SECURITY AGREEMENT BETWEEN PRIME OFFSHORE L.L.C. (DEBTOR) AND GUARANTY BANK, FSB, AS AGENT (SECURED PARTY) JUNE 29, 2006
EXHIBIT 10.27
BETWEEN
PRIME OFFSHORE L.L.C.
(DEBTOR)
(DEBTOR)
AND
GUARANTY BANK, FSB, AS AGENT
(SECURED PARTY)
(SECURED PARTY)
JUNE 29, 2006
TABLE OF CONTENTS
| Page | ||||||||
| ARTICLE I | DEFINITIONS AND INTERPRETATION | 1 | ||||||
| 1.1 | Terms Defined Above | 1 | ||||||
| 1.2 | Terms Defined in Credit Agreement | 1 | ||||||
| 1.3 | Additional Defined Terms | 1 | ||||||
| 1.4 | Undefined Financial Accounting Terms | 3 | ||||||
| 1.5 | References | 3 | ||||||
| 1.6 | Articles and Sections | 3 | ||||||
| 1.7 | Number and Gender | 4 | ||||||
| ARTICLE II | GRANT OF SECURITY INTEREST | 4 | ||||||
| ARTICLE III | REPRESENTATIONS AND WARRANTIES | 4 | ||||||
| 3.1 | Validity, Perfection and Priority | 4 | ||||||
| 3.2 | No Liens; Other Financing Statements | 5 | ||||||
| 3.3 | Location of Debtor and Collateral | 5 | ||||||
| 3.4 | Accounts | 5 | ||||||
| 3.5 | Tradenames; Prior Names | 5 | ||||||
| ARTICLE IV | COVENANTS | 5 | ||||||
| 4.1 | Further Assurances | 5 | ||||||
| 4.2 | Change of Chief Executive Office | 6 | ||||||
| 4.3 | Change of Name or Limited Liability Company Structure | 6 | ||||||
| 4.4 | Maintain Records and Accounts | 7 | ||||||
| 4.5 | Right of Inspection | 7 | ||||||
| 4.6 | Possession of Collateral | 7 | ||||||
| 4.7 | Financing Statement Filings; Notifications | 7 | ||||||
| ARTICLE V | ACCOUNTS | 7 | ||||||
| 5.1 | Debtor Remains Liable under Accounts | 7 | ||||||
| 5.2 | Collections on Accounts | 8 | ||||||
| ARTICLE VI | POWER OF ATTORNEY | 8 | ||||||
| 6.1 | Appointment as Attorney-in-Fact | 8 | ||||||
| 6.2 | No Duty on the Part of Secured Party | 9 | ||||||
| ARTICLE VII | REMEDIES; RIGHTS UPON DEFAULT | 10 | ||||||
| 7.1 | Rights and Remedies Generally | 10 | ||||||
| 7.2 | Proceeds | 10 | ||||||
| 7.3 | Collection of Accounts | 10 | ||||||
| 7.4 | Disposition of Collateral | 10 | ||||||
| 7.5 | Debtor’s Accounts | 11 | ||||||
| 7.6 | Possession of Collateral | 11 | ||||||
- i -
| Page | ||||||||
| 7.7 | Disposition of the Collateral | 11 | ||||||
| 7.8 | Recourse | 12 | ||||||
| 7.9 | Expenses; Attorneys’ Fees | 12 | ||||||
| 7.10 | Application of Proceeds | 12 | ||||||
| 7.11 | Limitation on Duties Regarding Preservation of Collateral | 13 | ||||||
| 7.12 | Waiver of Claims | 13 | ||||||
| 7 .13 | Discontinuance of Proceedings | 14 | ||||||
| ARTICLE VIII | INDEMNITY | 14 | ||||||
| 8.1 | INDEMNITY | 14 | ||||||
| 8.2 | Indemnity Obligations Secured by Collateral; Survival | 15 | ||||||
| ARTICLE IX | MISCELLANEOUS | 15 | ||||||
| 9.1 | No Waiver; Remedies Cumulative | 15 | ||||||
| 9.2 | Termination; Release | 15 | ||||||
| 9.3 | Counterparts | 15 | ||||||
| 9.4 | Marshalling | 16 | ||||||
| 9.5 | Severability | 16 | ||||||
| 9.6 | Financing Statement Filing | 16 | ||||||
| 9.7 | Notices and Other Communications | 16 | ||||||
| 9.8 | Parties in Interest | 16 | ||||||
| 9.9 | Amendments | 16 | ||||||
| 9.10 | ENTIRE AGREEMENT | 16 | ||||||
| 9.11 | GOVERNING LAW | 17 | ||||||
| 9.12 | JURISDICTION AND VENUE | 17 | ||||||
- ii -
This
SECURITY AGREEMENT (this “Agreement”), dated as of June 29, 2006, is by and between
PRIME OFFSHORE L.L.C., a Delaware limited liability company
(the “Debtor”) and GUARANTY BANK, FSB,
a federal savings bank, as Agent (“Secured Party”).
W
I T N E S S E
T H:
ARTICLE I
DEFINITIONS AND INTERPRETATION
1.1
Terms Defined Above. As used herein, each of the terms
“Agreement.” “Credit
Agreement,” “Debtor,” and “Secured
Party” shall have the meaning assigned to such term hereinabove.
1.2
Terms Defined in Credit Agreement. Each capitalized term used but not defined
herein shall have the meaning assigned to such term in the Credit Agreement.
