SECOND LIEN GUARANTEE AND COLLATERAL AGREEMENT Dated as of November 15, 2005 made by Parallel Petroleum Corporation, Parallel, L.P. and each of the other Obligors (as defined herein) in favor of BNP Paribas, as Administrative Agent
Exhibit 10.25
SECOND LIEN GUARANTEE AND COLLATERAL AGREEMENT
Dated as of
November 15, 2005
November 15, 2005
made by
Parallel Petroleum Corporation,
Parallel, L.P.
Parallel, L.P.
and
each of the other Obligors (as defined herein)
in favor of
BNP Paribas,
as Administrative Agent
as Administrative Agent
ALL LIENS AND RIGHTS GRANTED BY THIS INSTRUMENT SHALL, TO THE EXTENT SET FORTH IN THAT CERTAIN
INTERCREDITOR AND SUBORDINATION AGREEMENT DATED NOVEMBER 15, 2005 BY AND AMONG PARALLEL PETROLEUM
CORPORATION, PARALLEL, L.P., PARALLEL, L.L.C., BNP PARIBAS, AS THE SUBORDINATE ADMINISTRATIVE AGENT
AND CITIBANK, TEXAS, N.A., AS THE SENIOR ADMINISTRATIVE AGENT, BE SUBORDINATE AND JUNIOR TO ALL
LIENS AND RIGHTS GRANTED BY OBLIGOR TO SECURE THE SENIOR INDEBTEDNESS REGARDLESS OF THE RELATIVE
PRIORITY OF SUCH LIENS, THE PROVISIONS OF WHICH AGREEMENT BEING INCORPORATED HEREIN AND BY THIS
REFERENCE BEING MADE A PART HEREOF.
TABLE OF CONTENTS
| Page | ||||||||
| ARTICLE I Definitions | 1 | |||||||
| Section 1.01 | Definitions | 1 | ||||||
| Section 1.02 | Other Definitional Provisions | 3 | ||||||
| Section 1.03 | Rules of Interpretation | 4 | ||||||
| ARTICLE II Guarantee | 4 | |||||||
| Section 2.01 | Guarantee | 4 | ||||||
| Section 2.02 | Right of Contribution | 4 | ||||||
| Section 2.03 | No Subrogation Amendments, Etc. with respect to the Borrower | 5 | ||||||
| Section 2.04 | Obligations | 5 | ||||||
| Section 2.05 | Waivers | 6 | ||||||
| Section 2.06 | Guarantee Absolute and Unconditional | 6 | ||||||
| Section 2.07 | Reinstatement | 7 | ||||||
| Section 2.08 | Payments | 8 | ||||||
| ARTICLE III Grant of Security Interest | 8 | |||||||
| Section 3.01 | Grant of Security Interest | 8 | ||||||
| Section 3.02 | Transfer of Pledged Securities | 8 | ||||||
| ARTICLE IV Representations and Warranties | 8 | |||||||
| Section 4.01 | Representations in Credit Agreement | 8 | ||||||
| Section 4.02 | Title; No Other Liens | 9 | ||||||
| Section 4.03 | Perfected Priority Liens | 9 | ||||||
| Section 4.04 | Obligor Information | 9 | ||||||
| Section 4.05 | Pledged Securities | 9 | ||||||
| Section 4.06 | Benefit to the Guarantor | 10 | ||||||
| Section 4.07 | Solvency | 10 | ||||||
| ARTICLE V Covenants | 10 | |||||||
| Section 5.01 | Covenants in Credit Agreement Maintenance of Perfected Security Interest; | 10 | ||||||
| Section 5.02 | Further Documentation | 10 | ||||||
| Section 5.03 | Changes in Locations, Name, Etc | 11 | ||||||
| Section 5.04 | Pledged Securities | 11 | ||||||
| ARTICLE VI Remedial Provisions | 13 | |||||||
| Section 6.01 | Code and Other Remedies | 13 | ||||||
| Section 6.02 | Pledged Securities | 14 | ||||||
| Section 6.03 | Registration Rights | 16 | ||||||
| Section 6.04 | Private Sales of Pledged Securities | 16 | ||||||
| Section 6.05 | Waiver; Deficiency | 17 | ||||||
| Section 6.06 | Non-Judicial Enforcement | 17 | ||||||
| ARTICLE VII The Administrative Agent | 17 | |||||||
| Section 7.01 | Administrative Agent's Appointment as Attorney-in-Fact, Etc | 17 | ||||||
| Section 7.02 | Duty of Administrative Agent | 19 | ||||||
| Section 7.03 | Filing of Financing Statements | 19 | ||||||
| Section 7.04 | Authority of Administrative Agent | 20 | ||||||
| ARTICLE VIII Subordination of Indebtedness | 20 | |||||||
| Section 8.01 | Subordination of All Obligor Claims | 20 | ||||||
- i -
| Page | ||||||||
| Section 8.02 | Claims in Bankruptcy | 20 | ||||||
| Section 8.03 | Payments Held in Trust | 21 | ||||||
| Section 8.04 | Liens Subordinate | 21 | ||||||
| Section 8.05 | Notation of Records | 21 | ||||||
| ARTICLE IX Miscellaneous | 21 | |||||||
| Section 9.01 | Waiver | 21 | ||||||
| Section 9.02 | Notices | 21 | ||||||
| Section 9.03 | Payment of Expenses, Indemnities, Etc | 21 | ||||||
| Section 9.04 | Amendments in Writing | 22 | ||||||
| Section 9.05 | Successors and Assigns | 22 | ||||||
| Section 9.06 | Survival; Revival; Reinstatement | 22 | ||||||
| Section 9.07 | Counterparts; Integration; Effectiveness | 23 | ||||||
| Section 9.08 | Severability | 23 | ||||||
| Section 9.09 | Set-Off | 23 | ||||||
| Section 9.10 | Governing Law; Submission to Jurisdiction | 24 | ||||||
| Section 9.11 | Headings | 25 | ||||||
| Section 9.12 | Acknowledgments | 25 | ||||||
| Section 9.13 | Additional Obligors and Pledgors | 26 | ||||||
| Section 9.14 | Releases | 26 | ||||||
| Section 9.15 | Acceptance | 27 | ||||||
| Section 9.16 | Intercreditor Agreement | 27 | ||||||
ANNEXES:
| I Form of Assumption Agreement | ||
| II Form of Supplement | ||
EXHIBITS:
| Exhibit A Form of Acknowledgment and Consent |
SCHEDULES:
| 1 | Notice Addresses of Obligors | |
| 2 | Description of Pledged Securities | |
| 3 | Filings and Other Actions Required to Perfect Security Interests | |
| 4 | Location of Jurisdiction of Organization and Chief Executive Office |
- ii -
This SECOND LIEN GUARANTEE AND COLLATERAL AGREEMENT is dated as of November 15, 2005 made by
Parallel Petroleum Corporation, a Delaware Corporation (“PPC”), Parallel, L.P., a Texas
limited partnership (“PLP” and with PPC, the “Borrowers”), and each of the
signatories hereto (the Borrowers and each of the signatories hereto, together with any other
Subsidiary of the Borrowers that becomes a party hereto from time to time after the date hereof,
the “Obligors”), in favor of BNP Paribas, as administrative agent (in such capacity,
together with its successors in such capacity, the “Administrative Agent”), for the banks
and other financial institutions (the “Lenders”) from time to time parties to the Second
Lien Term Loan Agreement dated of even date herewith (as amended, supplemented or otherwise
modified from time to time, the “Credit Agreement”), among the Borrowers, the Lenders, the
Administrative Agent, and the other Agents party thereto.
R E C I T A L S
A. The Borrowers, the Administrative Agent and other financial institutions named and defined
therein as lenders and agents, are parties to that certain Second Lien Term Loan Agreement dated as
of November 15, 2005, pursuant to which such lenders will provide certain loans to the Borrowers
(as heretofore amended, modified or supplemented, the “Credit Agreement”).
B. It is a condition precedent to the effectiveness of the Credit Agreement that the parties
hereto enter into this Second Lien Guarantee and Collateral Agreement, subject to the terms and
conditions of this Agreement.
C. NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained
and of the loans hereinafter referred to, the parties hereto agree as follows:
ARTICLE I
Definitions
Definitions
Section 1.01 Definitions.
(a) Unless otherwise defined herein, terms defined in the Credit Agreement and used herein
have the meanings given to them in the Credit Agreement, and all uncapitalized terms which are
defined in the UCC on the date hereof are used herein as so defined.
(b) The following terms have the following meanings:
“Agreement” means this Second Lien Guarantee and Collateral Agreement, as the same may
be amended, supplemented or otherwise modified from time to time.
“Bankruptcy Code” means Xxxxx 00, Xxxxxx Xxxxxx Code, as amended from time to time.
“Borrower Obligations” means the collective reference to the payment and performance
when due of all indebtedness, liabilities, obligations and undertakings of the Borrowers and their
Subsidiaries (including, without limitation, all Indebtedness) of every kind or description arising
out of or outstanding under, advanced or issued pursuant, or evidenced by, the Guaranteed
Documents, including, without limitation, the unpaid principal of and interest on the Loans and
all
other obligations and liabilities of the Borrowers and their Subsidiaries (including, without
limitation, interest accruing at the then applicable rate provided in the Credit Agreement after
the maturity of the Loans and interest accruing after the filing of any petition in bankruptcy, or
the commencement of any insolvency, reorganization or like proceeding, relating to the Borrowers,
whether or not a claim for post-filing or post-petition interest is allowed in such proceeding) to
the Guaranteed Creditors, whether direct or indirect, absolute or contingent, due or to become due,
or now existing or hereafter incurred, arising out of or outstanding under, advanced or issued
pursuant, or evidenced by, the Guaranteed Documents, whether on account of principal, interest,
premium, reimbursement obligations, payments in respect of an early termination date, fees,
indemnities, costs, expenses or otherwise (including, without limitation, all costs, fees and
disbursements of counsel to the Guaranteed Creditors that are required to be paid by the Borrowers
pursuant to the terms of any Guaranteed Documents).
“Collateral” has the meaning assigned such term in Section 3.01.
“Guaranteed Creditors” means the collective reference to the Administrative Agent and
the Lenders.
“Guaranteed Documents” means the collective reference to the Credit Agreement, the
other Loan Documents, and any other document made, delivered or given in connection with any of the
foregoing.
“Guarantor Obligations” means with respect to any Guarantor, the collective reference
to (a) the Borrower Obligations and (b) the payment and performance when due of all indebtedness,
liabilities, obligations and undertakings of such Guarantor of every kind or description, whether
direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter
incurred, arising out of or outstanding under, advanced or issued pursuant, or evidenced by, any
Guaranteed Document to which such Guarantor is a party, in each case, whether on account of
principal, interest, guarantee obligations, reimbursement obligations, payments in respect of an
early termination date, fees, indemnities, costs, expenses or otherwise (including, without
limitation, all fees and disbursements of counsel to any Guaranteed Creditor under any Guaranteed
Document).
“Guarantors” means the collective reference to each Obligor other than the Borrowers.
“Issuers” means the collective reference to each issuer of a Pledged Security.
“LLC” means, with respect to each Pledgor, each limited liability company described or
referred to in Schedule 2 in which such Pledgor has an interest.
“LLC Agreement” means each operating agreement relating to an LLC, as each agreement
has heretofore been, and may hereafter be, amended, restated, supplemented or otherwise modified
from time to time.
“Obligations” means: (a) in the case of the Borrowers, the Borrower Obligations and
(b) in the case of each Guarantor, its Guarantor Obligations.
“Obligor Claims” has the meaning assigned to such term in Section 8.01.
- 2 -
“Partnership” means, with respect to each Pledgor, each partnership described or
referred to in Schedule 2 in which such Pledgor has an interest.
