined herein, terms defined in the
Term Loan Agreement and used herein shall have the meanings given to them in the
Term Loan Agreement, and the following terms as well as all uncapitalized terms
which are defined in the Texas UCC on the date hereof are used herein as so
defined: Accounts, As-Extracted Collateral, Chattel Paper, Commercial Tort
Claims, Deposit Accounts, Documents, Electronic Chattel Paper, Equipment,
Fixtures, General Intangibles, Goods, Instruments, Inventory, Investment
Property, Letter-of-Credit Rights, Payment Intangibles, Proceeds, Supporting
Obligations, and Tangible Chattel Paper.
(b) The following terms shall have the following meanings:
"Account Debtor" shall mean a Person (other than any Grantor) obligated on
an Account, Chattel Paper, or General Intangible.
"Agreement" shall mean this Amended and Restated Guarantee and Collateral
Agreement, as the same may be amended, supplemented or otherwise modified from
time to time.
"Collateral" shall have the meaning assigned such term in Section 3.01.
"Guarantors" shall mean, collectively, each Grantor other than the
Borrower.
"Issuers" shall mean, collectively, each issuer of a Pledged Security.
"Obligations" shall mean, collectively, all Indebtedness, liabilities and
obligations of the Borrower and each Guarantor to the Administrative Agent and
the Lenders, of whatsoever nature and howsoever evidenced, due or to become due,
now existing or hereafter arising, whether direct or indirect, absolute or
contingent, which may arise under, out of, or in connection with the Term Loan
Agreement, the other Loan Documents, and all other agreements, guarantees, notes
and other documents entered into by any party in connection therewith, and any
amendment, restatement or modification of any of the foregoing, including, but
not limited to, the full and punctual payment when due of any unpaid principal
of the Loans, interest (including, without limitation, interest accruing at any
post-default rate and interest accruing after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding, whether or not a claim for post-filing or post-petition interest is
allowed in such proceeding), fees, guaranty obligations, penalties, indemnities,
legal and other fees, charges and expenses, and amounts advanced by and expenses
incurred in order to preserve any collateral or security interest, whether due
after acceleration or otherwise.
"Pledged Securities" shall mean: (i) the Equity Interests described or
referred to in Schedule 2; and (ii) (a) the certificates or instruments, if any,
representing such Equity Interests, (b) 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 Equity
Interests, (c) all replacements, additions to and substitutions for any of the
property referred to in this definition, including, without limitation, claims
against third parties, (d) the proceeds, interest, profits and other income of
or on any of the property referred to in this definition and (e) all books and
records relating to any of the property referred to in this definition.
"Secured Parties" shall mean, collectively, the Administrative Agent and
the Lenders.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Texas UCC" shall mean the Uniform Commercial Code, as it may be amended,
from time to time in effect in the State of Texas.
Section 1.02 Other Definitional Provisions; References. The meanings given
to terms defined herein shall be equally applicable to both the singular and
plural forms of such terms. The gender of all words shall include the masculine,
feminine, and neuter, as appropriate. The words "herein," "hereof," "hereunder"
and other words of similar import when used in this Agreement refer to this
Agreement as a whole, and not to any particular article, section or subsection.
Any reference herein to a Section shall be deemed to refer to the applicable
Section of this Agreement unless otherwise stated herein. Any reference herein
to an exhibit, schedule or annex shall be deemed to refer to the applicable
exhibit, schedule or annex attached hereto unless otherwise stated herein. Where
the context requires, terms relating to the Collateral or any part thereof, when
used in relation to a Grantor, shall refer to such Grantor's Collateral or the
relevant part thereof.
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ARTICLE II
GUARANTEE
Section 2.01 Guarantee.
(a) Each of the Guarantors hereby, jointly and severally,
unconditionally and irrevocably, guarantees to the Administrative Agent, for the
ratable benefit of the Secured Parties and each of their respective successors,
endorsees, transferees and assigns, the prompt and complete payment and
performance by the Borrower and the Guarantors when due (whether at the stated
maturity, by acceleration or otherwise) of the Obligations. This is a guarantee
of payment and not collection and the liability of each Guarantor is primary and
not secondary.
(b) Anything herein or in any other Loan Document to the contrary
notwithstanding, the maximum liability of each Guarantor hereunder and under the
other Loan Documents shall in no event exceed the amount which can be guaranteed
by such Guarantor under applicable federal and state laws relating to the
insolvency of debtors.
(c) Each Guarantor agrees that the Obligations may at any time and
from time to time exceed the amount of the liability of such Guarantor hereunder
without impairing the guarantee contained in this Article II or affecting the
rights and remedies of the Administrative Agent or any Secured Party hereunder.
(d) Each Guarantor agrees that if the maturity of any of the
Obligations is accelerated by bankruptcy or otherwise, such maturity shall also
be deemed accelerated for the purpose of this guarantee without demand or notice
to such Guarantor. The guarantee contained in this Article II shall remain in
full force and effect until all the Obligations shall have been satisfied by
payment in full and the Term Loan Agreement has terminated.
(e) No payment made by the Borrower, any of the Guarantors, any other
guarantor or any other Person or received or collected by the Administrative
Agent or any other Secured Party from the Borrower, any of the Guarantors, any
other guarantor or any other Person by virtue of any action or proceeding or any
set-off or appropriation or application at any time or from time to time in
reduction of or in payment of the Obligations shall be deemed to modify, reduce,
release or otherwise affect the liability of any Guarantor hereunder which
shall, notwithstanding any such payment (other than any payment made by such
Guarantor in respect of the Obligations or any payment received or collected
from such Guarantor in respect of the Obligations), remain liable for the
Obligations up to the maximum liability of such Guarantor hereunder until the
Obligations are paid in full and the Term Loan Agreement has terminated.
Section 2.02 Payments. Each Guarantor hereby agrees and guarantees that
payments hereunder will be paid to the Administrative Agent without set-off or
counterclaim in Dollars at the Principal Office of the Administrative Agent
specified pursuant to the Term Loan Agreement.
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ARTICLE III
GRANT OF SECURITY INTEREST
Section 3.01 Grant of Security Interest. Each Grantor hereby pledges,
assigns and transfers to the Administrative Agent, and grants to the
Administrative Agent, for the ratable benefit of the Secured Parties, a security
interest in all of the following property now owned or at any time hereafter
acquired by such Grantor or in which such Grantor now has or at any time in the
future may acquire any right, title or interest and whether now existing or
hereafter coming into existence (collectively, the "Collateral"), as collateral
security for the prompt and complete payment and performance when due (whether
at the stated maturity, by acceleration or otherwise) of the Obligations:
(1) all Accounts;
(2) all Chattel Paper (whether Tangible Chattel Paper or Electronic
Chattel Paper);
(3) all Commercial Tort Claims;
(4) all Deposit Accounts other than payroll, withholding tax and other
fiduciary Deposit Accounts;
(5) all Documents;
(6) all General Intangibles (including, without limitation, rights in
and under any Hedging Agreements);
(7) all Goods (including, without limitation, all Inventory and all
Equipment, but excluding all Fixtures);
(8) all Instruments;
(9) all Investment Property;
(10) all Letter-of-Credit Rights (whether or not the letter of credit
is evidenced by a writing;
(11) all Pledged Securities;
(12) all Supporting Obligations;
(13) all books and records pertaining to the Collateral; and
(14) to the extent not otherwise included, all Proceeds and products
of any and all of the foregoing and all collateral security, income,
royalties and other payments now or hereafter due and payable with respect
to, and guarantees and supporting obligations relating to, any and all of
the Collateral and, to the extent not otherwise included, all payments of
insurance (whether or not the Administrative Agent is the loss payee
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thereof), or any indemnity, warranty or guaranty, payable by reason of loss
or damage to or otherwise with respect to any of the foregoing Collateral,
all other claims, including all cash, guarantees and other Supporting
Obligations given with respect to any of the foregoing.
Section 3.02 Transfer of Pledged Securities. All certificates and
instruments, if any, representing or evidencing the Pledged Securities shall be
delivered to and held pursuant hereto by the Administrative Agent or a Person
designated by the Administrative Agent and, in the case of an instrument or
certificate in registered form, shall be duly indorsed to the Administrative
Agent or in blank by an effective endorsement (whether on the certificate or
instrument or on a separate writing), and accompanied by any required transfer
tax stamps to effect the pledge of the Pledged Securities to the Administrative
Agent. Notwithstanding the preceding sentence, all Pledged Securities must be
delivered or transferred in such manner, and each Grantor shall take all such
further action as may be requested by the Administrative Agent, as to permit the
Administrative Agent to be a "protected purchaser" to the extent of its security
interest as provided in Section 8.303 of the Texas UCC (if the Administrative
Agent otherwise qualifies as a protected purchaser).
Section 3.03 Grantors Remains Liable under Accounts, Chattel Paper and
Payment Intangibles. Anything herein to the contrary notwithstanding, each
Grantor shall remain liable under each of the Accounts, Chattel Paper and
Payment Intangibles to observe and perform all the conditions and obligations to
be observed and performed by it thereunder, all in accordance with the terms of
any agreement giving rise to each such Account, Chattel Paper or Payment
Intangible. Neither the Administrative Agent nor any other Secured Party shall
have any obligation or liability under any Account, Chattel Paper or Payment
Intangible (or any agreement giving rise thereto) by reason of or arising out of
this Agreement or the receipt by the Administrative Agent or any such other
Secured Party of any payment relating to such Account, Chattel Paper or Payment
Intangible, pursuant hereto, nor shall the Administrative Agent or any other
Secured Party be obligated in any manner to perform any of the obligations of
any Grantor under or pursuant to any Account, Chattel Paper or Payment
Intangible (or any agreement giving rise thereto), to make any payment, to make
any inquiry as to the nature or the sufficiency of any payment received by it or
as to the sufficiency of any performance by any party under any Account, Chattel
Paper or Payment Intangible (or any agreement giving rise thereto), to present
or file any claim, to take any action to enforce any performance or to collect
the payment of any amounts which may have been assigned to it or to which it may
be entitled at any time or times.