1.3
Additional Defined Terms. As used herein, each of the following terms shall have
the following meanings:
“Accounts” shall mean all accounts receivable, book debts, notes, drafts,
instruments, documents, acceptances, and other forms of obligations now owned or
hereafter received or acquired by or belonging or owing to Debtor (including,
without limitation, under any trade names, styles, or divisions thereto), whether
arising from the sale or lease of goods or the rendition of services or any other
transaction (including, without limitation, any such obligation which might be
characterized as an account, general intangible, other than contract rights under
contracts containing prohibitions against assignment of or the granting of a
security interest in the rights of a party thereunder, or chattel paper under the
Uniform Commercial Code in effect in any jurisdiction), and all rights of Debtor in,
to, and under all purchase orders now owned or hereafter received or acquired by it
for goods or services, and all rights of Debtor to any goods the sale or lease
of which gave rise to any of the foregoing (including, without limitation, returned or repossessed
goods and rights of unpaid sellers), and all moneys due or to become due to Debtor under all
contracts for the sale or lease of goods or the performance of services (whether or not earned by
performance) or in connection with any other transaction, now in existence or hereafter arising,
including, without limitation, all collateral security and guarantees of any kind given by any
Person with respect to any of the foregoing.
“Account Debtor” shall mean each Person obligated on an Account, Chattel Paper, or
General Intangible.
“Account Records” shall mean (a) all original copies of all documents, instruments, or
other writings evidencing the Accounts, (b) all books, correspondence, credit or other files,
records, ledger sheets or cards, invoices, and other papers relating to the Accounts, including,
without limitation, all tapes, cards, computer tapes, computer discs, computer runs, record keeping
systems, and other papers and documents relating to the Accounts, whether in the possession or
under the control of Debtor or any computer bureau or agent from time to time acting for or on
behalf of Debtor or otherwise, (c) all evidences of the filing of financing statements and the
registration of other instruments in connection therewith and amendments, supplements, or other
modifications thereto, notices to other creditors or secured parties, and certificates,
acknowledgements, or other writings, including, without limitation, lien search reports, from
filing or other registration offices, (d) all credit information, reports, and memoranda relating
thereto, and (e) all other written or non-written forms of information related in any way to the
foregoing or any Account.
“Chattel Paper” shall mean all chattel paper (as such term is defined in Section 9-105(a)(2)
of the UCC) of the Debtor.
“Collateral” shall have the meaning assigned to it in Article II.
“Commodity Hedge Agreement” shall mean any agreement, device or arrangement entered
into by one Person with another Person providing for payments which are related to fluctuations in
the price of petroleum (or any fraction thereof), natural gas, or natural gas liquids (including,
but not limited to, swaps, caps, collars, options, puts, calls, futures and forward contracts).
“General Intangibles” shall mean all general intangibles (as such term is defined in
Section 9-106 of the UCC) of Debtor, including, without limitation, rights to the payment of money
(other than Accounts), net profit interests, contracts, farmout agreements, licenses, and
franchises (excluding licenses and franchises which prohibit the assignment or grant of a security
interest by Debtor), federal income tax refunds, trade names, distributions on certificated
securities (as defined in §8-102(a)(l) of the UCC) and uncertificated securities (as defined in
§8-102(a)(2) of the UCC), computer programs and other computer software, inventions, designs,
trade secrets, goodwill, proprietary rights, customer
- 2 -
lists, supplier contracts, sale orders, correspondence, advertising
materials, payments due in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of any property, reversionary interests in
pension and profit-sharing plans and reversionary, beneficial and residual
interests in trusts, credits with and other claims against any Person, together
with any collateral for any of the foregoing and the rights under any security
agreement granting a security interest in such collateral.
“Indemnitees” shall mean the Secured Party and its shareholders, officers,
directors, employees, agents, attorneys-in-fact, and affiliates.
“Proceeds”
shall mean proceeds (as such term is defined in Section 9-306(a) of
the UCC).
“Rate Management Transaction” shall mean any transaction (including an
agreement with respect thereto) now existing or hereafter entered into between
Borrower and Lenders which is a rate swap, basis swap, forward rate transaction,
commodity swap, commodity option, equity or equity index swap, equity or equity
index option, bond option, interest rate option, foreign exchange transaction, cap
transaction, floor transaction, collar transaction, forward transaction, currency
swap transaction, cross-currency rate swap transaction, currency option or any
other similar transaction (including any option with respect to any of these
transactions) or any combination thereof, whether linked to on or more interest
rates, foreign currencies, commodity prices, equity prices or other financial
measures.
“Secured Obligations” shall mean the Obligations.
“UCC” shall mean the Uniform Commercial Code as in effect from time to time in
the State of Texas.
1.4
Undefined Financial Accounting Terms. Undefined financial accounting terms used
in this Agreement shall have the meanings assigned to such terms according to GAAP.
1.5
References. The words “hereby,” “herein,” “hereinabove,” “hereinafter,”
“hereinbelow,” “hereof,” “hereunder,” and words of similar import when used in this Agreement shall
refer to this Agreement as a whole and not to any particular Article, Section, or provision of this
Agreement. References in this Agreement to Articles, Sections, or Exhibits are to such Articles,
Sections, or Exhibits of this Agreement unless otherwise specified.
1.6
Articles and Sections. This Agreement, for convenience only, has been divided
into Articles and Sections; and it is understood that the rights and other legal relations of the
parties hereto shall be determined from this instrument as an entirety and without regard to the
aforesaid division into Articles and Sections and without regard to headings prefixed to such
Articles or Sections.
- 3 -
1.7
Number and Gender. Whenever the context requires, reference herein made to
the single number shall be understood to include the plural; and likewise, the plural shall be
understood to include the singular. Words denoting sex shall be construed to include the
masculine, feminine and neuter, when such construction is appropriate; and specific enumeration
shall not exclude the general but shall be construed as cumulative. Definitions of terms defined
in the singular or plural shall be equally applicable to the plural or singular, as the case may
be, unless otherwise indicated.
