EXHIBIT 10.3
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SECURITY AGREEMENT
THIS SECURITY AGREEMENT ("Agreement"), dated as of July 29,
2005, is made between ENDEAVOR PIPELINE INC., an Oklahoma corporation
("Grantor") and HIBERNIA NATIONAL BANK ("Lender"), 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
Loan Agreement dated as of even date herewith between the Borrower and the
Lender (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 Lender a
Guaranty Agreement of even date herewith (as amended or restated from time to
time, the "Guaranty Agreement").
C. In order to secure the full and punctual payment and
performance of the Indebtedness (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 "Agreement", "Borrower", "Grantor", "Guaranty Agreement",
"Lender" 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.
"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 Lender.
"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.
"Indebtedness" means all present and future amounts,
liabilities or obligations owing from time to time to the Lender (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 or the
other Collateral Documents (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, or pursuant to any additional Loan
Agreements and all notes issued thereunder, and under and pursuant to all
amendments, supplements and restatements to any of said documents.
"Inventory" means all inventory now owned or hereafter
acquired by the Grantor.
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"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 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 Lender or permitted by the Lender 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 Liabilities" has the meaning provided in the Guaranty
Agreement.
"Security Interests" means the security interests in the
Collateral granted hereunder securing the Indebtedness.
"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
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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
Indebtedness, the Grantor hereby grants to the Lender 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 Lender;
(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 Lender cover all of the Accounts, in the event that
Other Revenues are included in the Accounts, then the Lender agrees that Lender
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 Lender 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 Lender 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 Lender to the Indebtedness.
The Lender shall not be liable, however, for any actions by Lender which are
taken in compliance with the terms of this Agreement and the Loan Agreement with
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respect to funds that are Other Revenues and which are taken before Lender
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 Lender 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 Lender 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 Lender 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 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
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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 Lender from
enforcing any of the terms of this Agreement or which would limit the Lender 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 Lender.
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.
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 Lender 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
Lender 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 Lender to file a financing statement covering all personal
property of the Grantor.
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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 Lender from time to time. The Grantor
will keep all such policies constantly assigned or payable to the Lender and to
have attached to each of such policies a non-contributory loss payable clause in
favor of and in form acceptable to the Lender. Upon request of the Lender, the
Grantor will furnish or cause to be furnished to the Lender from time to time a
summary of the insurance coverage of the Grantor in form and substance
satisfactory to the Lender and if requested will furnish the Lender 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 Lender satisfactory evidence
thereof, then the Lender, 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 Lender upon demand for
the amount of the premiums paid, together with interest thereon at eighteen
percent per annum from date until paid. The Lender 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 Lender. The policy shall contain an agreement by the
insurer not to cancel or amend the policy without giving the Lender at least 30
days prior written notice of its intention to do so. The Grantor will notify the
Lender immediately in writing of any material fire 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
Lender any of the Equipment is or may become part of any real property, the
Grantor will furnish to the Lender a written waiver by the record owner of such
realty (immovable) of all interest in such Collateral and a written
subordination to the Lender's Security Interest by any Person who has a Lien on
such realty (immovable) which is or may be superior to the Lender'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 Lender hereunder if an Event of
Default shall have occurred and be continuing, the Grantor may allow as
adjustments to amounts owing under its
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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 Lender, 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 Lender each instrument evidencing, representing or otherwise arising from an
Account or General Intangible, appropriately endorsed to the Lender, 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 Lender thereof in writing and execute all instruments and
take all steps required by the Lender 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 Lender 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 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 Lender of the Lender 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 Lender may reasonably desire. The Grantor will furnish
to the Lender promptly upon request and in the form and content specified by the
Lender, schedules of Equipment and its locations and other data concerning the
Collateral as the Lender 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 Lender, 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
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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 Lender 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 Lender (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 Lender and shall be a part of the Indebtedness.