ARTICLE IV
ACKNOWLEDGMENTS, WAIVERS AND CONSENTS
Section 4.01 Acknowledgments, Waivers and Consents.
(a) Each Grantor acknowledges and agrees that the obligations
undertaken by it under this Agreement involve the guarantee and the provision of
collateral security for the obligations of Persons other than such Grantor and
that such Grantor's guarantee and provision of collateral security for the
Obligations are absolute, irrevocable and unconditional under any and all
circumstances. In full recognition and furtherance of the foregoing, each
Grantor understands and agrees, to the fullest extent permitted under applicable
law and except as may
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otherwise be expressly and specifically provided in the Loan Documents, that
each Grantor shall remain obligated hereunder (including, without limitation,
with respect to the guarantee made such Grantor hereby and the collateral
security provided by such Grantor herein) and the enforceability and
effectiveness of this Agreement and the liability of such Grantor, and the
rights, remedies, powers and privileges of the Administrative Agent and the
other Secured Parties under this Agreement and the other Loan Documents shall
not be affected, limited, reduced, discharged or terminated in any way:
(i) notwithstanding that, without any reservation of rights
against any Grantor and without notice to or further assent by any Grantor, (A)
any demand for payment of any of the Obligations made by the Administrative
Agent or any other Secured Party may be rescinded by the Administrative Agent or
such other Secured Party and any of the Obligations continued; (B) the
Obligations, the liability of any other Person upon or for any part thereof or
any collateral security or guarantee therefor or right of offset with respect
thereto, may, from time to time, in whole or in part, be renewed, extended,
amended, modified, accelerated, compromised, waived, surrendered or released by,
or any indulgence or forbearance in respect thereof granted by, the
Administrative Agent or any other Secured Party; (C) the Term Loan Agreement,
the other Loan Documents and any other documents executed and delivered in
connection therewith may be amended, modified, supplemented or terminated, in
whole or in part, as the Administrative Agent (or the Required Lenders, the
Majority Lenders or all Lenders, as the case may be) may deem advisable from
time to time; (D) the Borrower, any Grantor or any other Person may from time to
time accept or enter into new or additional agreements, security documents,
guarantees or other instruments in addition to, in exchange for or relative to,
any Loan Document, all or any part of the Obligations or any Collateral now or
in the future serving as security for the Obligations; (E) any collateral
security, guarantee or right of offset at any time held by the Administrative
Agent or any other Secured Party for the payment of the Obligations may be sold,
exchanged, waived, surrendered or released; and (F) any other event shall occur
which constitutes a defense or release of sureties generally; and
(ii) without regard to, and each Grantor hereby expressly waives
to the fullest extent permitted by law any defense now or in the future arising
by reason of, (A) the illegality, invalidity or unenforceability of the Term
Loan Agreement, any other Loan Document, any of the Obligations or any other
collateral security therefor or guarantee or right of offset with respect
thereto at any time or from time to time held by the Administrative Agent or any
other Secured Party, (B) any defense, set-off or counterclaim (other than a
defense of payment or performance) which may at any time be available to or be
asserted by any Grantor or any other Person against the Administrative Agent or
any other Secured Party, (C) the insolvency, bankruptcy arrangement,
reorganization, adjustment, composition, liquidation, disability, dissolution or
lack of power of any Grantor or any other Person at any time liable for the
payment of all or part of the Obligations or the failure of the Administrative
Agent or any other Secured Party to file or enforce a claim in bankruptcy or
other proceeding with respect to any Person; or any sale, lease or transfer of
any or all of the assets of the any Grantor, or any changes in the partners of
any Grantor; (D) the fact that any Collateral or Lien contemplated or intended
to be given, created or granted as security for the repayment of the Obligations
shall not be properly perfected or created, or shall prove to be unenforceable
or subordinate to any other Lien, it being recognized and agreed by each of the
Grantors that it is not entering into this Agreement in reliance on, or in
contemplation of the benefits of, the validity, enforceability,
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collectability or value of any of the Collateral for the Obligations; (E) any
failure of the Administrative Agent or any other Secured Party to marshal assets
in favor of any Grantor or any other Person, to exhaust any collateral for all
or any part of the Obligations, to pursue or exhaust any right, remedy, power or
privilege it may have against any Grantor or any other Person or to take any
action whatsoever to mitigate or reduce any Grantor's liability under this
Agreement or any other Loan Document; (F) any law which provides that the
obligation of a surety or guarantor must neither be larger in amount nor in
other respects more burdensome than that of the principal or which reduces a
surety's or guarantor's obligation in proportion to the principal obligation;
(G) the possibility that the Obligations may at any time and from time to time
exceed the aggregate liability of such Grantor under this Agreement; or (H) any
other circumstance or act whatsoever, including any action or omission of the
type described (with or without notice to or knowledge of any Grantor), which
constitutes, or might be construed to constitute, an equitable or legal
discharge or defense of the Borrower for the Obligations, or of such Grantor
under the guarantee contained in Article II or with respect to the collateral
security provided by such Grantor herein, or which might be available to a
surety or guarantor, in bankruptcy or in any other instance.
(b) Each Grantor hereby waives to the extent permitted by law: (i)
except as expressly provided otherwise in any Loan Document, all notices to such
Grantor, or to any other Person, including but not limited to, notices of the
acceptance of this Agreement, the guarantee contained in Article II or the
provision of collateral security provided herein, or the creation, renewal,
extension, modification, accrual of any Obligations, or notice of or proof of
reliance by the Administrative Agent or any other Secured Party upon the
guarantee contained in Article II or upon the collateral security provided
herein, or of default in the payment or performance of any of the Obligations
owed to the Administrative Agent or any other Secured Party and enforcement of
any right or remedy with respect thereto; or notice of any other matters
relating thereto; the Obligations, and any of them, shall conclusively be deemed
to have been created, contracted or incurred, or renewed, extended, amended or
waived, in reliance upon the guarantee contained in Article II and the
collateral security provided herein and no notice of creation of the Obligations
or any extension of credit already or hereafter contracted by or extended to the
Borrower need be given to any Grantor; and all dealings between the Borrower and
any of the Grantors, on the one hand, and the Administrative Agent and the other
Secured Parties, on the other hand, likewise shall be conclusively presumed to
have been had or consummated in reliance upon the guarantee contained in Article
II and on the collateral security provided herein; (ii) diligence and demand of
payment, presentment, protest, dishonor and notice of dishonor; (iii) any
statute of limitations affecting any Grantor's liability hereunder or the
enforcement thereof; (iv) all rights of revocation with respect to the
Obligations, the guarantee contained in Article II and the provision of
collateral security herein; and (v) all principles or provisions of law which
conflict with the terms of this Agreement and which can, as a matter of law, be
waived.
(c) When making any demand hereunder or otherwise pursuing its rights
and remedies hereunder against any Grantor, the Administrative Agent or any
other Secured Party may, but shall be under no obligation to, join or make a
similar demand on or otherwise pursue or exhaust such rights and remedies as it
may have against the Borrower, any other Grantor or any other Person or against
any collateral security or guarantee for the Obligations or any right of offset
with respect thereto, and any failure by the Administrative Agent or any other
Secured Party to make any such demand, to pursue such other rights or remedies
or to collect any
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payments from the Borrower, any other Grantor or any other Person or to realize
upon any such collateral security or guarantee or to exercise any such right of
offset, or any release of the Borrower, any Grantor or any other Person or any
such collateral security, guarantee or right of offset, shall not relieve any
Grantor of any obligation or liability hereunder, and shall not impair or affect
the rights and remedies, whether express, implied or available as a matter of
law, of the Administrative Agent or any other Secured Party against any Grantor.
For the purposes hereof "demand" shall include the commencement and continuance
of any legal proceedings. Neither the Administrative Agent nor any other Secured
Party shall have any obligation to protect, secure, perfect or insure any Lien
at any time held by it as security for the Obligations or for the guarantee
contained in Article II or any property subject thereto.
Section 4.02 No Subrogation, Contribution or Reimbursement. Notwithstanding
any payment made by any Grantor hereunder or any set-off or application of funds
of any Grantor by the Administrative Agent or any other Secured Party, no
Grantor shall be entitled to be subrogated to any of the rights of the
Administrative Agent or any other Secured Party against the Borrower or any
other Grantor or any collateral security or guarantee or right of offset held by
the Administrative Agent or any other Secured Party for the payment of the
Obligations, nor shall any Grantor seek or be entitled to seek any indemnity,
exoneration, participation, contribution or reimbursement from the Borrower or
any other Grantor in respect of payments made by such Grantor hereunder, and
each Grantor hereby expressly waives, releases, and agrees not to exercise any
all such rights of subrogation, reimbursement, indemnity and contribution. Each
Grantor further agrees that to the extent that such waiver and release set forth
herein is found by a court of competent jurisdiction to be void or voidable for
any reason, any rights of subrogation, reimbursement, indemnity and contribution
such Grantor may have against the Borrower, any other Grantor or against any
collateral or security or guarantee or right of offset held by the
Administrative Agent or any other Secured Party shall be junior and subordinate
to any rights the Administrative Agent and the other Secured Parties may have
against the Borrower and such Grantor and to all right, title and interest the
Administrative Agent and the other Secured Parties may have in any collateral or
security or guarantee or right of offset. The Administrative Agent, for the
benefit of the Secured Parties, may use, sell or dispose of any item of
Collateral or security as it sees fit without regard to any subrogation rights
any Grantor may have, and upon any disposition or sale, any rights of
subrogation any Grantor may have shall terminate.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and the other Secured Parties to enter
into the Term Loan Agreement and to induce the Lenders to make their respective
term loans to the Borrower thereunder, each Grantor hereby represents and
warrants to the Administrative Agent and each other Secured Party that:
Section 5.01 Representations in Term Loan Agreement. In the case of each
Guarantor, the representations and warranties set forth in Article VII of the
Term Loan Agreement as they relate to such Guarantor (in its capacity as a
Subsidiary of the Borrower) or to the Loan Documents to which such Guarantor is
a party are true and correct in all material respects, provided that each
reference in each such representation and warranty to the Borrower's
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knowledge shall, for the purposes of this Section 5.01, be deemed to be a
reference to such Guarantor's knowledge.
