Exhibit 10.2
SECURITY AGREEMENT
dated as of December 20, 2005
from
the Grantors referred to herein,
to
CITICORP USA, INC.,
as Administrative Agent
TABLE OF CONTENTS
SECTION PAGE
- ------- ----
Section 1. Grant of Security.......................................... 2
Section 2. Security for Obligations................................... 5
Section 3. Grantors Remain Liable..................................... 5
Section 4. Delivery and Control of Security Collateral................ 6
Section 5. Maintaining the Account Collateral......................... 8
Section 6. Investing of Amounts in the Securities Acccounts........... 9
Section 7. Maintaining Letter-of-Credit Rights and Giving Notice of
Commercial Tort Claims..................................... 9
Section 8. Representations and Warranties............................. 10
Section 9. Further Assurances......................................... 12
Section 10. Post-Closing Changes; Bailees; Collections on Receivables
and Related Contracts...................................... 13
Section 11. As to Intellectual Property Collateral..................... 14
Section 12. Voting Rights; Dividends; Etc.............................. 15
Section 13. As to Letter-of-Credit Rights.............................. 16
Section 14. Additional Shares.......................................... 17
Section 15. Administrative Agent Appointed Attorney-in-Fact............ 17
Section 16. Administrative Agent May Perform........................... 17
Section 17. The Administrative Agent's Duties.......................... 17
Section 18. Remedies................................................... 18
Section 19. Indemnity and Expenses..................................... 22
Section 20. Subordination of Liens..................................... 23
Section 21. Amendments; Waivers; Additional Grantors; Etc.............. 23
Section 22. Notices, Etc............................................... 24
Section 23. Continuing Security Interest; Assignments under the Credit
Agreement.................................................. 24
Section 24. Release; Termination....................................... 25
i
Section 25. Terms Generally; References and Titles..................... 25
Section 26. Execution in Counterparts.................................. 26
Section 27. Governing Law.............................................. 26
Schedules
Schedule I - Location, Type of Organization, Jurisdiction of Organization
and Organizational Identification Number
Schedule II - Pledged Equity and Pledged Debt
Schedule III - Changes in Name, Location, Etc.
Schedule IV - Intellectual Property
Schedule V - Securities Accounts and Deposit Accounts
Schedule VI - Letters of Credit
Exhibits
Exhibit A - Form of Security Agreement Supplement
Exhibit B - Form of Deposit Account Control Agreement
Exhibit C - Form of Account Control Agreement (Deposit Account/Securities
Account)
Exhibit D - Form of Securities Account Control Agreement
Exhibit E - Form of Intellectual Property Security Agreement
Exhibit F - Form of Intellectual Property Security Agreement Supplement
Exhibit G - Form of Consent to Assignment of Letter of Credit Rights
ii
SECURITY AGREEMENT
SECURITY AGREEMENT dated as of December 20, 2005 made by AREP OIL &
GAS LLC, a Delaware limited liability company (the "BORROWER"), the other
Persons listed on the signature pages hereof and the Additional Grantors (as
defined in Section 21) (the Borrower, the Persons so listed and the Additional
Grantors being collectively the "GRANTORS"), to CITIBANK USA, INC., as
administrative agent (the "ADMINISTRATIVE AGENT") for the Secured Parties (as
hereinafter defined)).
PRELIMINARY STATEMENTS.
(1) The Borrower has entered into the Credit Agreement dated as of
December 20, 2005 (as amended, restated, supplemented, or otherwise modified
from time to time, the "CREDIT AGREEMENT"; capitalized terms defined therein and
not otherwise defined herein being used herein as therein defined) with certain
Lenders party thereto, Citicorp USA, Inc., as administrative agent (the
"ADMINISTRATIVE AGENT"), and Bear, Stearns & Co., Inc., as syndication agent.
(2) As contemplated in the Credit Agreement, the Grantors owe, and may
hereafter owe, Lender Hedging Obligations to some or all of the Lender Parties
and their Affiliates. The Lender Hedging Contracts under which such Lender
Hedging Obligations are owed are herein called the "LENDER HEDGING CONTRACTS".
The Lender Parties, together with all such Affiliates to which Lender Hedging
Obligations are at any time owing, are herein called the "SECURED PARTIES".
(3) The Grantors are entering into this Agreement in order to grant to
the Administrative Agent for the ratable benefit of the Secured Parties a
security interest in the Collateral (as hereinafter defined).
(4) Each Grantor is the owner of the shares of stock or other Equity
(the "INITIAL PLEDGED EQUITY") set forth opposite such Grantor's name on and as
otherwise described in Part I of Schedule II hereto and issued by the Persons
named therein and of the indebtedness (the "INITIAL PLEDGED DEBT") set forth
opposite such Grantor's name on and as otherwise described in Part II of
Schedule II hereto and issued by the obligors named therein.
(5) The Grantors have security entitlements (the "PLEDGED SECURITY
ENTITLEMENTS") with respect to all the financial assets (the "PLEDGED FINANCIAL
ASSETS") credited from time to time to the Grantors' securities accounts (the
"SECURITIES ACCOUNTS"), in their respective names and subject to this Agreement,
described in Schedule V hereto.
(6) The Grantors have opened deposit accounts (the "DEPOSIT ACCOUNTS")
with banks, in their respective names and subject to this Agreement, as
described in Schedule V hereto.
(7) It is a condition precedent to the making of Loans and the
issuance of Letters of Credit by the Secured Parties under the Credit Agreement
and the entry into Lender Hedging Contracts by the Lenders from time to time
that the Grantors shall have granted the
assignment and security interest and made the pledge and assignment contemplated
by this Agreement.
(8) Each Grantor will derive substantial direct and indirect benefit
from the transactions contemplated by the Loan Documents and the Lender Hedging
Contracts.
(9) Unless otherwise defined in this Agreement or in the Credit
Agreement, terms defined in Article 8 or 9 of the UCC (as defined below) and/or
in the Federal Book Entry Regulations (as defined below) are used in this
Agreement as such terms are defined in such Article 8 or 9 and/or the Federal
Book Entry Regulations. "UCC" means the Uniform Commercial Code as in effect,
from time to time, in the State of New York; provided that, if perfection or the
effect of perfection or non-perfection or the priority of any security interest
in any Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of New York, "UCC" means the Uniform
Commercial Code as in effect from time to time in such other jurisdiction for
purposes of the provisions hereof relating to such perfection, effect of
perfection or non-perfection or priority. "FEDERAL BOOK ENTRY REGULATIONS" means
(a) the federal regulations contained in Subpart B ("Treasury/Reserve Automated
Debt Entry System (TRADES)") governing book-entry securities consisting of U.S.
Treasury bonds, notes and bills and Subpart D ("ADDITIONAL PROVISIONS") of 31
C.F.R. Part 357, 31 C.F.R. Section 357.2, Section 357.10 through Section 357.14
and Section 357.41 through Section 357.44 and (b) to the extent substantially
identical to the federal regulations referred to in clause (a) above (as in
effect from time to time), the federal regulations governing other book-entry
securities.
NOW, THEREFORE, in consideration of the premises and in order to
induce the Secured Parties to make Loans and issue Letters of Credit under the
Credit Agreement and to induce the Secured Parties to enter into Lender Hedging
Contracts from time to time, each Grantor agrees with the Administrative Agent
for the ratable benefit of the Secured Parties as follows:
Section 1. Grant of Security. Each Grantor grants to the
Administrative Agent, for the ratable benefit of the Secured Parties, a security
interest in such Grantor's right, title and interest in and to the following, in
each case, as to each type of property described below, whether now owned or
hereafter acquired by such Grantor, wherever located, and whether now or
hereafter existing or arising (collectively, the "COLLATERAL"):
(a) all equipment in all of its forms, including all machinery, tools,
motor vehicles, furniture and fixtures, and all parts thereof and all
accessions thereto and all software related thereto, including software
that is embedded in and is part of the equipment (any and all such property
being the "Equipment");
(b) all inventory in all of its forms, including:
(i) all raw materials, work in process, finished goods and
materials used or consumed in the manufacture, production, preparation
or shipping thereof,
(ii) goods in which such Grantor has an interest in mass or a
joint or other interest or right of any kind (including goods in which
such Grantor has an interest or right as consignee) and
2
(iii) goods that are returned to or repossessed or stopped in
transit by such Grantor),
and all accessions thereto and products thereof and documents therefor, and
all software related thereto, including software that is embedded in and is
part of the inventory (any and all such property being the "INVENTORY");
(c) all chattel paper (including tangible chattel paper and electronic
chattel paper), instruments (including promissory notes), deposit accounts,
letter-of-credit rights, general intangibles (including payment intangibles
and rights as administrative agent or other agent under any loan agreements
relating to Pledged Debt (as defined below)) and other obligations of any
kind, whether or not arising out of or in connection with the sale or lease
of goods or the rendering of services and whether or not earned by
performance, and all rights now or hereafter existing in and to all
supporting obligations and in and to all security agreements, mortgages,
Liens, leases, letters of credit and other contracts securing or otherwise
relating to the foregoing property (any and all of such accounts, chattel
paper, instruments, deposit accounts, letter-of-credit rights, general
intangibles and other obligations, to the extent not referred to in clause
(d), (e) or (f) below, being the "RECEIVABLES", and any and all such
supporting obligations, security agreements, mortgages, Liens, leases,
letters of credit and other contracts being the "RELATED CONTRACTS");
(d) the following (the "SECURITY COLLATERAL"):
(i) the Initial Pledged Equity and the certificates, if any,
representing the Initial Pledged Equity, and all dividends,
distributions, return of capital, cash, instruments and other property
from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the Initial Pledged Equity
and all subscription warrants, rights or options issued thereon or
with respect thereto;
(ii) the Initial Pledged Debt and the instruments, if any,
evidencing the Initial Pledged Debt, and all interest, cash,
instruments and other property from time to time received, receivable
or otherwise distributed in respect of or in exchange for any or all
of the Initial Pledged Debt;
(iii) all additional shares of stock and other Equity from time
to time acquired by such Grantor in any manner (such shares and other
Equity, together with the Initial Pledged Equity, being the "PLEDGED
EQUITY"), and the certificates, if any, representing such additional
shares or other Equity, and all dividends, distributions, return of
capital, cash, instruments and other property from time to time
received, receivable or otherwise distributed in respect of or in
exchange for any or all of such shares or other Equity and all
subscription warrants, rights or options issued thereon or with
respect thereto;
(iv) all additional Indebtedness from time to time owed to such
Grantor (such Indebtedness, together with the Initial Pledged Debt,
being the "PLEDGED
3
DEBT") and the instruments, if any, evidencing such indebtedness, and
all interest, cash, instruments and other property from time to time
received, receivable or otherwise distributed in respect of or in
exchange for any or all of such indebtedness;
(v) the Securities Accounts, all Pledged Security Entitlements
with respect to all Pledged Financial Assets from time to time
credited to the Securities Accounts, all Pledged Financial Assets, and
all dividends, distributions, return of capital, interest, cash,
instruments and other property from time to time received, receivable
or otherwise distributed in respect of or in exchange for any or all
of the Pledged Security Entitlements or the Pledged Financial Assets
and all subscription warrants, rights or options issued thereon or
with respect thereto; and
all other investment property (including all (A) securities, whether
certificated or uncertificated, (B) security entitlements, (C) securities
accounts, (D) commodity contracts and (E) commodity accounts) in which such
Grantor has now, or acquires from time to time hereafter, any right, title
or interest in any manner, and the certificates or instruments, if any,
representing or evidencing such investment property, and all dividends,
distributions, return of capital, interest, distributions, value, cash,
instruments and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of such
investment property and all subscription warrants, rights or options issued
thereon or with respect thereto;
(e) the following (collectively, the "ACCOUNT COLLATERAL"):
(i) the Deposit Accounts and all funds from time to time credited
thereto, all interest, cash and other property from time to time
received, receivable or otherwise distributed in respect of or in
exchange for any or all of such funds, and all certificates and
instruments, if any, from time to time representing or evidencing the
Deposit Accounts;
(ii) all promissory notes, certificates of deposit, checks and
other instruments from time to time delivered to or otherwise
possessed by the Administrative Agent for or on behalf of such
Grantor, including those delivered or possessed in substitution for or
in addition to any or all of the then existing Account Collateral; and
(iii) all interest, cash and other property from time to time
received, receivable or otherwise distributed in respect of or in
exchange for any or all of the then-existing Account Collateral;
(f) the following (collectively, the "INTELLECTUAL PROPERTY
COLLATERAL"):
(i) all patents, patent applications, utility models and
statutory invention registrations, all inventions claimed or disclosed
therein and all improvements thereto;
4
(ii) all trademarks and service marks, together, in each case,
with the goodwill symbolized thereby;
(iii) all copyrights, whether registered or unregistered;
(iv) all computer software, programs and databases;
(g) all books and records (including customer lists, credit files,
printouts and other computer output materials and records) of such Grantor
pertaining to any of the Collateral; and
(h) all proceeds of, collateral for, income, royalties and other
payments now or hereafter due and payable with respect to, and supporting
obligations relating to, any and all of the Collateral (including proceeds,
collateral and supporting obligations that constitute property of the types
described in clauses (a) through (g) of this Section 1 and this clause (h))
and, to the extent not otherwise included, all (A) payments under insurance
(whether or not the Administrative Agent is the loss payee thereof), or any
indemnity, warranty or guaranty, payable by reason of loss or damage to or
otherwise with respect to any of the foregoing Collateral, (B) tort claims,
including all commercial tort claims and (C) cash,
but in each case excluding from the foregoing any property for which the grant
of a security interest pursuant to this Section 1 would violate any Law or
require the consent of a third party.
