EXHIBIT 10.5
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SECURITY AGREEMENT
THIS SECURITY AGREEMENT ("Agreement"), dated as of June 7, 2006, is
made between ENDEAVOR PIPELINE INC., an Oklahoma corporation ("Grantor") and
CAPITAL ONE, NATIONAL ASSOCIATION ("Agent"), who agree as follows:
RECITALS
A. The Grantor is a wholly owned subsidiary of GMX RESOURCES INC.,
an Oklahoma corporation ("Borrower"). Borrower is a party to that certain
Amended and Restated Loan Agreement dated as of even date herewith among the
Borrower, the Agent and the Banks from time to time a party thereto (as such
agreement may hereafter be amended, renewed, extended, increased or restated
from time to time, the "Loan Agreement").
B. The Grantor has executed and delivered to the Agent a Guaranty
Agreement of even date herewith (as amended or restated from time to time, the
"Guaranty Agreement").
C. In order to induce the Agent and the Banks to enter into the
Loan Agreement and the Secured Hedge Providers to enter into the Secured Hedge
Obligations (as defined in the Loan Agreement) and to secure the full and
punctual payment and performance of the Secured Liabilities (as hereafter
defined), the Grantor has agreed to execute and deliver this Agreement and to
grant a continuing security interest in and to the Collateral (as hereafter
defined).
AGREEMENT
ARTICLE 1
GENERAL TERMS
Section 1.1 Terms Defined Above or Elsewhere. As used in this
Agreement, the terms "Agent", "Agreement", "Borrower", "Grantor", "Guaranty
Agreement", and "Loan Agreement" shall have the meanings indicated above.
Section 1.2 Certain Definitions. As used in this Agreement, the
following additional terms shall have the meanings indicated:
"Accounts" means all "accounts" (as defined in the UCC) now owned or
hereafter acquired by the Grantor, and shall also mean and include all accounts
receivable, notes, notes receivable, instruments, drafts, acceptances, book
debts and similar documents and other monies, obligations or indebtedness owing
or to become owing to the Grantor arising from the sale, lease or exchange of
goods or other property by the Grantor or the performance of services by the
Grantor or under any contracts for any of the foregoing (whether or not yet
earned by performance on the part of the Grantor), in each case whether now in
existence or hereafter arising or acquired.
"Banks" has the meaning provided in the Loan Agreement.
"Collateral" has the meaning set forth in Section 2 of this Agreement.
"Collateral Account" has the meaning set forth in Section 5 of this
Agreement.
"Collateral Documents" means collectively all mortgages, pledges,
security agreements and other documents by which the Grantor, Borrower or any
affiliate grants liens and security interests in immovable or movable property
to the Agent.
"Contracts" means all natural gas gathering, dehydration,
transportation, marketing or sales contracts to which the Grantor is a party now
or hereafter, including without limitation all contracts with Borrower, and all
amendments, modifications, replacements and substitutions to any of the
foregoing.
"Equipment" means all equipment and goods used or held for use in
Grantor's business, now owned or hereafter acquired by the Grantor, wherever
located, including without limitation gas compressors and pipelines, together
with all additions, accessories, parts, attachments, special tools and
accessions now and hereafter affixed thereto or used in connection therewith,
and all replacements thereof and substitutions therefor.
"Event of Default" has the meaning set forth in the Loan Agreement.
"General Intangibles" means all general intangibles now owned or
hereafter acquired by the Grantor, including, without limitation, (i) all
contractual rights and obligations or indebtedness owing to the Grantor (other
than Accounts) from whatever source arising, including without limitation all
rights to payment under the Contracts, and (ii) all things in action, rights
represented by judgments, claims arising out of tort and other claims relating
to the Collateral (including the right to assert and otherwise be the proper
party of interest to commence and prosecute actions).
"Goods" means all Equipment and fixtures and other tangible personal
property now owned or hereafter acquired by the Grantor.
"Inventory" means all inventory now owned or hereafter acquired by the
Grantor.
"Lien" means any interest in property securing an obligation owed to,
or a claim by, a Person other than the owner of the property, whether such
interest is based on jurisprudence, statute or contract, and including but not
limited to the lien or security interest arising from a mortgage, encumbrance,
pledge, security agreement, conditional sale or trust receipt or a lease,
consignment or bailment for security purposes. The term "Lien" shall include
reservations, exceptions, encroachments, easements, servitudes, usufructs,
rights-of-way, covenants, conditions, restrictions, leases and other title
exceptions and encumbrances affecting property. For the purposes of this
Agreement, the Grantor shall be deemed to be the owner of
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any property which it has accrued or holds subject to a conditional sale
agreement, financing lease or other arrangement pursuant to which title to the
property has been retained by or vested in some other Person for security
purposes.