“Partnership Agreement” means each partnership agreement governing a Partnership, as
each such agreement has heretofore been, and may hereafter be, amended, restated, supplemented or
otherwise modified.
“Pledged LLC Interests” means, with respect to each Pledgor, all right, title and
interest of such Pledgor as a member of each LLC and all right, title and interest of any Pledgor
in, to and under each LLC Agreement.
“Pledged Partnership Interests” means, with respect to each Pledgor, all right, title
and interest of such Pledgor as a limited or general partner in all Partnerships and all right,
title and interest of any Pledgor in, to and under the Partnership Agreements.
“Pledged Securities” means: (a) the Equity Interests described or referred to in
Schedule 2 (as the same may be supplemented from time to time pursuant to a Supplement in
substantially the form of Annex II); and (b) (i) the certificates or instruments, if any,
representing such Equity Interests, (ii) all dividends (cash, Equity Interests or otherwise), cash,
instruments, rights to subscribe, purchase or sell and all other rights and Property from time to
time received, receivable or otherwise distributed in respect of or in exchange for any or all of
such securities, (iii) all replacements, additions to and substitutions for any of the Property
referred to in this definition, including, without limitation, claims against third parties, (iv)
the proceeds, interest, profits and other income of or on any of the Property referred to in this
definition, (v) all security entitlements in respect of any of the foregoing, if any and (vi) all
books and records relating to any of the Property referred to in this definition.
“Pledgor” means any Obligor that now or hereafter pledges Pledged Securities
hereunder.
“Proceeds” means all “proceeds” as such term is defined in Section 9-102(65) of the
Uniform Commercial Code in effect in the State of Texas on the date hereof and, in any event, shall
include, without limitation, all dividends or other income from the Pledged Securities, collections
thereon or distributions or payments with respect thereto.
“Securities Act” means the Securities Act of 1933, as amended.
“UCC” means the Uniform Commercial Code as from time to time in effect in the State of
Texas; provided, however, that, in the event that, by reason of mandatory provisions of law, any of
the attachment, perfection or priority of the Administrative Agent’s and the Guaranteed Creditors’
security interest in any Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of Texas, the term “UCC” shall mean the Uniform Commercial Code
as in effect in such other jurisdiction for purposes of the provisions hereof relating to such
attachment, perfection, the effect thereof or priority and for purposes of definitions related to
such provisions.
Section 1.02 Other Definitional Provisions.
Where the context requires, terms relating to the Collateral or any part thereof, when used in
relation to a Pledgor, refer to such Pledgor’s Collateral or the relevant part thereof.
- 3 -
Section 1.03 Rules of Interpretation. Section 1.04 and Section 1.05 of the Credit Agreement are hereby
incorporated herein by reference and shall apply to this Agreement, mutatis mutandis.
ARTICLE II
Guarantee
Guarantee
Section 2.01 Guarantee.
(a) Each of the Guarantors hereby jointly and severally, unconditionally and irrevocably,
guarantees to the Guaranteed Creditors and each of their respective successors, indorsees,
transferees and assigns, the prompt and complete payment in cash and performance by the Borrowers
when due (whether at the stated maturity, by acceleration or otherwise) of the Borrower
Obligations. This is a guarantee of payment and not collection and the liability of each Guarantor
is primary and not secondary.
(b) Anything herein or in any other Guaranteed Document to the contrary notwithstanding, the
maximum liability of each Guarantor hereunder and under the other Guaranteed Documents shall in no
event exceed the amount which can be guaranteed by such Guarantor under applicable federal and
state laws relating to the insolvency of debtors (after giving effect to the right of contribution
established in Section 2.02).
(c) Each Guarantor agrees that the Borrower Obligations may at any time and from time to time
exceed the amount of the liability of such Guarantor hereunder without impairing the guarantee
contained in this ARTICLE II or affecting the rights and remedies of any Guaranteed Creditor
hereunder.
(d) Each Guarantor agrees that if the maturity of the Borrower Obligations is accelerated by
bankruptcy or otherwise, such maturity shall also be deemed accelerated for the purpose of this
guarantee without demand or notice to such Guarantor. The guarantee contained in this ARTICLE II
shall remain in full force and effect until all the Borrower Obligations shall have been satisfied
by payment in full in cash.
(e) No payment made by any Obligor, any other guarantor or any other Person or received or
collected by any Guaranteed Creditor from any Obligor, any other guarantor or any other Person by
virtue of any action or proceeding or any set-off or appropriation or application at any time or
from time to time in reduction of or in payment of the Borrower Obligations shall be deemed to
modify, reduce, release or otherwise affect the liability of any Guarantor hereunder which shall,
notwithstanding any such payment (other than any payment made by such Guarantor in respect of the
Borrower Obligations or any payment received or collected from such Guarantor in respect of the
Borrower Obligations), remain liable
for the Borrower Obligations up to the maximum liability of such Guarantor hereunder until the
Borrower Obligations are paid in full in cash.
Section 2.02 Right of Contribution. Each Guarantor hereby agrees that to the extent that a Guarantor
shall have paid more than its proportionate share of any payment made hereunder, such Guarantor
shall be entitled to seek and receive contribution from and against any other Guarantor hereunder
which has not paid its proportionate share of such payment. Each
- 4 -
Guarantor’s right of contribution
shall be subject to the terms and conditions of Section 2.03. The provisions of this Section 2.02
shall in no respect limit the obligations and liabilities of any Guarantor to the Guaranteed
Creditors, and each Guarantor shall remain liable to the Guaranteed Creditors for the full amount
guaranteed by such Guarantor hereunder.
Section 2.03 No Subrogation. Notwithstanding any payment made by any Guarantor hereunder or any set-off
or application of funds of any Guarantor by any Guaranteed Creditor, no Guarantor shall be entitled
to be subrogated to any of the rights of any Guaranteed Creditor against either Borrower or any
other Guarantor or any collateral security or guarantee or right of offset held by any Guaranteed
Creditor for the payment of the Borrower Obligations, nor shall any Guarantor seek or be entitled
to seek any indemnity, exoneration, participation, contribution or reimbursement from either
Borrower or any other Guarantor in respect of payments made by such Guarantor hereunder, until all
amounts owing to the Guaranteed Creditors on account of the Borrower Obligations are irrevocably
and indefeasibly paid in full in cash. If any amount shall be paid to any Guarantor on account of
such subrogation rights at any time when all of the Borrower Obligations shall not have been
irrevocably and indefeasibly paid in full in cash, such amount shall be held by such Guarantor in
trust for the Guaranteed Creditors, and shall, forthwith upon receipt by such Guarantor, be turned
over to the Administrative Agent in the exact form received by such Guarantor (duly indorsed by
such Guarantor to the Administrative Agent, if required), to be applied against the Borrower
Obligations, whether matured or unmatured, in accordance with Section 10.02(c) of the Credit
Agreement.
Section 2.04 Amendments, Etc. with respect to the Borrower Obligations. Each Guarantor shall remain
obligated hereunder, and such Guarantor’s obligations hereunder shall not be released, discharged
or otherwise affected, notwithstanding that, without any reservation of rights against any
Guarantor and without notice to, demand upon or further assent by any Guarantor (which notice,
demand and assent requirements are hereby expressly waived by such Guarantor), (a) any demand for
payment of any of the Borrower Obligations made by any Guaranteed Creditor may be rescinded by such
Guaranteed Creditor or otherwise and any of the Borrower Obligations continued; (b) the Borrower
Obligations, the liability of any other Person upon or for any part thereof or any collateral
security or guarantee therefor or right of offset with respect thereto, may, from time to time, in
whole or in part, be renewed, extended, amended, modified, accelerated, compromised, waived,
surrendered or released by, or any indulgence or forbearance in respect thereof granted by, any
Guaranteed Creditor; (c) any Guaranteed Document may be amended, modified, supplemented or
terminated, in whole or in
part, as the Guaranteed Creditors may deem advisable from time to time; (d) any collateral
security, guarantee or right of offset at any time held by any Guaranteed Creditor for the payment
of the Borrower Obligations may be sold, exchanged, waived, surrendered or released; (e) any
additional guarantors, makers or endorsers of the Borrower Obligations may from time to time be
obligated on the Borrower Obligations or any additional security or collateral for the payment and
performance of the Borrower Obligations may from time to time secure the Borrower Obligations; and
(f) any other event shall occur which constitutes a defense or release of sureties generally. No
Guaranteed Creditor shall have any obligation to protect, secure, perfect or insure any Lien at any
time held by it as security for the Borrower Obligations or for the guarantee contained in this
ARTICLE II or any Property subject thereto.
- 5 -
Section 2.05
Waivers. Each Guarantor hereby waives any and all notice of the creation, renewal,
extension or accrual of any of the Borrower Obligations and notice of or proof of reliance by any
Guaranteed Creditor upon the guarantee contained in this ARTICLE II or acceptance of the guarantee
contained in this ARTICLE II; the Borrower Obligations, and any of them, shall conclusively be
deemed to have been created, contracted or incurred, or renewed, extended, amended or waived, in
reliance upon the guarantee contained in this ARTICLE II and no notice of creation of the Borrower
Obligations or any extension of credit already or hereafter contracted by or extended to the
Borrowers need be given to any Guarantor; and all dealings between the Borrowers and any of the
Guarantors, on the one hand, and the Guaranteed Creditors, on the other hand, likewise shall be
conclusively presumed to have been had or consummated in reliance upon the guarantee contained in
this ARTICLE II. Each Guarantor waives diligence, presentment, protest, demand for payment and
notice of default or nonpayment to or upon either Borrower or any of the Guarantors with respect to
the Borrower Obligations.
Section 2.06Guarantee Absolute and Unconditional.
(a) Each Guarantor understands and agrees that the guarantee contained in this ARTICLE II is,
and shall be construed as, a continuing, completed, absolute and unconditional guarantee of
payment, and each Guarantor hereby waives any defense of a surety or guarantor or any other obligor
on any obligations arising in connection with or in respect of any of the following and hereby
agrees that its obligations hereunder shall not be discharged or otherwise affected as a result of,
any of the following:
(i) the invalidity or unenforceability of any Guaranteed Document, any of the Borrower
Obligations or any other collateral security therefor or guarantee or right of offset with respect
thereto at any time or from time to time held by any Guaranteed Creditor;
(ii) any defense, set-off or counterclaim (other than a defense of payment or performance)
which may at any time be available to or be asserted by the Borrowers or any other Person against
any Guaranteed Creditor;
(iii) the insolvency, bankruptcy arrangement, reorganization, adjustment, composition,
liquidation, disability, dissolution or lack of power of either Borrower
or any other Guarantor or any other Person at any time liable for the payment of all or part
of the Obligations, including any discharge of, or bar or stay against collecting, any Obligation
(or any part of them or interest therein) in or as a result of such proceeding;
(iv) any sale, lease or transfer of any or all of the assets of the either Borrower or any
other Guarantor, or any changes in the shareholders of either Borrower or any Guarantor;
(v) any change in the corporate existence (including its constitution, laws, rules,
regulations or power), structure or ownership of any Obligor;
(vi) the fact that any Collateral or Lien contemplated or intended to be given, created or
granted as security for the repayment of the Obligations shall not be properly perfected or
created, or shall prove to be unenforceable or subordinate to any other Lien, it being recognized
and agreed by each of the Guarantors that it is not entering into this Agreement in
- 6 -
reliance on, or
in contemplation of the benefits of, the validity, enforceability, collectability or value of any
of the Collateral for the Obligations;
(vii) the absence of any attempt to collect the Obligations or any part of them from any
Obligor;
(viii) (A) any Guaranteed Creditor’s election, in any proceeding instituted under chapter 11
of the Bankruptcy Code, of the application of Section 1111(b)(2) of the Bankruptcy Code; (B) any
borrowing or grant of a Lien by either Borrower, as debtor-in-possession, or extension of credit,
under Section 364 of the Bankruptcy Code; (C) the disallowance, under Section 502 of the Bankruptcy
Code, of all or any portion of any Guaranteed Creditor’s claim (or claims) for repayment of the
Obligations; (D) any use of cash collateral under Section 363 of the Bankruptcy Code; (E) any
agreement or stipulation as to the provision of adequate protection in any bankruptcy proceeding;
(F) the avoidance of any Lien in favor of the Guaranteed Creditors or any of them for any reason;
or (G) failure by any Guaranteed Creditor to file or enforce a claim against either Borrower or its
estate in any bankruptcy or insolvency case or proceeding; or
(ix) any other circumstance or act whatsoever, including any action or omission of the type
described in Section 2.04 (with or without notice to or knowledge of such Borrower or such
Guarantor), which constitutes, or might be construed to constitute, an equitable or legal discharge
of either Borrower for the Borrower Obligations, or of such Guarantor under the guarantee contained
in this ARTICLE II, in bankruptcy or in any other instance.