Section 2. Security for Obligations. This Agreement secures, in the
case of each Grantor, the payment of all Obligations of any Credit Party that
are now or hereafter existing under the Loan Documents and all Lender Hedging
Obligations of any Credit Party that are now or hereafter existing, in each case
whether direct or indirect, absolute or contingent, and whether for principal,
reimbursement obligations, interest, fees, premiums, penalties,
indemnifications, contract causes of action, costs, expenses or otherwise (all
such Obligations and Lender Hedging Obligations being the "SECURED
OBLIGATIONS").
Section 3. Grantors Remain Liable. Anything herein to the contrary
notwithstanding:
(a) each Grantor shall remain liable under the contracts and
agreements included in such Grantor's Collateral to the extent set forth
therein to perform all of its duties and obligations thereunder to the same
extent as if this Agreement had not been executed;
(b) the exercise by the Administrative Agent of any of the rights
hereunder shall not release any Grantor from any of its duties or
obligations under the contracts and agreements included in the Collateral;
and
(c) no Secured Party shall have any obligation or liability under the
contracts and agreements included in the Collateral by reason of this
Agreement, any other Loan Document or any Lender Hedging Contract, nor
shall any Secured Party be obligated to
5
perform any of the obligations or duties of any Grantor thereunder or to
take any action to collect or enforce any claim for payment assigned
hereunder.
Section 4. Delivery and Control of Security Collateral. (a) All
certificates or instruments representing or evidencing Security Collateral shall
be delivered to and held by or on behalf of the Administrative Agent pursuant
hereto and shall be in suitable form for transfer by delivery, or shall be
accompanied by duly executed instruments of transfer or assignment in blank, all
in form and substance satisfactory to the Administrative Agent. The
Administrative Agent shall have the right, at any time in its discretion and
without notice to any Grantor, to transfer to or to register in the name of the
Administrative Agent or any of its nominees any or all of the Security
Collateral, subject only to the revocable rights specified in Section 12(a). In
addition, the Administrative Agent shall have the right, upon the occurrence and
during the continuance of an Event of Default at any time to exchange
certificates or instruments representing or evidencing Security Collateral for
certificates or instruments of smaller or larger denominations.
(b) With respect to any Security Collateral in which any Grantor has
any right, title or interest and that constitutes an uncertificated security,
such Grantor will cause the issuer thereof either:
(i) to register the Administrative Agent as the registered owner of
such security or
(ii) to agree in an authenticated record with such Grantor and the
Administrative Agent that such issuer will comply with instructions with
respect to such security originated by the Administrative Agent without
further consent of such Grantor, such authenticated record to be in form
and substance satisfactory to the Administrative Agent.
With respect to any Security Collateral in which any Grantor has any right,
title or interest and that is not an uncertificated security, upon the request
of the Administrative Agent, such Grantor will notify each such issuer of
Pledged Equity that such Pledged Equity is subject to the security interest
granted hereunder. Each Grantor that is the issuer of any Security Collateral or
Pledged Equity belonging to another Grantor acknowledges the security interest
granted hereunder in such Security Collateral and will take the actions
described above in this subsection (b).
(c) With respect to any Security Collateral in which any Grantor has
any right, title or interest and that constitutes a security entitlement in
which the Administrative Agent is not the entitlement holder, such Grantor will
cause the securities intermediary with respect to such security entitlement
either:
(i) to identify in its records the Administrative Agent as the
entitlement holder of such security entitlement against such securities
intermediary or
(ii) to agree in an authenticated record with such Grantor and the
Administrative Agent that such securities intermediary will comply with
entitlement orders (that is, notifications communicated to such securities
intermediary directing
6
transfer or redemption of the financial asset to which such Grantor has a
security entitlement) originated by the Administrative Agent without
further consent of such Grantor, such authenticated record to be in
substantially the form of Exhibit C hereto (in the case of a combined
Deposit Account and Securities Account) or Exhibit D hereto (in any other
case) or otherwise in form and substance satisfactory to the Administrative
Agent (such agreements together being the "SECURITIES ACCOUNT CONTROL
AGREEMENTS").
(d) No Grantor will add any securities intermediary that maintains a
Securities Account for such Grantor or open any new securities account with any
then-existing securities intermediary unless:
(i) the Administrative Agent shall have received at least 10 days'
prior written notice of such securities intermediary or such new securities
account, and
(ii) the Administrative Agent shall have received, in the case of a
securities intermediary that is not the Administrative Agent, a Securities
Account Control Agreement authenticated by such new securities intermediary
and such Grantor, or a supplement to an existing Securities Account Control
Agreement with such then-existing securities intermediary, covering such
new securities account (and, upon the receipt by the Administrative Agent
of such Securities Account Control Agreement or supplement, Schedule V
hereto shall be automatically amended to include such Securities Account).
No Grantor shall terminate any securities intermediary or terminate any
Securities Account, except that a Grantor may terminate a Securities Account,
and terminate a securities intermediary with respect to such Securities Account
if it gives the Administrative Agent at least 10 days' prior written notice of
such termination (and, upon such termination, Schedule V hereto shall be
automatically amended to delete such securities intermediary and Securities
Account).
(e) Upon any termination by a Grantor of any Securities Account or any
securities intermediary with respect thereto, such Grantor will immediately:
(i) transfer all property held in such terminated Securities Account
to another Securities Account, and
(ii) notify all Obligors that were making payments to such Securities
Account to make all future payments to another Securities Account, in each
case so that the Administrative Agent shall have a continuously perfected
security interest in such Account Collateral, funds and property.
(f) So long as no Event of Default shall have occurred and be
continuing, each Grantor shall have sole right to direct the disposition of
funds with respect to each of its Securities Accounts.
(g) The Administrative Agent may transfer, direct the transfer of, or
sell property credited to any Securities Account to satisfy the Grantor's
obligations under the Loan Documents and Lender Hedging Contracts if an Event of
Default shall have occurred and be continuing.
7
(h) Upon the request of the Administrative Agent upon the occurrence
and during the continuance of an Event of Default, such Grantor will notify each
such issuer of Pledged Debt that such Pledged Debt is subject to the security
interest granted hereunder.
Section 5. Maintaining the Account Collateral. So long as any Loan or
any other Obligation of any Loan Party under any Loan Document shall remain
unpaid, any Letter of Credit shall be outstanding, any Lender Hedging Contract
shall be in effect or any Secured Party shall have any Commitment:
(a) Each Grantor will maintain all Account Collateral only with the
Administrative Agent or with banks (the "PLEDGED ACCOUNT BANKS") that have
agreed, in a record authenticated by the Grantor, the Administrative Agent and
the Pledged Account Banks, to:
(i) comply with instructions originated by the Administrative Agent
directing the disposition of funds in the Account Collateral without the
further consent of the Grantor and
(ii) waive or subordinate in favor of the Administrative Agent all
claims of the Pledged Account Banks (including claims by way of a security
interest, lien or right of setoff or right of recoupment) to the Account
Collateral, which authenticated record shall be substantially in the form
of Exhibit C hereto (in the case of a combined Deposit Account and
Securities Account) or of Exhibit B hereto (in any other case), or shall
otherwise be in form and substance reasonably satisfactory to, and as
negotiated in good faith by, the Administrative Agent (such agreements
together being the "ACCOUNT CONTROL AGREEMENTS"), provided that each
Grantor shall have up to 30 days following the date hereof to provide any
such Account Control Agreement.
(b) Each Grantor will promptly instruct each Person obligated at any
time to make any payment to such Grantor for any reason (an "OBLIGOR") to make
such payment to a Deposit Account.
(c) Except for any deposit account holding LC Collateral, no Grantor
will add any bank that maintains a deposit account for such Grantor or open any
new deposit account with any then existing Pledged Account Bank unless:
(i) the Administrative Agent shall have received at least 10 days'
prior written notice of such additional bank or such new deposit account,
and
(ii) the Administrative Agent shall have received, in the case of a
bank or Pledged Account Bank that is not the Administrative Agent, an
Account Control Agreement authenticated by such new bank and such Grantor,
or a supplement to an existing Account Control Agreement with such then
existing Pledged Account Bank, covering such new deposit account (and, upon
the receipt by the Administrative Agent of such Account Control Agreement
or supplement, Schedule V hereto shall be automatically amended to include
such Deposit Account).
8
No Grantor shall terminate any bank as a Pledged Account Bank or terminate any
Account Collateral, except that a Grantor may terminate a Deposit Account, and
terminate a bank as a Pledged Account Bank with respect to such Deposit Account
if it gives the Administrative Agent at least 10 days' prior written notice of
such termination (and, upon such termination, Schedule V hereto shall be
automatically amended to delete such Pledged Account Bank and Deposit Account).
(d) Upon any termination by a Grantor of any Deposit Account or any
Pledged Account Bank with respect thereto, such Grantor will immediately:
(i) transfer all funds held in such terminated Deposit Account to
another Deposit Account, and
(ii) notify all Obligors that were making payments to such Deposit
Account to make all future payments to another Deposit Account, in each
case so that the Administrative Agent shall have a continuously perfected
security interest in such Account Collateral, funds and property.
(e) So long as no Event of Default shall have occurred and be
continuing, each Grantor shall have sole right to direct the disposition of
funds with respect to each of its Deposit Accounts.
(f) The Administrative Agent may, at any time and without notice to,
or consent from, a Grantor transfer, or direct the transfer of, funds from the
Account Collateral to satisfy the Grantor's obligations under the Loan Documents
and Lender Hedging Contracts if an Event of Default shall have occurred and be
continuing.
(g) Upon the occurrence and during the continuance of any Event of
Default, the Administrative Agent shall be authorized to send to each Pledged
Account Bank a Notice of Exclusive Control as defined in and under any Account
Control Agreement.
Section 6. Investing of Amounts in the Securities Acccounts(a) . So
long as no Event of Default has occurred and is continuing, the Grantors may,
subject to Sections 5, and 18, from time to time, make investments credited to
Securities Accounts to the extent allowed under Section 7.7 of the Credit
Agreement.
Section 7. Maintaining Letter-of-Credit Rights and Giving Notice of
Commercial Tort Claims. So long as any Obligation of any Loan Party under any
Loan Document shall remain unpaid, any Letter of Credit shall be outstanding,
any Lender Hedging Contract shall be in effect or any Secured Party shall have
any Commitment:
(a) Each Grantor will maintain all letter-of-credit rights assigned to
the Administrative Agent, including all letter-of-credit rights associated
with the letters of credit described in Schedule VI so that the
Administrative Agent has control of the letter-of-credit rights in the
manner specified in Section 9-107 of the UCC; and
(b) Each Grantor will promptly give notice to the Administrative Agent
of any commercial tort claim that may arise in the future and will
immediately execute or
9
otherwise authenticate a supplement to this Agreement, and otherwise take
all necessary action, to subject such commercial tort claim to the first
priority security interest created under this Agreement.
Section 8. Representations and Warranties. Each Grantor represents and
warrants as follows:
(a) Such Grantor's exact legal name, as defined in Section 9-503(a) of
the UCC, is correctly set forth in Schedule I (as amended as provided in
Section 10(a)). Such Grantor has only the trade names and marks listed on
Schedule IV. Such Grantor is located (within the meaning of Section 9-307
of the UCC), is the type of organization and is organized in the state or
jurisdiction set forth in Schedule I (as amended as provided in Section
10(a)). The information set forth in Schedule I(as amended as provided in
Section 10(a)) with respect to such Grantor is true and accurate in all
respects. Such Grantor has not, within the prior five years, changed its
name, location, chief executive office, place where it maintains its
agreements, type of organization, jurisdiction of organization or
organizational identification number from those set forth in Schedule I (as
amended as provided in Section 10(a)) except as disclosed in Schedule V.
(b) All Security Collateral consisting of certificated securities and
instruments have been delivered to the Administrative Agent. None of the
Receivables is evidenced by a promissory note or other instrument that has
not been delivered to the Administrative Agent.
(c) Such Grantor is the legal and beneficial owner of the Collateral
of such Grantor free and clear of any Lien, claim, option or right of
others, except for the security interest created under this Agreement or as
permitted under the Credit Agreement. No effective financing statement or
other instrument similar in effect covering all or any part of such
Collateral or listing such Grantor or any trade name of such Grantor as
debtor is on file in any recording office, except such as may have been
filed in favor of the Administrative Agent relating to the Loan Documents
or as otherwise permitted under the Credit Agreement.
(d) The Pledged Equity pledged by such Grantor hereunder has been duly
authorized and validly issued and is fully paid and non-assessable. With
respect to the Pledged Equity that is an uncertificated security, such
Grantor has caused the issuer thereof either:
(i) to register the Administrative Agent as the registered owner
of such security or
(ii) to agree in an authenticated record with such Grantor and
the Administrative Agent that such issuer will comply with
instructions with respect to such security originated by the
Administrative Agent without further consent of such Grantor.