"Other Revenues" means the revenues, if any, included within the
Accounts comprised of the portion of the accounts receivable owed to the Grantor
from the sale of hydrocarbons which are in turn owed by the Grantor to the gas
producers which are not affiliates of Borrower for gas sold by Grantor on behalf
of such producers.
"Permitted Liens" means the Security Interests, and any other Liens in
favor of the Agent or permitted by the Agent in writing to be created or assumed
or to otherwise exist on the Collateral.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof, or any other form of entity.
"Proceeds" means all cash and non-cash proceeds of, and all other
profits, rentals or receipts, in whatever form, arising from the collection,
sale, lease, exchange, assignment, licensing or other disposition of, or
realization upon, Collateral, including without limitation all claims of the
Grantor against third parties for loss of, damage to or destruction of, or for
proceeds payable under, or unearned premiums with respect to, policies of
insurance in respect of, any Collateral, and any condemnation or requisition
payments with respect to any Collateral, and including proceeds of all such
proceeds, in each case whether now existing or hereafter arising.
"Secured Hedge Agreements" has the meaning provided in the Loan
Agreement.
"Secured Hedge Providers" has the meaning provided in the Guaranty
Agreement.
"Secured Liabilities" means all present and future amounts, liabilities
or obligations owing from time to time to the Secured Parties (1) by the Grantor
under the Guaranty Agreement or (2) by Borrower as any part of the Secured
Liabilities, including without limitation any such amounts, liabilities or
obligations under or pursuant to the Loan Agreement, this Agreement, the other
Collateral Documents or the Secured Hedge Agreements (including attorneys' fees
incurred in connection with the execution, enforcement or collection of the
Grantor's obligations hereunder or thereunder or any part thereof), whether said
amounts, liabilities or obligations are liquidated or unliquidated, now existing
or hereafter arising, including without limitation all promissory term notes
heretofore or hereafter executed by Borrower pursuant to the Loan Agreement, in
principal, interest, deferral and delinquency charges, prepayment premiums,
costs and attorneys' fees, as therein stipulated, and under and pursuant to all
amendments, supplements and restatements to any of said documents.
"Secured Parties" has the meaning provided in the Guaranty Agreement.
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"Security Interests" means the security interests in the Collateral
granted hereunder securing the Secured Liabilities.
"UCC" means Article 9 of the Uniform Commercial Code in the State of
Texas, as amended from time to time; provided that if by reason of mandatory
provisions of law, the perfection or the effect of perfection or non-perfection
of the Security Interests in any Collateral or the remedies pertaining thereto
is governed by the Uniform Commercial Code as in effect in a jurisdiction other
than Texas, "UCC" means the Uniform Commercial Code as in effect in such other
jurisdiction for purposes of the provisions hereof relating to such perfection
or effect of perfection or non-perfection or such remedies.
ARTICLE 2
SECURITY INTEREST
Section 2.1 The Security Interests. In order to secure the full
and punctual payment and performance of all present and future Secured
Liabilities, the Grantor hereby grants to the Agent, for itself and the ratable
benefit of the Secured Parties, a continuing security interest in and to all
right, title and interest of the Grantor in, to or under the following property,
whether now owned or existing or hereafter acquired or arising and regardless of
where located:
(i) the Equipment, the Inventory and all fixtures and Goods;
(ii) the Accounts;
(iii) the Contracts and the General Intangibles;
(iv) the Collateral Account, all cash deposited therein from time
to time, and all other monies and property of any kind of the Grantor in the
possession or under the control of the Agent;
(v) all books and records (including, without limitation, customer
lists, credit files, computer programs, tapes, disks, punch cards, data
processing software, transaction files, master files, printouts and other
computer materials and records) of the Grantor pertaining to any of the
Collateral; and
(vi) all Proceeds and products of all or any of the Collateral
described in clauses i through v hereof.
The term "Collateral" means each and all of the items and property rights
described in clauses i through vi above.
Section 2.2 Other Revenues. Notwithstanding that the Security
Interests granted to the Agent cover all of the Accounts, in the event that
Other Revenues are included in
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the Accounts, then the Agent agrees that Agent shall retain from such Accounts
an amount equal to the difference between the resale price of the natural gas
less the actual price paid or owed by the Grantor for the natural gas at the
wellhead, and Agent will release such Other Revenues of another Person to such
Person (even if an Event of Default has occurred and is continuing) upon the
receipt by the Agent of appropriate evidence that such funds are Other Revenues
(i.e., are not the Grantor's funds) before such funds are collected and applied
by the Agent to the Secured Liabilities. The Agent shall not be liable, however,
for any actions by Agent which are taken in compliance with the terms of this
Agreement and the Loan Agreement with respect to funds that are Other Revenues
and which are taken before Agent receives such evidence that such funds are
Other Revenues.