(b) When making any demand hereunder or otherwise pursuing its rights and remedies hereunder
against any Guarantor, any Guaranteed Creditor may, but shall be under no obligation to, join or
make a similar demand on or otherwise pursue or exhaust such rights and remedies as it may have
against either Borrower, any other Guarantor or any other Person or against any collateral security
or guarantee for the Borrower Obligations or any right of offset with respect thereto, and any
failure by any Guaranteed Creditor to make any such demand, to pursue such other rights or remedies
or to collect any payments from either Borrower, any other Guarantor or any other Person or to
realize upon any such collateral security or guarantee or to
exercise any such right of offset, or any release of either Borrower, any other Guarantor or
any other Person or any such collateral security, guarantee or right of offset, shall not relieve
any Guarantor of any obligation or liability hereunder, and shall not impair or affect the rights
and remedies, whether express, implied or available as a matter of law, of any Guaranteed Creditor
against any Guarantor. For the purposes hereof “demand” shall include the commencement and
continuance of any legal proceedings.
Section 2.07
Reinstatement. The guarantee contained in this ARTICLE II shall continue to be effective,
or be reinstated, as the case may be, if at any time payment, or any part thereof, of any of the
Borrower Obligations is rescinded or must otherwise be restored or returned by any Guaranteed
Creditor upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of either
Borrower or any Guarantor, or upon or as a result of the appointment of a receiver, intervenor or
conservator of, or trustee or similar officer for, either Borrower or any Guarantor or any
substantial part of its Property, or otherwise, all as though such payments had not been made.
- 7 -
Section 2.08
Payments. Each Guarantor hereby guarantees that payments hereunder will be paid to the
Administrative Agent, for the ratable benefit of the Guaranteed Creditors, without set-off,
deduction or counterclaim in dollars, in immediately available funds, at the offices of the
Administrative Agent specified in Section 12.01 of the Credit Agreement.
ARTICLE III
Grant of Security Interest
Grant of Security Interest
Section 3.01
Grant of Security Interest. Each Pledgor hereby pledges, assigns and transfers to the
Administrative Agent, and hereby grants to the Administrative Agent, for the ratable benefit of the
Guaranteed Creditors, a second lien security interest in all of the following Property now owned or
at any time hereafter acquired by such Pledgor or in which such Pledgor now has or at any time in
the future may acquire any right, title or interest (collectively, the “Collateral”), as
collateral security for the prompt and complete payment and performance when due (whether at the
stated maturity, by acceleration or otherwise) of such Pledgor’s Obligations:
(1) all Pledged Securities;
(2) all books and records pertaining to the Collateral; and
(3) to the extent not otherwise included, all Proceeds and products of any and all of
the foregoing and all collateral security and guarantees given by any Person with respect to
any of the foregoing.
Section 3.02
Transfer of Pledged Securities. Upon termination of all loans and commitments under the Senior Revolving Credit Documents, all
certificates or instruments representing or evidencing the Pledged Securities shall be delivered to
and held pursuant hereto by the Administrative Agent or a Person designated by the Administrative
Agent and shall be in suitable form for transfer by delivery, or shall be accompanied by duly
executed instruments of transfer or assignment in blank, and accompanied by any required transfer
tax stamps to effect the pledge of the Pledged Securities to the Administrative Agent. During the
continuance of an Event of Default, the Administrative Agent shall have the right, at any time in
its discretion and without notice, to transfer to or to register in the name of the Administrative
Agent or any of its nominees any or all of the Pledged Securities, subject only to the revocable
rights specified in Section 6.04. In addition, during the continuance of an Event of Default, the
Administrative Agent shall have the right at any time to exchange certificates or instruments
representing or evidencing Pledged Securities for certificates or instruments of smaller or larger
denominations.
ARTICLE IV
Representations and Warranties
Representations and Warranties
To induce the Administrative Agent and the Lenders to enter into the Credit Agreement, each
Obligor hereby represents and warrants to the Administrative Agent and each Lender that:
Section 4.01
Representations in Credit Agreement. In the case of each Guarantor, the representations
and warranties set forth in Article VII of the Credit Agreement as they relate to such Guarantor or
to the Loan Documents to which such Guarantor is a party are true and correct in all material
respects, provided that each reference in each such representation and warranty to
- 8 -
the Borrowers’
knowledge shall, for the purposes of this Section 4.01, be deemed to be a reference to such
Guarantor’s knowledge.
Section 4.02
Title; No Other Liens. Except for the security interest granted to the Administrative
Agent for the ratable benefit of the Guaranteed Creditors pursuant to this Agreement and except for
Liens permitted under the Credit Agreement, such Pledgor is the record and beneficial owner of its
respective items of the Collateral free and clear of any and all Liens and has the power to
transfer each item of the Collateral in which a Lien is granted by it hereunder, free and clear of
any Lien. No financing statement or other public notice with respect to all or any part of the
Collateral is on file or of record in any public office, except such as have been filed in favor of
the Administrative Agent, for the ratable benefit of the Guaranteed Creditors, pursuant to this
Agreement or the Security Instruments and except for such financing statements or notices relating
to Liens permitted under the Credit Agreement.
Section 4.03 Perfected Priority Liens. The security interests granted pursuant to this Agreement (a)
upon the completion of the filings and the other actions specified on Schedule 3 constitute valid
perfected security interests in all of the Collateral in favor of the Administrative Agent, for the
ratable benefit of the Guaranteed Creditors, as collateral security for such Pledgor’s Obligations,
enforceable in accordance with the terms hereof against all creditors of such Pledgor and any
Persons purporting to purchase any
Collateral from such Pledgor and (b) are prior to all other Liens on the Collateral in existence on
the date hereof except for Liens securing the loans and commitments under the Senior Revolving
Credit Documents.
Section 4.04 Obligor Information. On the date hereof, the correct legal name of such Obligor, all names
and trade names that such Obligor has used in the last five years, such Obligor’s jurisdiction of
organization and each jurisdiction of organization of such Obligor over the last five years,
organizational number, taxpayor identification number, and the location(s) of such Obligor’s chief
executive office or sole place of business over the last five years are specified on Schedule 4.
Section 4.05 Pledged Securities.
(a) The Pledged Securities required to be pledged hereunder and under the Credit Agreement by
such Pledgor are listed in Schedule 2. The shares of Pledged Securities pledged by such Pledgor
hereunder constitute all the issued and outstanding shares of all classes of the Equity Interests
of each Issuer owned by such Pledgor (or in the case of any Issuer that is a Foreign Subsidiary,
65% of all the issued and outstanding shares of all classes of the Equity Interests of such
Issuer). All the shares of the Pledged Securities have been duly and validly issued and are fully
paid and nonassessable; and such Pledgor is the record and beneficial owner of, has good title to,
and has the power to transfer, the Pledged Securities pledged by it hereunder, free of any and all
Liens or options in favor of, or claims of, any other Person, except the security interest created
by the Liens securing the loans and commitments under the Senior Revolving Credit Documents and
this Agreement.
(b) There are no restrictions on transfer (that have not been waived or otherwise consented
to) in the applicable LLC Agreement governing any Pledged LLC Interest and the applicable
Partnership Agreement governing any Pledged Partnership Interest or any
- 9 -
other agreement relating
thereto which would limit or restrict (i) the grant of a security interest in the Pledged LLC
Interests and the Pledged Partnership Interests, (ii) the perfection of such security interest or
(iii) the exercise of remedies in respect of such perfected security interest in the Pledged LLC
Interests and the Pledged Partnership Interests, in each case, as contemplated by this Agreement,
except for such restrictions set forth in the Senior Revolving Credit Documents. Upon the exercise
of remedies in respect of the Pledged LLC Interests and the Pledged Partnership Interests, a
transferee or assignee of a membership interest or partnership interest, as the case may be, of
such LLC or Partnership, as the case may be, shall become a member or partner, as the case may be,
of such LLC or Partnership, as the case may be, entitled to participate in the management thereof
and, upon the transfer of the entire interest of such Pledgor, such Pledgor ceases to be a member
or partner, as the case may be.
Section 4.06 Benefit to the Guarantor. The Borrowers are members of an affiliated group of companies
that includes each Guarantor and the Borrowers and the other Guarantors are engaged in related
businesses. Each Guarantor is a Subsidiary of one of the Borrowers and its guarantee and surety
obligations pursuant to this
Agreement reasonably may be expected to benefit, directly or indirectly, it; and it has determined
that this Agreement is necessary and convenient to the conduct, promotion and attainment of the
business of such Guarantor and the Borrowers.
Section 4.07 Solvency. Each Obligor (a) is not insolvent as of the date hereof and will not be rendered
insolvent as a result of this Agreement (after giving effect to Section 2.02), (b) is not engaged
in business or a transaction, or about to engage in a business or a transaction, for which any
Property remaining with it constitute unreasonably small capital, and (c) does not intend to incur,
or believe it will incur, Debt that will be beyond its ability to pay as such Debt matures.
ARTICLE V
Covenants
Covenants
Each Obligor covenants and agrees with the Administrative Agent and the Lenders that, from and
after the date of this Agreement until the Borrower Obligations shall have been paid in full in
cash:
Section 5.01 Covenants in Credit Agreement. In the case of each Guarantor, such Guarantor shall take,
or shall refrain from taking, as the case may be, each action that is necessary to be taken or not
taken, as the case may be, so that no Default is caused by the failure to take such action or to
refrain from taking such action by such Guarantor or any of its Subsidiaries.
Section 5.02 Maintenance of Perfected Security Interest; Further Documentation. In the case of each
Pledgor, such Pledgor agrees that:
(a) it shall maintain the security interest created by this Agreement as a perfected security
interest having at least the priority described in Section 4.03 and shall defend such security
interest against the claims and demands of all Persons whomsoever;
- 10 -
(b) it will furnish to the Administrative Agent and the Lenders from time to time statements
and schedules further identifying and describing the Collateral and such other reports in
connection with the Collateral as the Administrative Agent may reasonably request, all in
reasonable detail;
(c) at any time and from time to time, upon the written request of the Administrative Agent,
and at the sole expense of such Pledgor, it will promptly and duly execute and deliver, and have
recorded, such further instruments and documents and take such further actions as the
Administrative Agent may reasonably deem necessary for the purpose of obtaining or preserving the
full benefits of this Agreement and of the rights and powers herein granted, including, without
limitation, the delivery of certificated securities (subject to Section 3.02) and the filing of any
financing or continuation statements under the UCC (or other similar laws) in effect in any
jurisdiction with respect to the security interests created hereby.