If such Grantor is an issuer of Pledged Equity, such Grantor confirms that
it has received notice of such security interest. The Pledged Debt pledged
by such Grantor hereunder
10
has been duly authorized, authenticated or issued and delivered, is the
legal, valid and binding obligation of the issuers thereof, is evidenced by
one or more promissory notes (which notes have been delivered to the
Administrative Agent) and is not in default.
(e) The Initial Pledged Equity pledged by such Grantor constitutes the
percentage of the issued and outstanding Equity of the issuers thereof
indicated on Schedule II. The Initial Pledged Debt constitutes all of the
outstanding indebtedness owed to such Grantor by the issuers thereof and is
outstanding in the principal amount indicated on Schedule II.
(f) All of the investment property owned by such Grantor as of the
date hereof is listed on Schedule II.
(g) Except for any deposit account in which LC Collateral may be held,
such Grantor has no deposit account, other than the Account Collateral
listed on Schedule V, as amended from time to time pursuant to Section
5(c), and legal, binding and enforceable Account Control Agreements are in
effect for each deposit account that constitutes Account Collateral (other
than Account Collateral consisting of deposit accounts maintained with the
Administrative Agent). Such Grantor has instructed all existing Obligors to
make all payments to either a Deposit Account.
(h) Such Grantor is not a beneficiary or assignee under any letter of
credit, other than any letter of credit described in Schedule VI, as
amended from time to time, and legal, binding and enforceable Consents to
Assignment of Letter of Credit Rights, in the form of the Consent to
Assignment of Letter of Credit Rights attached hereto as Exhibit G, are in
effect for each letter of credit that constitutes Collateral. Such Grantor
has instructed all issuers and nominated persons under letters of credit in
which the Grantor is the beneficiary or assignee to make all payments to
either a Deposit Account.
(i) All filings and other actions (including (A) actions necessary to
obtain control of Collateral as provided in Sections 9-104, 9-105, 9-106
and 9-107 of the UCC and (B) actions necessary to perfect the
Administrative Agent's security interest with respect to Collateral
evidenced by a certificate of ownership) necessary to perfect the security
interest in the Collateral of such Grantor created under this Agreement
have been duly made or taken and are in full force and effect, and this
Agreement creates in favor of the Administrative Agent for the benefit of
the Secured Parties a valid and, together with such filings and other
actions, perfected first priority security interest in the Collateral of
such Grantor (subject to Permitted Liens), securing the payment of the
Secured Obligations.
(j) No authorization or approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body or any other
third party is required for:
(i) the grant by such Grantor of the security interest granted
hereunder or for the execution, delivery or performance of this
Agreement by such Grantor,
11
(ii) the perfection or maintenance of the security interest
created hereunder (including the first priority nature of such
security interest), except for the filing of financing and
continuation statements under the UCC, which financing statements have
been duly filed and are in full force and effect, the recordation of
the Intellectual Property Security Agreements referred to in Section
11 with the U.S. Patent and Trademark Office and the U.S. Copyright
Office, which Agreements have been duly recorded and are in full force
and effect, and the actions described in Section 4 with respect to
Security Collateral, which actions have been taken and are in full
force and effect, or
(iii) the exercise by the Administrative Agent of its voting or
other rights provided for in this Agreement or the remedies in respect
of the Collateral pursuant to this Agreement, except as may be
required in connection with the disposition of any portion of the
Security Collateral by laws affecting the offering and sale of
securities generally.
(k) The Grantor has no commercial tort claims (as defined in Section
9-102(13) of the UCC), except for commercial tort claims with respect to
which it has taken the actions required by Section 7(b).
Section 9. Further Assurances. (a) From time to time, at the expense
of such Grantor, each Grantor will promptly execute and deliver, or otherwise
authenticate, all further instruments and documents, and take all further action
that may be necessary or desirable, or that the Administrative Agent may
reasonably request, in order to perfect and protect any pledge or security
interest granted or purported to be granted by such Grantor hereunder or to
enable the Administrative Agent to exercise and enforce its rights and remedies
hereunder with respect to any Collateral of such Grantor. Without limiting the
generality of the foregoing, each Grantor will promptly with respect to
Collateral of such Grantor:
(i) mark conspicuously each document included in Inventory, each
chattel paper included in Receivables, each Related Contract, and, at the
reasonable request of the Administrative Agent, each of its records
pertaining to such Collateral with a legend, in form and substance
satisfactory to the Administrative Agent, indicating that such document,
chattel paper, Related Contract or Collateral is subject to the security
interest granted hereby;
(ii) if any such Collateral shall be evidenced by a promissory note or
other instrument or chattel paper, deliver and pledge to the Administrative
Agent hereunder such note or instrument or chattel paper duly indorsed and
accompanied by duly executed instruments of transfer or assignment, all in
form and substance satisfactory to the Administrative Agent;
(iii) execute or authenticate and file such financing or continuation
statements, or amendments thereto, and such other instruments or notices,
as may be necessary or desirable, or as the Administrative Agent may
request, in order to perfect and preserve the security interest granted or
purported to be granted by such Grantor hereunder;
12
(iv) deliver and pledge to the Administrative Agent for benefit of the
Secured Parties certificates representing Security Collateral that
constitutes certificated securities, accompanied by undated stock or bond
powers executed in blank;
(v) take all action necessary to ensure that the Administrative Agent
has control of Collateral consisting of deposit accounts, electronic
chattel paper, investment property, letter-of-credit rights and
transferable records as provided in Sections 9-104, 9-105, 9-106 and 9-107
of the UCC;
(vi) at the reasonable request of the Administrative Agent, take all
action to ensure that the Administrative Agent's security interest is noted
on any certificate of ownership related to any Collateral evidenced by a
certificate of ownership;
(vii) at the reasonable request of the Administrative Agent, cause the
Administrative Agent to be the beneficiary under all letters of credit that
constitute Collateral, with the exclusive right to make all draws under
such letters of credit, and with all rights of a transferee under Section
5-114(e) of the UCC; and
(viii) deliver to the Administrative Agent evidence that all other
action that the Administrative Agent may deem reasonably necessary or
desirable in order to perfect and protect the security interest created by
such Grantor under this Agreement has been taken.
(b) Each Grantor authorizes the Administrative Agent to file one or
more financing or continuation statements, and amendments thereto, including one
or more financing statements indicating that such financing statements cover all
assets or all personal property (or words of similar effect) of such Grantor, in
each case without the signature of such Grantor, and regardless of whether any
particular asset described in such financing statements falls within the scope
of the UCC or the granting clause of this Agreement. A photocopy or other
reproduction of this Agreement or any financing statement covering the
Collateral or any part thereof shall be sufficient as a financing statement
where permitted by law. Each Grantor ratifies its authorization for the
Administrative Agent to have filed such financing statements, continuation
statements or amendments filed prior to the date hereof.
(c) Each Grantor will furnish to the Administrative Agent from time to
time statements and schedules further identifying and describing the Collateral
of such Grantor and such other reports in connection with such Collateral as the
Administrative Agent may reasonably request, all in reasonable detail.
Section 10. Post-Closing Changes; Bailees; Collections on Receivables
and Related Contracts. (a) No Grantor will change its name, type of
organization, jurisdiction of organization, organizational identification number
or location from those set forth in Section 8(a) without first giving at least
30 days' prior written notice to the Administrative Agent and taking all action
required by the Administrative Agent for the purpose of perfecting or protecting
the security interest granted by this Agreement. No Grantor will become bound by
a security agreement authenticated by another Person (determined as provided in
Section 9-203(d) of the UCC) without giving the Administrative Agent 30 days'
prior written notice thereof and taking all action required by the
Administrative Agent to ensure that the perfection and first priority
13
nature of the Administrative Agent's security interest in the Collateral will be
maintained. . Schedule I to this Agreement may be supplemented from time to time
by the Grantors, or by Additional Grantors at the time of the change or addition
of any Additional Grantor, by prior written notice (as provided herein or as
provided in the Credit Agreement) to the Administrative Agent and from the date
of such notice such Schedule shall be deemed automatically amended to reflect
the information set forth in such notice.
(b) If any Collateral of any Grantor is at any time in the possession
or control of a warehouseman, bailee or agent, or if the Administrative Agent so
requests such Grantor will:
(i) notify such warehouseman, bailee or agent of the security interest
created hereunder,
(ii) instruct such warehouseman, bailee or agent to hold all such
Collateral solely for the Administrative Agent's account subject only to
the Administrative Agent's instructions (which shall permit such Collateral
to be removed by such Grantor in the ordinary course of business until the
Administrative Agent notifies such warehouseman, bailee or agent that an
Event of Default has occurred and is continuing),
(iii) use commercially reasonable efforts, to cause such warehouseman,
bailee or agent to authenticate a record acknowledging that it holds
possession of such Collateral for the Administrative Agent's benefit and
shall act solely on the instructions of the Administrative Agent without
the further consent of the Grantor or any other Person, and
(iv) make such authenticated record available to the Administrative
Agent.
(c) Except as otherwise provided in this subsection (c), each Grantor
will continue to collect, at its own expense, all amounts due or to become due
such Grantor under Receivables and Related Contracts. In connection with such
collections, such Grantor may take (and, at the Administrative Agent's
direction, will take) such action as such Grantor or the Administrative Agent
may deem necessary or advisable to enforce collection of the Receivables and
Related Contracts; provided that the Administrative Agent shall have the right
at any time, upon the occurrence and during the continuance of an Event of
Default and upon written notice to such Grantor of its intention to do so, to
notify the Obligors under any Receivables and Related Contracts of the
assignment of such Receivables and Related Contracts to the Administrative Agent
and to direct such Obligors to make payment of all amounts due or to become due
to such Grantor thereunder directly to the Administrative Agent and, upon such
notification and at the expense of such Grantor, to enforce collection of any
such Receivables and Related Contracts, to adjust, settle or compromise the
amount or payment thereof, in the same manner and to the same extent as such
Grantor might have done, and to otherwise exercise all rights with respect to
such Receivables and Related Contracts, including those set forth set forth in
Section 9-607 of the UCC.
Section 11. As to Intellectual Property Collateral(a) . (a) With
respect to its Intellectual Property Collateral, each Grantor will execute or
otherwise authenticate an Intellectual Property Security Agreement, in
substantially the form set forth in Exhibit E hereto
14
or otherwise in form and substance satisfactory to the Administrative Agent, for
recording the security interest granted hereunder to the Administrative Agent in
such Intellectual Property Collateral with the U.S. Patent and Trademark Office,
the U.S. Copyright Office and any other governmental authorities necessary to
perfect the security interest hereunder in such Intellectual Property
Collateral.
(b) Should any Grantor obtain an ownership interest in any item of the
type set forth in Section 1(f) that is not on the date hereof a part of the
Intellectual Property Collateral:
(i) this Agreement shall automatically apply thereto, and
(ii) any such item and, in the case of trademarks, the goodwill
symbolized thereby, shall automatically become part of the Intellectual
Property Collateral subject to this Agreement.
Each Grantor shall give prompt written notice to the Administrative Agent
identifying such items, and such Grantor shall execute and deliver to the
Administrative Agent with such written notice, or otherwise authenticate, an
Intellectual Property Security Agreement Supplement substantially in the form of
Exhibit F hereto or otherwise in form and substance satisfactory to the
Administrative Agent covering such items, which supplement shall be recorded
with the U.S. Patent and Trademark Office, the U.S. Copyright Office and any
other governmental authorities necessary to perfect the security interest
hereunder in such items.
Section 12. Voting Rights; Dividends; Etc. (a) Except as set forth in
subsection (b):
(i) Each Grantor shall be entitled to exercise any and all voting and
other consensual rights pertaining to the Security Collateral of such
Grantor or any part thereof for any purpose; provided that such Grantor
will not exercise or refrain from exercising any such right if such action
would have a material adverse effect on the value of the Security
Collateral or any part thereof.
Each Grantor shall be entitled to receive and retain any and all dividends,
interest and other distributions paid in respect of the Security Collateral
of such Grantor if and to the extent that the payment thereof is not
otherwise prohibited by the terms of the Loan Documents.
(ii) The Administrative Agent will execute and deliver (or cause to be
executed and delivered) to each Grantor all such proxies and other
instruments as such Grantor may reasonably request for the purpose of
enabling such Grantor to exercise the voting and other rights that it is
entitled to exercise pursuant to paragraph (i) above and to receive the
dividends or interest payments that it is authorized to receive and retain
pursuant to paragraph (ii) above.
(b) Upon the occurrence and during the continuance of an Event of
Default:
(i) All rights of each Grantor:
15
(A) to exercise or refrain from exercising the voting and other
consensual rights that it would otherwise be entitled to exercise
pursuant to Section 12(a)(i) shall, upon notice to such Grantor by the
Administrative Agent, cease and
(B) to receive the dividends, interest and other distributions
that it would otherwise be authorized to receive and retain pursuant
to Section 12(a)(ii) shall automatically cease,
and all such rights shall thereupon become vested in the Administrative
Agent, which shall thereupon have the sole right to exercise or refrain
from exercising such voting and other consensual rights and to receive and
hold as Security Collateral such dividends, interest and other
distributions.