Section 2.3 No Liability. The Security Interests are granted as
security only and shall not subject the Agent to, or transfer or in any way
affect or modify, any obligation or liability of the Grantor with respect to any
of the Collateral or any transaction in connection therewith.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
The Grantor represents and warrants to the Agent and the other Secured
Parties that:
Section 3.1 No Liens. Other than financing statements or other
similar or equivalent documents or instruments with respect to the Security
Interests and Permitted Liens, no financing statement, mortgage, security
agreement or similar or equivalent document or instrument covering all or any
part of the Collateral is on file or of record in any jurisdiction in which such
filing or recording would be effective to perfect a Lien on such Collateral. No
Collateral is in the possession of any Person (other than the Grantor) asserting
any claim thereto or security interest therein, except that the Agent or its
designee may have possession of Collateral as contemplated hereby.
Section 3.2 Name. The exact name of the Grantor as it appears in
its articles of incorporation is as it appears on page 1 of this Agreement. The
Grantor has used no other names (including trade names or similar appellations)
at any time during the past five years.
Section 3.3 Identification Number. The Oklahoma Secretary of State
does not assign an organizational identification number to the Grantor.
Section 3.4 Chief Executive Office. The chief executive office of
the Grantor is located at 0000 Xxxxx Xxxxxxxx, Xxxxx 000, Xxxxxxxx Xxxx,
Xxxxxxxx 00000, and has been located continuously in the State of Oklahoma since
the date of Grantor's formation.
Section 3.5 Records Location. The Grantor maintains all of the
books or
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records relating to any Accounts or other Collateral at the location specified
in Section 3.4.
Section 3.6 Goods Location. All of the Goods are located in
Xxxxxxxx and Panola Counties, Texas.
Section 3.7 Filing Location. When a UCC financing statement has
been filed in the offices of Clerk of Court of Oklahoma County, Oklahoma, the
Security Interests shall constitute perfected security interests in the
Collateral to the extent that a security interest therein may be perfected by
filing pursuant to the UCC, prior to all other Liens and rights of others
therein except for the Permitted Liens to the extent that such priority is
afforded by the UCC, and except to the extent that fixture filings in the real
estate records of the counties listed in Section 3.6 may be required in some
circumstances as to a portion of the equipment, which fixture filings however
are not being made at this time.
Section 3.8 No Inconsistent Agreements. The Grantor has not
performed any acts or signed any agreements which might prevent the Agent from
enforcing any of the terms of this Agreement or which would limit the Agent in
any such enforcement.
Section 3.9 Title. The Grantor has good and merchantable title to
the Collateral (other than Other Revenues), except the portion thereof
consisting of after-acquired property, free of Liens except Permitted Liens, and
the Grantor will have good and merchantable title to such after-acquired
Collateral, free of Liens except Permitted Liens. Furthermore, the Grantor has
not heretofore conveyed or agreed to convey or encumber any Collateral in any
way, except in favor of the Agent.
Section 3.10 Accounts. The Accounts represent bona fide obligations
of the respective account debtors, which obligations are free and clear of any
set off, compensation, counterclaim, defense, allowance or adjustment, other
than discounts for prompt payment shown on the invoice and other than as to the
portion constituting Other Revenues, and arose in the ordinary course of the
Grantor's business.
Section 3.11 Goods Condition. The Goods are in good condition and
are free of damage caused by fire or other casualty.
Section 3.12 Special Collateral. No part of the portion of the
Equipment consisting of gas compressors is or will become fixtures. No other
portion of the Goods is known by Grantor to be fixtures, except possibly for
pipelines (as to which Grantor does not so intend, but as to which no such
representation is made). No part of the Goods is leased or held for lease by the
Grantor to others.
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ARTICLE 4
COVENANTS
Section 4.1 Notice of Changes. The Grantor will not change its
name, identity, identification number or corporate structure in any manner
unless it shall have given the Agent at least 30 days' prior written notice
thereof. The Grantor will not change the location of its chief executive office
or chief place of business or of the records relating to any Collateral from the
applicable office location described in Article 3 unless it shall have given the
Agent at least 30 days' prior written notice thereof.
Section 4.2 Filing. The Grantor shall pay all costs of or
incidental to the recording or filing of any financing, amendment, continuation,
termination or other statements concerning the Collateral. The Grantor
authorizes the Agent to file a financing statement covering all personal
property of the Grantor.