Section 5.02 Benefit to the Guarantor. The Borrower is a member of an
affiliated group of companies that includes each Guarantor, and the Borrower and
the Guarantors are engaged in related businesses. Each Guarantor is a Subsidiary
of the Borrower and its guaranty and surety obligations pursuant to this
Agreement reasonably may be expected to benefit, directly or indirectly, it; and
it has determined that this Agreement is necessary and convenient to the
conduct, promotion and attainment of the business of such Guarantor and the
Borrower.
Section 5.03 Solvency. Such Grantor (i) is not insolvent as of the date
hereof and will not be rendered insolvent as a result of this Agreement (after
giving effect to Section 2.01(a)), (ii) is not engaged in a business or a
transaction, or about to engage in a business or a transaction, for which any
Property or assets remaining with it constitute unreasonably small capital, and
(iii) does not intend to incur, or believe it will incur, debts that will be
beyond its ability to pay as such debts mature.
Section 5.04 Title; No Other Liens. Except for the security interest
granted to the Administrative Agent for the ratable benefit of the Secured
Parties pursuant to this Agreement and Excepted Liens, such Grantor is the legal
and beneficial owner of its respective items of the Collateral free and clear of
any and all Liens. No financing statement or other public notice with respect to
all or any part of the Collateral is on file or of record in any public office,
except such as have been or will be filed in favor of the Administrative Agent,
for the ratable benefit of the Secured Parties, pursuant to this Agreement, the
Security Instruments or as are filed to secure Liens permitted by Section 9.03
of the Term Loan Agreement.
Section 5.05 Perfected Second Priority Liens. The security interests
granted pursuant to this Agreement (a) upon completion of the filings and other
actions specified on Schedule 3 (which, in the case of all filings and other
documents referred to on said Schedule, have been delivered to the
Administrative Agent in completed and duly executed form) will constitute valid
perfected security interests in all of the Collateral in favor of the
Administrative Agent, for the ratable benefit of the Secured Parties, as
collateral security for such Grantor's obligations, enforceable in accordance
with the terms hereof against all creditors of such Grantor and any Persons
purporting to purchase any Collateral from such Grantor and (b) are prior to all
other Liens on the Collateral in existence on the date hereof except for the
Liens securing the obligations under the Senior Revolving Credit Agreement which
have priority over .
Section 5.06 Legal Name, Organizational Status, Chief Executive Office. On
the date hereof, the correct legal name of such Grantor, such Grantor's
jurisdiction of organization, organizational number, taxpayor identification
number and the location of such Grantor's chief executive office or sole place
of business are specified on Schedule 4.
Section 5.07 Prior Names, Addresses, Locations of Tangible Assets. Schedule
5 correctly sets forth (a) all names and trade names that such Grantor has used
in the last five years and (b) the chief executive office of such Grantor over
the last five years (if different from that which is set forth in Section 5.06
above).
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Section 5.08 Pledged Securities. The shares (or such other interests) of
Pledged Securities pledged by such Grantor hereunder constitute all the issued
and outstanding shares (or such other interests) of all classes of the capital
stock or other Equity Interests of each Issuer owned by such Grantor. All the
shares (or such other interests) of the Pledged Securities have been duly and
validly issued and, in the case of shares of stock of a corporation, are fully
paid and nonassessable; and such Grantor is the record and beneficial owner of,
and has good title to, the Pledged Securities pledged by it hereunder, free of
any and all Liens except Excepted Liens or options, warrants, puts, calls or
other rights of any other Person, and restrictions or options in favor of, or
claims of, any other Person, except the security interest created by this
Agreement. The pledged LLC interests and the pledged partnership interests do
not, by their terms, provide that they are securities to be governed by Article
8 of the Code - Investment Securities.
Section 5.09 Goods. No portion of the Collateral constituting Goods is in
the possession of a bailee that has issued a negotiable or non-negotiable
document covering such Collateral.
Section 5.10 Instruments and Chattel Paper. Such Grantor has delivered to
the Administrative Agent all Collateral constituting Instruments and Chattel
Paper. No Collateral constituting Chattel Paper or Instruments contains any
statement therein to the effect that such Collateral has been assigned to an
identified party other than the Administrative Agent, and the grant of a
security interest in such Collateral in favor of the Administrative Agent
hereunder does not violate the rights of any other Person as a secured party.
Section 5.11 Truth of Information; Accounts. All information with respect
to the Collateral set forth in any schedule, certificate or other writing at any
time heretofore or hereafter furnished by such Grantor to the Administrative
Agent or any other Secured Party, and all other written information heretofore
or hereafter furnished by such Grantor to the Administrative Agent or any other
Secured Party is and will be true and correct in all material respects as of the
date furnished. The amount represented by such Grantor to the Administrative
Agent and the Lenders from time to time as owing by each Account Debtor or by
all Account Debtors in respect of the Accounts, Chattel Paper and Payment
Intangibles will at such time be the correct amount actually owing by such
Account Debtor or Account Debtors thereunder. The place where each Grantor keeps
its records concerning the Accounts, Chattel Paper and Payment Intangibles is
0000 Xxxxxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000. Section
5.12 Governmental Obligors. None of the Account Debtors on such Grantor's
Accounts, Chattel Paper or Payment Intangibles is a Governmental Authority.
ARTICLE VI
COVENANTS
Each Grantor covenants and agrees with the Administrative Agent and the
other Secured Parties that, from and after the date of this Agreement until the
Obligations shall have been paid in full:
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Section 6.01 Covenants in Term Loan Agreement. In the case of each
Guarantor, such Guarantor shall take, or shall refrain from taking, as the case
may be, each action that is necessary to be taken or not taken, as the case may
be, so that no Default or Event of Default is caused by the failure to take such
action or to refrain from taking such action by such Guarantor or any of its
Subsidiaries.
Section 6.02 Maintenance of Perfected Security Interest; Further
Documentation.
(a) Such Grantor shall maintain the security interest created by this
Agreement as a perfected security interest having at least the priority
described in Section 5.05 and shall defend such security interest against the
claims and demands of all Persons whomsoever except for Excepted Liens.
(b) At any time and from time to time, upon the request of the
Administrative Agent or any other Secured Party, and at the sole expense of such
Grantor, such Grantor will promptly and duly give, execute, deliver, indorse,
file or record any and all financing statements, continuation statements,
amendments, notices (including, without limitation, notifications to financial
institutions and any other Person), contracts, agreements, assignments,
certificates, stock powers or other instruments, obtain any and all governmental
approvals and consents and take or cause to be taken any and all steps or acts
that may be necessary or advisable or as the Administrative Agent may reasonably
request to create, perfect, establish the priority of, or to preserve the
validity, perfection or priority of, the Liens granted by this Agreement or to
enable the Administrative Agent or any other Secured Party to enforce its
rights, remedies, powers and privileges under this Agreement with respect to
such Liens or to otherwise obtain or preserve the full benefits of this
Agreement and the rights, powers and privileges herein granted.
(c) Without limiting the obligations of the Grantors under Section
5.02(b): (i)upon the request of the Administrative Agent or any other Secured
Party, such Grantor shall take or cause to be taken all actions (other than any
actions required to be taken by the Administrative Agent or any Lender)
requested by the Administrative Agent to cause the Administrative Agent to (A)
have "control" (within the meaning of Sections 9-104, 9-105, 9-106, and 9-107 of
the UCC) over any Collateral constituting Deposit Accounts, Electronic Chattel
Paper, Investment Property (including the Pledged Securities), or
Letter-of-Credit Rights, including, without limitation, executing and delivering
any agreements, in form and substance satisfactory to the Administrative Agent,
with securities intermediaries, Issuers or other Persons in order to establish
"control", and each Grantor shall promptly notify the Administrative Agent and
the other Secured Parties of such Grantor's acquisition of any such Collateral,
and (B) be a "protected purchaser" (as defined in Section 8.303 of the Texas
UCC); (ii) with respect to Collateral other than certificated securities and
goods covered by a document in the possession of a Person other than such
Grantor or the Administrative Agent, such Grantor shall obtain written
acknowledgment that such Person holds possession for the Administrative Agent's
benefit; and (iii) with respect to any Collateral constituting Goods that are in
the possession of a bailee, such Grantor shall provide prompt notice to the
Administrative Agent and the other Secured Parties of any such Collateral then
in the possession of such bailee, and such Grantor shall take or cause to be
taken all actions (other than any actions required to be taken by the
Administrative Agent or any other Secured Party) necessary or requested by the
Administrative Agent to cause the
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Administrative Agent to have a perfected security interest in such Collateral
under applicable law.
(d) This Section 6.02 and the obligations imposed on each Grantor by
this Section 6.02 shall be interpreted as broadly as possible in favor of the
Administrative Agent and the other Secured Parties in order to effectuate the
purpose and intent of this Agreement.
Section 6.03 Maintenance of Records. Such Grantor will keep and maintain at
its own cost and expense satisfactory and complete records of the Collateral,
including, without limitation, a record of all payments received and all credits
granted with respect to the Accounts. For the Administrative Agent's and the
other Secured Parties' further security, the Administrative Agent, for the
ratable benefit of the Secured Parties, shall have a security interest in all of
such Grantor's books and records pertaining to the Collateral, and such Grantor
shall turn over any such books and records to the Administrative Agent or to its
representatives during normal business hours at the request of the
Administrative Agent and shall provide such clerical and other assistance as may
be reasonably requested with regard thereto.