(ii) All dividends, interest and other distributions that are received
by any Grantor contrary to the provisions of paragraph (i) of this Section
12(b) shall be received in trust for the benefit of the Administrative
Agent, shall be segregated from other funds of such Grantor and shall be
forthwith paid over to the Administrative Agent as Security Collateral in
the same form as so received (with any necessary indorsement).
(iii) The Administrative Agent shall be authorized to send to each
Securities Intermediary as defined in and under any Security Control
Agreement a Notice of Exclusive Control as defined in and under such
Security Account Control Agreement.
Section 13. As to Letter-of-Credit Rights. (a) Each Grantor, by
granting a security interest in its Receivables consisting of letter-of-credit
rights to the Administrative Agent, intends to (and does) assign to the
Administrative Agent its rights (including its contingent rights) to the
proceeds of all Related Contracts consisting of letters of credit of which it is
or hereafter becomes a beneficiary or assignee. Each Grantor will promptly use
its commercially reasonable efforts to cause the issuer of each letter of credit
and each nominated person (if any) with respect thereto to consent to such
assignment of the proceeds thereof in substantially the form of the Consent to
Assignment of Letter of Credit Rights attached hereto as Exhibit G or otherwise
in form and substance satisfactory to the Administrative Agent and deliver
written evidence of such consent to the Administrative Agent.
(b) Upon the occurrence of an Event of Default, each Grantor will,
promptly upon request by the Administrative Agent:
(i) notify (and such Grantor hereby authorizes the Administrative
Agent to notify) the issuer and each nominated person with respect to each
of the Related Contracts consisting of letters of credit that the proceeds
thereof have been assigned to the Administrative Agent hereunder and any
payments due or to become due in respect thereof are to be made directly to
the Administrative Agent or its designee, and
(ii) arrange for the Administrative Agent to become the transferee
beneficiary of letter of credit.
16
Section 14. Additional Shares. Each Grantor will pledge hereunder,
immediately upon its acquisition (directly or indirectly) thereof, any
additional Equity or other securities of each issuer of the Pledged Equity.
Section 15. Administrative Agent Appointed Attorney-in-Fact. Each
Grantor irrevocably appoints the Administrative Agent such Grantor's
attorney-in-fact, with full authority in the place and stead of such Grantor and
in the name of such Grantor or otherwise, from time to time , upon the
occurrence and during the continuance of an Event of Default, in the
Administrative Agent's discretion, to take any action and to execute any
instrument that the Administrative Agent may deem necessary or advisable to
accomplish the purposes of this Agreement, including, without limitation:
(a) to obtain and adjust insurance required to be paid to the
Administrative Agent pursuant to Section 6.8(a) of the Credit Agreement
(b) to ask for, demand, collect, sue for, recover, compromise, receive
and give acquittance and receipts for moneys due and to become due under or
in respect of any of the Collateral,
(c) to receive, indorse and collect any drafts or other instruments,
documents and chattel paper, in connection with clause (a) or (b) above,
and
(d) to file any claims or take any action or institute any proceedings
that the Administrative Agent may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights of
the Administrative Agent with respect to any of the Collateral.
Section 16. Administrative Agent May Perform. If any Grantor fails to
perform any agreement contained herein, the Administrative Agent may, but
without any obligation to do so and without notice, itself perform, or cause
performance of, such agreement, and the expenses of the Administrative Agent
incurred in connection therewith shall be payable by such Grantor under Section
19.
Section 17. The Administrative Agent's Duties. (a) The powers
conferred on the Administrative Agent hereunder are solely to protect the
Secured Parties' interest in the Collateral and shall not impose any duty upon
it to exercise any such powers. Except for the safe custody of any Collateral in
its possession and the accounting for moneys actually received by it hereunder,
the Administrative Agent shall have no duty as to any Collateral, as to
ascertaining or taking action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relative to any Collateral, whether or not
any Secured Party has or is deemed to have knowledge of such matters, or as to
the taking of any necessary steps to preserve rights against any parties or any
other rights pertaining to any Collateral. The Administrative Agent shall be
deemed to have exercised reasonable care in the custody and preservation of any
Collateral in its possession if such Collateral is accorded treatment
substantially equal to that which it accords its own property.
(b) Anything contained herein to the contrary notwithstanding, the
Administrative Agent may from time to time, when the Administrative Agent deems
it to be
17
necessary, appoint one or more subagents for the Administrative Agent hereunder
with respect to all or any part of the Collateral. If the Administrative Agent
so appoints any such subagent with respect to any Collateral:
(i) the assignment and pledge of such Collateral and the security
interest granted in such Collateral by each Grantor hereunder shall be
deemed for purposes of this Security Agreement to have been made to such
subagent, in addition to the Administrative Agent, for the ratable benefit
of the Secured Parties, as security for the Secured Obligations of such
Grantor,
(ii) such subagent shall automatically be vested, in addition to the
Administrative Agent, with all rights, powers, privileges, interests and
remedies of the Administrative Agent hereunder with respect to such
Collateral, and
(iii) the term "Administrative Agent," when used herein in relation to
any rights, powers, privileges, interests and remedies of the
Administrative Agent with respect to such Collateral, shall include such
subagent;
provided that no such subagent shall be authorized to take any action with
respect to any such Collateral unless and except to the extent expressly
authorized in writing by the Administrative Agent.
Section 18. Remedies. If any Event of Default shall have occurred and
be continuing:
(a) The Administrative Agent may exercise in respect of the
Collateral, in addition to other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a Secured Party
upon default under the UCC (whether or not the UCC applies to the affected
Collateral) and also may:
(i) require each Grantor to, and each Grantor will at its expense
and upon request of the Administrative Agent forthwith, assemble all
or part of the Collateral as directed by the Administrative Agent and
make it available to the Administrative Agent at a place and time to
be designated by the Administrative Agent that is reasonably
convenient to both parties;
(ii) without notice except as specified below, sell the
Collateral or any part thereof in one or more parcels at public or
private sale, at any of the Administrative Agent's offices or
elsewhere, for cash, on credit or for future delivery, and upon such
other terms as the Administrative Agent may deem commercially
reasonable;
(iii) occupy any premises owned or leased by any of the Grantors
where the Collateral or any part thereof is assembled or located for a
reasonable period in order to effectuate its rights and remedies
hereunder or under law, without obligation to such Grantor in respect
of such occupation; and
18
(iv) exercise any and all rights and remedies of any of the
Grantors under or in connection with the Collateral, or otherwise in
respect of the Collateral, including:
(A) any and all rights of such Grantor to demand or
otherwise require payment of any amount under, or performance of
any provision of, the Receivables, the Related Contracts and the
other Collateral,
(B) withdraw, or cause or direct the withdrawal, of all
funds with respect to the Account Collateral and
(C) exercise all other rights and remedies with respect to
the Receivables, the Related Contracts and the other Collateral,
including those set forth in Section 9-607 of the UCC.
To the extent that notice of sale shall be required by law, at least 10
days' notice to such Grantor of the time and place of any public sale or
the time after which any private sale is to be made shall constitute
reasonable notification. The Administrative Agent shall not be obligated to
make any sale of Collateral regardless of notice of sale having been given.
The Administrative Agent may adjourn any public or private sale from time
to time by announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which it was
so adjourned.
(b) Any cash held by or on behalf of the Administrative Agent and all
cash proceeds received by or on behalf of the Administrative Agent in
respect of any sale of, collection from, or other realization upon all or
any part of the Collateral may, in the discretion of the Administrative
Agent, be held by the Administrative Agent as collateral for, and/or then
or at any time thereafter applied (after payment of any amounts payable to
the Administrative Agent pursuant to Section 19) in whole or in part by the
Administrative Agent for the ratable benefit of the Secured Parties
against, all or any part of the Secured Obligations, in the following
manner:
(i) first, paid to the Administrative Agent for any amounts then
owing to the Administrative Agent pursuant to the Credit Agreement or
otherwise under the Loan Documents; and
(ii) second, ratably:
(A) paid to the Secured Parties for any amounts then owing
to them, in their capacities as such, under the Loan Documents
and Lender Hedging Contracts ratably in accordance with such
respective amounts then owing to such Secured Parties; provided
that, for purposes of this Section 18, the amount owing to any
Lender pursuant to any Lender Hedging Contract to which it is a
party (other than any amount therefore accrued and unpaid) shall
be deemed to be equal to the Agreement Value therefor and
19
(B) deposited as LC Collateral as provided in the Credit
Agreement up to an amount equal to 100% of the aggregate
Available Amount of all outstanding Letters of Credit; provided
that:
(I) if any such Letter of Credit is drawn, the
Administrative Agent shall pay to the Issuing Bank that
issued such Letter of Credit the amount held in the L/C
Collateral Account in respect of such Letter of Credit, and
(II) to the extent that any such Letter of Credit shall
expire or terminate undrawn and as a result thereof the
amount of the Collateral in the L/C Collateral Account shall
exceed 100% of the aggregate Available Amount of all then
outstanding Letters of Credit, such excess amount of such
Collateral shall be applied in accordance with the remaining
order of priority set out in this Section 18(b).
Any surplus of such cash or cash proceeds held by or on the behalf of the
Administrative Agent and remaining after payment in full of all the Secured
Obligations shall be paid over to the applicable Grantor or to whomsoever
may be lawfully entitled to receive such surplus.
"AGREEMENT VALUE" means, for each Lender Hedging Contract with any Grantor,
on any date of determination, an amount determined by the Secured Party
party thereto equal to:
(1) if such Lender Hedging Contract is documented pursuant to the
Master Agreement (Multicurrency-Cross Border) published by the
International Swap and Derivatives Association, Inc., the amount, if
any, that would be payable by such Grantor to such Secured Party
pursuant to such Lender Hedging Contract, as if (x) such Lender
Hedging Contract was being terminated early on such date of
determination, (y) such Grantor was the sole "affected party", and (z)
the Secured Party was the sole party determining such payment (as
provided in such Master Agreement);
(2) in the case of any Lender Hedging Contract traded on an
exchange, the mark-to-market value of such Lender Hedging Contract,
which will be the unrealized loss thereon to such Grantor, determined
by such Secured Party based on the settlement price of such Lender
Hedging Contract on such date of determination; and
(3) in all other cases, the mark-to-market value of such Lender
Hedging Contract, which will be the unrealized loss thereon to such
Grantor, determined by such Secured Party as the amount, if any, by
which (x) the present value of the future cash flows to be paid by
such Grantor thereunder exceeds (y) the present value of the future
cash flows to be paid by such Grantor thereunder.
(c) All payments received by any Grantor under or in connection with
in respect of the Collateral shall be received in trust for the benefit of
the Administrative
20
Agent, shall be segregated from other funds of such Grantor and shall be
forthwith paid over to the Administrative Agent in the same form as so
received (with any necessary indorsement).
(d) the Administrative Agent may, without notice to any Grantor,
except as required by law and at any time or from time to time, charge,
set-off and otherwise apply all or any part of the Secured Obligations
against any funds held with respect to the Account Collateral or in any
other deposit account.
(e) In the event of any sale or other disposition of any of the
Intellectual Property Collateral of any Grantor, the goodwill symbolized by
any trademarks subject to such sale or other disposition shall be included
therein, and such Grantor shall supply to the Administrative Agent or its
designee such Grantor's know-how and expertise, and documents and things
relating to any Intellectual Property Collateral subject to such sale or
other disposition, and such Grantor's customer lists and other records and
documents relating to such Intellectual Property Collateral and to the
manufacture, distribution, advertising and sale of products and services of
such Grantor.
(f) The Grantors recognize that the Administrative Agent may deem it
impracticable to effect a public sale of all or any part of the Security
Collateral and that the Administrative Agent may, therefore, determine to
make one or more private sales of any such securities to a restricted group
of purchasers who will be obligated 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. The Grantors acknowledge that
any such private sale may be at prices and on terms less favorable to the
seller than the prices and other terms which might have been obtained at a
public sale and, notwithstanding the foregoing, agree that such private
sales shall be deemed to have been made in a commercially reasonable manner
and that the Administrative Agent shall have no obligation to delay sale of
any such securities for the period of time necessary to permit the Issuer
of such securities to register such securities for public sale under the
Securities Act of 1933, as amended. Any offer to sell such securities that
has been:
(i) publicly advertised on a bona fide basis in a newspaper or
other publication of general circulation in the financial community of
New York, New York (to the extent that such an offer may be so
advertised without prior registration under such Securities Act), or
(ii) made privately in the manner described above to not less
than 15 bona-fide offerees,
shall be deemed to involve a "public disposition" for the purposes of
Section 9.610(c) of the UCC (or any successor or similar, applicable
statutory provision), notwithstanding that such sale may not constitute a
"public offering" under the Securities Act, and that the Administrative
Agent or any other Secured Party may, in such event, bid for the purchase
of such securities.