Section 4.3 Condition of Goods. The Grantor will maintain,
preserve and keep the Goods at all times in thorough repair and good working
order and condition, and from time to time make all needful repairs, renewals
and additions so that its value and the Security Interests shall at no time
become impaired. The Grantor will not do or permit anything to be done to the
Collateral that may violate the terms of any insurance covering the Collateral
or any part thereof.
Section 4.4 Insurance. The Grantor will maintain with financially
sound and reputable insurers, insurance with respect to the Goods against such
liabilities, casualties, risks and contingencies and in such types and amounts
as are satisfactory to the Agent from time to time. The Grantor will keep all
such policies constantly assigned or payable to the Agent and to have attached
to each of such policies a non-contributory loss payable clause in favor of and
in form acceptable to the Agent. Upon request of the Agent, the Grantor will
furnish or cause to be furnished to the Agent from time to time a summary of the
insurance coverage of the Grantor in form and substance satisfactory to the
Agent and if requested will furnish the Agent original certificates of insurance
and/or copies of the applicable policies and all renewals thereof. In the event
the Grantor should, for any reason whatsoever, fail to keep the Goods or any
part thereof so insured, or to keep said policies so assigned or payable, or
fail to deliver to the Agent satisfactory evidence thereof, then the Agent, if
it so elects, may itself have such insurance effected in such amounts and in
such companies as it may deem proper and may pay the premiums therefor and the
Grantor shall reimburse the Agent upon demand for the amount of the premiums
paid, together with interest thereon at eighteen percent per annum from date
until paid. The Agent shall not be responsible for the solvency of any company
issuing any insurance policy, whether or not selected or approved by it, or for
the collection of any amounts due under any such policy, and shall be
responsible and accountable only for such money as may be actually received by
the Agent. The policy shall contain an agreement by the insurer not to cancel or
amend the policy without giving the Agent at least 30 days prior written notice
of its intention to do so. The Grantor will notify the Agent immediately in
writing of any material fire
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or other casualty to or accident involving the Goods, whether or not such fire,
casualty or accident is covered by insurance. The Grantor will promptly further
notify the Grantor's insurance company and submit an appropriate claim and proof
of claim to the insurance company as to any of the Collateral that is damaged or
destroyed by fire or other casualty.
Section 4.5 Equipment Not Fixtures. If, in the opinion of the
Agent any of the Equipment is or may become part of any real property, the
Grantor will furnish to the Agent a written waiver by the record owner of such
realty (immovable) of all interest in such Collateral and a written
subordination to the Agent's Security Interest by any Person who has a Lien on
such realty (immovable) which is or may be superior to the Agent's Security
Interest hereunder.
Section 4.6 Accounts Collection. The Grantor shall use its best
efforts to cause to be collected from its account debtors, as and when due, any
and all amounts owing under or on account of each Account (including, without
limitation, Accounts which are delinquent, such Accounts to be collected in
accordance with lawful collection procedures) and shall apply forthwith upon
receipt thereof all such amounts as are so collected to the outstanding balance
of such Account. Subject to the rights of the Agent hereunder if an Event of
Default shall have occurred and be continuing, the Grantor may allow as
adjustments to amounts owing under its Accounts (i) an extension or renewal of
the time or times of payment, or settlement for less than the total unpaid
balance, and (ii) a refund or credit due as a result of returned or damaged
merchandise, all in accordance with the Grantor's ordinary course of business
consistent with its historical collection practices and with sound business
judgment. The costs and expenses (including, without limitation, attorneys'
fees) of collection, whether incurred by the Grantor or the Agent, shall be
borne by the Grantor.
Section 4.7 Instruments. While an Event of Default has occurred
and is continuing, the Grantor will immediately deliver and pledge to the Agent
each instrument evidencing, representing or otherwise arising from an Account or
General Intangible, appropriately endorsed to the Agent, provided that so long
as no Event of Default shall have occurred and be continuing, the Grantor may
refrain from such delivery and may retain possession of, for the purpose of
collection in the ordinary course, any such instruments received by it in the
ordinary course of business.
Section 4.8 Governmental Accounts. If the Collateral is or becomes
subject to the Federal Assignment of Claims Act, the Grantor will immediately
notify the Agent thereof in writing and execute all instruments and take all
steps required by the Agent to comply with that act.
Section 4.9 Transfer and Other Liens. The Grantor will not sell,
lease, transfer, exchange or otherwise dispose of the Collateral, or any part
thereof, without the prior written consent of the Agent and will not permit any
Lien to attach to the Collateral, or any part thereof, other than Permitted
Liens, except that the Grantor may, in the ordinary course of its business
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and in the absence of an Event of Default, collect its Accounts and General
Intangibles and sell or otherwise dispose of obsolete or worn out Goods.