Section 6.04 Right of Inspection. The Administrative Agent and the other
Secured Parties and their respective representatives shall at all times have
full and free access during normal business hours to all the books,
correspondence and records of such Grantor, and the Administrative Agent and the
other Secured Parties and their respective representatives may examine the same,
take extracts therefrom and make photocopies thereof and shall at all times also
have the right to enter into and upon any premises where any of the Collateral
(including, without limitation, Inventory or Equipment) is located for the
purpose of inspecting the same, observing its use or otherwise protecting its
interests therein, and such Grantor agrees to render to the Administrative Agent
and the other Secured Parties and their respective representatives, at such
Grantor's sole cost and expense, such clerical and other assistance as may be
reasonably requested with regard to any of the foregoing. The Administrative
Agent and the other Secured Parties and their respective representatives shall
use reasonable efforts to give Grantors prior written notice of such entry and
to use reasonable efforts to not disturb Grantors' ordinary course of business
Section 6.05 Further Identification of Collateral. Such Grantor will
furnish to the Administrative Agent and the Lenders from time to time, at such
Grantor's sole cost and expense, statements and schedules further identifying
and describing the Collateral and such other reports in connection with the
Collateral as the Administrative Agent may reasonably request, all in reasonable
detail.
Section 6.06 Changes in Locations, Name, etc. Such Grantor recognizes that
financing statements pertaining to the Collateral have been or may be filed
where such Grantor maintains any Collateral or is organized. Without limitation
of any other covenant herein, such Grantor will not cause or permit (i) any
change to be made in its name, identity or corporate structure or (ii) any
change to (A) the identity of any warehouseman, common carrier, other
third-party transporter, bailee or any agent or processor in possession or
control of any Collateral or (iii) such Grantor's jurisdiction of organization
or (iv) the location of any Collateral, unless such Grantor shall have first (1)
notified the Administrative Agent and the other Secured Parties of such change
at least ten (10) days prior to the effective date of such change, and (2) taken
all
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action reasonably requested by the Administrative Agent or any other Secured
Party for the purpose of maintaining the perfection and priority of the
Administrative Agent's security interests under this Agreement. In any notice
furnished pursuant to this Section 6.06, such Grantor will expressly state in a
conspicuous manner that the notice is required by this Agreement and contains
facts that may require additional filings of financing statements or other
notices for the purposes of continuing perfection of the Administrative Agent's
security interest in the Collateral.
Section 6.07 Compliance with Contractual Obligations. Such Grantor will
perform and comply in all material respects with all its contractual obligations
relating to the Collateral (including, without limitation, with respect to the
goods or services, the sale or lease or rendition of which gave rise or will
give rise to each Account).
Section 6.08 Limitations on Dispositions of Collateral. The Administrative
Agent and the other Secured Parties do not authorize, and such Grantor agrees
not to sell, transfer, lease or otherwise dispose of any of the Collateral, or
attempt, offer or contract to do so except to the extent expressly permitted by
the Term Loan Agreement.
Section 6.09 Pledged Securities.
(a) If such Grantor shall become entitled to receive or shall receive
any stock certificate or other instrument (including, without limitation, any
certificate or instrument representing a dividend or a distribution in
connection with any reclassification, increase or reduction of capital or any
certificate or instrument issued in connection with any reorganization), option
or rights in respect of the capital stock or other Equity Interests of any
Issuer, whether in addition to, in substitution of, as a conversion of, or in
exchange for, any shares (or such other interests) of the Pledged Securities, or
otherwise in respect thereof, such Grantor shall accept the same as the agent of
the Administrative Agent and the other Secured Parties, hold the same in trust
for the Administrative Agent and the other Secured Parties and deliver the same
forthwith to the Administrative Agent in the exact form received, duly indorsed
by such Grantor to the Administrative Agent, if required, together with an
undated stock power or other equivalent instrument of transfer, if applicable,
acceptable to the Administrative Agent covering such certificate or instrument
duly executed in blank by such Grantor and with, if the Administrative Agent so
requests, signature guaranteed, to be held by the Administrative Agent, subject
to the terms hereof, as additional collateral security for the Obligations.
(b) Without the prior written consent of the Administrative Agent,
such Grantor will not (i) unless otherwise permitted hereby, vote to enable, or
take any other action to permit, any Issuer to issue any stock or other Equity
Interests of any nature or to issue any other securities or interests
convertible into or granting the right to purchase or exchange for any stock or
other Equity Interests of any nature of any Issuer, (ii) sell, assign, transfer,
exchange or otherwise dispose of, or grant any option with respect to, the
Pledged Securities or Proceeds thereof (except pursuant to a transaction
expressly permitted by the Term Loan Agreement), (iii) create, incur or permit
to exist any Lien except for Excepted Liens or option in favor of, or any claim
of any Person with respect to, any of the Pledged Securities or Proceeds
thereof, or any interest therein, except for the security interests created by
this Agreement or (iv) enter into any
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agreement or undertaking restricting the right or ability of such Grantor or the
Administrative Agent to sell, assign or transfer any of the Pledged Securities
or Proceeds thereof.
(c) In the case of each Grantor which is an Issuer, such Issuer agrees
that (i) it will be bound by the terms of this Agreement relating to the Pledged
Securities issued by it and will comply with such terms insofar as such terms
are applicable to it, (ii) it will notify the Administrative Agent promptly in
writing of the occurrence of any of the events described in Section 6.09(a) with
respect to the Pledged Securities issued by it and (iii) the terms of Section
7.01(c) and Section 7.05 shall apply to it, mutatis mutandis, with respect to
all actions that may be required of it pursuant to Section 7.01(c) or Section
7.05 with respect to the Pledged Securities issued by it.
(d) Such Grantor shall furnish to the Administrative Agent such stock
powers and other equivalent instruments of transfer, if applicable, as may be
required by the Administrative Agent to assure the transferability of and the
perfection of the security interest in the Pledged Securities when and as often
as may be reasonably requested by the Administrative Agent.
(e) The Pledged Securities will at all times constitute not less than
100% of the capital stock or other Equity Interests of the Issuer thereof owned
by any Grantor. Each Grantor will not permit any Issuer of any of the Pledged
Securities to issue any new shares (or other interests) of any class of capital
stock or other Equity Interests of such Issuer without the prior written consent
of the Administrative Agent.
(f) Each Pledgor shall not agree to any amendment of a partnership
agreement, LLC agreement or other organic document relating to any Pledged
Security that in any way adversely affects the perfection of the security
interest of the Administrative Agent in the Pledged Securities, including any
amendment electing to treat the membership interest or partnership interest of
such Pledgor as a security under Section 8-103 of the Texas UCC. In the event of
a foreclosure or a taking of Pledged Securities consisting of partnership
interests or LLC interests in lieu of foreclosure pursuant to any Security
Instrument executed in connection with the Term Loan Agreement, the
Administrative Agent or its assignee or transferee, at any of their option,
will, without any further action or consent, become a member or partner upon the
exercise of such option by the Administrative Agent, its assignee or transferee,
having all of the rights, powers and privileges of a member or partner with
respect to such Equity Interest, including, without limitation, the right to
participate in the management of the business, to vote such Equity Interest and
to receive distributions hereunder.
Section 6.10 Limitations on Modifications, Waivers, Extensions of
Agreements Giving Rise to Accounts. Such Grantor will not (i) amend, modify,
terminate or waive any provision of any Chattel Paper, Instrument or any
agreement giving rise to an Account or Payment Intangible in any manner which
could reasonably be expected to materially adversely affect the value of such
Chattel Paper, Instrument, Payment Intangible or Account as Collateral, or (ii)
fail to exercise promptly and diligently each and every material right which it
may have under any Chattel Paper, Instrument and each agreement giving rise to
an Account or Payment Intangible (other than any right of termination). Such
Grantor shall deliver to the Administrative Agent a
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copy of each material demand, notice or document received by it relating in any
way to any Chattel Paper, Instrument or any agreement giving rise to an Account
or Payment Intangible.
Section 6.11 Analysis of Accounts, Etc. The Administrative Agent shall have
the right from time to time to make test verifications of the Accounts, Chattel
Paper and Payment Intangibles in any manner and through any medium that it
reasonably considers advisable, and each Grantor, at such Grantor's sole cost
and expense, shall furnish all such assistance and information as the
Administrative Agent may reasonably require in connection therewith. At any time
and from time to time, upon the Administrative Agent's request and at the
expense of each Grantor, such Grantor shall furnish to the Administrative Agent
reports showing reconciliations, aging and test verifications of, and trial
balances for, the Accounts, Chattel Paper and Payment Intangibles, and all
original and other documents evidencing, and relating to, the agreements and
transactions which gave rise to the Accounts, Chattel Paper and Payment
Intangibles, including, without limitation, all original orders, invoices and
shipping receipts.
Section 6.12 Instruments and Tangible Chattel Paper. If any amount payable
under or in connection with any of the Collateral shall be or become evidenced
by any Instrument or Tangible Chattel Paper, such Instrument or Tangible Chattel
Paper shall be immediately delivered to the Administrative Agent, duly endorsed
in a manner satisfactory to the Administrative Agent, to be held as Collateral
pursuant to this Agreement.
Section 6.13 Maintenance of Equipment. Such Grantor will maintain each item
of Equipment in good operating condition, ordinary wear and tear and immaterial
impairments of value and damage by the elements excepted, and will provide all
maintenance, service and repairs necessary for such purpose.