Section 5.03 Changes in Locations, Name, Etc. Such Obligor recognizes that financing
statements pertaining to the Collateral have been or may be filed where such Obligor maintains any
Collateral or is organized. Without limitation of Section 8.01(n) of the Credit Agreement or any
other covenant herein, such Obligor will not cause or permit any change in its (a) corporate name
or in any trade name used to identify it in the conduct of its business or in the ownership of its
Properties, (b) the location of its chief executive office or principal place of business, (c) its
identity or corporate structure or in the jurisdiction in which it is incorporated or formed, (d)
its jurisdiction of organization or its organizational identification number in such jurisdiction
of organization or (e) its federal taxpayer identification number, unless, in each case, such
Obligor shall have first (i) notified the Administrative Agent of such change at least thirty (30)
days prior to the effective date of such change, and (ii) taken all action reasonably requested by
the Administrative Agent for the purpose of maintaining the perfection and priority of the
Administrative Agent’s security interests under this Agreement. In any notice furnished pursuant
to this Section 5.03, such Obligor will expressly state in a conspicuous manner that the notice is
required by this Agreement and contains facts that may require additional filings of financing
statements or other notices for the purposes of continuing perfection of the Administrative Agent’s
security interest in the Collateral. At the request of the Administrative Agent, on or prior to
the occurrence of such event, the Borrowers will provide to the Administrative Agent and the
Lenders an opinion of counsel, in form and substance reasonably satisfactory to the Administrative
Agent, to the effect that such event will not impair the validity of the security interests
hereunder, the perfection and priority thereof, the enforceability of the Loan Documents, and such
other matters as may be reasonably requested by the Administrative Agent.
Section 5.04 Pledged Securities. Upon the termination of all loans and commitments under
the Senior Revolving Credit Documents, each Pledgor agrees that:
(a) if such Pledgor shall become entitled to receive or shall receive any stock certificate
(including, without limitation, any certificate representing a stock dividend or a distribution in
connection with any reclassification, increase or reduction of capital or any certificate issued in
connection with any reorganization), option or rights in respect of the Equity Interests of any
Issuer, whether in addition to, in substitution of, as a conversion of, or in exchange for, any
shares of the Pledged Securities, or otherwise in respect thereof, such Pledgor shall accept the
same as the agent of the Guaranteed Creditors, hold the same in trust for the
- 11 -
Guaranteed Creditors,
segregated from other Property of such Pledgor, and deliver the same forthwith to the
Administrative Agent in the exact form received, duly indorsed by such Pledgor to the
Administrative Agent, if required, together with an undated stock power covering such certificate
duly executed in blank by such Pledgor and with, if the Administrative Agent so requests, signature
guaranteed, to be held by the Administrative Agent, subject to the terms hereof, as additional
collateral security for the Obligations;
(b) without the prior written consent of the Administrative Agent, such Pledgor will not (i)
unless otherwise expressly permitted hereby or under the other Loan Documents, vote to enable, or
take any other action to permit, any Issuer to issue any Equity
Interests of any nature or to issue any other securities convertible into or granting the
right to purchase or exchange for any Equity Interests of any nature of any Issuer, (ii) sell,
assign, transfer, exchange, or otherwise dispose of, or grant any option with respect to, the
Pledged Securities or Proceeds thereof (except pursuant to a transaction expressly permitted by the
Credit Agreement), (iii) create, incur or permit to exist any Lien or option in favor of, or any
claim of any Person with respect to, any of the Pledged Securities or Proceeds thereof, or any
interest therein, except for Liens securing the loans and commitments under the Senior Revolving
Credit Documents and the security interests created by this Agreement or (iv) enter into any
agreement or undertaking restricting the right or ability of such Pledgor or the Administrative
Agent to sell, assign or transfer any of the Pledged Securities or Proceeds thereof;
(c) in the case of each Pledgor that is an Issuer, such Issuer agrees that (i) it will be
bound by the terms of this Agreement relating to the Pledged Securities issued by it and will
comply with such terms insofar as such terms are applicable to it, (ii) it will notify the
Administrative Agent promptly in writing of the occurrence of any of the events described in
Section 5.04(a) with respect to the Pledged Securities issued by it and (iii) the terms of Sections
Section 6.02(a) and Section 6.04 shall apply to it, mutatis mutandis, with respect to all actions
that may be required of it pursuant to Section 6.02(d) or Section 6.04 with respect to the Pledged
Securities issued by it. In the case of any Issuer that is not a Pledgor hereunder, such Pledgor
shall promptly cause such Issuer to execute and deliver to the Administrative Agent an
Acknowledgment and Consent in substantially the form of Exhibit A;
(d) in the case of each Pledgor that is a partner in a Partnership, such Pledgor hereby
consents to the extent required by the applicable Partnership Agreement to the pledge by each other
Pledgor, pursuant to the terms hereof, of the Pledged Partnership Interests in such Partnership and
to the transfer of such Pledged Partnership Interests to the Administrative Agent or its nominee
and to the substitution of the Administrative Agent or its nominee as a substituted partner in such
Partnership with all the rights, powers and duties of a general partner or a limited partner, as
the case may be. In the case of each Pledgor that is a member of an LLC, such Pledgor hereby
consents to the extent required by the applicable LLC Agreement to the pledge by each other
Pledgor, pursuant to the terms hereof, of the Pledged LLC Interests in such LLC and to the transfer
of such Pledged LLC Interests to the Administrative Agent or its nominee and to the substitution of
the Administrative Agent or its nominee as a substituted member of the LLC with all the rights,
powers and duties of a member of such LLC;
(e) such Pledgor shall not agree to any amendment of a Partnership Agreement or LLC Agreement
that in any way adversely affects the perfection of the security
- 12 -
interest of the Administrative
Agent in the Pledged Partnership Interests or Pledged LLC Interests pledged by such Pledgor
hereunder, including any amendment electing to treat the membership interest or partnership
interest of such Pledgor as a security under Section 8-103 of the UCC;
(f) such Pledgor shall furnish to the Administrative Agent such stock powers and other
instruments as may be required by the Administrative Agent to assure the transferability of the
Pledged Securities when and as often as may be reasonably requested by the Administrative Agent;
and
(g) the Pledged Securities will at all times constitute not less than 100% of the Equity
Interests of the Issuer thereof owned by any Pledgor (or in the case of any Issuer owned by any
Pledgor that is a Foreign Subsidiary, not less than 65% of the Equity Interests of such Issuer).
Such Pledgor will not, to the extent available to do so under the terms of the appropriate
governing instruments, permit any Issuer of any of the Pledged Securities to issue any new shares
of any class of Equity Interests of such Issuer without the prior written consent of the
Administrative Agent.
ARTICLE VI
Remedial Provisions
Remedial Provisions
Section 6.01 Code and Other Remedies.
(a) Upon the occurrence and during the continuance of an Event of Default, the Administrative
Agent, on behalf of the Guaranteed Creditors, may exercise, in addition to all other rights and
remedies granted to them in this Agreement, the other Loan Documents and in any other instrument or
agreement securing, evidencing or relating to the Obligations, all rights and remedies of a secured
party under the UCC or any other applicable law or otherwise available at law or equity. Without
limiting the generality of the foregoing, the Administrative Agent, without demand of performance
or other demand, presentment, protest, advertisement or notice of any kind (except any notice
required by law referred to below) to or upon any Pledgor or any other Person (all and each of
which demands, defenses, advertisements and notices are hereby waived), may in such circumstances
forthwith collect, receive, appropriate and realize upon the Collateral, or any part thereof,
and/or may forthwith sell, lease, assign, give option or options to purchase, or otherwise dispose
of and deliver the Collateral or any part thereof (or contract to do any of the foregoing), in one
or more parcels at public or private sale or sales, at any exchange, broker’s board or office of
any Guaranteed Creditor or elsewhere upon such terms and conditions as it may deem advisable and at
such prices as it may deem best, for cash or on credit or for future delivery without assumption of
any credit risk. Any Guaranteed Creditor shall have the right upon any such public sale or sales,
and, to the extent permitted by law, upon any such private sale or sales, to purchase the whole or
any part of the Collateral so sold, free of any right or equity of redemption in any Pledgor, which
right or equity is hereby waived and released. If applicable to any particular item of Collateral,
each Pledgor further agrees, at the Administrative Agent’s request, to assemble the Collateral and
make it available to the Administrative Agent at places which the Administrative Agent shall
reasonably select, whether at such Pledgor’s premises or elsewhere. Any such sale or transfer by
the Administrative Agent either to itself or to any other Person shall be absolutely free from any
claim of right by Pledgor,
- 13 -
including any equity or right of redemption, stay or appraisal which
Pledgor has or may have under any rule of law, regulation or statute now existing or hereafter
adopted (and such Pledgor hereby waives any rights it may have in respect thereof). Upon any such
sale or transfer, the Administrative Agent shall have the right to deliver, assign and transfer to
the purchaser or transferee thereof the Collateral so sold or transferred. The Administrative
Agent shall apply the net proceeds of any action taken by it pursuant to this Section 6.01, after
deducting all reasonable costs and expenses of every kind incurred in connection therewith or
incidental to the care or safekeeping of any of the Collateral or in any way relating to the
Collateral or the rights of the
Administrative Agent and the Guaranteed Creditors hereunder, including, without limitation,
reasonable attorneys’ fees and disbursements, to the payment in whole or in part of the
Obligations, in accordance with Section 10.02(c) of the Credit Agreement, and only after such
application and after the payment by the Administrative Agent of any other amount required by any
provision of law, including, without limitation, Section 9-615 of the UCC, need the Administrative
Agent account for the surplus, if any, to any Pledgor. To the extent permitted by applicable law,
each Pledgor waives all claims, damages and demands it may acquire against the Administrative Agent
or any Guaranteed Creditor arising out of the exercise by them of any rights hereunder. If any
notice of a proposed sale or other disposition of Collateral shall be required by law, such notice
shall be deemed reasonable and proper if given at least 10 days before such sale or other
disposition.
(b) In the event that the Administrative Agent elects not to sell the Collateral, the
Administrative Agent retains its rights to dispose of or utilize the Collateral or any part or
parts thereof in any manner authorized or permitted by law or in equity, and to apply the proceeds
of the same towards payment of the Obligations. Each and every method of disposition of the
Collateral described in this Agreement shall constitute disposition in a commercially reasonable
manner.
(c) The Administrative Agent may appoint any Person as agent to perform any act or acts
necessary or incident to any sale or transfer of the Collateral.
Section 6.02 Pledged Securities. Upon termination of all loans and commitments under the
Senior Revolving Credit Documents:
(a) Unless an Event of Default shall have occurred and be continuing and the Administrative
Agent shall have given notice to the relevant Pledgor of the Administrative Agent’s intent to
exercise its corresponding rights pursuant to Section 6.02(b), each Pledgor shall be permitted to
receive all cash dividends paid in respect of the Pledged Securities paid in the normal course of
business of the relevant Issuer (other than liquidating or distributing dividends), to the extent
permitted in the Credit Agreement, and to exercise all voting, consent and corporate, partnership
or limited liability rights with respect to the Pledged Securities; provided, however, that no vote
shall be cast, consent given or right exercised or other action taken by such Pledgor that would
impair the Collateral, be inconsistent with or result in any violation of any provision of the
Credit Agreement, this Agreement or any other Loan Document or, without the prior consent of the
Administrative Agent and the Lenders, enable or permit any issuer of Pledged Securities to issue
any Equity Interest or to issue any other securities convertible into or granting the right to
purchase or exchange for any Equity Interest of any issuer of Pledged Securities other than as
permitted by the Credit Agreement. Any sums paid upon or in respect of
- 14 -
any Pledged Securities upon
the liquidation or dissolution of any issuer of any Pledged Securities, any distribution of capital
made on or in respect of any Pledged Securities or any property distributed upon or with respect to
any Pledged Securities pursuant to the recapitalization or reclassification of the capital of any
issuer of Pledged Securities or pursuant to the reorganization thereof shall, unless otherwise
subject to a perfected security interest in favor of the Administrative Agent, be delivered to the
Administrative Agent to be held by it hereunder
as additional collateral security for the Obligations. If any sum of money or property so
paid or distributed in respect of any Pledged Securities shall be received by such Pledgor, such
Pledgor shall, until such money or property is paid or delivered to the Administrative Agent, hold
such money or property in trust for the Administrative Agent, segregated from other funds of such
Pledgor, as additional security for the Obligations.