Section 4.10 Right of Inspection and Information. The Grantor will
permit any officer, employee or Agent of the Agent to visit and inspect any of
the Collateral, examine the books of record and accounts of the Grantor, take
copies and extracts therefrom, and discuss the affairs, finances and accounts of
the Grantor with the Grantor's officers, accountants and auditors, all at such
reasonable times and on reasonable notice and without hindrance and delay and as
often as the Agent may reasonably desire. The Grantor will furnish to the Agent
promptly upon request and in the form and content specified by the Agent,
schedules of Equipment and its locations and other data concerning the
Collateral as the Agent may from time to time specify.
Section 4.11 Taxes. The Grantor will pay as and when due and
payable all taxes, levies, license fees, assessments, and other impositions
levied on the Collateral or any part thereof before its use and operation.
Section 4.12 Further Assurances. On request of the Agent, the
Grantor will promptly (i) correct any defect, error or omission which may be
discovered in the contents of this Agreement or any financing statement relating
thereto or in the execution or acknowledgment of this Agreement or any financing
statement; (ii) execute, acknowledge, deliver and record in any jurisdictions
such further instruments (including, without limitation, further security
agreements, financing statements, continuation statements and assignments of
proceeds) and do such further acts as may be necessary, desirable or proper to
carry out more effectively the purposes of this Agreement and to more fully
identify and subject to the Security Interest hereof any property intended to be
covered hereby, including without limitation any renewals, additions,
substitutions, replacements or accessions to the Collateral; and (iii) execute,
acknowledge, deliver and record any document or instrument (including
specifically any financing statement) necessary, desirable or proper in any
jurisdictions to protect the Lien and Security Interest hereunder against the
rights or interests of third persons. The Grantor shall pay all costs connected
with any of the foregoing.
Section 4.13 Collateral Indemnity. If the validity or priority of
this Agreement or any rights, security interests or other interests created or
evidenced hereby shall be attacked, endangered or questioned or if any legal
proceedings are instituted with respect thereto, the Grantor will give prompt
written notice thereof to the Agent and at the Grantor's own cost and expense
will diligently endeavor to cure any defect that may be developed or claimed,
and will take all necessary and proper steps for the defense of such legal
proceedings, and the Agent (whether or not named as a party to legal proceedings
with respect thereto) is hereby authorized and empowered to take such additional
steps as in its judgment and discretion may be necessary or proper for the
defense of any such legal proceedings or the protection of the validity or
priority of this Agreement and the rights, security interests and other
interests created or evidenced hereby, and all expenses so incurred of every
kind and character shall be a demand obligation owing by the Grantor to the
Agent and shall be a part of the Secured Liabilities.
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Section 4.14 Compliance with Laws. The Grantor will observe and
comply with all laws, statutes, ordinances, rules, regulations, judgments,
decrees, franchises, permits, licenses, certificates and requirements of all
federal, state, parish, county, municipal and other governmental agencies,
departments, commissions, boards, courts and authorities applicable to the
Grantor or to the Collateral.
ARTICLE 5
DEFAULT
Section 5.1 Collateral Account. Without limiting any requirements
or agreements set forth in the Loan Agreement or the Guaranty Agreement, upon
the occurrence of an Event of Default, and at any time thereafter, the Agent may
require the Grantor to establish a cash collateral account (the "Collateral
Account") in the name and under the control of the Agent at the Agent or a bank
satisfactory to the Agent, which shall be subject to access and withdrawal by
the Agent only. In such event, all payments (in the form of checks, drafts, cash
or otherwise) received by the Grantor in satisfaction, in whole or in part, of
any Accounts or General Intangibles (or Proceeds therefrom) of the Grantor shall
be deposited by the Grantor in the Collateral Account. The Grantor will deposit
for credit to the Collateral Account all such items of payment and remittances
within one (1) business day of the receipt thereof, and shall not commingle any
such items of payment and remittances with any of the Grantor's other property.
Funds in the Collateral Account are and shall be subject to a security interest
in favor of the Agent to secure the Secured Liabilities, and the Agent may apply
or cause to be applied (subject to collection) any or all of the balance from
time to time standing in the Collateral Account against the Secured Liabilities
in such order as determined by the Agent, but subject to Agent's agreement in
Section 2.2 with respect to Other Revenues.