Section 6.14 Commercial Tort Claims. If such Grantor shall at any time hold
or acquire a Commercial Tort Claim that satisfies the requirements of the
following sentence, such Grantor shall, within thirty (30) days after such
Commercial Tort Claim satisfies such requirements, notify the Administrative
Agent and the other Secured Parties in a writing signed by such Grantor
containing a brief description thereof, and granting to the Administrative Agent
in such writing (for the benefit of the Secured Parties) a security interest
therein and in the Proceeds thereof, all upon the terms of this Agreement, with
such writing to be in form and substance satisfactory to the Administrative
Agent and the other Secured Parties. The provisions of the preceding sentence
shall apply only to a Commercial Tort Claim that satisfies the following
requirements: (i) the monetary value claimed by or payable to the relevant
Grantor in connection with such Commercial Tort Claim shall exceed $2,000,000,
and either (ii) (A) such Grantor shall have filed a law suit or counterclaim or
otherwise commenced legal proceedings (including, without limitation,
arbitration proceedings) against the Person against whom such Commercial Tort
Claim is made, or (B) such Grantor and the Person against whom such Commercial
Tort Claim is asserted shall have entered into a settlement agreement with
respect to such Commercial Tort Claim. In addition, to the extent that the
existence of any Commercial Tort Claim held or acquired by any Grantor is
disclosed by such Grantor in any public filing with the Securities Exchange
Commission or any successor thereto or analogous Governmental Authority, or to
the extent that the existence of any such Commercial Tort Claim is disclosed in
any press release issued by any Grantor, then, upon the request of the
Administrative Agent, the relevant Grantor shall, within thirty (30) days after
such request is made, transmit to the Administrative Agent and
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the other Secured Parties a writing signed by such Grantor containing a brief
description of such Commercial Tort Claim and granting to the Administrative
Agent in such writing (for the benefit of the Secured Parties) a security
interest therein and in the Proceeds thereof, all upon the terms of this
Agreement, with such writing to be in form and substance satisfactory to the
Administrative Agent and the other Secured Parties.
ARTICLE VII
REMEDIAL PROVISIONS
Section 7.01 Pledged Securities.
(a) Unless an Event of Default shall have occurred and be continuing
and the Administrative Agent shall have given notice to the relevant Grantor of
the Administrative Agent's intent to exercise its corresponding rights pursuant
to Section 7.01(b), each Grantor shall be permitted to receive all cash
dividends paid in respect of the Pledged Securities paid in the normal course of
business of the relevant Issuer, to the extent permitted in the Term Loan
Agreement, and to exercise all voting and corporate rights with respect to the
Pledged Securities.
(b) If an Event of Default shall occur and be continuing, then at any
time in the Administrative Agent's discretion without notice, (i) the
Administrative Agent shall have the right to receive any and all cash dividends,
payments or other Proceeds paid in respect of the Pledged Securities and make
application thereof to the Obligations in accordance with Section 10.02 of the
Term Loan Agreement, and (ii) any or all of the Pledged Securities shall be
registered in the name of the Administrative Agent or its nominee, and the
Administrative Agent or its nominee may thereafter exercise (x) all voting,
corporate and other rights pertaining to such Pledged Securities at any meeting
of shareholders (or other equivalent body) of the relevant Issuer or Issuers or
otherwise and (y) any and all rights of conversion, exchange and subscription
and any other rights, privileges or options pertaining to such 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 fundamental change in the organizational structure of any Issuer, or upon
the exercise by any Grantor or the Administrative Agent of any right, privilege
or option pertaining to such Pledged Securities, and in connection therewith,
the right to deposit and deliver any and all of the Pledged Securities with any
committee, depositary, transfer agent, registrar or other designated agency upon
such terms and conditions as the Administrative Agent may determine), all
without liability except to account for property actually received by it, but
the Administrative Agent shall have no duty to any Grantor to exercise any such
right, privilege or option and shall not be responsible for any failure to do so
or delay in so doing.
(c) Each Grantor hereby authorizes and instructs each Issuer of any
Pledged Securities pledged by such Grantor hereunder (and each Issuer party
hereto hereby agrees) to (i) comply with any instruction received by it from the
Administrative Agent in writing that (x) states that an Event of Default has
occurred and is continuing and (y) is otherwise in accordance with the terms of
this Agreement, without any other or further instructions from such Grantor, and
each Grantor agrees that each Issuer shall be fully protected in so complying,
and (ii) unless
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otherwise expressly permitted hereby, pay any dividends or other payments with
respect to the Pledged Securities directly to the Administrative Agent.
(d) After the occurrence and during the continuation of an Event of
Default, if the Issuer of any Pledged Securities is the subject of bankruptcy,
insolvency, receivership, custodianship or other proceedings under the
supervision of any Governmental Authority, then all rights of the Grantor in
respect thereof to exercise the voting and other consensual rights which such
Grantor would otherwise be entitled to exercise with respect to the Pledged
Securities issued by such Issuer shall cease, and all such rights shall
thereupon become vested in the Administrative Agent who shall thereupon have the
sole right to exercise such voting and other consensual rights, but the
Administrative Agent shall have no duty to exercise any such voting or other
consensual rights and shall not be responsible for any failure to do so or delay
in so doing.
Section 7.02 Collections on Accounts, Etc. The Administrative Agent hereby
authorizes each Grantor to collect upon the Accounts, Instruments, Chattel Paper
and Payment Intangibles subject to the Administrative Agent's direction and
control, and the Administrative Agent may curtail or terminate said authority at
any time after the occurrence and during the continuance of an Event of Default.
Upon the request of the Administrative Agent at any time after the occurrence
and during the continuance of an Event of Default, each Grantor shall notify the
Account Debtors that the applicable Accounts, Chattel Paper and Payment
Intangibles have been assigned to the Administrative Agent for the ratable
benefit of the Secured Parties and that payments in respect thereof shall be
made directly to the Administrative Agent. The Administrative Agent may in its
own name or in the name of others communicate with the Account Debtors to verify
with them to its satisfaction the existence, amount and terms of any Accounts,
Chattel Paper or Payment Intangibles.
Section 7.03 Proceeds. If required by the Administrative Agent at any time
after the occurrence and during the continuance of an Event of Default, any
payments of Accounts, Instruments, Chattel Paper and Payment Intangibles, when
collected or received by each Grantor, and any other cash or non-cash Proceeds
received by each Grantor upon the sale or other disposition of any Collateral,
shall be forthwith (and, in any event, within two Business Days) deposited by
such Grantor in the exact form received, duly indorsed by such Grantor to the
Administrative Agent if required, in a special collateral account maintained by
the Administrative Agent, subject to withdrawal by the Administrative Agent for
the ratable benefit of the Secured Parties only, as hereinafter provided, and,
until so turned over, shall be held by such Grantor in trust for the
Administrative Agent for the ratable benefit of the Secured Parties, segregated
from other funds of any such Grantor. Each deposit of any such Proceeds shall be
accompanied by a report identifying in reasonable detail the nature and source
of the payments included in the deposit. All Proceeds (including, without
limitation, Proceeds constituting collections of Accounts, Chattel Paper,
Instruments) while held by the Administrative Agent (or by any Grantor in trust
for the Administrative Agent for the ratable benefit of the Secured Parties)
shall continue to be collateral security for all of the Obligations and shall
not constitute payment thereof until applied as hereinafter provided. At such
intervals as may be agreed upon by each Grantor and the Administrative Agent,
or, if an Event of Default shall have occurred and be continuing, at any time at
the Administrative Agent's election, the Administrative Agent shall apply all or
any part of the funds on deposit in said special collateral account on account
of the
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Obligations in such order as the Administrative Agent may elect, and any part of
such funds which the Administrative Agent elects not so to apply and deems not
required as collateral security for the Obligations shall be paid over from time
to time by the Administrative Agent to each Grantor or to whomsoever may be
lawfully entitled to receive the same.
Section 7.04 Texas UCC and Other Remedies.
(a) If an Event of Default shall occur and be continuing, the
Administrative Agent, on behalf of the Secured Parties, may exercise in its
discretion, in addition to all other rights, remedies, powers and privileges
granted to them in this Agreement, the other Loan Documents and in any other
instrument or agreement securing, evidencing or relating to the Obligations, all
rights, remedies, powers and privileges of a secured party under the Texas UCC
(whether the Texas UCC is in effect in the jurisdiction where such rights,
remedies, powers or privileges are asserted) or any other applicable law or
otherwise available at law or equity. Without limiting the generality of the
foregoing, the Administrative Agent, without demand of performance or other
demand, presentment, protest, advertisement or notice of any kind (except any
notice required by law referred to below) to or upon any Grantor or any other
Person (all and each of which demands, defenses, advertisements and notices are
hereby waived), may in such circumstances forthwith collect, receive,
appropriate and realize upon the Collateral, or any part thereof, and/or may
forthwith sell, lease, assign, give option or options to purchase, or otherwise
dispose of and deliver the Collateral or any part thereof (or contract to do any
of the foregoing), in one or more parcels at public or private sale or sales, at
any exchange, broker's board or office of the Administrative Agent or any other
Secured Party or elsewhere upon such terms and conditions as it may deem
advisable and at such prices as it may deem best, for cash or on credit or for
future delivery without assumption of any credit risk. The Administrative Agent
or any other Secured Party shall have the right upon any such public sale or
sales, and, to the extent permitted by law, upon any such private sale or sales,
to purchase the whole or any part of the Collateral so sold, free of any right
or equity of redemption in any Grantor, which right or equity is hereby waived
and released. If an Event of Default shall occur and be continuing, each Grantor
further agrees, at the Administrative Agent's request, to assemble the
Collateral and make it available to the Administrative Agent at places which the
Administrative Agent shall reasonably select, whether at such Grantor's premises
or elsewhere. Any such sale or transfer by the Administrative Agent either to
itself or to any other Person shall be absolutely free from any claim of right
by Grantor, including any equity or right of redemption, stay or appraisal which
Grantor has or may have under any rule of law, regulation or statute now
existing or hereafter adopted. Upon any such sale or transfer, the
Administrative Agent shall have the right to deliver, assign and transfer to the
purchaser or transferee thereof the Collateral so sold or transferred. The
Administrative Agent shall apply the net proceeds of any action taken by it
pursuant to this Section 7.04, after deducting all reasonable costs and expenses
of every kind incurred in connection therewith or incidental to the care or
safekeeping of any of the Collateral or in any way relating to the Collateral or
the rights of the Administrative Agent and the other Secured Parties hereunder,
including, without limitation, reasonable attorneys' fees and disbursements, to
the payment in whole or in part of the Obligations, in accordance with Section
10.02 of the Term Loan Agreement, and only after such application and after the
payment by the Administrative Agent of any other amount required by any
provision of law, including, without limitation, Section 9.615 of the Texas UCC,
need the Administrative Agent account for the surplus, if any, to any Grantor.