ARTICLE
II
GRANT OF SECURITY INTEREST
As security for the prompt and complete payment and performance in full of all Secured
Obligations, Debtor hereby assigns and transfers for the purpose of security and pledges to the
Secured Party and grants to the Secured Party a security interest in and continuing lien on all
right, title, and interest of Debtor in, to, and under the following, in each case, whether now
owned or existing or hereafter acquired or arising, and wherever located (all of which is herein
collectively called the “Collateral”):
| (a) | all Accounts; | ||
| (b) | all Account Records; | ||
| (c) | all Chattel Paper; | ||
| (d) | all General Intangibles; | ||
| (e) | all Commodity Hedge Agreements; | ||
| (f) | all Rate Management Transactions; and | ||
| (g) | all accessions and additions to any or all of the foregoing, all substitutions and replacements for any or all of the foregoing, and all Proceeds and products of any or all of the foregoing. |
ARTICLE
III
REPRESENTATIONS AND WARRANTIES
Debtor hereby represents and warrants to the Secured Party, which representations and
warranties shall survive execution and delivery of this Agreement, as follows:
3.1
Validity, Perfection and Priority. The security interests in the Collateral
granted to the Secured Party hereunder constitute valid and continuing security interests in the
Collateral. Upon the filing of financing statements, naming Debtor as “debtor” and the Secured
Party as “secured party” and describing the Collateral, in the filing offices set forth on Exhibit
A, the security interests granted to the Secured Party hereunder will constitute valid
first-priority
- 4 -
perfected security interests in all Collateral with respect to which a security interest can be
perfected by the filing of a financing statement, subject only to Permitted Liens.
3.2
No Liens; Other Financing Statements. (a) Except for the Lien granted to the
Secured Party hereunder and Permitted Liens, Debtor owns each item of the Collateral free and clear
of any and all Liens, rights, or claims of all other Persons, and Debtor shall defend the
Collateral against all claims and demands of all Persons at any time claiming the same or any
interest therein adverse to the Secured Party.
(b) No financing statement or other evidence of Lien covering or purporting to cover any of
the Collateral is on file in any public office other than (i) financing statements in favor of the
Secured Party, (ii) financing statements for which proper termination statements have been
delivered to the Secured Party for filing, and (iii) financing statements filed in connection with
Permitted Liens.
3.3
Location of Debtor and Collateral. The chief executive office of Debtor is located
at 0000 Xxxx Xxxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000. The primary copies of the Account Records
are located at, and all Accounts and General Intangibles are maintained at, and controlled and
directed (including, without limitation, for general accounting purposes) from, such chief
executive office.
3.4
Accounts. (a) Each Account (i) is and will be, in all material respects, the
genuine, legal, valid, and binding obligation of the Account Debtor in respect thereof,
representing an unsatisfied obligation of such Account Debtor, (ii) is and will be, in all material
respects, enforceable in accordance with its terms, (iii) is not and will not be subject to any
setoffs, defenses, taxes, counterclaims (except (A) with respect to refunds, returns, and
allowances in the ordinary course of business, and (B) to the extent that such Account may not yet
have been earned by performance), and (iv) is and will be, in all material respects, in compliance
with all applicable laws, whether federal, state, local, or foreign.
(b) No Accounts which are evidenced by Chattel Paper require the consent of the Account Debtor
in respect thereof in connection with their assignment hereunder.
3.5
Tradenames; Prior Names. Debtor has not conducted business under any name other
than F-W Oil Exploration L.L.C. and its current name during the last five years.
ARTICLE IV
COVENANTS
COVENANTS
Debtor covenants and agrees with the Secured Party that from and after the date of this
Agreement:
4.1
Further Assurances. At any time and from time to time, upon the request of the
Secured Party, and at the sole expense of Debtor, Debtor will promptly and duly execute and
deliver any and all such further instruments, endorsements, powers of attorney, and other
documents, make such filings, give such notices, and take such further action as the Secured
- 5 -
Party may reasonably deem desirable in obtaining the full benefits of this Agreement and the
rights, remedies, and powers herein granted, including, without limitation, the following:
(a) the filing of financing statements, in form acceptable to the Secured Party
under the Uniform Commercial Code in effect in any jurisdiction with respect to the
liens and security interests granted hereby;
(b) the performance of all searches of public records deemed necessary
by the Secured Party to establish and determine the priority of the security interests
of the Secured Party or to determine the presence or priority of other secured parties;
and
(c) the furnishing to the Secured Party from time to time of reports and schedules
in connection with the Collateral as required pursuant to the Credit Agreement, all in
reasonable detail and in form reasonably satisfactory to the Secured Party.
4.2
Change of Chief Executive Office. Debtor will not move its chief executive
office except to such new location as Debtor may establish in accordance with the last sentence of
this Section. The originals of all Account Records and General Intangibles will be kept at such
chief executive office or at the locations referred to in Section 3.3, or at such new locations as
Debtor may establish in accordance with the last sentence of this Section. All Accounts, Account
Records, and General Intangibles of Debtor will be maintained at and controlled and directed
(including, without limitation, for general accounting purposes) from the locations referred to in
Section 3.3 or such new locations as the Debtor may establish in accordance with the last sentence
of this Section. With respect to any new location, promptly upon the request of the Secured Party,
Debtor shall take all such action as the Secured Party may request to maintain the security
interest of the Secured Party in the Collateral granted hereby at all times fully perfected with
the same or better priority and in full force and effect. Debtor shall not establish a new location
for its chief executive office or such activities (or move any such activities from the locations
referred to in Section 3.3) until it shall have given to the Secured Party not less than ten days’
prior written notice of its intention to do so, clearly describing such new location and providing
such other information in connection therewith as the Secured Party may reasonably request.