Section 5.2 General Authority. The Grantor hereby irrevocably
appoints the Agent its agent and attorney in fact, with full power of
substitution, in the name of the Grantor or the Agent, for the sole use and
benefit of the Agent, but at the Grantor's expense, to exercise, at any time and
from time to time while an Event of Default has occurred and is continuing, all
or any of the following powers with respect to all or any of the Collateral:
(i) to endorse the name of the Grantor upon any check, draft, note
or other instrument payable to the Grantor evidencing payment upon any Accounts
or General Intangible,
(ii) to notify postal service authorities to change the address for
delivery of the Grantor's mail to a "lockbox" address designated and controlled
by the Agent, and to receive, open and dispose of all mail addressed to the
Grantor,
(iii) to demand, xxx for, collect, receive and give acquittance for
any and all Accounts and other monies due or to become due for or as Collateral
or by virtue thereof,
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(iv) to settle, compromise, compound, prosecute or defend any
action or proceeding with respect to any of the Collateral, and
(v) to extend the time of payment of any or all of the Collateral
and to make any allowance and other adjustments with reference thereto.
The aforesaid mandate and power of attorney, being coupled with an interest, is
irrevocable so long as any of the Secured Liabilities remains outstanding.
Section 5.3 Accounts. While an Event of Default has occurred and
is continuing, the Grantor will make no material change to the terms of any
Account without the prior written permission of the Agent. Upon the occurrence
of an Event of Default, and at any time thereafter, the Grantor upon request of
the Agent will promptly notify (and the Grantor hereby authorizes the Agent so
to notify) each account debtor in respect of any Account or General Intangible
that such Collateral has been assigned to the Agent hereunder, and that any
payments due or to become due in respect of such Collateral are to be made
directly to the Agent or its designee, and Agent may demand, xxx for, collect
and receive all such Accounts or General Intangibles.
Section 5.4 Sale. Upon the occurrence of an Event of Default, the
Agent may exercise all rights of a secured party under the UCC and other
applicable law (including the Uniform Commercial Code as in effect in another
applicable jurisdiction) and, in addition, the Agent may, without being required
to give any notice, except as herein provided or as may be required by mandatory
provisions of law, sell the Collateral or any part thereof at public or private
sale, for cash, upon credit or for future delivery, and at such price or prices
as the Agent may deem satisfactory. The Agent shall incur no liability as a
result of the sale of Collateral, or any part thereof, at any private sale. The
Grantor hereby waives, to the extent permitted by applicable law, any claims
against the Agent arising by reason of the fact that the price at which the
Collateral may have been sold at such private sale was less than the price which
might have been obtained at a public sale or was less than the aggregate amount
of the outstanding Secured Liabilities, even if the Agent accepts the first
offer received and does not offer such Collateral to more than one offeree. The
Agent may be the purchaser of any or all of the Collateral so sold at any public
sale (or, if the Collateral is of a type customarily sold in a recognized market
or is of a type which is the subject of widely distributed standard price
quotations, at any private sale). The Grantor will execute and deliver such
documents and take such other action as the Agent deems necessary or advisable
in order that any such sale may be made in compliance with law. Upon any such
sale the Agent shall have the right to deliver, assign and transfer to the
purchaser thereof the Collateral so sold. Each purchaser at any such sale shall
hold the Collateral so sold to it absolutely and free from any claim or right of
whatsoever kind, including any equity or right of redemption of the Grantor
which may be waived, and the Grantor, to the extent permitted by law, hereby
specifically waives all rights of redemption, stay or appraisal which it has or
may have under any law now existing or hereafter adopted. The Grantor agrees
that five (5) days prior written notice of the time and place of any sale or
other intended disposition of any of the
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Collateral constitutes "reasonable notification" within the meaning of the UCC,
except that shorter or no notice shall be reasonable as to any Collateral which
is perishable or threatens to decline speedily in value or is of a type
customarily sold on a recognized market. The notice (if any) of such sale shall
(l) in case of a public sale, state the time and place fixed for such sale, and
(2) in the case of a private sale, state the day after which such sale may be
consummated. Any such public sale shall be held at such time or times within
ordinary business hours and at such place or places as the Agent may fix in the
notice of such sale. At any such sale the Collateral may be sold in one lot as
an entirety or in separate parcels or portions, as the Agent may determine. The
Agent shall not be obligated to make any such sale pursuant to any such notice.
The Agent may, without notice or publication, adjourn any public or private sale
or cause the same to be adjourned from time to time by announcement at the time
and place fixed for the sale, and such sale may be made at any time or place to
which the same may be so adjourned. In case of any sale of all or any part of
the Collateral on credit or for future delivery, the Collateral so sold may be
retained by the Agent until the selling price is paid by the purchaser thereof,
but the Agent shall not incur any liability in case of the failure of such
purchaser to take up and pay for the Collateral so sold and, in case of any such
failure, such Collateral may again be sold upon like notice. The Agent shall not
be liable for any depreciation in the value of the Collateral. All rights to
marshaling of assets of the Grantor, including any such right with respect to
the Collateral, are hereby waived.