To the extent permitted by applicable law, each Grantor waives all claims,
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damages and demands it may acquire against the Administrative Agent or any other
Secured Party arising out of the exercise by them of any rights hereunder. If
any notice of a proposed sale or other disposition of Collateral shall be
required by law, such notice shall be deemed reasonable and proper if given at
least 10 days before such sale or other disposition.
(b) In the event that the Administrative Agent elects not to sell the
Collateral, the Administrative Agent 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. Each and every method of disposition of the
Collateral described in this Agreement shall constitute disposition in a
commercially reasonable manner. The Administrative Agent may appoint any Person
as agent to perform any act or acts necessary or incident to any sale or
transfer of the Collateral.
Section 7.05 Private Sales of Pledged Securities. Each Grantor recognizes
that the Administrative Agent may be unable to effect a public sale of any or
all the Pledged Securities, by reason of certain prohibitions contained in the
Securities Act and applicable state securities laws or otherwise, and may be
compelled to resort to one or more private sales thereof to a restricted group
of purchasers which will be obliged to agree, among other things, to acquire
such securities for their own account for investment and not with a view to the
distribution or resale thereof. Each Grantor acknowledges and agrees that any
such private sale may result in prices and other terms less favorable than if
such sale were a public sale and, notwithstanding such circumstances, agrees
that any such private sale shall be deemed to have been made in a commercially
reasonable manner. The Administrative Agent shall be under no obligation to
delay a sale of any of the Pledged Securities for the period of time necessary
to permit the Issuer thereof to register such securities for public sale under
the Securities Act, or under applicable state securities laws, even if such
Issuer would agree to do so. Each Grantor agrees to use its best efforts to do
or cause to be done all such other acts as may reasonably be necessary to make
such sale or sales of all or any portion of the Pledged Securities pursuant to
this Section 7.05 valid and binding and in compliance with any and all other
applicable Governmental Requirements. Each Grantor further agrees that a breach
of any of the covenants contained in this Section 7.05 will cause irreparable
injury to the Administrative Agent and the other Secured Parties, that the
Administrative Agent and the other Secured Parties have no adequate remedy at
law in respect of such breach and, as a consequence, that each and every
covenant contained in this Section 7.05 shall be specifically enforceable
against such Grantor, and such Grantor hereby waives and agrees not to assert
any defenses against an action for specific performance of such covenants.
Section 7.06 Waiver; Deficiency. Each Grantor waives and agrees not to
assert any rights or privileges which it may acquire under the Texas UCC or any
other applicable law. Each Grantor shall remain liable for any deficiency if the
proceeds of any sale or other disposition of the Collateral are insufficient to
pay its Obligations and the fees and disbursements of any attorneys employed by
the Administrative Agent or any other Secured Party to collect such deficiency.
Section 7.07 Non-Judicial Enforcement. The Administrative Agent may enforce
its rights hereunder without prior judicial process or judicial hearing, and to
the extent permitted by
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law, each Grantor expressly waives any and all legal rights which might
otherwise require the Administrative Agent to enforce its rights by judicial
process.
ARTICLE VIII
THE ADMINISTRATIVE AGENT
Section 8.01 Administrative Agent's Appointment as Attorney-in-Fact, Etc.
(a) Each Grantor hereby irrevocably constitutes and appoints the
Administrative Agent 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 such Grantor and in the name of
such Grantor or in its own name, for the purpose of carrying out the terms of
this Agreement, to take any and all reasonably appropriate action and to execute
any and all documents and instruments which may be reasonably necessary or
desirable to accomplish the purposes of this Agreement, and, without limiting
the generality of the foregoing, each Grantor hereby gives the Administrative
Agent the power and right, on behalf of such Grantor, without notice to or
assent by such Grantor, to do any or all of the following:
(i) unless being disputed under Section 9.03(a) of the Term Loan
Agreement, pay or discharge taxes and Liens levied or placed on or threatened
against the Collateral, effect any repairs or any insurance called for by the
terms of this Agreement and pay all or any part of the premiums therefor and the
costs thereof;
(ii) execute, in connection with any sale provided for in Section
7.04 or Section 7.05, any endorsements, assignments or other instruments of
conveyance or transfer with respect to the Collateral; and
(iii) (A) direct any party liable for any payment under any of
the Collateral to make payment of any and all moneys due or to become due
thereunder directly to the Administrative Agent or as the Administrative Agent
shall direct; (B) take possession of and indorse and collect any checks, drafts,
notes, acceptances or other instruments for the payment of moneys due under any
Account, Instrument, General Intangible, Chattel Paper or Payment Intangible or
with respect to any other Collateral, and to file any claim or to take any other
action or proceeding in any court of law or equity or otherwise deemed
appropriate by the Administrative Agent for the purpose of collecting any all
such moneys due under any Account, Instrument or General Intangible or with
respect to any other Collateral whenever payable; (C) ask or demand for,
collect, and receive payment of and receipt for, any and all moneys, claims and
other amounts due or to become due at any time in respect of or arising out of
any Collateral; (D) sign and indorse any invoices, freight or express bills,
bills of lading, storage or warehouse receipts, drafts against debtors,
assignments, verifications, notices and other documents in connection with any
of the Collateral; (E) receive, change the address for delivery, open and
dispose of mail addressed to any Grantor, and to execute, assign and indorse
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 any Grantor; (F) 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 any Collateral; (G) defend any suit, action or
proceeding brought against such
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Grantor with respect to any Collateral; (H) settle, compromise or adjust any
such suit, action or proceeding and, in connection therewith, give such
discharges or releases as the Administrative Agent may deem appropriate; and (I)
generally, sell, transfer, pledge and make any agreement with respect to or
otherwise deal with any of the Collateral as fully and completely as though the
Administrative Agent were the absolute owner thereof for all purposes, and do,
at the Administrative Agent's option and such Grantor's expense, at any time, or
from time to time, all acts and things which the Administrative Agent deems
necessary to protect, preserve or realize upon the Collateral and the
Administrative Agent's and the other Secured Parties' security interests therein
and to effect the intent of this Agreement, all as fully and effectively as such
Grantor might do.
Anything in this Section 8.01(a) to the contrary notwithstanding, the
Administrative Agent agrees that it will not exercise any rights under the power
of attorney provided for in this Section 8.01(a) unless an Event of Default
shall have occurred and be continuing.
(b) If any Grantor fails to perform or comply with any of its
agreements contained herein within the applicable grace periods, the
Administrative Agent, at its option, but without any obligation so to do, may
perform or comply, or otherwise cause performance or compliance, with such
agreement.
(c) The expenses of the Administrative Agent incurred in connection
with actions undertaken as provided in this Section 8.01, together with interest
thereon at the Post-Default Rate from the date of payment by the Administrative
Agent to the date reimbursed by the relevant Grantor, shall be payable by such
Grantor to the Administrative Agent on demand.
(d) Each Grantor hereby ratifies all that said attorneys shall
lawfully do or cause to be done by virtue and in compliance hereof. All powers,
authorizations and agencies contained in this Agreement are coupled with an
interest and are irrevocable until this Agreement is terminated and the security
interests created hereby are released.
Section 8.02 Duty of Administrative Agent. The Administrative Agent's sole
duty with respect to the custody, safekeeping and physical preservation of the
Collateral in its possession, under Section 9.207 of the Texas UCC or otherwise,
shall be to deal with it in the same manner as the Administrative Agent deals
with similar property for its own account and 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. Neither the
Administrative Agent, any other Secured Party nor any of their respective
officers, directors, employees or agents shall be liable for failure to demand,
collect or realize upon any of the Collateral or for any delay in doing so or
shall be under any obligation to sell or otherwise dispose of any Collateral
upon the request of any Grantor or any other Person or to take any other action
whatsoever with regard to the Collateral or any part thereof. The powers
conferred on the Administrative Agent and the other Secured Parties hereunder
are solely to protect the Administrative Agent's and the other Secured Parties'
interests in the Collateral and shall not impose any duty upon the
Administrative Agent or any other Secured Party to exercise any such powers. The
Administrative Agent and the other Secured Parties shall be accountable only for
amounts that they actually receive as a result of the exercise of such powers,
and neither they nor any of their officers, directors, employees or agents
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shall be responsible to any Grantor for any act or failure to act hereunder,
except for their own gross negligence or willful misconduct. To the fullest
extent permitted by applicable law, the Administrative Agent shall be under no
duty whatsoever to make or give any presentment, notice of dishonor, protest,
demand for performance, notice of non-performance, notice of intent to
accelerate, notice of acceleration, or other notice or demand in connection with
any Collateral or the Obligations, or to take any steps necessary to preserve
any rights against any Grantor or other Person or ascertaining or taking action
with respect to calls, conversions, exchanges, maturities, tenders or other
matters relative to any Collateral, whether or not it has or is deemed to have
knowledge of such matters. Each Grantor, to the extent permitted by applicable
law, waives any right of marshaling in respect of any and all Collateral, and
waives any right to require the Administrative Agent or any other Secured Party
to proceed against any Grantor or other Person, exhaust any Collateral or
enforce any other remedy which the Administrative Agent or any other Secured
Party now has or may hereafter have against each Grantor, any Grantor or other
Person.
Section 8.03 Execution of Financing Statements. Pursuant to the Texas UCC
and any other applicable law, each Grantor authorizes the Administrative Agent,
its counsel or its representative, at any time and from time to time, to file or
record financing statements, continuation statements, amendments thereto and
other filing or recording documents or instruments with respect to the
Collateral without the signature of such Grantor in such form and in such
offices as the Administrative Agent reasonably determines appropriate to perfect
the security interests of the Administrative Agent under this Agreement.
Additionally, each Grantor authorizes the Administrative Agent, its counsel or
its representative, at any time and from time to time, to file or record such
financing statements that describe the collateral covered thereby as "all assets
of the Grantor", "all personal property of the Grantor" or words of similar
effect. A photographic or other reproduction of this Agreement shall be
sufficient as a financing statement or other filing or recording document or
instrument for filing or recording in any jurisdiction.