4.3
Change of Name or Limited Liability Company Structure. Debtor shall not change
its name or limited liability company structure or conduct business under any name other than its
current name without giving notice thereof to the Secured Party within ten days thereafter, clearly
describing such new name, or limited liability company structure or such new tradename and
providing such other information in connection therewith as the Secured Party may reasonably
request. With respect to such new name, limited liability company structure, or tradename, promptly
upon the request of the Secured Party, Debtor shall take all such action as the Secured Party may
reasonably request to maintain the security interest of the Secured Party in the Collateral granted
hereby at all times fully perfected with the same or better priority and in full force and effect.
- 6 -
4.4
Maintain Records and Accounts. Debtor will keep and maintain, or cause to be kept
and maintained, at its own cost and expense satisfactory and complete records of the Collateral,
including, but not limited to, the originals of all documentation with respect to all Accounts and
General Intangibles and records of all payments received and all credits granted on the Accounts,
all merchandise returned, and all other dealings therewith.
4.5
Right of Inspection. The Secured Party shall upon reasonable notice to Debtor
have full and free access during normal business hours of Debtor to all the books,
correspondence, and records of Debtor; and the Secured Party and its representatives may examine
the same, take extracts therefrom, and make photocopies thereof.
4.6
Possession of Collateral. The Secured Party shall be deemed to have possession of
any of the Collateral in transit to it or set apart for it. Otherwise the Collateral shall remain
in Debtor’s constructive possession and control at all times, at Debtor’s risk of loss, and shall
(except for sales permitted by Section 6.4 of the Credit Agreement) be kept at the locations
represented in Section 3.3.
4.7
Financing Statement Filings; Notifications. Debtor recognizes that financing
statements pertaining to the Collateral have been or will be filed with the offices of the
Secretary of State for the States listed in Exhibit A hereto. Debtor will immediately notify the
Secured Party of any condition or event that may change the proper location for the filing of any
financing statement or other public notice or recording for the purpose of perfecting a security
interest in the Collateral. Without limiting the generality of the foregoing, Debtor will (a)
notify the Secured Party within a reasonable period of time in advance of any change to a
jurisdiction other than as represented in Section 3.3 hereof, (i) in the location of Debtor’s chief
place of business, (ii) in the location of the office where Debtor keeps its records concerning the
Accounts and the General Intangibles and the original of all the Accounts Records, or (iii) in the
“location” of Debtor within the meaning of Section 9-103(c) of the UCC, and (b) immediately notify
Secured Party of any change in Debtor’s name. In any notice furnished pursuant to this Section,
Debtor will expressly state that the notice is required by this Agreement and contains facts that
will or may require additional filings of financing statements or other notices for the purpose of
continuing perfection of the Secured Party’s security interest in the Collateral.
ARTICLE V
ACCOUNTS
ACCOUNTS
5.1
Debtor Remains Liable under Accounts. Anything herein to the contrary
notwithstanding (including, without limitation, the grant of any rights to the Secured Party),
Debtor shall remain liable under each of the Accounts 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. The Secured Party shall have no obligation or
liability under any Account (or any agreement giving rise thereto) by reason of or arising out of
this Agreement or the receipt by the Secured Party of any payment relating to such Account
pursuant hereto, nor shall the Secured Party be obligated in any manner to perform any of the
obligations of Debtor under or pursuant to any Account (or any agreement giving rise thereto), to
make any payment, to make any inquiry as to the nature or the sufficiency of any payment
- 7 -
received by it or as to the sufficiency of any performance by any party under any Account (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.
5.2
Collections on Accounts. Prior to the occurrence of an Event of Default, the
Secured Party hereby authorizes Debtor to collect the Accounts. At any time following and during
the continuance of any Event of Default, the Secured Party may curtail or terminate said authority
at any time and itself, or by its agents, collect all Accounts, and any payments of Accounts
collected by Debtor shall be held by Debtor in trust for the Secured Party, segregated from other
funds of Debtor. All Proceeds, while held by the Secured Party (or by Debtor in trust for the
Secured Party) shall continue to be Collateral securing all of the Secured Obligations and shall
not constitute payment thereof until applied as hereinafter provided.
ARTICLE VI
POWER OF ATTORNEY
POWER OF ATTORNEY
6.1
Appointment as Attorney-in-Fact. Debtor hereby irrevocably constitutes and
appoints the Secured Party 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 Debtor and in the name of Debtor or in its own name, from time to time in the discretion
of the Secured Party, for the purpose of carrying out the terms of this Agreement, to take any and
all appropriate action and to execute any and all documents and instruments which may be necessary
or desirable to accomplish the purposes of this Agreement, and, without limiting the generality of
the foregoing, Debtor hereby gives the Secured Party the power and right, on behalf of Debtor,
without notice to or assent by the Debtor, to do the following:
(a) in the case of any Account, at any time when the authority of Debtor to
collect the Accounts has been curtailed or terminated pursuant hereto, or in the case
of any other Collateral, at any time when any Event of Default shall have occurred and
be continuing, in the name of Debtor or its own name, or otherwise, to take possession
of and indorse and collect any checks, drafts, notes, acceptances, or other instruments
for the payment of moneys due under, or with respect to, any Collateral; in the name of
Debtor or otherwise to 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 Secured Party or as the Secured Party shall direct; to ask or demand
for, collect, 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;
(b) at any time when an Event of Default shall have occurred and be continuing, to
prepare, sign, and file financing statements and amendments thereto in the name of
Debtor;
(c) at any time when an Event of Default shall have occurred and be continuing, to
take or cause to be taken all actions necessary to perform or comply
- 8 -
or cause performance or compliance with the terms of this Agreement, including,
without limitation, actions to pay or discharge taxes and Liens levied or placed on
or threatened against the Collateral, to effect any repairs or obtain any insurance
called for by the terms of this Agreement, and to pay all or any part of the
premiums therefor and the costs thereof;
(d) upon the occurrence and during the continuance of any Event of Default, (i)
to sign and indorse any invoices, freight or express bills, bills of lading, storage
or warehouse receipts, drafts against debtor, assignments, verifications,
notices, and other documents in connection with any of the Collateral, (ii) to
commence and prosecute any suits, actions, or proceedings at law or in equity in any
court of competent jurisdiction to collect the Collateral or any portion thereof and
to enforce any other right in respect of any Collateral, (iii) to defend any suit,
action, or proceeding brought against Debtor with respect to any Collateral, (iv) to
settle, compromise, or adjust any suit, action, or proceeding described in the
preceding clause and, in connection therewith, to give such discharges or releases as
the Secured Party may deem appropriate, and (v) generally, to sell or transfer and
make any agreement with respect to or otherwise deal with any of the Collateral as
fully and completely as though the Secured Party were the absolute owner thereof for
all purposes, and to do, at the option of the Secured Party and the expense of Debtor,
at any time, or from time to time, all acts and things which the Secured Party deems
necessary to protect, preserve, or realize upon the Collateral and the Liens of the
Secured Party thereon and to effect the intent of this Agreement, all as fully and
effectively as Debtor might do; and
(e) at any time when an Event of Default shall have occurred and be continuing,
to execute, in connection with any foreclosure, any endorsements, assignments, or
other instruments of conveyance or transfer with respect to the Collateral.