21
Section 19. Indemnity and Expenses. (a) EACH GRANTOR SHALL INDEMNIFY
ADMINISTRATIVE AGENT (AND ANY SUB-AGENT THEREOF), EACH SECURED PARTY AND EACH
RELATED PARTY OF ANY OF THE FOREGOING PERSONS (EACH SUCH PERSON BEING CALLED AN
"INDEMNITEE") AGAINST, AND HOLD EACH INDEMNITEE HARMLESS FROM, ANY AND ALL
LOSSES, CLAIMS, DAMAGES, LIABILITIES AND RELATED EXPENSES (INCLUDING THE FEES,
CHARGES AND DISBURSEMENTS OF ANY COUNSEL FOR ANY INDEMNITEE), AND SHALL
INDEMNIFY AND HOLD HARMLESS EACH INDEMNITEE FROM ALL FEES AND TIME CHARGES AND
DISBURSEMENTS FOR ATTORNEYS WHO MAY BE EMPLOYEES OF ANY INDEMNITEE, INCURRED BY
ANY INDEMNITEE OR ASSERTED AGAINST ANY INDEMNITEE BY ANY THIRD PARTY OR BY ANY
GRANTOR ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT OF:
(I) THE EXECUTION OR DELIVERY OF THIS AGREEMENT, ANY OTHER LOAN
DOCUMENT, ANY LENDER HEDGING CONTRACT OR ANY AGREEMENT OR INSTRUMENT
CONTEMPLATED HEREBY OR THEREBY, THE PERFORMANCE BY THE PARTIES HERETO OF
THEIR RESPECTIVE OBLIGATIONS HEREUNDER OR THEREUNDER OR THE CONSUMMATION OF
THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY,
(II) ANY LOAN OR LETTER OF CREDIT OR THE USE OR PROPOSED USE OF THE
PROCEEDS THEREFROM, OR
(III) ANY ACTUAL OR PROSPECTIVE CLAIM, LITIGATION, INVESTIGATION OR
PROCEEDING RELATING TO ANY OF THE FOREGOING, WHETHER BASED ON CONTRACT,
TORT OR ANY OTHER THEORY, WHETHER BROUGHT BY A THIRD PARTY OR BY ANY
GRANTOR, AND REGARDLESS OF WHETHER ANY INDEMNITEE IS A PARTY THERETO.
THE FOREGOING INDEMNIFICATION WILL APPLY WHETHER OR NOT SUCH LIABILITIES AND
COSTS ARE IN ANY WAY OR TO ANY EXTENT OWED, IN WHOLE OR IN PART, UNDER ANY CLAIM
OR THEORY OF STRICT LIABILITY OR CAUSED, IN WHOLE OR IN PART BY ANY NEGLIGENT
ACT OR OMISSION OF ANY KIND BY ANY INDEMNITEE, PROVIDED THAT SUCH INDEMNITY
SHALL NOT, AS TO ANY INDEMNITEE, BE AVAILABLE TO THE EXTENT THAT SUCH LOSSES,
CLAIMS, DAMAGES, LIABILITIES OR RELATED EXPENSES ARE DETERMINED BY A COURT OF
COMPETENT JURISDICTION BY FINAL AND NON-APPEALABLE JUDGMENT TO HAVE RESULTED
FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNITEE OR IF A
GRANTOR HAS OBTAINED A FINAL AND NON-APPEALABLE JUDGMENT IN ITS FAVOR ON SUCH
CLAIM AS DETERMINED BY A COURT OF COMPETENT JURISDICTION.
(b) Each Grantor will upon demand pay to the Administrative Agent the
amount of any and all reasonable expenses, including the reasonable fees and
expenses of its counsel and of any experts and agents, that the Administrative
Agent may incur in connection with:
(i) the administration of this Agreement,
(ii) the custody, preservation, use or operation of, or the sale of,
collection from or other realization upon, any of the Collateral of such
Grantor,
(iii) the exercise or enforcement of any of the rights of the
Administrative Agent or the other Secured Parties hereunder or
22
(iv) the failure by such Grantor to perform or observe any of the
provisions hereof.
(b) To the fullest extent permitted by applicable law, no Grantor
shall assert, and hereby waives, any claim against any Indemnitee, on any
theory of liability, for special, indirect, consequential or punitive
damages (as opposed to direct or actual damages) arising out of, in
connection with, or as a result of, this Agreement, any other Loan
Document, any Lender Hedging Contract or any agreement or instrument
contemplated hereby or thereby, the transactions contemplated hereby or
thereby, any Loan or Letter of Credit or the use of the proceeds thereof.
No Indemnitee referred to in subsection (a) shall be liable for any damages
arising from the use by unintended recipients of any information or other
materials distributed by it through telecommunications, electronic or other
information transmission systems in connection with this Agreement, the
other Loan Documents, the Lender Hedging Contracts or the transactions
contemplated hereby or thereby.
Section 20. Subordination of Liens. Each Grantor confirms that:
(a) any and all Liens securing debts, liabilities and other
Obligations owed to such Grantor by any other Credit Party ("SUBORDINATED
LIENS") shall be subordinate to any and all Liens under the Security
Documents securing the Secured Obligations ("SENIOR LIENS") as if the
Senior Liens were created, filed, recorded and otherwise perfected prior in
time to the creation, filing, recording and other perfection of the
Subordinated Liens, and
(b) by reason of this Agreement, the Administrative Agent, for the
benefit of the Secured Parties, has a perfected, first-priority Lien on
each Subordinated Lien and the right, to the exclusion of any Grantor, to
enforce, exercise remedies, grant waivers, release and take any and all
other actions with respect to such Subordinated Lien.
Section 21. Amendments; Waivers; Additional Grantors; Etc. (a) No
amendment or waiver of any provision of this Agreement, and no consent to any
departure by any Grantor herefrom shall in any event be effective unless the
same shall be entered into in accordance with Section 10.1 of the Credit
Agreement. No failure on the part of the Administrative Agent or any other
Secured Party to exercise, and no delay in exercising any right hereunder, shall
operate as a waiver thereof; nor shall any single or partial exercise of any
such right preclude any other or further exercise thereof or the exercise of any
other right.
(b) Upon the execution and delivery, or authentication, by any Person
of a security agreement supplement in substantially the form of Exhibit A hereto
(each a "SECURITY AGREEMENT SUPPLEMENT"):
(i) such Person shall be referred to as an "ADDITIONAL GRANTOR" and
shall be and become a Grantor hereunder, and each reference in this
Agreement and the other Loan Documents to "Grantor" shall also mean and be
a reference to such Additional Grantor, and each reference in this
Agreement, the other Loan Documents and the
23
Lender Hedging Contracts to "Collateral" shall also mean and be a reference
to the Collateral of such Additional Grantor, and
(ii) the supplemental schedules attached to each Security Agreement
Supplement shall be incorporated into and become a part of and supplement
the respective Schedule hereto, and the Administrative Agent may attach
such supplemental schedules to such Schedules; and each reference to such
Schedules shall mean and be a reference to such Schedules as supplemented
pursuant to each Security Agreement Supplement.
Section 22. Notices, Etc. All notices and other communications
provided for hereunder shall be delivered in the manner provided in the Credit
Agreement, in the case of the Borrower or the Administrative Agent, addressed to
it at its address specified in the Credit Agreement and, in the case of each
Grantor other than the Borrower, addressed to it at its address set forth
opposite such Grantor's name on the signature pages hereto or on the signature
page to the Security Agreement Supplement pursuant to which it became a party
hereto; or, as to any party, at such other address as shall be designated by
such party in a written notice to the other parties. All such notices and other
communications shall be effective when and as provided in the Credit Agreement.
Delivery by telecopier of an executed counterpart of any amendment or waiver of
any provision of this Agreement or of any Security Agreement Supplement or
Schedule hereto shall be effective as delivery of an original executed
counterpart thereof.
Section 23. Continuing Security Interest; Assignments under the Credit
Agreement. This Agreement shall create a continuing security interest in the
Collateral and shall:
(a) remain in full force and effect until the latest of:
(i) the payment in full in cash of the Secured Obligations,
(ii) the irrevocable termination or expiration of all Commitments
and
(iii) the termination or expiration of all Letters of Credit and
all Lender Hedging Contracts,
(b) be binding upon each Grantor, its successors and assigns and
(c) inure, together with the rights and remedies of the Administrative
Agent hereunder, to the benefit of the Secured Parties and their respective
successors, transferees and assigns.
Without limiting the generality of the foregoing clause (c), any Secured Party
may assign or otherwise transfer all or any portion of its rights and
obligations under the Credit Agreement (including all or any portion of its
Commitment, the Loans owing to it and the Note or Notes, if any, held by it), to
any other Person, and such other Person shall thereupon become vested with all
the benefits in respect thereof granted to such Secured Party herein or
otherwise, in each case as provided in the Credit Agreement.
24
Section 24. Release; Termination. (a) Upon any sale, lease, transfer
or other disposition of any item of Collateral of any Grantor or release of any
Guaranty by a Grantor, in each case in accordance with the terms of the Loan
Documents (other than sales of Inventory in the ordinary course of business),
the Administrative Agent will, at such Grantor's expense, execute and deliver to
such Grantor such documents as such Grantor shall reasonably request to evidence
the release of such item of Collateral from the assignment and security interest
granted hereby; provided that:
(i) at the time of such request and such release no Event of Default
shall have occurred and be continuing,
(ii) such Grantor shall have delivered to the Administrative Agent, at
least 10 Business Days prior to the date of the proposed release, a written
request for release describing the item of Collateral and the terms of the
sale, lease, transfer or other disposition in reasonable detail, including
the price thereof and any expenses in connection therewith, together with a
form of release for execution by the Administrative Agent and a certificate
of such Grantor to the effect that the transaction is in compliance with
the Loan Documents and as to such other matters as the Administrative Agent
may request and
(iii) the proceeds of any such sale, lease, transfer or other
disposition required to be applied, or any payment to be made in connection
therewith, in accordance with the Credit Agreement shall, to the extent so
required, be paid or made to, or in accordance with the instructions of,
the Administrative Agent when and as required under the Credit Agreement.
(b) In the circumstances provided in Section 10.9 of the Credit
Agreement, and subject to the limitations described therein, the
Administrative Agent will release this Agreement.
Section 25. Terms Generally; References and Titles. The definitions of
terms herein shall apply equally to the singular and plural forms of the terms
defined. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. The words "include,"
"includes" and "including" shall be deemed to be followed by the phrase "without
limitation." Unless the context requires otherwise:
(a) any definition of or reference to any agreement, instrument or
other document herein shall be construed as referring to such agreement,
instrument or other document as from time to time amended, supplemented or
otherwise modified (subject to any restrictions on such amendments,
supplements or modifications set forth herein);
(b) any reference herein to any Person shall be construed to include
such Person's successors and assigns;
(c) the words "herein," "hereof" and "hereunder," and words of similar
import, shall be construed to refer to this Agreement in its entirety and
not to any particular provision hereof;
25
(d) all references herein to Articles, Sections and Exhibits shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules
to, this Agreement;
(e) any reference to any law or regulation herein shall, unless
otherwise specified, refer to such law or regulation as amended, modified
or supplemented from time to time; and
(f) the words "asset" and "property" shall be construed to have the
same meaning and effect and to refer to any and all tangible and intangible
assets and properties, including cash, securities, accounts and contract
rights.
References to any document, instrument, or agreement shall include:
(i) all exhibits, schedules, and other attachments thereto, and
(ii) shall include all documents, instruments, or agreements issued or
executed in replacement thereof.
Titles appearing at the beginning of any subdivision are for convenience only
and do not constitute any part of such subdivision and shall be disregarded in
construing the language contained in such subdivisions. The phrases "this
section" and "this subsection" and similar phrases refer only to the sections or
subsections hereof in which such phrases occur. The word "or" is not exclusive.
Accounting terms have the meanings assigned to them by GAAP, as applied by the
accounting entity to which they refer. References to "days" shall mean calendar
days, unless the term "Business Day" is used. Unless otherwise specified,
references herein to any particular Person also refer to its successors and
permitted assigns.
Section 26. Execution in Counterparts. This Agreement may be executed
in any number of counterparts, each of which when so executed shall be deemed to
be an original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of an original executed
counterpart of this Agreement.
Section 27. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.
Section 28. Subordination of Liens. Each Grantor confirms that:
(a) any and all Liens securing debts, liabilities and other
Obligations owed to such Grantor by any other Credit Party ("SUBORDINATED
LIENS") shall be subordinate to any and all Liens under the Security
Documents securing the Secured Obligations ("SENIOR LIENS") as if the
Senior Liens were created, filed, recorded and otherwise perfected prior in
time to the creation, filing, recording and other perfection of the
Subordinated Liens, and
26
(b) by reason of this Agreement, the Administrative Agent, for the
benefit of the Secured Parties, has a perfected, first-priority Lien on
each Subordinated Lien and the right, to the exclusion of any Grantor, to
enforce, exercise remedies, grant waivers, release and take any and all
other actions with respect to such Subordinated Lien.