Section 8.04 Authority of Administrative Agent. Each Grantor acknowledges
that the rights and responsibilities of the Administrative Agent under this
Agreement with respect to any action taken by the Administrative Agent or the
exercise or non-exercise by the Administrative Agent of any option, voting
right, request, judgment or other right or remedy provided for herein or
resulting or arising out of this Agreement shall, as between the Administrative
Agent and the other Secured Parties, be governed by the Term Loan Agreement and
by such other agreements with respect thereto as may exist from time to time
among them, but, as between the Administrative Agent and the Grantors, the
Administrative Agent shall be conclusively presumed to be acting as agent for
the Secured Parties with full and valid authority so to act or refrain from
acting, and no Grantor shall be under any obligation, or entitlement, to make
any inquiry respecting such authority.
ARTICLE IX
SUBORDINATION OF INDEBTEDNESS
Section 9.01 Subordination of All Guarantor Claims. As used herein, the
term "Guarantor Claims" shall mean all debts and obligations of the Borrower or
any other Grantor to any Grantor, whether such debts and obligations now exist
or are hereafter incurred or arise, or whether the obligation of the debtor
thereon be direct, contingent, primary, secondary, several, joint and several,
or otherwise, and irrespective of whether such debts or obligations be
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evidenced by note, contract, open account, or otherwise, and irrespective of the
Person or Persons in whose favor such debts or obligations may, at their
inception, have been, or may hereafter be created, or the manner in which they
have been or may hereafter be acquired by. After and during the continuation of
an Event of Default, no Grantor shall receive or collect, directly or
indirectly, from any obligor in respect thereof any amount upon the Guarantor
Claims.
Section 9.02 Claims in Bankruptcy. In the event of receivership,
bankruptcy, reorganization, arrangement, debtor's relief or other insolvency
proceedings involving any Grantor, the Administrative Agent on behalf of the
Secured Parties shall have the right to prove their claim in any proceeding, so
as to establish their rights hereunder and receive directly from the receiver,
trustee or other court custodian, dividends and payments which would otherwise
be payable upon Guarantor Claims. Each Grantor hereby assigns such dividends and
payments to the Administrative Agent for the benefit of the Secured Parties for
application against the Obligations as provided under Section 10.02 of the Term
Loan Agreement. Should any Agent or Secured Party receive, for application upon
the Obligations, any such dividend or payment which is otherwise payable to any
Grantor, and which, as between such Grantor, shall constitute a credit upon the
Guarantor Claims, then upon payment in full of the Obligations, the intended
recipient shall become subrogated to the rights of the Administrative Agent and
the other Secured Parties to the extent that such payments to the Administrative
Agent and the other Secured Parties on the Guarantor Claims have contributed
toward the liquidation of the Obligations, and such subrogation shall be with
respect to that proportion of the Obligations which would have been unpaid if
the Administrative Agent and the other Secured Parties had not received
dividends or payments upon the Guarantor Claims.
Section 9.03 Payments Held in Trust. In the event that notwithstanding
Section 9.01 and Section 9.02, any Grantor should receive any funds, payments,
claims or distributions which is prohibited by such Sections, then it agrees: to
hold in trust for the Administrative Agent and the other Secured Parties an
amount equal to the amount of all funds, payments, claims or distributions so
received, and (b) that it shall have absolutely no dominion over the amount of
such funds, payments, claims or distributions except to pay them promptly to the
Administrative Agent, for the benefit of the Secured Parties; and each Grantor
covenants promptly to pay the same to the Administrative Agent.
Section 9.04 Liens Subordinate. Each Grantor agrees that, until the
Obligations are paid in full, any Liens securing payment of the Guarantor Claims
shall be and remain inferior and subordinate to any Liens securing payment of
the Obligations, regardless of whether such encumbrances in favor of such
Grantor, the Administrative Agent or any other Secured Party presently exist or
are hereafter created or attach. Without the prior written consent of the
Administrative Agent, no Grantor, during the period in which any of the
Obligations are outstanding, shall (a) exercise or enforce any creditor's right
it may have against any debtor in respect of the Guarantor Claims, or (b)
foreclose, repossess, sequester or otherwise take steps or institute any action
or proceeding (judicial or otherwise, including without limitation the
commencement of or joinder in any liquidation, bankruptcy, rearrangement,
debtor's relief or insolvency proceeding) to enforce any Lien held by it.
Section 9.05 Notation of Records. Upon the request of the Administrative
Agent, all promissory notes and all accounts receivable ledgers or other
evidence of the Guarantor Claims
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accepted by or held by any Grantor shall contain a specific written notice
thereon that the indebtedness evidenced thereby is subordinated under the terms
of this Agreement.
ARTICLE X
MISCELLANEOUS
Section 10.01 Waiver. No failure on the part of the Administrative Agent or
any other Secured Party to exercise and no delay in exercising, and no course of
dealing with respect to, any right, remedy, power or privilege under any of the
Loan Documents shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, power or privilege under any of the Loan
Documents preclude any other or further exercise thereof or the exercise of any
other right, remedy, power or privilege. The rights, remedies, powers and
privileges provided herein are cumulative and not exclusive of any rights,
remedies, powers and privileges provided by law. The exercise by the
Administrative Agent 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 rights of set-off.
Section 10.02 Notices. All notices and other communications provided for
herein shall be given in the manner and subject to the terms of Section 12.01 of
the Term Loan Agreement; provided that any such notice, request or demand to or
upon any Guarantor shall be addressed to such Guarantor at its notice address
set forth on Schedule 1.
Section 10.03 Payment of Expenses, Indemnities, Etc.
(a) Each Grantor agrees to pay or promptly reimburse the
Administrative Agent and each other Secured Party for all advances, charges,
costs and expenses (including, without limitation, all costs and expenses of
holding, preparing for sale and selling, collecting or otherwise realizing upon
the Collateral and all attorneys' fees, legal expenses and court costs) incurred
by any Secured Party in connection with the exercise of its respective rights
and remedies hereunder, including, without limitation, any advances, charges,
costs and expenses that may be incurred in any effort to enforce any of the
provisions of this Agreement or any obligation of any Grantor in respect of the
Collateral or in connection with (i) the preservation of the Lien of, or the
rights of the Administrative Agent or any other Secured Party under this
Agreement, (ii) any actual or attempted sale, lease, disposition, exchange,
collection, compromise, settlement or other realization in respect of, or care
of, the Collateral, including all such costs and expenses incurred in any
bankruptcy, reorganization, workout or other similar proceeding, or (iii)
collecting against such Grantor under the guarantee contained in Article II or
otherwise enforcing or preserving any rights under this Agreement and the other
Loan Documents to which such Grantor is a party.
(b) Each Grantor agrees to pay, and to save the Administrative Agent
and the other Secured Parties harmless from, any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever (including, without
limitation, court costs and attorneys' fees, any and all liabilities with
respect to, or resulting from any delay in paying, any and all stamp, excise,
sales or other taxes which may be payable or determined to be payable with
respect to any of the Collateral or in connection with any of the transactions
contemplated by this Agreement) incurred because of,
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incident to, or with respect to, the Collateral (including, without limitation,
any exercise of rights or remedies in connection therewith) or the execution,
delivery, enforcement, performance and administration of this Agreement, to the
extent the Borrower would be required to do so pursuant to Section 12.03 of the
Term Loan Agreement. All amounts for which any Grantor is liable pursuant to
this Section 10.03 shall be due and payable by such Grantor to the Secured
Parties upon demand.
Section 10.04 Amendments in Writing. None of the terms or provisions of
this Agreement may be waived, amended, supplemented or otherwise modified except
in accordance with Section 12.04 of the Term Loan Agreement.
Section 10.05 Successors and Assigns. This Agreement shall be binding upon
the successors and assigns of each Grantor and shall inure to the benefit of the
Administrative Agent and the other Secured Parties and their successors and
assigns; provided that except as set forth in Section 8.14 or Section 9.13 of
the Term Loan Agreement, no Grantor may assign, transfer or delegate any of its
rights or obligations under this Agreement without the prior written consent of
the Administrative Agent and the Lenders.
Section 10.06 Invalidity. In the event that any one or more of the
provisions contained in this Agreement or in any of the Loan Documents to which
a Grantor is a party shall, for any reason, be held invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Agreement or such other Loan
Document.
Section 10.07 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart.
Section 10.08 Survival. The obligations of the parties under Section 10.03
shall survive the repayment of the Loans and termination of the Term Loan
Agreement. To the extent that any payments on the Obligations or proceeds of any
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 and
the Administrative Agent's and the other Secured Parties' Liens, security
interests, rights, powers and remedies under this Agreement and each Security
Instrument shall continue in full force and effect. In such event, each Security
Instrument shall be automatically reinstated and each Grantor shall take such
action as may be reasonably requested by the Administrative Agent and the other
Secured Parties to effect such reinstatement.
Section 10.09 Captions. Captions and section headings appearing herein are
included solely for convenience of reference and are not intended to affect the
interpretation of any provision of this Agreement.
Section 10.10 No Oral Agreements. The Loan Documents embody the entire
agreement and understanding between the parties and supersede all other
agreements and understandings between such parties relating to the subject
matter hereof and thereof. The Loan Documents
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represent the final agreement between the parties and may not be contradicted by
evidence of prior, contemporaneous or subsequent oral agreements of the parties.
There are no unwritten oral agreements between the parties.
Section 10.11 Governing Law; Submission to Jurisdiction.
(a) This Agreement shall be governed by, and construed in accordance with,
the laws of the state of Texas.
(b) Any legal action or proceeding with respect to this Agreement or any
other Loan Documents to which a Grantor is a party shall be brought in the
courts of the State of Texas or of the United States of America for the Southern
District of Texas, and each of the Lenders, the Administrative Agent and the
Grantors hereby accepts for itself and (to the extent permitted by law) in
respect of its Property, generally and unconditionally, the jurisdiction of the
aforesaid courts. Each of the Lenders, the Administrative Agent and the Grantors
hereby irrevocably waives any objection, including, without limitation, any
objection to the laying of venue or based on the grounds of forum non
conveniens, which it may now or hereafter have to the bringing of any such
action or proceeding in such respective jurisdictions. This submission to
jurisdiction is non-exclusive and does not preclude the Administrative Agent or
any Lender from obtaining jurisdiction over such Grantor in any court otherwise
having jurisdiction.