Debtor hereby ratifies all that said attorneys shall lawfully do or cause to be done by
virtue hereof. This power of attorney is a power coupled with an interest and shall be irrevocable
so long as any Obligation remains outstanding or any Commitment exists.
6.2
No Duty on the Part of Secured Party. The powers conferred on the Secured Party
hereunder are solely to protect the interests of the Secured Party in the Collateral and shall not
impose any duty upon the Secured Party to exercise any such powers. The Secured Party shall be
accountable only for amounts that it actually receives as a result of the exercise of such powers,
and, except for its willful misconduct and/or own gross negligence, neither it nor any of its
officers, directors, employees, or agents shall be responsible to the Debtor for any act or failure
to act hereunder.
- 9 -
ARTICLE VII
REMEDIES; RIGHTS UPON DEFAULT
REMEDIES; RIGHTS UPON DEFAULT
7.1
Rights and Remedies Generally. If an Event of Default shall occur and be
continuing, then and in every such case, the Secured Party shall have all the rights of a secured
party under the UCC, all rights now or hereafter existing under all other applicable laws, and,
subject to any mandatory requirements of applicable law then in effect, all rights set forth in
this Agreement and the other Loan Documents. No enumeration of rights in this Section or
elsewhere in this Agreement or in any other Loan Document or other agreement shall be deemed to in
any way limit the rights of the Secured Party as described in this Section.
7.2
Proceeds. If an Event of Default shall occur and be continuing, in addition to the
rights of the Secured Party specified with respect to the payment of Accounts, (a) all Proceeds
received by Debtor consisting of cash, checks, and other near-cash items shall be held by Debtor in
trust for the Secured Party, segregated from other funds of Debtor, and shall forthwith upon
receipt by Debtor, be turned over to the Secured Party, in the same form received by Debtor
(appropriately indorsed or assigned by the Debtor to the order of the Secured Party or in such
other manner as shall be satisfactory to the Secured Party), and (b) any and all such Proceeds
received by the Secured Party (whether from Debtor or otherwise), or any part thereof, shall be
applied by the Secured Party as provided in Section 7.10 hereof.
7.3
Collection of Accounts. If an Event of Default shall occur and be continuing:
(a) the Secured Party may instruct the obligor or obligors on any obligation owing
or purporting to be owed to Debtor constituting the Collateral (including, without
limitation, the Accounts) to make any payment required by the terms of such obligation
directly to the Secured Party;
(b) the Secured Party shall have the right from time to time to modify (including,
without limitation, to extend the time for payment or arrange for payment in
installments) or waive rights under any such obligation and to compromise or settle
counterclaims or setoffs with the obligor under any such obligation; and
(c) any and all of such proceeds of such collections paid to the Secured Party, or
any part thereof, (after deduction of the Secured Party’s expenses of collection,
including, without limitation, reasonable attorneys’ fees and disbursements), shall be
applied by the Secured Party as provided in Section 7.10 hereof.
7.4
Disposition of Collateral. If an Event of Default shall occur and be continuing:
(a) the Secured Party may direct Debtor to sell, assign, or otherwise liquidate
or dispose of all or from time to time any portion of the Collateral, and Debtor
shall do so, and the Secured Party may take possession of the Proceeds of such
Collateral. The Secured Party may direct Debtor to direct that all Proceeds
- 10 -
of such Collateral be paid directly to the Secured Party or may permit the
Proceeds of such Collateral to be paid to Debtor and all such Proceeds consisting of
cash, checks, or near-cash items shall be held by Debtor in trust for the Secured
Party, segregated from other funds of Debtor in a separate deposit account
containing only Proceeds and shall forthwith upon receipt by Debtor, be turned over
to the Secured Party, in the same form received by Debtor (appropriately indorsed or
assigned by Debtor to the order of the Secured Party or in such other manner as
shall be satisfactory to the Secured Party); and
(b) any and all such Proceeds received by the Secured Party (whether from
Debtor or otherwise), shall be applied by the Secured Party as provided in Section
7.10 hereof.
7.5 Debtor’s Accounts. If an Event of Default shall occur and be continuing, the
Secured Party may liquidate any securities held in any accounts of Debtor and apply the proceeds
thereof and any other amounts held in any accounts of Debtor as provided in Section 7.10 hereof.