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 Lender may require the Grantor to establish a cash collateral
account (the "Collateral Account") in the name and under the control of the
Lender at the Lender or a bank satisfactory to the Lender, which shall be
subject to access and withdrawal by the Lender 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.
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Funds in the Collateral Account are and shall be subject to a security interest
in favor of the Lender to secure the Indebtedness, and the Lender 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 Indebtedness in such
order as determined by the Lender, but subject to Lender's agreement in Section
2.2 with respect to Other Revenues.
Section 5.2 General Authority. The Grantor hereby irrevocably
appoints the Lender its agent and attorney in fact, with full power of
substitution, in the name of the Grantor or the Lender, for the sole use and
benefit of the Lender, 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 Lender, 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,
(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 Indebtedness 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 Lender. Upon the occurrence
of an Event of Default, and at any time thereafter, the Grantor upon request of
the Lender will promptly notify (and the Grantor hereby authorizes the Lender so
to notify) each account debtor in respect of any Account or General Intangible
that such Collateral has been assigned to the Lender hereunder, and that any
payments due or to become due in respect of such Collateral are to be made
directly to the Lender or its designee, and Lender 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 Lender 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 Lender may, without being
required to give any notice, except as herein provided or as may be
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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 Lender may deem satisfactory. The Lender 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 Lender 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 Indebtedness, even if the Lender accepts the
first offer received and does not offer such Collateral to more than one
offeree. The Lender 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 Lender deems necessary
or advisable in order that any such sale may be made in compliance with law.
Upon any such sale the Lender 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 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 Lender 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 Lender may determine. The Lender shall
not be obligated to make any such sale pursuant to any such notice. The Lender
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 Lender until the selling price is paid by the purchaser thereof,
but the Lender 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 Lender 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 Lender, 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 Lender may apply for and
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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 Indebtedness, or the existence of any waste to the Collateral. In the
event that the Lender 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 Lender may (i) require
the Grantor to, and the Grantor agrees that it will, at its expense and upon the
request of the Lender, forthwith assemble all or any part of the Collateral as
directed by the Lender and make it available at a place designated by the Lender
which is, in its opinion, reasonably convenient to the Lender and the Grantor,
whether at the premises of the Grantor or otherwise, and Lender 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, 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 Lender 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 Lender. Beyond the exercise
of reasonable care in the custody thereof, the Lender 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 Lender 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 Lender in good faith. The
Grantor agrees that the Lender shall not be obligated to preserve rights against
prior parties obligated on any instruments.
Section 5.8 Appointment of Lender. At any time or times, in
order to comply with any legal requirement in any jurisdiction, the Lender 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 Lender may, but shall not be required to, effect such
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compliance on behalf of the Grantor, and the Grantor shall reimburse the Lender
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 Lender 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 Lender therefor on demand. All sums so paid or incurred by the
Lender 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 Lender 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 Indebtedness plus one (1%) percent, be
additional Indebtedness hereunder and Grantor agrees to pay all of the foregoing
sums promptly on demand.
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 Lender 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 Lender: Hibernia National Bank
X.X. Xxx 00000 Xxx Xxxxxxx, XX 00000
or
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Attention: Manager, Energy Maritime Department
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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
Lender, its officers, employees, consultants or agents, nor any failure or delay
by the Lender 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
Lender 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.
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 Indebtedness, this Agreement shall terminate, and the Lender
shall pay to the Grantor all amounts then remaining in the possession of the
Lender from collections on or proceeds of the Collateral. Upon request of the
Grantor, the Lender 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 Lender and its
successors and assigns.
(b) This Agreement is for the benefit of the Lender and for
such other Person or Persons as may from time to time become or be the holders
of any of the Indebtedness, and
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this Agreement shall be transferrable and negotiable, with the same force and
effect and to the same extent as the Indebtedness 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.
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: HIBERNIA NATIONAL BANK
By: /s/ H. Xxxxxxx Xxxxxxxx XX
------------------------------
Name: H. Xxxxxxx Xxxxxxxx XX
Title: Vice President
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