(c) Each of the Lenders, the Administrative Agent and the Grantors
irrevocably consents to the service of process of any of the aforementioned
courts in any such action or proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, to such Person at the address
specified on its signature page of this Agreement or the Term Loan Agreement, as
applicable, such service to become effective thirty (30) days after such
mailing. Nothing herein shall affect the right of the Administrative Agent or
any Lender or any holder of a Note or Grantor to serve process in any other
manner permitted by law or to commence legal proceedings or otherwise proceed
against such Grantor in any other jurisdiction.
(d) Each Grantor and each Lender hereby (i) irrevocably and unconditionally
waive, to the fullest extent permitted by law, trial by jury in any legal action
or proceeding relating to this Agreement or any other Loan Document and for any
counterclaim therein; (ii) irrevocably waive, to the maximum extent not
prohibited by law, any right it may have to claim or recover in any such
litigation any special, exemplary, punitive or consequential damages, or damages
other than, or in addition to, actual damages; (iii) certify that no party
hereto nor any representative or agent of counsel for any party hereto has
represented, expressly or otherwise, or implied that such party would not, in
the event of litigation, seek to enforce the foregoing waivers, and (iv)
acknowledge that it has been induced to enter into this Agreement, the Loan
Documents and the transactions contemplated hereby and thereby by, among other
things, the mutual waivers and certifications contained in this Section 9.12.
Section 10.12 Acknowledgments. Each Grantor hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents to which it is a party;
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(b) neither the Administrative Agent nor any other Secured Party has
any fiduciary relationship with or duty to any Grantor arising out of or in
connection with this Agreement or any of the other Loan Documents, and the
relationship between the Grantors, on the one hand, and the Administrative Agent
and the other Secured Parties, on the other hand, in connection herewith or
therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan Documents
or otherwise exists by virtue of the transactions contemplated hereby among the
Secured Parties or among the Grantors and the Lenders.
(d) Each of the parties hereto specifically agrees that it has a duty
to read this Agreement and the Security Instruments and agrees that it is
charged with notice and knowledge of the terms of this Agreement and the
Security Instruments; that it has in fact read this Agreement and is fully
informed and has full notice and knowledge of the terms, conditions and effects
of this Agreement; that it has been represented by independent legal counsel of
its choice throughout the negotiations preceding its execution of this Agreement
and the Security Instruments; and has received the advice of its attorney in
entering into this Agreement and the Security Instruments; and that it
recognizes that certain of the terms of this Agreement and the Security
Instruments result in one party assuming the liability inherent in some aspects
of the transaction and relieving the other party of its responsibility for such
liability. Each party hereto agrees and covenants that it will not contest the
validity or enforceability of any exculpatory provision of this Agreement and
the Security Instruments on the basis that the party had no notice or knowledge
of such provision or that the provision is not "conspicuous."
(e) Each Grantor warrants and agrees that each of the waivers and
consents set forth in this Agreement are made voluntarily and unconditionally
after consultation with outside legal counsel and with full knowledge of their
significance and consequences, with the understanding that events giving rise to
any defense or right waived may diminish, destroy or otherwise adversely affect
rights which such Grantor otherwise may have against the Borrower, any other
Grantor, the Secured Parties or any other Person or against any collateral. If,
notwithstanding the intent of the parties that the terms of this Agreement shall
control in any and all circumstances, any such waivers or consents are
determined to be unenforceable under applicable law, such waivers and consents
shall be effective to the maximum extent permitted by law.
Section 10.13 Additional Grantors. Each Subsidiary of the Borrower that is
required to become a party to this Agreement pursuant to Section 8.11 of the
Term Loan Agreement and is not a signatory hereto shall become a Grantor for all
purposes of this Agreement upon execution and delivery by such Subsidiary of an
Assumption Agreement in the form of Annex I hereto.
Section 10.14 Set-Off. Each Grantor agrees that, in addition to (and
without limitation of) any right of set-off, bankers' lien or counterclaim a
Secured Party may otherwise have, each Secured Party shall have the right and be
entitled (after consultation with the Administrative Agent), at its option, to
offset balances held by it or by any of its Affiliates for account of any
Grantor or any Subsidiary at any of its offices, in Dollars or in any other
currency (regardless of whether such balances are then due to such Person), in
which case it shall promptly notify the
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Borrower and the Administrative Agent thereof, provided that such Secured
Party's failure to give such notice shall not affect the validity thereof.
Section 10.15 Releases.
(a) Release Upon Payment in Full. The grant of a security interest
hereunder and all of rights, powers and remedies in connection herewith shall
remain in full force and effect until the Administrative Agent has (i)
retransferred and delivered all Collateral in its possession to the Grantors,
and (ii) executed a written release or termination statement and reassigned to
the Grantors without recourse or warranty any remaining Collateral and all
rights conveyed hereby. Upon the complete payment of the Obligations and the
compliance by the Grantors with all covenants and agreements hereof, the
Administrative Agent, at the written request and expense of the Borrower, will
promptly release, reassign and transfer the Collateral to the Grantors and
declare this Agreement to be of no further force or effect.
(b) Further Assurances. If any of the Collateral shall be sold,
transferred or otherwise disposed of by any Grantor in a transaction permitted
by the Term Loan Agreement, then the Administrative Agent, at the request and
sole expense of such Grantor, shall promptly execute and deliver to such Grantor
all releases or other documents reasonably necessary or desirable for the
release of the Liens created hereby on such Collateral and the capital stock of
such Grantor. At the request and sole expense of the Borrower, a Grantor shall
be released from its obligations hereunder in the event that all the capital
stock of such Grantor shall be sold, transferred or otherwise disposed of in a
transaction permitted by the Term Loan Agreement; provided that the Borrower
shall have delivered to the Administrative Agent, at least ten Business Days
prior to the date of the proposed release, a written request for release
identifying the relevant Grantor and the terms of the sale or other disposition
in reasonable detail, including the price thereof and any expenses in connection
therewith, together with a certification by the Borrower stating that such
transaction is in compliance with the Term Loan Agreement and the other Loan
Documents.
(c) Retention in Satisfaction. Except as may be expressly applicable
pursuant to Section 9.620 of the Texas UCC, no action taken or omission to act
by the Administrative Agent or the other Secured Parties hereunder, including,
without limitation, any exercise of voting or consensual rights or any other
action taken or inaction, 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 the Administrative Agent and the other Secured Parties 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 provided in Section 10.15(a).
Section 10.16 Reinstatement. The obligations of each Grantor under this
Agreement (including, without limitation, with respect to the guarantee
contained in Article II and the provision of collateral herein) shall continue
to be effective, or be reinstated, as the case may be, if at any time payment,
or any part thereof, of any of the Obligations is rescinded or must otherwise be
restored or returned by the Administrative Agent or any other Secured Party upon
the insolvency, bankruptcy, dissolution, liquidation or reorganization of the
Borrower or any Grantor, or upon or as a result of the appointment of a
receiver, intervenor or conservator of, or
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trustee or similar officer for, the Borrower or any Guarantor or any substantial
part of its property, or otherwise, all as though such payments had not been
made.
Section 10.17 Acceptance. Each Grantor hereby expressly waives notice of
acceptance of this Agreement, acceptance on the part of the Administrative Agent
and the other Secured Parties being conclusively presumed by their request for
this Agreement and delivery of the same to the Administrative Agent.
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IN WITNESS WHEREOF, each of the undersigned has caused this Guarantee and
Collateral Agreement to be duly executed and delivered as of the date first
above written.
BORROWER: PETROHAWK ENERGY CORPORATION
By:
----------------------------------------
Xxxxx X. Xxxxxx
President and Chief Executive Officer
SIGNATURE PAGE
SECOND LIEN - GUARANTEE AND COLLATERAL AGREEMENT
GUARANTORS: PETROHAWK OPERATING COMPANY
P-H ENERGY, LLC
PETROHAWK PROPERTIES, LP
BY: P-H ENERGY, LLC
ITS GENERAL PARTNER
BETA OPERATING COMPANY, L.L.C.
BY: PETROHAWK ENERGY CORPORATION
ITS SOLE MEMBER
TCM, L.L.C.
BY: BETA OPERATING COMPANY, L.L.C.
ITS SOLE MEMBER
BY: PETROHAWK ENERGY CORPORATION
ITS SOLE MEMBER
RED RIVER FIELD SERVICES, L.L.C.
BY: BETA OPERATING COMPANY, L.L.C.
ITS SOLE MEMBER
BY: PETROHAWK ENERGY CORPORATION
ITS SOLE MEMBER
PROHAWK OIL & GAS CORPORATION
PROHAWK OPERATING, LLC
BY: PROHAWK OIL & GAS CORPORATION
ITS SOLE MEMBER-MANAGER
MISSION E&P LIMITED PARTNERSHIP
BY: BLACK HAWK OIL COMPANY
ITS GENERAL PARTNER
BLACK HAWK OIL COMPANY
BY:
----------------------------------------
XXXXX X. XXXXXX
PRESIDENT AND CHIEF EXECUTIVE OFFICER
SIGNATURE PAGE
SECOND LIEN - GUARANTEE AND COLLATERAL AGREEMENT
PETROHAWK HOLDINGS, LLC
MISSION HOLDINGS LLC
BY:
----------------------------------------
XXXXXX X. XXXXX
PRESIDENT
Acknowledged and Agreed to as of the date
hereof by:
ADMINISTRATIVE AGENT: BNP PARIBAS
By:
----------------------------------------
Title:
-------------------------------------
By:
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Title:
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SIGNATURE PAGE
SECOND LIEN - GUARANTEE AND COLLATERAL AGREEMENT