7.6 Possession of Collateral. If an Event of Default shall occur and be continuing,
(a) the Secured Party may, personally or by agents or attorneys, immediately retake possession of
the Collateral (including the originals of all or any Accounts and Account Records) or any part
thereof, from Debtor or any other Person which then has possession of any part thereof with or
without notice or judicial process, and for that purpose may enter upon Debtor’s premises where any
of the Collateral is located and remove the same and may make reasonable use in connection with
such removal of any and all services, supplies, aids, and other facilities of Debtor, and (b) upon
three days’ notice to Debtor, Debtor shall, at its own expense, assemble the Collateral, including,
without limitation, the originals of all Account Records (or from time to time any portion thereof)
and make it available to the Secured Party by delivery to the Secured Party at any location
designated by the Secured Party which is reasonably convenient to both parties, whether at the
premises of Debtor or the Secured Party or elsewhere. Debtor shall, at its sole expense, store and
keep any Collateral so assembled at such place or places pending further action by the Secured
Party and while the Collateral shall be so stored and kept, provide such guards and maintenance
services as shall be reasonably necessary to protect the same and to preserve and maintain the
Collateral in good condition. Debtor’s obligation to so assemble and deliver the Collateral is of
the essence of this Agreement and, accordingly, upon application to a court of equity having
jurisdiction, the Secured Party shall be entitled to a decree requiring specific performance by the
Debtor of such obligation.
7.7 Disposition of the Collateral. If an Event of Default shall occur and be
continuing, the Secured Party may sell, assign, lease, give an option or options to purchase, or
otherwise dispose of the Collateral (or contract to do any of the foregoing) under one or more
contracts or as an entirety, and, to the extent permitted by applicable law, without the necessity
of gathering at the place of sale the property to be sold, at public or private sale or sales,
conducted by any officer, nominee or agent of, or auctioneer or attorney for the Secured Party at
any location of any third party conducting or otherwise involved in such sale or any office of the
Secured Party or elsewhere and in general in such manner, at such time or times and upon such terms
and conditions and at such price as may be commercially reasonable, for cash or on credit
- 11 -
or for future delivery without assumption of any credit risk. Any of the Collateral may be
sold, leased, assigned, or options or contracts entered to do so, or otherwise disposed of, in the
condition in which the same existed when taken by the Secured Party or after any overhaul or repair
which may be commercially reasonable. Any such disposition which shall be a private sale or other
private proceeding shall be made upon not less than ten days’ written notice to Debtor specifying
the time after which such disposition is to be made and the intended sale price or other
consideration therefor. Any such disposition which shall be a public sale shall be made upon not
less than ten days’ written notice to Debtor (which Debtor agrees to be commercially reasonable)
specifying the time and place of such sale and, in the absence of applicable requirements of law to
the contrary, shall be by public auction (which may, at the option or the Secured Party, be subject
to reserve), after publication of commercially reasonable notice of such auction. To the extent
permitted by applicable law, the Secured Party may bid for and become the purchaser of the
Collateral or any item thereof, offered for sale in accordance with this Section without
accountability to Debtor (except to the extent of surplus money received) as provided below. In the
payment of the purchase price of the Collateral, the purchaser shall be entitled to have credit on
account of the purchase price thereof of amounts owing to such purchaser on account of any of the
Secured Obligations and any such purchaser may deliver notes, claims for interest, or claims for
other payment with respect to such Secured Obligations in lieu of cash up to the amount which
would, upon distribution of the net proceeds of such sale, be payable thereon. Such notes, if the
amount payable hereunder shall be less than the amount due thereon, shall be returned to the holder
thereof after being appropriately stamped to show partial payment. Notwithstanding the foregoing,
if the Collateral or any portion thereof is perishable or threatens to decline speedily in value or
is of a type customarily sold in a recognized market only such notice as shall be reasonably
practicable shall be required.
7.8 Recourse. Debtor shall remain liable for any deficiency if the proceeds of any
sale or other disposition of the Collateral are insufficient to satisfy the Secured Obligations.
Debtor shall also be liable for all reasonable expenses of the Secured Party incurred in connection
with collecting such deficiency, including, without limitation, the reasonable fees and
disbursements of any attorneys employed by the Secured Party to collect such deficiency.
7.9 Expenses; Attorneys’ Fees. Debtor shall reimburse the Secured Party for all its
reasonable expenses in connection with the exercise of its rights and remedies hereunder,
including, without limitation, reasonable attorneys’ fees and legal expenses incurred by the
Secured Party.
7.10 Application of Proceeds. The proceeds of any disposition of Collateral shall be
applied as follows:
(a) to the payment of any and all reasonable expenses and fees (including
attorneys’ fees and disbursements) incurred by the Secured Party in connection with
the exercise of its rights and remedies hereunder, including, without limitation,
reasonable expenses and fees in connection with obtaining, taking possession of,
removing, holding, insuring, repairing, preparing for sale or lease, storing and
disposing of Collateral;
- 12 -
(b) to the satisfaction of the Secured Obligations in such order as the
Secured Party may elect; and
(c) after the indefeasible payment in full in cash of all Secured Obligations, to
Debtor or to whomever may lawfully be entitled to receive the same or as a court of
competent jurisdiction may direct.
7.11 Limitation on Duties Regarding Preservation of Collateral. The Secured Party’s
sole duty with respect to the custody, safekeeping, and physical preservation of the Collateral in
its possession, under Section 9.207 of the UCC or otherwise, shall be to deal with it in the same
manner as the Secured Party deals with similar property for its own account. The Secured Party
shall have no obligation to take any steps to preserve rights against prior parties to any
Collateral. Except for matters constituting willful misconduct and/or gross negligence, neither
the Secured Party nor any of its directors, officers, employees, or agents shall be liable for
failure to demand, collect, or realize upon all or any part 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 the Debtor or otherwise.