(b) Upon the occurrence and during the continuance of an Event of Default, upon notice by the
Administrative Agent of its intent to exercise such rights to the relevant Pledgor or Pledgors, (i)
the Administrative Agent shall have the right to receive any and all cash dividends, payments,
Property or other Proceeds paid in respect of the Pledged Securities and make application thereof
to the Borrower Obligations in accordance with Section 10.02(c) of the Credit Agreement, and (ii)
any or all of the Pledged Securities shall be registered in the name of the Administrative Agent or
its nominee, and (iii) the Administrative Agent or its nominee may exercise (A) all voting,
consent, corporate, partnership or limited liability and other rights pertaining to such Pledged
Securities at any meeting of shareholders, partners or members (or other equivalent body) of the
relevant Issuer or Issuers or otherwise and (B) any and all rights of conversion, exchange and
subscription and any other rights, privileges or options pertaining to such Pledged Securities as
if it were the absolute owner thereof (including, without limitation, the right to exchange at its
discretion any and all of the Pledged Securities upon the merger, consolidation, reorganization,
recapitalization or other fundamental change in the organizational structure of any Issuer, or upon
the exercise by any Pledgor or the Administrative Agent of any right, privilege or option
pertaining to such Pledged Securities, and in connection therewith, the right to deposit and
deliver any and all of the Pledged Securities with any committee, depositary, transfer agent,
registrar or other designated agency upon such terms and conditions as the Administrative Agent may
determine), all without liability except to account for Property actually received by it, but the
Administrative Agent shall have no duty to any Pledgor to exercise any such right, privilege or
option and shall not be responsible for any failure to do so or delay in so doing.
(c) In order to permit the Administrative Agent to exercise the voting and other consensual
rights that it may be entitled to exercise pursuant hereto and to receive all dividends and other
distributions that it may be entitled to receive hereunder, (i) each Pledgor shall promptly execute
and deliver (or cause to be executed and delivered) to the Administrative Agent all such proxies,
dividend payment orders and other instruments as the Administrative Agent may from time to time
reasonably request and (ii) without limiting the effect of clause (i) above, such Pledgor hereby
grants to the Administrative Agent an irrevocable proxy to vote all or any part of the Pledged
Securities and to exercise all other rights, powers, privileges and remedies to which a holder of
the Pledged Securities would be entitled (including giving or withholding written consents of
shareholders, partners or members, as the case may be, calling special meetings of shareholders,
partners or members, as the case may be, and voting at such meetings), which proxy shall be
effective, automatically and without the necessity of any action
- 15 -
(including any transfer of any
Pledged Securities on the record books of the Issuer thereof) by any other Person (including the
Issuer of such Pledged Securities or any officer or agent thereof) upon the occurrence and during
the continuance of an Event of Default and which proxy shall only terminate upon the payment in
full in cash of the Obligations.
(d) Each Pledgor hereby authorizes and instructs each Issuer of any Pledged Securities pledged
by such Pledgor hereunder to (i) comply with any instruction received by it from the Administrative
Agent in writing that (A) states that an Event of Default has occurred and is continuing and (B) is
otherwise in accordance with the terms of this Agreement, without any other or further instructions
from such Pledgor, and each Pledgor agrees that each Issuer shall be fully protected in so
complying, and (ii) unless otherwise expressly permitted hereby, pay any dividends or other
payments with respect to the Pledged Securities directly to the Administrative Agent.
(e) Upon the occurrence and during the continuance of an Event of Default, if the Issuer of
any Pledged Securities is the subject of bankruptcy, insolvency, receivership, custodianship or
other proceedings under the supervision of any Governmental Authority, then all rights of the
Pledgor in respect thereof to exercise the voting and other consensual rights which such Pledgor
would otherwise be entitled to exercise with respect to the Pledged Securities issued by such
Issuer shall cease, and all such rights shall thereupon become vested in the Administrative Agent
who shall thereupon have the sole right to exercise such voting and other consensual rights, but
the Administrative Agent shall have no duty to exercise any such voting or other consensual rights
and shall not be responsible for any failure to do so or delay in so doing.
Section 6.03 Registration Rights. Upon termination of all loans and commitments under the
Senior Revolving Credit Documents, if the Administrative Agent shall determine to exercise its
right to sell any Collateral pursuant to Section 6.01, and if in the opinion of the Administrative
Agent it is necessary or advisable to have the Pledged Securities, or any portion thereof to be
registered under the provisions of the Securities Act, the relevant Pledgor shall cause the issuer
thereof to (a) execute and deliver, and cause the directors and officers of such issuer to execute
and deliver, all such instruments and documents, and do or cause to be done all such other acts as
may be, in the opinion of the Administrative Agent, necessary or advisable to register the Pledged
Securities, or that portion thereof to be sold, under the provisions of the Securities Act, (b) use
its best efforts to cause the registration statement relating thereto to become effective and to
remain effective for a period of one year from the date of the first public offering of the Pledged
Securities, or that portion thereof to be sold and (c) make all amendments thereto or to the
related prospectus that, in the opinion of the Administrative Agent, are necessary or advisable,
all in conformity with the requirements of the Securities Act and the rules and regulations of the
SEC applicable thereto. Each Pledgor agrees to cause such issuer to comply with the provisions of
the securities or “Blue Sky” laws of any jurisdiction that the Administrative Agent shall designate
and to make available to its security holders, as soon as practicable, an earnings statement (which
need not be audited) satisfying the provisions of Section 11(a) of the Securities Act.
Section 6.04 Private Sales of Pledged Securities.
- 16 -
(a) Each Pledgor recognizes that the Administrative Agent may be unable to effect a public
sale of any or all the Pledged Securities, by reason of certain prohibitions
contained in the Securities Act and applicable state securities laws or otherwise or may
determine that a public sale is impracticable or not commercially reasonable and, accordingly, may
resort to one or more private sales thereof to a restricted group of purchasers which will be
obliged to agree, among other things, to acquire such securities for their own account for
investment and not with a view to the distribution or resale thereof. Each Pledgor acknowledges
and agrees that any such private sale may result in prices and other terms less favorable than if
such sale were a public sale and, notwithstanding such circumstances, agrees that any such private
sale shall be deemed to have been made in a commercially reasonable manner. The Administrative
Agent shall be under no obligation to delay a sale of any of the Pledged Securities for the period
of time necessary to permit the Issuer thereof to register such securities for public sale under
the Securities Act, or under applicable state securities laws, even if such Issuer would agree to
do so.
(b) Each Pledgor agrees to use its best efforts to do or cause to be done all such other acts
as may reasonably be necessary to make such sale or sales of all or any portion of the Pledged
Securities pursuant to this Section 6.04 valid and binding and in compliance with any and all other
applicable Governmental Requirements. Each Pledgor further agrees that a breach of any of the
covenants contained in this Section 6.04 will cause irreparable injury to the Guaranteed Creditors,
that the Guaranteed Creditors have no adequate remedy at law in respect of such breach and, as a
consequence, that each and every covenant contained in this Section 6.04 shall be specifically
enforceable against such Pledgor, and such Pledgor hereby waives and agrees not to assert any
defenses against an action for specific performance of such covenants except for a defense that no
Event of Default has occurred under the Credit Agreement.
Section 6.05 Waiver; Deficiency. Each Pledgor waives and agrees not to assert any rights
or privileges which it may acquire under the UCC. Each Pledgor shall remain liable for any
deficiency if the proceeds of any sale or other disposition of the Collateral are insufficient to
pay its Obligations and the fees and disbursements of any attorneys employed by the Administrative
Agent or any Guaranteed Creditor to collect such deficiency.
Section 6.06 Non-Judicial Enforcement. The Administrative Agent may enforce its rights
hereunder without prior judicial process or judicial hearing, and to the extent permitted by law,
each Pledgor expressly waives any and all legal rights which might otherwise require the
Administrative Agent to enforce its rights by judicial process.
ARTICLE VII
The Administrative Agent
The Administrative Agent
Section 7.01 Administrative Agent’s Appointment as Attorney-in-Fact, Etc.
(a) Each Pledgor hereby irrevocably constitutes and appoints the Administrative Agent and any
officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact
with full irrevocable power and authority in the place and stead of such Pledgor and in the name of
such Pledgor or in its own name, for the purpose of carrying out
- 17 -
the terms of this Agreement, to
take any and all reasonably appropriate action and to execute any and all documents and instruments
which may be reasonably necessary or desirable to accomplish the purposes of this Agreement, and,
without limiting the generality of the foregoing, each Pledgor hereby gives the Administrative
Agent the power and right, on behalf of such Pledgor, without notice to or assent by such Pledgor,
to do any or all of the following:
(i) unless being disputed under Section 8.04 of the Credit Agreement, pay or discharge Taxes
and Liens levied or placed on or threatened against the Collateral, effect any repairs or any
insurance called for by the terms of this Agreement or any other Loan Document and pay all or any
part of the premiums therefor and the costs thereof;
(ii) execute, in connection with any sale provided for in Section 6.01 or Section 6.04, any
endorsements, assignments or other instruments of conveyance or transfer with respect to the
Collateral; and
(iii) (A) direct any party liable for any payment under any of the Collateral to make payment
of any and all moneys due or to become due thereunder directly to the Administrative Agent or as
the Administrative Agent shall direct; (B) ask or demand for, collect, and receive payment of and
receipt for, any and all moneys, claims and other amounts due or to become due at any time in
respect of or arising out of any Collateral; (C) in the name of such Pledgor or its own name, or
otherwise, take possession of and indorse and collect any check, draft, note, acceptance or other
instrument for the payment of moneys due with respect to any Collateral and 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; (D) defend any suit, action or proceeding brought against such Pledgor with respect to
any Collateral; (E) settle, compromise or adjust any such suit, action or proceeding and, in
connection therewith, give such discharges or releases as the Administrative Agent may deem
appropriate; and (F) generally, sell, transfer, pledge and make any agreement with respect to or
otherwise deal with any of the Collateral as fully and completely as though the Administrative
Agent were the absolute owner thereof for all purposes, and do, at the Administrative Agent’s
option and such Pledgor’s expense, at any time, or from time to time, all acts and things which the
Administrative Agent deems necessary to protect, preserve or realize upon the Collateral and the
Administrative Agent’s and the Guaranteed Creditors’ security interests therein and to effect the
intent of this Agreement, all as fully and effectively as such Pledgor might do.
Anything in this Section 7.01(a) to the contrary notwithstanding, the Administrative Agent
agrees that it will not exercise any rights under the power of attorney provided for in this
Section 7.01(a) unless an Event of Default shall have occurred and be continuing.
(b) If any Obligor fails to perform or comply with any of its agreements contained herein
within the applicable grace periods, the Administrative Agent, at its option, but
without any obligation so to do, may perform or comply, or otherwise cause performance or
compliance, with such agreement.
(c) The expenses of the Administrative Agent incurred in connection with actions undertaken as
provided in this Section 7.01, together with interest thereon at a rate per
- 18 -
annum equal to the
post-default rate specified in Section 3.02(c) of the Credit Agreement, but in no event to exceed
the Highest Lawful Rate, from the date of payment by the Administrative Agent to the date
reimbursed by the relevant Obligor, shall be payable by such Obligor to the Administrative Agent on
demand.