Section 5.5 Foreclosure; Receiver. The Agent, instead of
exercising the power of sale herein conferred upon it, may proceed by a suit or
suits at law or in equity to foreclose the Security Interests and sell the
Collateral, or any portion thereof, under a judgment or decree of a court or
courts of competent jurisdiction. Moreover, the Agent may apply for and obtain,
without notice and upon ex parte application, the appointment of a receiver for
the Collateral without regard to the Grantor's financial condition or solvency,
the adequacy of the Collateral to secure the payment or performance of the
Secured Liabilities, or the existence of any waste to the Collateral. In the
event that the Agent institutes an action to recover any Collateral or appoint a
receiver or seeks the recovery of any Collateral or the appointment of a
receiver by way of a pre-judgment remedy in an action against the Grantor, the
Grantor waives the posting of any bond which might otherwise be required.
Section 5.6 Assemble Collateral. For the purpose of enforcing any
and all rights and remedies under this Agreement the Agent may (i) require the
Grantor to, and the Grantor agrees that it will, at its expense and upon the
request of the Agent, forthwith assemble all or any part of the Collateral as
directed by the Agent and make it available at a place designated by the Agent
which is, in its opinion, reasonably convenient to the Agent and the Grantor,
whether at the premises of the Grantor or otherwise, and Agent shall be entitled
to specific performance of this obligation, (ii) to the extent permitted by
applicable law of any applicable state, enter, with or without process of law
and without breach of the peace, any premise where any of the Collateral is or
may be located, and without charge or liability to it seize and remove such
Collateral from such premises, (iii) have access to and use the Grantor's books
and records relating to the Collateral and (iv) prior to the disposition of the
Collateral,
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store or transfer it without charge in or by means of any storage or
transportation facility owned or leased by the Grantor, process, repair or
recondition it or otherwise prepare it for disposition in any manner and to the
extent the Agent deems appropriate and, in connection with such preparation and
disposition, use without charge any trademark, trade name, copyright, patent or
technical process used by the Grantor.
Section 5.7 Limitation on Duty of Agent. Beyond the exercise of
reasonable care in the custody thereof, the Agent shall have no duty as to any
Collateral in its possession or control or in the possession or control of any
agent or bailee or any income thereon. The Agent shall be deemed to have
exercised reasonable care in the custody of the Collateral in its possession if
the Collateral is accorded treatment substantially equal to that which it
accords its own property, and shall not be liable or responsible for any loss or
damage to any of the Collateral, or for any diminution in the value thereof, by
reason of the act or omission of any warehouseman, carrier, forwarding agency,
consignee or other agent or bailee selected by the Agent in good faith. The
Grantor agrees that the Agent shall not be obligated to preserve rights against
prior parties obligated on any instruments.
Section 5.8 Appointment of Agent. At any time or times, in order
to comply with any legal requirement in any jurisdiction, the Agent may appoint
a bank or trust company or one or more other Persons with such power and
authority as may be necessary for the effectual operation of the provisions
hereof and may be specified in the instrument of appointment.
Section 5.9 Expenses. In the event that the Grantor fails to
comply with any provisions of this Agreement or the Collateral Documents, such
that the value of any Collateral or the validity, perfection, rank or value of
any Security Interest hereunder is thereby diminished or potentially diminished
or put at risk, the Agent may, but shall not be required to, effect such
compliance on behalf of the Grantor, and the Grantor shall reimburse the Agent
for the costs thereof on demand. All insurance expenses and all expenses of
protecting, storing, warehousing, appraising, preparing for sale, handling,
maintaining and shipping the Collateral, any and all excise, property, sales,
and use taxes imposed by any federal, state or local authority on any of the
Collateral, all expenses in respect of periodic appraisals and inspections of
the Collateral to the extent the same may be requested from time to time, and
all expenses in respect of the sale or other disposition thereof shall be borne
and paid by the Grantor; and if the Grantor fails to promptly pay any portion
thereof when due, the Agent may, at its option, but shall not be required to,
pay the same and charge the Grantor's account therefor, and the Grantor agrees
to reimburse the Agent therefor on demand. All sums so paid or incurred by the
Agent for any of the foregoing and any and all other sums for which the Grantor
may become liable hereunder and all costs and expenses (including reasonable
attorneys' fees, legal expenses and court costs) incurred by the Agent in
enforcing or protecting the Security Interests or any of its rights or remedies
under this Agreement or the other Collateral Documents, shall, together with
interest thereon until paid at the rate equal the then highest rate of interest
charged on the principal of any of the Secured Liabilities plus one (1%)
percent, be additional Secured Liabilities hereunder and Grantor agrees to pay
all of the foregoing sums promptly on demand.