27
IN WITNESS WHEREOF, each Grantor has caused this Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
AREP OIL & GAS LLC
By: /s/ Philip D. Devlin
------------------------------------
Name: Philip D. Devlin
Title: Vice President and Secretary
Address for Notices: ONSHORE GP LLC
ONSHORE GP, LLC
1400 One Energy Square
4925 Greenville Avenue By: /s/ Philip D. Devlin
Dallas, TX 75206 ------------------------------------
Name: Philip D. Devlin
Title: Vice President and Secretary
Address for Notices: Onshore LP LLC
ONSHORE LP, LLC
1400 One Energy Square
4925 Greenville Avenue By: /s/ Philip D. Devlin
Dallas, TX 75206 ------------------------------------
Name: Philip D. Devlin
Title: Vice President and Secretary
Address for Notices: OFFSHORE GP LLC
OFFSHORE GP, LLC
1400 One Energy Square
4925 Greenville Avenue By: /s/ Philip D. Devlin
Dallas, TX 75206 ------------------------------------
Name: Philip D. Devlin
Title: Vice President and Secretary
Address for Notices: OFFSHORE LP LLC
OFFSHORE LP, LLC
1400 One Energy Square
4925 Greenville Avenue By: /s/ Philip D. Devlin
Dallas, TX 75206 ------------------------------------
Name: Philip D. Devlin
Title: Vice President and Secretary
28
Address for Notices: NATIONAL ONSHORE LP
NATIONAL ONSHORE LP
1400 One Energy Square
4925 Greenville Avenue By: /s/ Philip D. Devlin
Dallas, TX 75206 ------------------------------------
Name: Philip D. Devlin
Title: Vice President and Secretary
Address for Notices: NATIONAL OFFSHORE LP
NATIONAL OFFSHORE LP
1400 One Energy Square
4925 Greenville Avenue By: /s/ Philip D. Devlin
Dallas, TX 75206 ------------------------------------
Name: Philip D. Devlin
Title: Vice President and Secretary
Address for Notices: MID RIVER LLC
MID RIVER LLC
1400 One Energy Square By: AREP Oil & Gas LLC, sole member
4925 Greenville Avenue
Dallas, TX 75206
By: /s/ Philip D. Devlin
------------------------------------
Name: Philip D. Devlin
Title: Vice President and Secretary
Address for Notices: GALVESTON BAY PROCESSING CORPORATION
GALVESTON BAY PROCESSING CORPORATION
1400 One Energy Square
4925 Greenville Avenue By: /s/ Philip D. Devlin
Dallas, TX 75206 ------------------------------------
Name: Philip D. Devlin
Title: Vice President and Secretary
Address for Notices: GALVESTON BAY PIPELINE COMPANY
GALVESTON BAY PIPELINE COMPANY
1400 One Energy Square
4925 Greenville Avenue By: /s/ Philip D. Devlin
Dallas, TX 75206 ------------------------------------
Name: Philip D. Devlin
Title: Vice President and Secretary
29
EXHIBIT A TO THE
SECURITY AGREEMENT
FORM OF SECURITY AGREEMENT SUPPLEMENT
[Date of Security Agreement Supplement]
CITICORP USA, INC.,
as the Administrative Agent for the
Secured Parties referred to in the
Credit Agreement referred to below
388 Greenwich Street
New York, NY 10013
AREP Oil & Gas LLC
Ladies and Gentlemen:
Reference is made to (i) the Credit Agreement dated as of December 20,
2005 (as amended, amended and restated, supplemented or otherwise modified from
time to time, the "CREDIT AGREEMENT"), among AREP Oil & Gas LLC, the Lenders
party thereto, Citicorp USA, Inc., as Administrative Agent (together with any
successor Administrative Agent appointed pursuant to the Credit Agreement, the
"ADMINISTRATIVE AGENT"), and Bear, Stearns & Co., Inc., as syndication agent,
and (ii) the Security Agreement dated as of December 20, 2005 (as amended,
amended and restated, supplemented or otherwise modified from time to time, the
"SECURITY AGREEMENT") made by the Grantors from time to time party thereto in
favor of the Administrative Agent for the Secured Parties. Terms defined in the
Credit Agreement or the Security Agreement and not otherwise defined herein are
used herein as defined in the Credit Agreement or the Security Agreement.
SECTION 1. Grant of Security. The undersigned hereby grants to the
Administrative Agent, for the ratable benefit of the Secured Parties, a security
interest in, all of its right, title and interest in and to all of the
Collateral of the undersigned, whether now owned or hereafter acquired by the
undersigned, wherever located and whether now or hereafter existing or arising,
including the property and assets of the undersigned set forth on the attached
supplemental schedules to the Schedules to the Security Agreement.
SECTION 2. Security for Obligations. The grant of a security interest
in, the Collateral by the undersigned under this Security Agreement Supplement
and the Security Agreement secures the payment of all Obligations of any Credit
Party that are now or hereafter existing under or in respect of the Loan
Documents and all Lender Hedging Obligations of any Credit Party that are now or
hereafter existing, in each case whether direct or indirect, absolute or
contingent, and whether for principal, reimbursement obligations, interest,
premiums, penalties, fees, indemnifications, contract causes of action, costs,
expenses or otherwise.
2
SECTION 3. Supplements to Security Agreement Schedules. The
undersigned has attached hereto supplemental Schedules to the respective
Schedules to the Security Agreement, and the undersigned hereby certifies, as of
the date first above written, that such supplemental schedules have been
prepared by the undersigned in substantially the form of the equivalent
Schedules to the Security Agreement and are complete and correct.
SECTION 4. Representations and Warranties. The undersigned makes as of
the date hereof each representation and warranty set forth in Section 8 of the
Security Agreement (as supplemented by the attached supplemental schedules) to
the same extent as each other Grantor.
SECTION 5. Obligations Under the Security Agreement. The undersigned
hereby agrees, as of the date first above written, to be bound as a Grantor by
all of the terms and provisions of the Security Agreement to the same extent as
each of the other Grantors. The undersigned further agrees, as of the date first
above written, that each reference in the Security Agreement to an "Additional
Grantor" or a "Grantor" shall also mean and be a reference to the undersigned.
SECTION 6. Governing Law. This Security Agreement Supplement shall be
governed by, and construed in accordance with, the laws of the State of New
York.
Very truly yours,
[NAME OF ADDITIONAL GRANTOR]
By
-------------------------------------
Title:
---------------------------------
Address for notices:
----------------------------------------
----------------------------------------
----------------------------------------
EXHIBIT B TO THE
SECURITY AGREEMENT
FORM OF DEPOSIT ACCOUNT CONTROL AGREEMENT
ACCOUNT CONTROL AGREEMENT (this "AGREEMENT") dated as of ________,
____, among____________, a ___________ (the "GRANTOR"), Citibank USA, Inc., as
Administrative Agent (the "ADMINISTRATIVE AGENT"), and _________, a _________
("____________"), as securities intermediary and depository bank (the "ACCOUNT
HOLDER").
PRELIMINARY STATEMENTS:
(1) The Grantor has granted the Secured Party a security interest (the
"SECURITY INTEREST") in the following accounts maintained by the Account Holder
for the Grantor (each, an "ACCOUNT" and collectively, the "ACCOUNTS"):
[Insert account numbers and other identifying information.]
(2) Terms defined in Article 9 of the Uniform Commercial Code in
effect in the State of New York ("N.Y. UNIFORM COMMERCIAL CODE") are used in
this Agreement as such terms are defined in such Article 9.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained herein, the parties hereto hereby agree as follows:
SECTION 1. The Accounts. The Grantor and Account Holder represent and
warrant to, and agree with, the Administrative Agent that:
(a) The Account Holder maintains each Account for the Grantor, and
funds held by the Account Holder for the account of the Grantor are, and
will continue to be, credited to an Account in accordance with instructions
given by the Grantor (unless otherwise provided herein).
(b) To the extent that funds are credited to any Account, such Account
is a deposit account; and to the extent that financial assets are credited
to any Account, such Account is a securities account. The Account Holder is
the bank with which each Account that is a deposit account is maintained.
The Grantor is the Account Holder's customer with respect to the Accounts.
(c) Notwithstanding any other agreement to the contrary, the Account
Holder's jurisdiction with respect to each Account for purposes of the N.Y.
Uniform Commercial Code is, and will continue to be for so long as the
Security Interest shall be in effect, the State of New York.
2
(d) The Grantor and Account Holder do not know of any claim to or
interest in any Account or any property (including funds and financial
assets) credited to any Account, except for claims and interests of the
parties referred to in this Agreement.
SECTION 2. Control by Administrative Agent. The Account Holder will
comply with:
(a) instructions directing disposition of the funds in any and all of
the Accounts,
(b) notifications that the Account Holder receives directing it to
transfer funds in any and all of the Accounts, and
(c) other directions concerning any and all of the Accounts, including
directions to distribute to the Administrative Agent proceeds of any such
transfer or interest or any and all of the Accounts
(any such instruction, notification or direction referred to in clause (a), (b)
or (c) above being an "ACCOUNT DIRECTION"), in each case of clauses (a), (b) and
(c) above originated by the Administrative Agent without further consent by the
Grantor or any other Person.
SECTION 3. Grantor's Rights in Accounts.
(a) Except as otherwise provided in this Section 3, the Account Holder
will comply with Account Directions and other directions concerning each Account
originated by the Grantor without further consent by the Administrative Agent.
(b) Until the Account Holder receives a notice from the Administrative
Agent that the Administrative Agent will exercise exclusive control over any
Account (a "NOTICE OF EXCLUSIVE CONTROL" with respect to such Account), the
Account Holder may distribute to the Grantor all interest and funds in such
Account.
(c) The Account Holder will not comply with any Account Direction
originated by the Grantor that would require the Account Holder to make a free
delivery of any funds or financial asset to the Grantor or any other Person.
(d) If the Account Holder receives from the Administrative Agent a
Notice of Exclusive Control with respect to any Account, the Account Holder will
comply only with Account Directions originated by the Administrative Agent and
will cease:
(i) complying with Account Directions or other directions concerning
such Account originated by the Grantor, and
(ii) distributing to the Grantor interest and dividends on property
(including funds and financial assets) in such Account.
SECTION 4. Priority of Administrative Agent's Security Interest. (a)
The Account Holder:
3
(i) subordinates to the Security Interest and in favor of the
Administrative Agent any security interest, lien, or right of recoupment or
setoff that the Account Holder may have, now or in the future, against any
Account or property (including any funds and financial assets) credited to
any Account, and
(ii) agrees that it will not exercise any right in respect of any such
security interest or lien or any such right of recoupment or setoff until
the Security Interest is terminated,
except that the Account Holder:
(A) will retain its prior security interest and lien on property
credited to any Account,
(B) may exercise any right in respect of such security interest or
lien, and
(C) may exercise any right of recoupment or setoff against any
Account,
in the case of clauses (A), (B) and (C) above, to secure or to satisfy, and only
to secure or to satisfy, payment:
(I) for such property,
(II) for its customary fees and expenses for the routine maintenance
and operation of such Account, and
(III) for the face amount of any items that have been credited to such
Account but are subsequently returned unpaid because of uncollected or
insufficient funds.
(b) The Account Holder will not enter into any other agreement with
any Person relating to Account Directions or other directions with respect to
any Account.
SECTION 5. Statements, Confirmations, and Notices of Adverse Claims.
(a) The Account Holder will send copies of all statements and confirmations for
each Account simultaneously to the Administrative Agent and the Grantor.
(b) When the Account Holder knows of any claim or interest in any
Account or any property (including funds and financial assets) credited to any
Account other than the claims and interests of the parties referred to in this
Agreement, the Account Holder will promptly notify the Administrative Agent and
the Grantor of such claim or interest.
SECTION 6. The Account Holder's Responsibility. (a) Except for
permitting a withdrawal, delivery, or payment in violation of Section 3, the
Account Holder will not be liable to the Administrative Agent for complying with
Account Directions or other directions concerning any Account from the Grantor
that are received by the Account Holder before the Account Holder receives and
has a reasonable opportunity to act on a Notice of Exclusive Control.
4
(b) The Account Holder will not be liable to the Grantor or the
Administrative Agent for complying with a Notice of Exclusive Control or with an
Account Direction or other direction concerning any Account originated by the
Administrative Agent, even if the Grantor notifies the Account Holder that the
Administrative Agent is not legally entitled to issue the Notice of Exclusive
Control or Account Direction or such other direction unless the Account Holder
takes the action after it is served with an injunction, restraining order, or
other legal process enjoining it from doing so, issued by a court of competent
jurisdiction, and had a reasonable opportunity to act on the injunction,
restraining order or other legal process.
(c) This Agreement does not create any obligation of the Account
Holder except for those expressly set forth in this Agreement and in Article 4
of the N.Y. Uniform Commercial Code. In particular, the Account Holder need not
investigate whether the Administrative Agent is entitled under the
Administrative Agent's agreements with the Grantor to give an Account Direction
or other direction concerning any Account or a Notice of Exclusive Control. The
Account Holder may rely on notices and communications it believes given by the
appropriate party.
SECTION 7. Indemnity. The Grantor will indemnify the Account Holder,
its officers, directors, employees and agents against claims, liabilities and
expenses arising out of this Agreement (including reasonable attorney's fees and
disbursements), except to the extent the claims, liabilities or expenses are
caused by the Account Holder's gross negligence or willful misconduct as found
by a court of competent jurisdiction in a final, non-appealable judgment.
SECTION 8. Termination; Survival. (a) The Administrative Agent may
terminate this Agreement by notice to the Account Holder and the Grantor. If the
Administrative Agent notifies the Account Holder that the Security Interest has
terminated, this Agreement will immediately terminate.
(b) The Account Holder may terminate this Agreement on 60 days' prior
notice to the Administrative Agent and the Grantor; provided that before such
termination the Account Holder and the Grantor shall make arrangements to
transfer the property (including all funds and financial assets) credited to
each Account to another Account Holder that shall have executed, together with
the Grantor, a control agreement in favor of the Administrative Agent in respect
of such property in substantially the form of this Agreement or otherwise in
form and substance satisfactory to the Administrative Agent.