(d) Each Obligor hereby ratifies all that said attorneys shall lawfully do or cause to be done
by virtue and in compliance hereof. All powers, authorizations and agencies contained in this
Agreement are coupled with an interest and are irrevocable until this Agreement is terminated and
the security interests created hereby are released.
Section 7.02 Duty of Administrative Agent. The Administrative Agent’s sole duty with
respect to the custody, safekeeping and physical preservation of the Collateral in its possession,
under Section 9-207 of the UCC or otherwise, shall be to deal with it in the same manner as the
Administrative Agent deals with similar Property for its own account and shall be deemed to have
exercised reasonable care in the custody and preservation of the Collateral in its possession if
the Collateral is accorded treatment substantially equal to that which comparable secured parties
accord comparable collateral. Neither the Administrative Agent, any Guaranteed Creditor nor any of
their Related Parties shall be liable for failure to demand, collect or realize upon any of the
Collateral or for any delay in doing so or shall be under any obligation to sell or otherwise
dispose of any Collateral upon the request of any Pledgor or any other Person or to take any other
action whatsoever with regard to the Collateral or any part thereof. The powers conferred on the
Administrative Agent and the Guaranteed Creditors hereunder are solely to protect the
Administrative Agent’s and the Guaranteed Creditors’ interests in the Collateral and shall not
impose any duty upon the Administrative Agent or any Guaranteed Creditor to exercise any such
powers. The Administrative Agent and the Guaranteed Creditors shall be accountable only for
amounts that they actually receive as a result of the exercise of such powers, and neither they nor
any of their Related Parties shall be responsible to any Obligor for any act or failure to act
hereunder, except for their own gross negligence or willful misconduct. To the fullest extent
permitted by applicable law, the Administrative Agent shall be under no duty whatsoever to make or
give any presentment, notice of dishonor, protest, demand for performance, notice of
non-performance, notice of intent to accelerate, notice of acceleration, or other notice or demand
in connection with any Collateral or the Obligations, or to take any steps necessary to preserve
any rights against any Pledgor or other Person or ascertaining or taking action with respect to
calls, conversions, exchanges, maturities, tenders or other matters relative to any Collateral,
whether or not it has or is deemed to have knowledge of such matters. Each Obligor, to the extent
permitted by applicable law, waives any right of marshaling in respect of any and all Collateral,
and waives any right to require the Administrative Agent or any Guaranteed Creditor to proceed
against any Obligor or other Person, exhaust any Collateral or enforce any other remedy which the
Administrative Agent or any Guaranteed Creditor now has or may hereafter have against each Obligor,
any Obligor or other Person.
Section 7.03 Filing of Financing Statements. Pursuant to the UCC and any other applicable
law, each Pledgor authorizes the Administrative Agent to file or record financing statements and
other filing or recording documents or instruments with respect to the Collateral in such form and
in such offices as the Administrative Agent reasonably determines appropriate to perfect the
security interests of the Administrative Agent under this Agreement. A
- 19 -
photographic or other
reproduction of this Agreement shall be sufficient as a financing statement or other filing or
recording document or instrument for filing or recording in any jurisdiction.
Section 7.04 Authority of Administrative Agent. Each Obligor acknowledges that the rights
and responsibilities of the Administrative Agent under this Agreement with respect to any action
taken by the Administrative Agent or the exercise or non-exercise by the Administrative Agent of
any option, voting right, request, judgment or other right or remedy provided for herein or
resulting or arising out of this Agreement shall, as between the Administrative Agent and the
Guaranteed Creditors, be governed by the Credit Agreement and by such other agreements with respect
thereto as may exist from time to time among them, but, as between the Administrative Agent and the
Obligors, the Administrative Agent shall be conclusively presumed to be acting as agent for the
Guaranteed Creditors with full and valid authority so to act or refrain from acting, and no Obligor
shall be under any obligation, or entitlement, to make any inquiry respecting such authority.
ARTICLE VIII
Subordination of Indebtedness
Subordination of Indebtedness
Section 8.01 Subordination of All Obligor Claims. As used herein, the term “Obligor
Claims” shall mean all debts and obligations of the Borrowers or any other Obligor to any other
Obligor, whether such debts and obligations now exist or are hereafter incurred or arise, or
whether the obligation of the debtor thereon be direct, contingent, primary, secondary, several,
joint and several, or otherwise, and irrespective of whether such debts or obligations be evidenced
by note, contract, open account, or otherwise, and irrespective of the Person or Persons in whose
favor such debts or obligations may, at their inception, have been, or may hereafter be created, or
the manner in which they have been or may hereafter be acquired by. After and during the
continuation of an Event of Default, no Obligor shall receive or collect, directly or indirectly,
from any obligor in respect thereof any amount upon the Obligor Claims.
Section 8.02 Claims in Bankruptcy. In the event of receivership, bankruptcy,
reorganization, arrangement, debtor’s relief, or other insolvency proceedings involving any
Obligor, the Administrative Agent on behalf of the Administrative Agent and the Guaranteed
Creditors shall have the right to prove their claim in any proceeding, so as to establish their
rights hereunder and receive directly from the receiver, trustee or other court custodian,
dividends and payments which would otherwise be payable upon Obligor Claims. Each Obligor hereby
assigns such dividends and payments to the
Administrative Agent for the benefit of the Administrative Agent and the Guaranteed Creditors for
application against the Borrower Obligations as provided under Section 10.02(c) of the Credit
Agreement. Should any Agent or Guaranteed Creditor receive, for application upon the Obligations,
any such dividend or payment which is otherwise payable to any Obligor, and which, as between such
Obligors, shall constitute a credit upon the Obligor Claims, then upon payment in full in cash of
the Borrower Obligations, the intended recipient shall become subrogated to the rights of the
Administrative Agent and the Guaranteed Creditors to the extent that such payments to the
Administrative Agent and the Lenders on the Obligor Claims have contributed toward the liquidation
of the Obligations, and such subrogation shall be with respect to that proportion of the
Obligations which would have been unpaid if the Administrative Agent and the Guaranteed Creditors
had not received dividends or payments upon the Obligor Claims.
- 20 -
Section 8.03 Payments Held in Trust. In the event that notwithstanding Section 8.01 and
Section 8.02, any Obligor should receive any funds, payments, claims or distributions which is
prohibited by such Sections, then it agrees: (a) to hold in trust for the Administrative Agent and
the Guaranteed Creditors an amount equal to the amount of all funds, payments, claims or
distributions so received, and (b) that it shall have absolutely no dominion over the amount of
such funds, payments, claims or distributions except to pay them promptly to the Administrative
Agent, for the benefit of the Guaranteed Creditors; and each Obligor covenants promptly to pay the
same to the Administrative Agent.
Section 8.04 Liens Subordinate. Each Obligor agrees that, until the Borrower Obligations
are paid in full in cash, any Liens securing payment of the Obligor Claims shall be and remain
inferior and subordinate to any Liens securing payment of the Obligations, regardless of whether
such encumbrances in favor of such Obligor, the Administrative Agent or any Guaranteed Creditor
presently exist or are hereafter created or attach. Without the prior written consent of the
Administrative Agent, no Obligor, during the period in which any of the Borrower Obligations are
outstanding, shall (a) exercise or enforce any creditor’s right it may have against any debtor in
respect of the Obligor Claims, or (b) foreclose, repossess, sequester or otherwise take steps or
institute any action or proceeding (judicial or otherwise, including without limitation the
commencement of or joinder in any liquidation, bankruptcy, rearrangement, debtor’s relief or
insolvency proceeding) to enforce any Lien held by it.
Section 8.05 Notation of Records. Upon the request of the Administrative Agent, all
promissory notes and all accounts receivable ledgers or other evidence of the Obligor Claims
accepted by or held by any Obligor shall contain a specific written notice thereon that the
indebtedness evidenced thereby is subordinated under the terms of this Agreement.
ARTICLE IX
Miscellaneous
Miscellaneous
Section 9.01 Waiver. No failure on the part of the Administrative Agent or any Guaranteed
Creditor to exercise and no delay in exercising, and no course of dealing with respect to, any
right, power, privilege or remedy or any abandonment or discontinuance of steps to enforce such
right, power, privilege or remedy under this Agreement or any other Loan Document shall operate as
a waiver thereof, nor shall any single or partial exercise of any right, power, privilege or remedy
under this Agreement or any other Loan Document preclude or be construed as a waiver of any other
or further exercise thereof or the exercise of any other right, power, privilege or remedy. The
remedies provided herein are cumulative and not exclusive of any remedies provided by law or
equity.
Section 9.02 Notices. All notices and other communications provided for herein shall be
given in the manner and subject to the terms of Section 12.01 of the Credit Agreement; provided
that any such notice, request or demand to or upon any Guarantor shall be addressed to such
Guarantor at its notice address set forth on Schedule 1.
Section 9.03 Payment of Expenses, Indemnities, Etc.
- 21 -
(a) Each Guarantor agrees to pay or reimburse each Guaranteed Creditor and the Administrative
Agent for all out-of-pocket expenses incurred by such Person, including the fees, charges and
disbursements of any counsel for the Administrative Agent or any Guaranteed Creditor, in connection
with the enforcement or protection of its rights in connection with this Agreement or any other
Loan Document, including, without limitation, all costs and expenses incurred in collecting against
such Guarantor under the guarantee contained in ARTICLE II or otherwise enforcing or preserving any
rights under this Agreement and the other Loan Documents to which such Guarantor is a party.
(b) Each Guarantor agrees to pay, and to save the Administrative Agent and the Guaranteed
Creditors harmless from, any and all liabilities with respect to, or resulting from any delay in
paying, any and all Other Taxes which may be payable or determined to be payable with respect to
any of the Collateral or in connection with any of the transactions contemplated by this Agreement.
(c) Each Guarantor agrees to pay, and to save the Administrative Agent and the Guaranteed
Creditors harmless from, any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever with respect to
the execution, delivery, enforcement, performance and administration of this Agreement to the
extent the Borrowers would be required to do so pursuant to Section 12.03 of the Credit Agreement.
Section 9.04 Amendments in Writing. None of the terms or provisions of this Agreement may be waived, amended, supplemented or
otherwise modified except in accordance with Section 12.02 of the Credit Agreement.
Section 9.05 Successors and Assigns. The provisions of this Agreement shall be binding
upon the Obligors and their successors and assigns and shall inure to the benefit of the
Administrative Agent and the Guaranteed Creditors and their respective successors and assigns;
provided that except as set forth in Section 9.12 of the Credit Agreement, no Obligor may assign,
transfer or delegate any of its rights or obligations under this Agreement without the prior
written consent of the Administrative Agent and the Lenders, and any such purported assignment,
transfer or delegation shall be null and void.
Section 9.06 Survival; Revival; Reinstatement.
(a) All covenants, agreements, representations and warranties made by any Obligor herein and
in the certificates or other instruments delivered in connection with or pursuant to this Agreement
or any other Loan Document to which it is a party shall be considered to have been relied upon by
the Administrative Agent, the other Agents and the Lenders and shall survive the execution and
delivery of this Agreement and the making of any Loans, regardless of any investigation made by any
such other party or on its behalf and notwithstanding that the Administrative Agent, the other
Agents or any Lender may have had notice or knowledge of any Default or incorrect representation or
warranty at the time any credit is extended hereunder, and shall continue in full force and effect
as long as the principal of or any accrued interest on any Loan or any fee or any other amount
payable under the Credit Agreement is outstanding and unpaid. The provisions of Section 9.03 shall
survive and remain
- 22 -
in full force and effect regardless of the consummation of the transactions
contemplated hereby, the repayment of the Loans or the termination of this Agreement, any other
Loan Document or any provision hereof or thereof.