7.12 Waiver of Claims. Except as otherwise provided in this Agreement, Debtor hereby
waives, to the extent permitted by applicable law, notice of and judicial hearing in connection
with the Secured Party’s taking possession or the Secured Party’s disposition of any of the
Collateral in accordance herewith, including, without limitation, any and all prior notice and
hearing for any prejudgment remedy or remedies and any such right which the Debtor would otherwise
have under the constitution or any statute of the United States or any state, and Debtor hereby
further waives, to the extent permitted by law:
(a) all damages occasioned by such taking of possession except any damages which
are the direct result of the willful misconduct and/or gross negligence of the Secured
Party;
(b) all other requirements as to the time, place, and terms of sale or other
requirements with respect to the enforcement of the rights of the Secured Party
hereunder;
(c) demand of performance or other demand, notice of intent to demand or
accelerate, notice of acceleration, presentment, protest, advertisement, or notice of
any kind to or upon Debtor or any other Person, except as may be required by the Credit
Agreement; and
(d) all rights of redemption, appraisement, valuation, diligence, stay, extension,
or moratorium now or hereafter in force under any applicable law in order to stay or
delay the enforcement of this Agreement, including the absolute sale of the Collateral
or any portion thereof, and Debtor, for itself and all who may claim under it, insofar
as it or they now or hereafter lawfully may, hereby waives the benefit of all such
laws.
- 13 -
7.13 Discontinuance of Proceedings. In case the Secured Party shall have
instituted any proceeding to enforce any right, power, or remedy under this Agreement by
foreclosure, sale, entry, or otherwise, and such proceeding shall have been discontinued or
abandoned for any reason, then and in every such case, Debtor and the Secured Party shall be
returned to their former positions and rights hereunder with respect to the Collateral subject to
the security interest created under this Agreement, and all rights, remedies, and powers of the
Secured Party shall continue as if no such proceeding had been instituted.
8.1
INDEMNITY. (a) DEBTOR AGREES TO INDEMNIFY, REIMBURSE, AND HOLD THE INDEMNITEES
HARMLESS FROM ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, CLAIMS, ACTIONS,
JUDGMENTS, SUITS, REASONABLE COSTS, REASONABLE EXPENSES, OR REASONABLE DISBURSEMENTS (INCLUDING
REASONABLE ATTORNEYS’ FEES AND EXPENSES) (FOR THE PURPOSES OF THIS SECTION ALL OF THE FOREGOING
ARE COLLECTIVELY CALLED “EXPENSES”) OF WHATSOEVER KIND OR NATURE WHICH MAY BE IMPOSED ON, ASSERTED
AGAINST, OR INCURRED BY ANY OF SUCH INDEMNITEES IN ANY WAY RELATING TO OR ARISING OUT OF THIS
AGREEMENT OR THE DOCUMENTS EXECUTED IN CONNECTION HEREWITH OR IN ANY OTHER WAY CONNECTED WITH THE
ADMINISTRATION OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THE ENFORCEMENT OF ANY OF THE TERMS OF
OR THE PRESERVATION OF ANY RIGHTS HEREUNDER, INCLUDING, WITHOUT LIMITATION, THOSE ARISING FROM THE
NEGLIGENCE, WHETHER SOLE OR CONCURRENT, OF ANY INDEMNITEE; PROVIDED THAT NO SUCH INDEMNITEE SHALL
BE INDEMNIFIED PURSUANT TO THIS SECTION FOR EXPENSES TO THE EXTENT ARISING FROM THE WILLFUL
MISCONDUCT AND/OR GROSS NEGLIGENCE OF SUCH INDEMNITEE.
(b) Debtor agrees that upon written notice by any such Indemnitee of any assertion that
could give rise to an Expense, Debtor shall assume full responsibility for the defense thereof.
Without limiting the application of part (a) of this Section, Debtor agrees to pay or reimburse
such Indemnitee on demand for any and all reasonable fees, costs, and expenses of whatever kind or
nature incurred in connection with the creation, preservation, or protection of the Secured Party’s
Liens on, and security interests in, the Collateral, including, without limitation, all reasonable
fees and taxes in connection with the recording or filing of instruments and documents in public
offices, payment, or discharge of any taxes or Liens or security interests upon or in respect of
the Collateral, premiums for insurance with respect to the Collateral, all reasonable expenses
incurred in the custody, preservation, use, or operation of the Collateral when Collateral is in
the Secured Party’s possession, and all other reasonable fees, costs, and expenses in connection
with protecting, maintaining, or preserving the Collateral and the Secured Party’s interest
therein, whether through judicial proceedings or otherwise, or in defending or prosecuting any
actions, suits, or proceedings arising out of or relating to the Collateral.
- 14 -
(c) Without limiting the application of parts (a) or (b) of this Section, Debtor agrees
to pay, indemnify, and hold each Indemnitee harmless from and against any Expenses which such
Indemnitee may suffer, expend, or incur in consequence of or growing out of any misrepresentation
by any Debtor in this Agreement or in any statement or writing contemplated by or made or delivered
pursuant to or in connection with this Agreement.
(d) If and to the extent that the obligations of Debtor under this Section are unenforceable
for any reason, Debtor hereby agrees to make the maximum contribution to the payment and
satisfaction of such obligations which is permissible under applicable law.
8.2 Indemnity Obligations Secured by Collateral; Survival. Any amounts paid by any
Indemnitee as to which such Indemnitee has the right to reimbursement shall constitute Secured
Obligations secured by the Collateral. The indemnity obligations of the Debtor contained in this
Article VIII shall continue in full force and effect notwithstanding the full payment and
performance of the Secured Obligations and the termination of this Agreement.