(c) Sections 6 and 7 will survive termination of this Agreement.
SECTION 9. Governing Law. This Agreement and each Account will be
governed by the law of the State of New York. The Account Holder and the Grantor
may not change the law governing any Account without the Administrative Agent's
express prior written agreement.
SECTION 10. Entire Agreement. This Agreement is the entire agreement,
and supersedes any prior agreements, and contemporaneous oral agreements, of the
parties concerning its subject matter.
5
SECTION 11. Amendments. No amendment of, or waiver of a right under,
this Agreement will be binding unless it is in writing and signed by the party
to be charged.
SECTION 12. Notices. A notice or other communication to a party under
this Agreement will be in writing (except that Account Directions may be given
orally), will be sent to the party's address set forth under its name below or
to such other address as the party may notify the other parties and will be
effective on receipt.
SECTION 13. Binding Effect. This Agreement shall become effective when
it shall have been executed by the Grantor, the Administrative Agent and the
Account Holder, and thereafter shall be binding upon and inure to the benefit of
the Grantor, the Administrative Agent and the Account Holder and their
respective successors and assigns.
SECTION 14. Execution in Counterparts. This Agreement may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
Delivery of an executed counterpart of a signature page to this Agreement by
telecopier shall be effective as delivery of an original executed counterpart of
this Agreement.
6
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
[NAME OF GRANTOR]
By
-------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Address:
----------------------------------------
----------------------------------------
CITIBANK USA, INC., as
Administrative Agent
By
-------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Address:
----------------------------------------
----------------------------------------
[NAME OF ACCOUNT HOLDER]
By
-------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Address:
- -------------------------------------
- -------------------------------------
EXHIBIT C TO THE
SECURITY AGREEMENT
FORM OF ACCOUNT CONTROL AGREEMENT
(DEPOSIT ACCOUNT/SECURITIES ACCOUNT)
ACCOUNT CONTROL AGREEMENT (this "AGREEMENT") dated as of ________,
____, among____________, a ___________ (the "GRANTOR"), Citibank USA, Inc., as
Administrative Agent (the "ADMINISTRATIVE AGENT"), and _________, a _________
("____________"), as securities intermediary and depository bank (the "ACCOUNT
HOLDER").
PRELIMINARY STATEMENTS:
(1) The Grantor has granted the Secured Party a security interest (the
"SECURITY Interest") in the following accounts maintained by the Account Holder
for the Grantor (each, an "ACCOUNT" and collectively, the "ACCOUNTS"):
[Insert account numbers and other identifying information.]
(2) Terms defined in Article 8 or 9 of the Uniform Commercial Code in
effect in the State of New York ("N.Y. UNIFORM COMMERCIAL CODE") are used in
this Agreement as such terms are defined in such Article 8 or 9.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained herein, the parties hereto hereby agree as follows:
SECTION 1. The Accounts. The Grantor and Account Holder represent and
warrant to, and agree with, the Administrative Agent that:
(a) The Account Holder maintains each Account for the Grantor, and all
property (including all funds and financial assets) held by the Account
Holder for the account of the Grantor are, and will continue to be,
credited to an Account in accordance with instructions given by the Grantor
(unless otherwise provided herein).
(b) To the extent that funds are credited to any Account, such Account
is a deposit account; and to the extent that financial assets are credited
to any Account, such Account is a securities account. The Account Holder is
(i) the bank with which each Account that is a deposit account is
maintained and (ii) the securities intermediary with respect to financial
assets held in any Account that is a securities account. The Grantor is (x)
the Account Holder's customer with respect to the Accounts and (y) the
entitlement holder with respect to financial assets credited from time to
time to any Account.
(c) Notwithstanding any other agreement to the contrary, the Account
Holder's jurisdiction with respect to each Account for purposes of the N.Y.
Uniform Commercial Code is, and will continue to be for so long as the
Security Interest shall be in effect, the State of New York.
2
(d) The Grantor and Account Holder do not know of any claim to or
interest in any Account or any property (including funds and financial
assets) credited to any Account, except for claims and interests of the
parties referred to in this Agreement.
SECTION 2. Control by Administrative Agent. The Account Holder will
comply with:
(a) all instructions directing disposition of the funds in any and all
of the Accounts,
(b) all notifications and entitlement orders that the Account Holder
receives directing it to transfer or redeem any financial asset in any and
all of the Accounts, and
(c) all other directions concerning any and all of the Accounts,
including directions to distribute to the Administrative Agent proceeds of
any such transfer or redemption or interest or dividends on property in any
and all of the Accounts
(any such instruction, notification or direction referred to in clause (a), (b)
or (c) above being an "ACCOUNT DIRECTION"), in each case of clauses (a), (b) and
(c) above originated by the Administrative Agent without further consent by the
Grantor or any other Person.
SECTION 3. Grantor's Rights in Accounts.
(a) Except as otherwise provided in this Section 3, the Account Holder
will comply with Account Directions and other directions concerning each Account
originated by the Grantor without further consent by the Administrative Agent.
(b) Until the Account Holder receives a notice from the Administrative
Agent that the Administrative Agent will exercise exclusive control over any
Account (a "NOTICE OF EXCLUSIVE CONTROL" with respect to such Account), the
Account Holder may distribute to the Grantor all interest and regular cash
dividends on property (including funds and financial assets) in such Account.
(c) The Account Holder will not comply with any Account Direction
originated by the Grantor that would require the Account Holder to make a free
delivery of any funds or financial asset to the Grantor or any other Person.
(d) If the Account Holder receives from the Administrative Agent a
Notice of Exclusive Control with respect to any Account, the Account Holder will
comply only with Account Directions originated by the Administrative Agent and
will cease:
(i) complying with Account Directions or other directions concerning
such Account originated by the Grantor and
(ii) distributing to the Grantor interest and dividends on property
(including funds and financial assets) in such Account.
3
SECTION 4. Priority of Administrative Agent's Security Interest. (a)
The Account Holder:
(i) subordinates to the Security Interest and in favor of the
Administrative Agent any security interest, lien, or right of recoupment or
setoff that the Account Holder may have, now or in the future, against any
Account or property (including any funds and financial assets) credited to
any Account, and
(ii) agrees that it will not exercise any right in respect of any such
security interest or lien or any such right of recoupment or setoff until
the Security Interest is terminated,
except that the Account Holder:
(A) will retain its prior security interest and lien on property
credited to any Account,
(B) may exercise any right in respect of such security interest or
lien, and
(C) may exercise any right of recoupment or setoff against any
Account,
in the case of clauses (A), (B) and (C) above, to secure or to satisfy, and only
to secure or to satisfy, payment:
(I) for such property,
(II) for its customary fees and expenses for the routine maintenance
and operation of such Account, and
(III) for the face amount of any items that have been credited to such
Account but are subsequently returned unpaid because of uncollected or
insufficient funds.
(b) The Account Holder will not enter into any other agreement with
any Person relating to Account Directions or other directions with respect to
any Account.
SECTION 5. Statements, Confirmations, and Notices of Adverse Claims.
(a) The Account Holder will send copies of all statements and confirmations for
each Account simultaneously to the Administrative Agent and the Grantor.
(b) When the Account Holder knows of any claim or interest in any
Account or any property (including funds and financial assets) credited to any
Account other than the claims and interests of the parties referred to in this
Agreement, the Account Holder will promptly notify the Administrative Agent and
the Grantor of such claim or interest.
SECTION 6. The Account Holder's Responsibility. (a) Except for
permitting a withdrawal, delivery, or payment in violation of Section 3, the
Account Holder will not be liable to the Administrative Agent for complying with
Account Directions or other directions
4
concerning any Account from the Grantor that are received by the Account Holder
before the Account Holder receives and has a reasonable opportunity to act on a
Notice of Exclusive Control.
(b) The Account Holder will not be liable to the Grantor or the
Administrative Agent for complying with a Notice of Exclusive Control or with an
Account Direction or other direction concerning any Account originated by the
Administrative Agent, even if the Grantor notifies the Account Holder that the
Administrative Agent is not legally entitled to issue the Notice of Exclusive
Control or Account Direction or such other direction unless the Account Holder
takes the action after it is served with an injunction, restraining order, or
other legal process enjoining it from doing so, issued by a court of competent
jurisdiction, and had a reasonable opportunity to act on the injunction,
restraining order or other legal process
(c) This Agreement does not create any obligation of the Account
Holder except for those expressly set forth in this Agreement and, in the case
of any Account that is a securities account, in Part 5 of Article 8 of the N.Y.
Uniform Commercial Code and, in the case of any Account that is a deposit
account, in Article 4 of the N.Y. Uniform Commercial Code. In particular, the
Account Holder need not investigate whether the Administrative Agent is entitled
under the Administrative Agent's agreements with the Grantor to give an Account
Direction or other direction concerning any Account or a Notice of Exclusive
Control. The Account Holder may rely on notices and communications it believes
given by the appropriate party.
SECTION 7. Indemnity. The Grantor will indemnify the Account Holder,
its officers, directors, employees and agents against claims, liabilities and
expenses arising out of this Agreement (including reasonable attorney's fees and
disbursements), except to the extent the claims, liabilities or expenses are
caused by the Account Holder's gross negligence or willful misconduct as found
by a court of competent jurisdiction in a final, non-appealable judgment.
SECTION 8. Termination; Survival. (a) The Administrative Agent may
terminate this Agreement by notice to the Account Holder and the Grantor. If the
Administrative Agent notifies the Account Holder that the Security Interest has
terminated, this Agreement will immediately terminate.
(b) The Account Holder may terminate this Agreement on 60 days' prior
notice to the Administrative Agent and the Grantor; provided that before such
termination the Account Holder and the Grantor shall make arrangements to
transfer the property (including all funds and financial assets) credited to
each Account to another Account Holder that shall have executed, together with
the Grantor, a control agreement in favor of the Administrative Agent in respect
of such property in substantially the form of this Agreement or otherwise in
form and substance satisfactory to the Administrative Agent.
(c) Sections 6 and 7 will survive termination of this Agreement.
SECTION 9. Governing Law. This Agreement and each Account will be
governed by the law of the State of New York. The Account Holder and the Grantor
may not change the law governing any Account without the Administrative Agent's
express prior written agreement.
5
SECTION 10. Entire Agreement. This Agreement is the entire agreement,
and supersedes any prior agreements, and contemporaneous oral agreements, of the
parties concerning its subject matter.
SECTION 11. Amendments. No amendment of, or waiver of a right under,
this Agreement will be binding unless it is in writing and signed by the party
to be charged.
SECTION 12. Financial Assets. To the fullest extent permitted by
applicable law, all property (other than funds) credited from time to time to
any Account will be treated as financial assets under Article 8 of the N.Y.
Uniform Commercial Code.
SECTION 13. Notices. A notice or other communication to a party under
this Agreement will be in writing (except that Account Directions may be given
orally), will be sent to the party's address set forth under its name below or
to such other address as the party may notify the other parties and will be
effective on receipt.
SECTION 14. Binding Effect. This Agreement shall become effective when
it shall have been executed by the Grantor, the Administrative Agent and the
Account Holder, and thereafter shall be binding upon and inure to the benefit of
the Grantor, the Administrative Agent and the Account Holder and their
respective successors and assigns.
SECTION 15. Execution in Counterparts. This Agreement may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
Delivery of an executed counterpart of a signature page to this Agreement by
telecopier shall be effective as delivery of an original executed counterpart of
this Agreement.
6
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
[NAME OF GRANTOR]
By
-------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Address:
----------------------------------------
----------------------------------------
CITIBANK USA, INC., as
Administrative Agent
By
-------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Address:
----------------------------------------
----------------------------------------
[NAME OF ACCOUNT HOLDER]
By
-------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Address:
----------------------------------------
----------------------------------------
EXHIBIT D TO THE
SECURITY AGREEMENT
FORM OF SECURITIES ACCOUNT CONTROL AGREEMENT
CONTROL AGREEMENT dated as of ________, ____, among____________, a
___________ (the "GRANTOR"), CITIBANK USA, INC., as Administrative Agent (the
"ADMINISTRATIVE AGENT"), and _________, a _________ ("____________"), as
securities intermediary (the "SECURITIES INTERMEDIARY").
PRELIMINARY STATEMENTS:
(1) The Grantor has granted the Administrative Agent a security
interest (the "SECURITY INTEREST") in account no. _______________ maintained by
the Securities Intermediary for the Grantor (the "ACCOUNT").
(2) Terms defined in Article 8 or 9 of the Uniform Commercial Code in
effect in the State of New York ("N.Y. UNIFORM COMMERCIAL CODE") are used in
this Agreement as such terms are defined in such Article 8 or 9.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained herein, the parties hereto hereby agree as follows:
SECTION 1. The Account. The Grantor and Securities Intermediary
represent and warrant to, and agree with, the Grantor and the Administrative
Agent that:
(a) The Securities Intermediary maintains the Account for the Grantor,
and all property held by the Securities Intermediary for the account of the
Grantor is, and will continue to be, credited to the Account.
(b) The Account is a securities account. The Securities Intermediary
is the securities intermediary with respect to the property credited from
time to time to the Account. The Grantor is the entitlement holder with
respect to the property credited from time to time to the Account.