(b) To the extent that any payments on the Guarantor Obligations or proceeds of any Collateral
are subsequently invalidated, declared to be fraudulent or preferential, set aside or required to
be repaid to a trustee, debtor in possession, receiver or other Person under any bankruptcy law,
common law or equitable cause, then to such extent, the Guarantor Obligations so satisfied shall be
revived and continue as if such payment or proceeds had not been received and the Administrative
Agent’s and the Guaranteed Creditors’ Liens, security interests, rights, powers and remedies under
this Agreement and each other Loan Document shall continue in full force and effect. In such
event, each Loan Document shall be automatically reinstated and the Borrowers shall take such
action as may be reasonably requested by the Administrative Agent and the Guaranteed Creditors to
effect such reinstatement.
Section 9.07 Counterparts; Integration; Effectiveness.
(a) This Agreement may be executed in counterparts (and by different parties hereto on
different counterparts), each of which shall constitute an original, but all of which when taken
together shall constitute a single contract.
(b) This Agreement, the other Loan Documents and any separate letter agreements with respect
to fees payable to the Administrative Agent constitute the entire contract among the parties
relating to the subject matter hereof and thereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof and thereof. This Agreement
and the other Loan Documents represent the final agreement among the parties hereto and thereto and
may not be contradicted by evidence of prior, contemporaneous or subsequent oral agreements of the
parties. There are no unwritten oral agreements between the parties.
(c) This Agreement shall become effective when it shall have been executed by the
Administrative Agent and when the Administrative Agent shall have received counterparts hereof
which, when taken together, bear the signatures of each of the other parties hereto, and thereafter
shall be binding upon and inure to the benefit of the parties hereto, the Lenders and their
respective successors and assigns. Delivery of an executed counterpart of a signature page of this
Agreement by telecopy shall be effective as delivery of a manually executed counterpart of this
Agreement.
Section 9.08 Severability. Any provision of this Agreement or any other Loan Document held
to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity, illegality or unenforceability without affecting the
validity, legality and enforceability of the remaining provisions hereof or thereof; and the
invalidity of a particular provision in a particular jurisdiction shall not invalidate such
provision in any other jurisdiction.
Section 9.09 Set-Off. If an Event of Default shall have occurred and be continuing, each
Lender and each of its Affiliates is hereby authorized at any time and from time to time, to
- 23 -
the fullest extent permitted by law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other obligations (of whatsoever kind)
at any time owing by such Lender or Affiliate to or for the credit or the account of any Obligor
against any of and all the obligations of the Obligor owed to such Lender now or hereafter existing
under this Agreement or any other Loan Document, irrespective of whether or not such Lender shall
have made any demand under this Agreement or any other Loan Document and although such obligations
may be unmatured. The rights of each Lender under this Section 9.09 are in addition to other
rights and remedies (including other rights of setoff) which such Lender or its Affiliates may
have.
Section 9.10 Governing Law; Submission to Jurisdiction.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF TEXAS.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT
SHALL BE BROUGHT IN THE COURTS OF THE STATE OF TEXAS OR OF THE UNITED STATES OF AMERICA FOR THE
SOUTHERN DISTRICT OF TEXAS, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE PARTIES
HEREBY ACCEPTS FOR ITSELF AND (TO THE EXTENT PERMITTED BY LAW) IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. EACH PARTY HEREBY
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF
VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS. THIS SUBMISSION TO
JURISDICTION IS NON-EXCLUSIVE AND DOES NOT PRECLUDE A PARTY FROM OBTAINING JURISDICTION OVER
ANOTHER PARTY IN ANY COURT OTHERWISE HAVING JURISDICTION.
(c) EACH PARTY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED
COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED
MAIL, POSTAGE PREPAID, TO IT AT THE ADDRESS SPECIFIED IN SECTION 12.01 OF THE CREDIT AGREEMENT (OR
SUCH OTHER ADDRESS AS IS SPECIFIED PURSUANT TO SECTION 12.01 OF THE CREDIT AGREEMENT) OR SCHEDULE 1
HERETO, AS APPLICABLE, SUCH SERVICE TO BECOME EFFECTIVE THIRTY (30) DAYS AFTER SUCH MAILING.
NOTHING HEREIN SHALL AFFECT THE RIGHT OF A PARTY OR ANY HOLDER OF A NOTE TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANOTHER
PARTY IN ANY OTHER JURISDICTION.
EACH PARTY HEREBY (1) IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY LAW, TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN; (2) IRREVOCABLY
- 24 -
WAIVES, TO THE MAXIMUM EXTENT NOT
PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY SPECIAL,
EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES, OR DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
DAMAGES; (3) CERTIFIES THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OR AGENT OF COUNSEL FOR ANY
PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS, AND (4) ACKNOWLEDGES THAT IT HAS BEEN
INDUCED TO ENTER INTO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED
HEREBY AND THEREBY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED IN THIS
SECTION 9.10.
Section 9.11 Headings . Article and Section headings and the Table of Contents used herein are for convenience of
reference only, are not part of this Agreement and shall not affect the construction of, or be
taken into consideration in interpreting, this Agreement.
Section 9.12 Acknowledgments. Each Obligor hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and delivery of this
Agreement and the other Loan Documents to which it is a party;
(b) neither the Administrative Agent nor any Guaranteed Creditor has any fiduciary
relationship with or duty to any Obligor arising out of or in connection with this Agreement or any
of the other Loan Documents, and the relationship between the Obligors, on the one hand, and the
Administrative Agent and Guaranteed Creditors, on the other hand, in connection herewith or
therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan Documents or otherwise exists by
virtue of the transactions contemplated hereby among the Guaranteed Creditors or among the Obligors
and the Guaranteed Creditors.
(d) Each of the parties hereto specifically agrees that it has a duty to read this Agreement,
the Security Instruments and the other Loan Documents and agrees that it is charged with notice and
knowledge of the terms of this Agreement, the Security Instruments and the other Loan Documents;
that it has in fact read this Agreement, the Security Instruments and the other Loan Documents and
is fully informed and has full notice and knowledge of the terms, conditions and effects thereof;
that it has been represented by independent legal counsel of its choice throughout the negotiations
preceding its execution of this Agreement and the Security Instruments; and has received the advice
of its attorney in entering into this Agreement and the Security Instruments; and that it
recognizes that certain of the terms of this Agreement and the Security Instruments result in one
party assuming the liability inherent in some aspects of the transaction and relieving the other
party of its responsibility for such liability. EACH PARTY HERETO AGREES AND COVENANTS THAT IT
WILL NOT CONTEST THE VALIDITY OR ENFORCEABILITY OF ANY EXCULPATORY PROVISION OF THIS AGREEMENT AND
THE SECURITY INSTRUMENTS ON THE BASIS THAT THE
- 25 -
PARTY HAD NO NOTICE OR KNOWLEDGE OF SUCH PROVISION OR THAT THE PROVISION IS NOT “CONSPICUOUS.”
Section 9.13 Additional Obligors and Pledgors. Each Subsidiary of the Borrowers that is
required to become a party to this Agreement pursuant to Section 8.14 of the Credit Agreement shall
become an Obligor for all purposes of this Agreement upon execution and delivery by such Subsidiary
of an Assumption Agreement in the form of Annex I hereto and shall thereafter have the same rights,
benefits and obligations as an Obligor party hereto on the date hereof. Each Obligor that is
required to pledge Equity Interests of its Subsidiaries shall execute and deliver a Supplement in
the form of Annex II hereto, if such Equity Interests were not previously pledged.
Section 9.14 Releases.
(a) Release Upon Payment in Full. The grant of a security interest hereunder and all
of rights, powers and remedies in connection herewith shall remain in full force and effect until
the Administrative Agent has (i) retransferred and delivered all Collateral in its possession to
the Pledgors, and (ii) executed a written release or termination statement and reassigned to the
Pledgors without recourse or warranty any remaining Collateral and all rights conveyed hereby.
Upon the complete payment of the Borrower Obligations and the compliance by the Obligors with all
covenants and agreements hereof, the Administrative Agent, at the written request and expense of
the Borrowers, will promptly release, reassign and transfer the Collateral to the Pledgors and
declare this Agreement to be of no further force or effect.
(b) Partial Releases. If any of the Collateral shall be sold, transferred or
otherwise disposed of by any Pledgor in a transaction permitted by the Credit Agreement, then the
Administrative Agent, at the request and sole expense of such Pledgor, shall promptly execute and
deliver to such Pledgor all releases or other documents reasonably necessary or desirable for the
release of the Liens created hereby on such Collateral and the Equity Interests of the Issuer
thereof. At the request and sole expense of the Borrowers, a Guarantor shall be released from its
obligations hereunder in the event that all the Equity Interests of such Guarantor shall be sold,
transferred or otherwise disposed of in a transaction permitted by the Credit Agreement; provided
that the Borrowers shall have delivered to the Administrative Agent, at least ten Business Days
prior to the date of the proposed release, a written request of a Responsible Officer of PPC for
release identifying the relevant Guarantor and the terms of the sale or other disposition in
reasonable detail, including the price thereof and any expenses in connection therewith, together
with a certification by the Borrowers stating that such transaction is in compliance with the
Credit Agreement and the other Loan Documents.
(c) Retention in Satisfaction. Except as may be expressly applicable pursuant to
Section 9-620 of the UCC, no action taken or omission to act by the Administrative Agent or the
Guaranteed Creditors hereunder, including, without limitation, any exercise of voting or consensual
rights or any other action taken or inaction, shall be deemed to constitute a retention of the
Collateral in satisfaction of the Obligations or otherwise to be in full satisfaction of the
Obligations, and the Obligations shall remain in full force and effect, until the Administrative
Agent and the Guaranteed Creditors shall have applied payments (including, without limitation,
- 26 -
collections from Collateral) towards the Obligations in the full amount then outstanding or until
such subsequent time as is provided in Section 9.14(a).
Section 9.15 Acceptance. Each Obligor hereby expressly waives notice of acceptance of this
Agreement, acceptance on the part of the Administrative Agent and the Guaranteed Creditors being
conclusively presumed by their request for this Agreement and delivery of the same to the
Administrative Agent.
Section 9.16 Intercreditor Agreement. This Agreement is executed subject to that certain Intercreditor and Subordination Agreement
dated November 15, 2005, by and among the Borrowers, Parallel, L.L.C., BNP Paribas, as the
subordinated administrative agent and Citibank Texas, N.A., as the senior administrative agent, the
terms and provisions of such Intercreditor and Subordination Agreement being incorporated herein by
this reference.
- 27 -
IN WITNESS WHEREOF, each of the undersigned has caused this Guarantee and Collateral Agreement
to be duly executed and delivered as of the date first above written.
| BORROWERS: | PARALLEL PETROLEUM CORPORATION | |||||||
| By: | /s/ Xxxxxx X. Xxxxxx
|
|||||||
| PARALLEL, L.P. | ||||||||
| by: Parallel Petroleum Corporation, its | ||||||||
| General Partner | ||||||||
| By: | /s/ Xxxxxx X. Xxxxxx
|
|||||||
| GUARANTORS: | PARALLEL, L.L.C. | |||||||
| By: | /s/ Xxxxxx X. Xxxxxx | |||||||
| Xxxxxx X. Xxxxxx, Chief Financial Officer | ||||||||
Signature Page — Second Lien Guarantee and Collateral Agreement
Acknowledged and Agreed to as
of the date hereof by:
of the date hereof by:
| ADMINISTRATIVE AGENT: | BNP PARIBAS | |||||||
| By: Name: |
/s/ Xxxxx X. Xxxxxx
|
|||||||
| Title: | Managing Director | |||||||
| By: Name: |
/s/ Xxxx Xxxxxxx
|
|||||||
| Title: | Vice President | |||||||
Signature Page — Second Lien Guarantee and Collateral Agreement
Annex I
Assumption Agreement
ASSUMPTION AGREEMENT, dated as of [___] 2005, made by [] (the “Additional Obligor”), in
favor of BNP Paribas, as administrative agent (in such capacity, the “Administrative
Agent”) for the financial institutions (the “Lenders”) parties to the Credit Agreement
referred to below. All capitalized terms not defined herein shall have the meaning ascribed to
them in such Credit Agreement.