9.1 No Waiver; Remedies Cumulative. No failure or delay on the part of the
Secured Party in exercising any right, power, or privilege hereunder and no course of dealing
between any Debtor and the Secured Party shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, power, or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, power, or privilege. A waiver by the Secured Party of
any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or
remedy which the Secured Party would otherwise have on any future occasion. The rights and
remedies herein expressly provided are cumulative, may be exercised singly or concurrently and as
often and in such order as the Secured Party deems expedient, and are not exclusive of any rights
or remedies which the Secured Party would otherwise have whether by agreement or now or hereafter
existing under applicable law. No notice to or demand on Debtor in any case shall entitle Debtor to
any other or further notice or demand in similar or other circumstances or constitute a waiver of
the rights of the Secured Party to any other or further action in any circumstances without notice
or demand.
9.2
Termination; Release. When the Secured Obligations have been indefeasibly paid and
performed in full and the Commitment has terminated, this Agreement shall terminate, and the
Secured Party, at the request and sole expense of Debtor, will execute and deliver to Debtor the
proper instruments (including Uniform Commercial Code termination statements)
acknowledging the termination of this Agreement, and will duly assign, transfer, and deliver to
Debtor, without recourse, representation, or warranty of any kind whatsoever, such of the
Collateral as may be in possession of the Secured Party and has not theretofore been disposed of,
applied, or released.
9.3 Counterparts. This Agreement may be executed in any number of counterparts and
by the different parties hereto on separate counterparts, each of which when so executed and
- 15 -
delivered shall be an original, but all of which shall together constitute one and the same
instrument.
9.4 Marshalling. The Secured Party shall not be under any obligation to xxxxxxxx any
assets in favor of Debtor or any other Person or against or in payment of any or all of the Secured
Obligations.
9.5
Severability. In case any provision in or obligation under this Agreement or the
Secured Obligations shall be invalid, illegal, or unenforceable in any jurisdiction, the validity,
legality, and enforceability of the remaining provisions or obligations, or of such provision or
obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.
9.6 Financing Statement Filing. A photocopy or other reproduction of this
Agreement shall be sufficient as a financing statement and may be filed in lieu of the original to
the extent permitted by applicable law.
9.7 Notices and Other Communications. Except as to oral notices expressly
authorized herein, all notices, requests, and communications under this Agreement shall be in
writing (including by telecopy). Unless otherwise expressly provided herein, any such notice,
request, or communication shall be deemed to have been duly given or made when provided in
accordance with the terms of the Credit Agreement.
9.8 Parties in Interest. This Agreement shall be binding upon and inure to the benefit
of Debtor, the Secured Party, and their respective legal representatives, successors, and assigns.
No other Person shall have any right, benefit, priority, or interest hereunder or as a result
hereof or have standing to require satisfaction of provisions hereof in accordance with their
terms, and any or all of such provisions may be freely waived in whole or in part by the Secured
Party at any time if the Secured Party in its sole discretion deems it advisable to do so.
9.9 Amendments. Neither this Agreement nor any provision hereof may be amended,
supplemented, modified, discharged, or terminated orally, but only by an instrument in writing
signed by the party against whom enforcement of the amendment, supplement, modification, discharge,
or termination is sought.
9.10 ENTIRE AGREEMENT. THIS AGREEMENT CONSTITUTES THE ENTIRE
AGREEMENT BETWEEN THE PARTIES HERETO WITH RESPECT TO THE SUBJECT HEREOF AND SHALL SUPERSEDE ANY
PRIOR AGREEMENTS, WHETHER WRITTEN OR ORAL, BETWEEN THE PARTIES HERETO RELATING TO THE SUBJECT
HEREOF. FURTHERMORE, IN THIS REGARD, THIS AGREEMENT AND THE OTHER WRITTEN LOAN
DOCUMENTS REPRESENT, COLLECTIVELY, THE FINAL AGREEMENT AMONG THE
PARTIES THERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF SUCH PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS
AMONG SUCH PARTIES.
- 16 -
9.11
GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS (WITHOUT GIVING EFFECT TO PRINCIPLES
THEREOF RELATING TO CONFLICTS OF LAWS).
9.12 JURISDICTION AND VENUE. ALL ACTIONS OR PROCEEDINGS WITH RESPECT TO, ARISING
DIRECTLY OR INDIRECTLY IN CONNECTION WITH, OUT OF, RELATED TO OR FROM THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT TO WHICH ANY DEBTOR IS A PARTY MAY BE LITIGATED, AT THE SOLE DISCRETION AND ELECTION
OF THE SECURED PARTY, IN COURTS HAVING SITUS IN HOUSTON, XXXXXX COUNTY, TEXAS. DEBTOR HEREBY
SUBMITS TO THE JURISDICTION OF ANY LOCAL, STATE, OR FEDERAL COURT LOCATED IN
HOUSTON, XXXXXX COUNTY, TEXAS, AND HEREBY WAIVES ANY RIGHTS IT MAY HAVE TO TRANSFER OR CHANGE
THE JURISDICTION OR VENUE OF ANY LITIGATION BROUGHT AGAINST IT BY THE SECURED PARTY IN ACCORDANCE
WITH THIS SECTION.
| DEBTOR: PRIME OFFSHORE L.L.C. |
||||
| By: | /s/ Xxx X. Xxxxx | |||
| Xxx X. Xxxxx | ||||
| President and Chief Financial Officer | ||||
- 17 -
| SECURED PARTY: GUARANTY BANK, FSB, AS AGENT |
||||
| By: | /s/ Xxxxx X. Xxxxxx, III | |||
| Xxxxx X. Xxxxxx, III | ||||
| Senior Vice President | ||||
- 18 -
EXHIBIT A
Section 3.1: FILING LOCATIONS
Secretary of State of Delaware
A-i