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ARTICLE 6
MISCELLANEOUS
Section 6.1 Notices. Any notice or demand which, by provision of
this Agreement, is required or permitted to be given or served to the Grantor
and the Agent shall be deemed to have been sufficiently given and served for all
purposes if made in accordance with the Loan Agreement to the following
addresses:
If to Grantor: Endeavor Pipeline Inc.
0000 Xxxxx Xxxxxxxx
Xxxxx 000
Xxxxxxxx Xxxx, Xxxxxxxx 00000
If to Agent: Capital One, National Association
X.X. Xxx 00000
Xxx Xxxxxxx, XX 00000
or
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Attention: Manager, Energy Maritime Department
Section 6.2 Amendment. Neither this Agreement nor any provisions
thereof may be changed, waived, discharged or terminated orally or in any manner
other than by an instrument in writing signed by the party against whom
enforcement of the change, waiver, discharge or termination is sought.
Section 6.3 Waivers. No course of dealing on the part of the
Agent, its officers, employees, consultants or agents, nor any failure or delay
by the Agent with respect to exercising any of its rights, powers or privileges
under this Agreement shall operate as a waiver thereof.
Section 6.4 Cumulative Rights. The rights and remedies of the
Agent under this Agreement and the other Collateral Documents shall be
cumulative, and the exercise or partial exercise of any such right or remedy
shall not preclude the exercise of any other right or remedy.
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Section 6.5 Titles of Articles, Sections and Subsections. All
titles or headings to articles, sections, subsections or other divisions of this
Agreement or the exhibits hereto are only for the convenience of the parties and
shall not be construed to have any effect or meaning with respect to the other
content of such articles, sections, subsections or other divisions, such other
content being controlling as to the agreement between the parties hereto.
Section 6.6 Singular and Plural. Words used herein in the
singular, where the context so permits, shall be deemed to include the plural
and vice versa. The definitions of words in the singular herein shall apply to
such words when used in the plural where the context so permits and vice versa.
SECTION 6.7 GOVERNING LAW. THIS AGREEMENT IS A CONTRACT MADE UNDER
AND SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE UNITED
STATES OF AMERICA AND THE STATE OF TEXAS.
Section 6.8 Termination. Upon full and final payment and
performance of the Secured Liabilities, this Agreement shall terminate, and the
Agent shall pay to the Grantor all amounts then remaining in the possession of
the Agent from collections on or proceeds of the Collateral. Upon request of the
Grantor, the Agent shall execute and deliver to the Grantor at the Grantor's
expense such termination statements as the Grantor may reasonably request to
evidence such termination.
Section 6.9 Successors and Assigns. (a) All covenants and
agreements contained by or on behalf of the Grantor in this Agreement shall bind
its successors and assigns and shall inure to the benefit of the Agent and the
other Secured Parties and their successors and assigns.
(b) This Agreement is for the benefit of the Agent and the other
Secured Parties and for such other Person or Persons as may from time to time
become or be the holders of any of the Secured Liabilities, and this Agreement
shall be transferrable and negotiable, with the same force and effect and to the
same extent as the Secured Liabilities may be transferrable.
Section 6.10 Counterparts. This Agreement may be executed in two or
more counterparts, and it shall not be necessary that the signatures of all
parties hereto be contained on any one counterpart hereof; each counterpart
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
Section 6.11 Loan Agreement. The provisions of Section 3.4 of the
Loan Agreement pertaining to "Shared Collateral" (as defined therein) shall
apply to this Agreement and the Collateral hereunder. Without limiting the
generality of the foregoing, the Agent shall be required to act only at the
direction of the Required Banks (as defined in the Loan Agreement) or
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such other vote of the Banks as required by the Loan Agreement, and not at the
direction of the Secured Hedge Providers.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
GRANTOR: ENDEAVOR PIPELINE INC.,
an Oklahoma corporation
By: /s/ Xxx X. Xxxxxxxxx, Xx.
--------------------------------------
Name: Xxx X. Xxxxxxxxx, Xx.
Title: President
LENDER: CAPITAL ONE, NATIONAL ASSOCIATION,
as Agent
By: /s/ Xxxxx Xxxxxxxx
--------------------------------------
Name: Xxxxx Xxxxxxxx
Title: Vice President
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