W I T N E S S E T H:
WHEREAS, Parallel Petroleum Corporation, a Delaware corporation (“PPC”) and Parallel,
L.P., a Texas limited partnership (“PLP” and with PPC, the “Borrowers”), BNP
Paribas, the Administrative Agent and the Lenders have entered into the Second Lien Term Loan
Agreement, dated as of November 15, 2005 (as amended, supplemented or otherwise modified from time
to time, the “Credit Agreement”);
WHEREAS, in connection with the Credit Agreement, the Borrowers and certain of its Affiliates
(other than the Additional Obligor) have entered into the Second Lien Guarantee and Collateral
Agreement, dated as of November 15, 2005 (as amended, supplemented or otherwise modified from time
to time, the “Guarantee and Collateral Agreement”) in favor of the Administrative Agent for
the benefit of the Guaranteed Creditors;
WHEREAS, the Credit Agreement requires the Additional Obligor to become a party to the
Guarantee and Collateral Agreement; and
WHEREAS, the Additional Obligor has agreed to execute and deliver this Assumption Agreement in
order to become a party to the Guarantee and Collateral Agreement;
NOW, THEREFORE, IT IS AGREED:
1. Guarantee and Collateral Agreement. By executing and delivering this Assumption
Agreement, the Additional Obligor, as provided in Section 9.13 of the Guarantee and Collateral
Agreement, hereby becomes a party to the Guarantee and Collateral Agreement as an Obligor
thereunder with the same force and effect as if originally named therein as an Obligor and, without
limiting the generality of the foregoing, hereby expressly assumes all obligations and liabilities
of an Obligor thereunder and expressly grants to the Administrative Agent, for the benefit of the
Guaranteed Creditors, a security interest in all Collateral owned by such Additional Obligor to
secure all of such Additional Obligor’s obligations and liabilities thereunder. The information
set forth in Annex 1-A hereto is hereby added to the information set forth in Schedules 1 through 4
to the Guarantee and Collateral Agreement. The Additional Obligor hereby represents and warrants
that each of the representations and warranties contained in Article IV of the Guarantee and
Collateral Agreement is true and correct on and as the date hereof (after giving effect to this
Assumption Agreement) as if made on and as of such date.
Annex I — 1
2. Governing Law. This Assumption Agreement shall be governed by, and construed in
accordance with, the laws of the State of Texas.
IN WITNESS WHEREOF, the undersigned has caused this Assumption Agreement to be duly executed
and delivered as of the date first above written.
| [ADDITIONAL OBLIGOR] | ||||||
| By: | ||||||
| Name: | ||||||
| Title: | ||||||
Annex I — 2
Annex II
Supplement
SUPPLEMENT, dated as of [___], 2005, made by , a [ ] (the “Additional
Pledgor”), in favor of BNP Paribas, as administrative agent (in such capacity, the
“Administrative Agent”) for the financial institutions (the “Lenders”) parties to
the Credit Agreement referred to below. All capitalized terms not defined herein shall have the
meaning ascribed to them in such Credit Agreement.
W I T N E S S E T H:
WHEREAS, Parallel Petroleum Corporation, a Delaware corporation (“PPC”) and Parallel,
L.P., a Texas limited partnership (“PLP” and with PPC, the “Borrowers”), BNP
Paribas, the Administrative Agent and the Lenders have entered into an Second Lien Term Loan
Agreement, dated as of November 15, 2005 (as amended, supplemented or otherwise modified from time
to time, the “Credit Agreement”);
WHEREAS, in connection with the Credit Agreement, the Borrowers and certain of its Affiliates
(other than the Additional Pledgor) have entered into the Second Lien Guarantee and Collateral
Agreement, dated as of November 15, 2005 (as amended, supplemented or otherwise modified from time
to time, the “Guarantee and Collateral Agreement”) in favor of the Administrative Agent for
the benefit of the Guaranteed Creditors;
WHEREAS, the Credit Agreement requires the Additional Pledgor to pledge the Equity Interests
described hereto on Schedule 2-S; and
WHEREAS, the Additional Pledgor has agreed to execute and deliver this Supplement in order to
pledge such Equity Interests;
NOW, THEREFORE, IT IS AGREED:
1. Guarantee and Collateral Agreement. By executing and delivering this Supplement,
the Additional Pledgor, as provided in Section 9.13 of the Guarantee and Collateral Agreement,
hereby becomes a party to the Guarantee and Collateral Agreement as an Obligor thereunder (if not
already a party thereto as an Obligor thereunder) with the same force and effect as if originally
named as an Obligor therein, and without limiting the generality of the foregoing, hereby pledges
and grants a security interest in (a) the Equity Interests described or referred to in Schedule 2-S
and (b) (i) the certificates or instruments, if any, representing such Equity Interests, (ii) all
dividends (cash, Equity Interests or otherwise), cash, instruments, rights to subscribe, purchase
or sell and all other rights and Property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such securities, (iii) all replacements,
additions to and substitutions for any of the Property referred to in this definition, including,
without limitation, claims against third parties, (iv) the proceeds, interest, profits and other
income of or on any of the Property referred to in this definition, (v) all security entitlements
in respect of any of the foregoing, if any, (vi) all books and records relating to any
Annex II — 1
of the Property referred to in this definition and (vii) all proceeds of any of the foregoing
(collectively, the “Collateral”). Upon execution of this Supplement, such securities will
constitute “Pledged Securities” for purposes of the Guarantee and Collateral Agreement with the
same force and effect as if originally listed on Schedule 2 thereto and, without limiting the
generality of the foregoing, the Additional Pledgor hereby expressly assumes all obligations and
liabilities of a Pledgor thereunder and expressly grants to the Administrative Agent, for the
benefit of the Guaranteed Creditors, a security interest in all Collateral owned by such Additional
Pledgor to secure all of such its obligations and liabilities thereunder. The information set
forth in Schedule 2-S hereto is hereby added to the information set forth in Schedule 2 to the
Guarantee and Collateral Agreement. The Additional Pledgor hereby represents and warrants that
each of the representations and warranties contained in Article IV of the Guarantee and Collateral
Agreement is true and correct on and as the date hereof (after giving effect to this Supplement) as
if made on and as of such date.
2. Governing Law. This Supplement shall be governed by, and construed in accordance
with, the laws of the State of Texas.
IN WITNESS WHEREOF, the undersigned has caused this Supplement to be duly executed and
delivered as of the date first above written.
| [ADDITIONAL PLEDGOR] | ||||||
| By: | ||||||
| Name: | ||||||
| Title: | ||||||
Annex II — 2
Exhibit A
Acknowledgment and Consent
The undersigned hereby acknowledges receipt of a copy of the Guarantee and Collateral
Agreement dated as of November 15, 2005 (the “Guarantee Agreement”), made by the Obligors
parties thereto for the benefit of BNP Paribas, as Administrative Agent and others. The
undersigned agrees for the benefit of the Administrative Agent and the Guaranteed Creditors as
follows:
1. The undersigned will be bound by the terms of the Guarantee Agreement and will comply with
such terms insofar as such terms are applicable to the undersigned.
2. The terms of Sections 6.01(a) and 6.03 of the Guarantee Agreement shall apply to it,
mutatis mutandis, with respect to all actions that may be required of it pursuant to Section
6.02(a) or Section 6.04 of the Guarantee Agreement.
| [NAME OF ISSUER] | ||||||
| By: | ||||||
| Title: | ||||||
| Address for Notices: | ||||||
| Fax: | ||||||
Exhibit A-1
| * | This consent is necessary only with respect to any Issuer which is not also a Obligor. This consent may be modified or eliminated with respect to any Issuer that is not controlled by a Obligor. |
Exhibit A-2
Schedule 1
NOTICE ADDRESSES OF OBLIGORS
Parallel Petroleum Corporation
0000 Xxxxx Xxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Facsimile (000) 000-0000
Attention: Xxxxx X. Xxxxxx, President
0000 Xxxxx Xxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Facsimile (000) 000-0000
Attention: Xxxxx X. Xxxxxx, President
Parallel, L.L.C.
0000-X Xxxxxxxxxxx Xxxxx, Xxxxx 0
Xxx Xxxxx, Xxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxxx, President
Facsimile (000) 000-0000
0000-X Xxxxxxxxxxx Xxxxx, Xxxxx 0
Xxx Xxxxx, Xxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxxx, President
Facsimile (000) 000-0000
Parallel, L.P.
0000 Xxxxx Xxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Facsimile (000) 000-0000
Attention: Xxxxx X. Xxxxxx, President
0000 Xxxxx Xxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Facsimile (000) 000-0000
Attention: Xxxxx X. Xxxxxx, President
Exhibit A-1
Schedule 2
DESCRIPTION OF PLEDGED SECURITIES
Pledged Securities:
| Percentage | Percentage | Type of | No. of | Certificate | ||||||||||||
| Owner | Issuer | Owned | Pledged | Security | Shares | No. | ||||||||||
Parallel Petroleum Corporation
|
Parallel, L.L.C. | 100 | % | 100 | % | Limited Liability Company Membership Interest |
n/a | No. 1 | ||||||||
Parallel Petroleum Corporation
|
Parallel, L.P. | 1 | % | 1 | % | Limited Partnership Interest |
n/a | GP — 1 | ||||||||
Parallel, L.L.C.
|
Parallel, L.P. | 99 | % | 99 | % | Limited Partnership Interest |
n/a | LP — 1 | ||||||||
Schedule 3
FILINGS AND OTHER ACTIONS
REQUIRED TO PERFECT SECURITY INTERESTS
REQUIRED TO PERFECT SECURITY INTERESTS
| 1. | Filing of UCC-1 Financing Statement with respect to the Collateral with the Secretary of State of the State of Texas for Parallel, L.P. | |
| 2. | Filing of UCC-1 Financing Statement with respect to the Collateral with the Secretary of State of the State of Delaware for Parallel Petroleum Corporation and Parallel, L.L.C. |
Schedule 4
LOCATION OF JURISDICTION OF ORGANIZATION AND CHIEF EXECUTIVE OFFICE
| (1) | Legal name of Borrower: Parallel Petroleum Corporation |
Address: 0000 Xxxxx Xxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Xxxxxxx, Xxxxx 00000
All other names and trade names that such Borrower has used in the last five years: None.
Jurisdiction of organization: Delaware
Organizational number: 2037319
Taxpayer identification number: 00-0000000
Location of chief executive office/sole place of business for last five years: See address
above.
| (2) | Legal name of Borrower: Parallel, L.P. |
Address: 0000 Xxxxx Xxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Xxxxxxx, Xxxxx 00000
All other names and trade names that such Borrower has used in the last five years: None.
Jurisdiction of organization: Texas
Organizational number: 000000000
Taxpayer identification number: 00-0000000
Location of chief executive office/sole place of business for last five years: See address
above.
| (3) | Legal name of Obligor: Parallel, L.L.C. |
Address: 0000-X Xxxxxxxxxxx Xxxxx, Xxxxx 0
Xxx Xxxxx, Xxxxxx 00000
Xxx Xxxxx, Xxxxxx 00000
All other names and trade names that such Obligor has used in the last five years:
None.
None.
Jurisdiction of organization: Delaware
Organizational number: 3502688
Taxpayer identification number: 00-0000000
Location of chief executive office/sole place of business for last five years:
Midland, Texas
Midland, Texas