(c) The State of New York is, and will continue to be, the Securities
Intermediary's jurisdiction of organization for purposes of Section
8-110(e) of the UCC so long as the Security Interest shall remain in
effect.
(d) The Grantor and Securities Intermediary do not know of any claim
to or interest in the Account or any property credited to the Account,
except for claims and interests of the parties referred to in this
Agreement.
SECTION 2. Control by Administrative Agent. The Securities
Intermediary will comply with all notifications it receives directing it to
transfer or redeem any property in the Account (each an "ENTITLEMENT ORDER") or
other directions concerning the Account (including
2
directions to distribute to the Administrative Agent proceeds of any such
transfer or redemption or interest or dividends on property in the Account)
originated by the Administrative Agent without further consent by the Grantor or
any other person.
SECTION 3. Grantor's Rights in Account.
(a) Except as otherwise provided in this Section 3, the Securities
Intermediary will comply with Entitlement Orders originated by the Grantor
without further consent by the Administrative Agent.
(b) Until the Securities Intermediary receives a notice from the
Administrative Agent that the Administrative Agent will exercise exclusive
control over the Account (a "NOTICE OF EXCLUSIVE CONTROL"), the Securities
Intermediary may distribute to the Grantor all interest and regular cash
dividends on property in the Account.
(c) The Securities Intermediary will not comply with any Entitlement
Order originated by the Grantor that would require the Securities Intermediary
to make a free delivery to the Grantor or any other person.
(d) If the Securities Intermediary receives from the Administrative
Agent a Notice of Exclusive Control, the Securities Intermediary will cease:
(i) complying with Entitlement Orders or other directions concerning
the Account originated by the Grantor and
(ii) distributing to the Grantor interest and dividends on property in
the Account.
SECTION 4. Priority of Administrative Agent's Security Interest. (a)
The Securities Intermediary subordinates in favor of the Administrative Agent
any security interest, lien, or right of setoff it may have, now or in the
future, against the Account or property in the Account, except that the
Securities Intermediary will retain its prior lien on property in the Account to
secure payment for property purchased for the Account and normal commissions and
fees for the Account.
(b) The Securities Intermediary will not agree with any Person not
party to this Agreement that the Securities Intermediary will comply with
Entitlement Orders originated by such Person.
SECTION 5. Statements, Confirmations, and Notices of Adverse Claims.
(a) The Securities Intermediary will send copies of all statements and
confirmations for the Account simultaneously to the Grantor and the
Administrative Agent.
(b) When the Securities Intermediary knows of any claim or interest in
the Account or any property credited to the Account other than the claims and
interests of the parties referred to in this Agreement, the Securities
Intermediary will promptly the Administrative Agent and the Grantor of such
claim or interest.
3
SECTION 6. The Securities Intermediary's Responsibility. (a) Except
for permitting a withdrawal, delivery, or payment in violation of Section 3, the
Securities Intermediary will not be liable to the Administrative Agent for
complying with Entitlement Orders or other directions concerning the Account
from the Grantor that are received by the Securities Intermediary before the
Securities Intermediary receives and has a reasonable opportunity to act on a
Notice of Exclusive Control.
(b) The Securities Intermediary will not be liable to the Grantor or
the Administrative Agent for complying with a Notice of Exclusive Control or
with an Entitlement Order or other direction concerning the Account originated
by the Administrative Agent , even if the Grantor notifies the Securities
Intermediary that the Administrative Agent is not legally entitled to issue the
Notice of Exclusive Control or Entitlement Order or such other direction unless
the Securities Intermediary takes the action after it is served with an
injunction, restraining order, or other legal process enjoining it from doing
so, issued by a court of competent jurisdiction, and had a reasonable
opportunity to act on the injunction, restraining order or other legal process.
(c) This Agreement does not create any obligation of the Securities
Intermediary except for those expressly set forth in this Agreement and in Part
5 of Article 8 of the N.Y. Uniform Commercial Code. In particular, the
Securities Intermediary need not investigate whether the Administrative Agent is
entitled under the Administrative Agent's agreements with the Grantor or
Administrative Agent to give an Entitlement Order or other direction concerning
the Account or a Notice of Exclusive Control. The Securities Intermediary may
rely on notices and communications it believes given by the appropriate party.
SECTION 7. Indemnity. The Grantor will indemnify the Securities
Intermediary, its officers, directors, employees and agents against claims,
liabilities and expenses arising out of this Agreement (including reasonable
attorney's fees and disbursements), except to the extent the claims, liabilities
or expenses are caused by the Securities Intermediary's gross negligence or
willful misconduct as found by a court of competent jurisdiction in a final,
non-appealable judgment.
SECTION 8. Termination; Survival. (a) The Administrative Agent may
terminate this Agreement by notice to the Securities Intermediary and the
Grantor. If the Administrative Agent notifies the Securities Intermediary that
the Security Interest has terminated, this Agreement will immediately terminate.
(b) The Securities Intermediary may terminate this Agreement on 60
days' prior notice to the Administrative Agent and the Grantor; provided that
before such termination the Securities Intermediary and the Grantor shall make
arrangements to transfer the property in the Account to another securities
intermediary that shall have executed, together with the Grantor, a control
agreement in favor of the Administrative Agent in respect of such property in
substantially the form of this Agreement or otherwise in form and substance
satisfactory to the Administrative Agent.
(c) Sections 6 and 7 will survive termination of this Agreement.
4
SECTION 9. Governing Law. This Agreement and the Account will be
governed by the law of the State of New York. The Securities Intermediary and
the Grantor may not change the law governing the Account without the
Administrative Agent's express prior written agreement.
SECTION 10. Entire Agreement. This Agreement is the entire agreement,
and supersedes any prior agreements, and contemporaneous oral agreements, of the
parties concerning its subject matter.
SECTION 11. Amendments. No amendment of, or waiver of a right under,
this Agreement will be binding unless it is in writing and signed by the party
to be charged.
SECTION 12. Financial Assets. To the fullest extent permitted by
applicable law, all property credited from time to time to the Account will be
treated as financial assets under Article 8 of the N.Y. Uniform Commercial Code.
SECTION 13. Notices. A notice or other communication to a party under
this Agreement will be in writing (except that Entitlement Orders may be given
orally), will be sent to the party's address set forth under its name below or
to such other address as the party may notify the other parties and will be
effective on receipt.
SECTION 14. Binding Effect. This Agreement shall become effective when
it shall have been executed by the Grantor, the Administrative Agent and the
Securities Intermediary, and thereafter shall be binding upon and inure to the
benefit of the Grantor, the Administrative Agent and the Securities Intermediary
and their respective successors and assigns.
SECTION 15. Execution in Counterparts. This Agreement may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
Delivery of an executed counterpart of a signature page to this Agreement by
telecopier shall be effective as delivery of an original executed counterpart of
this Agreement.
5
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
[NAME OF GRANTOR]
By
-------------------------------------
Title:
---------------------------------
Address:
----------------------------------------
----------------------------------------
CITIBANK USA, INC., as
Administrative Agent
By
-------------------------------------
Title:
---------------------------------
Address:
388 Greenwich Street
New York, NY 10013
[NAME OF SECURITIES
INTERMEDIARY]
By
-------------------------------------
Title:
---------------------------------
Address:
----------------------------------------
----------------------------------------
EXHIBIT E TO THE
SECURITY AGREEMENT
FORM OF INTELLECTUAL PROPERTY SECURITY AGREEMENT
This INTELLECTUAL PROPERTY SECURITY AGREEMENT (as amended, amended and
restated, supplemented or otherwise modified from time to time, this
"AGREEMENT") dated ________, ____, is made by the Persons listed on the
signature pages hereof (collectively, the "GRANTORS") in favor of CITIBANK USA,
INC. ("Citibank"), as Administrative Agent (the "ADMINISTRATIVE AGENT") for the
Secured Parties (as defined in the Credit Agreement referred to below).
WHEREAS, AREP Oil & Gas, LLC, a Delaware limited liability company,
has entered into a Credit Agreement dated as of December 20, 2005 (as amended,
amended and restated, supplemented or otherwise modified from time to time, the
"CREDIT AGREEMENT"), with Citibank, as administrative agent, Bear Stearns & Co.,
Inc., as syndication agent, and the Secured Parties party thereto. Terms defined
in the Credit Agreement and not otherwise defined herein are used herein as
defined in the Credit Agreement.
WHEREAS, as a condition precedent to the making of Loans and the
issuance of Letters of Credit by the Secured Parties under the Credit Agreement
and the entry into Lender Hedging Contracts by the Lenders from time to time,
each Grantor has executed and delivered that certain Security Agreement dated as
of December 20, 2005 made by the Grantors to the Administrative Agent (as
amended, amended and restated, supplemented or otherwise modified from time to
time, the "SECURITY AGREEMENT").
WHEREAS, under the terms of the Security Agreement, the Grantors have
granted to the Administrative Agent, for the ratable benefit of the Secured
Parties, a security interest in, among other property, certain intellectual
property of the Grantors, and have agreed as a condition thereof to execute this
Agreement for recording with the U.S. Patent and Trademark Office, the United
States Copyright Office and other governmental authorities.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each Grantor agrees as follows:
SECTION 1. Grant of Security. Each Grantor hereby grants to the
Administrative Agent for the ratable benefit of the Secured Parties a security
interest in all of such Grantor's right, title and interest in and to the
following (the "COLLATERAL"):
(i) the patents and patent applications set forth in Schedule A
hereto;
(ii) the trademark and service mark registrations and
applications set forth in Schedule B hereto (provided that no security
interest shall be granted in United States intent-to-use trademark
applications to the extent that, and solely during the period in
which, the grant of a security interest therein would impair the
validity or enforceability of such intent-to-use trademark
applications under applicable federal law), together with the goodwill
symbolized thereby;
2
(iii) all copyrights, whether registered or unregistered, now
owned or hereafter acquired by such Grantor, including the copyright
registrations and applications and exclusive copyright licenses set
forth in Schedule C hereto;
(iv) all reissues, divisions, continuations,
continuations-in-part, extensions, renewals and reexaminations of any
of the foregoing, all rights in the foregoing provided by
international treaties or conventions, all rights corresponding
thereto throughout the world and all other rights of any kind
whatsoever of such Grantor accruing thereunder or pertaining thereto;
(v) any and all claims for damages and injunctive relief for
past, present and future infringement, dilution, misappropriation,
violation, misuse or breach with respect to any of the foregoing, with
the right, but not the obligation, to sue for and collect, or
otherwise recover, such damages; and
(vi) any and all proceeds of, collateral for, income, royalties
and other payments now or hereafter due and payable with respect to,
and supporting obligations relating to, any and all of the Collateral
of or arising from any of the foregoing.
SECTION 2. Security for Obligations. The grant of a security interest
in, the Collateral by each Grantor under this Agreement secures the payment of
all Obligations of any Credit Party that are now or hereafter existing under or
in respect of the Loan Documents and all Lender Hedging Obligations of any
Credit Party that are now or hereafter existing, in each case whether direct or
indirect, absolute or contingent, and whether for principal, reimbursement
obligations, interest, premiums, penalties, fees, indemnifications, contract
causes of action, costs, expenses or otherwise.
SECTION 3. Recordation. Each Grantor authorizes and requests that the
Register of Copyrights, the Commissioner for Patents and the Commissioner for
Trademarks and any other applicable government officer record this Agreement.
SECTION 4. Execution in Counterparts. This Agreement may be executed
in any number of counterparts, each of which when so executed shall be deemed to
be an original and all of which taken together shall constitute one and the same
agreement.
SECTION 5. Grants, Rights and Remedies. This Agreement has been
entered into in conjunction with the provisions of the Security Agreement. Each
Grantor does hereby acknowledge and confirm that the grant of the security
interest hereunder to, and the rights and remedies of, the Administrative Agent
with respect to the Collateral are more fully set forth in the Security
Agreement, the terms and provisions of which are incorporated herein by
reference as if fully set forth herein.
SECTION 6. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.
3
IN WITNESS WHEREOF, each Grantor has caused this Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
[NAME OF GRANTOR]
By
-------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Address for Notices:
----------------------------------------
----------------------------------------
----------------------------------------
[NAME OF GRANTOR]
By
-------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Address for Notices:
----------------------------------------
----------------------------------------
----------------------------------------
EXHIBIT F TO THE
SECURITY AGREEMENT
FORM OF INTELLECTUAL PROPERTY SECURITY AGREEMENT SUPPLEMENT
This INTELLECTUAL PROPERTY SECURITY AGREEMENT SUPPLEMENT (this
"SUPPLEMENT") dated ________, ____, is made by the Person listed on the
signature page hereof (the "GRANTOR") in favor of CITIBANK USA, INC.
("Citibank"), as Administrative Agent (the "ADMINISTRATIVE AGENT") for the
Lenders (as defined in the Credit Agreement referred to below).
WHEREAS, AREP Oil & Gas LLC, a Delaware limited liability company, has
entered into the Credit Agreement dated as of December 20, 2005 (as amended,
amended and restated, supplemented or otherwise modified from time to time, the
"CREDIT AGREEMENT"), with Citibank, as administrative agent, Bear Stearns & Co.,
Inc., as syndication agent, and the Lenders party thereto. Terms defined in the
Credit Agreement and not otherwise defined herein are used herein as defined in
the Credit Agreement.
WHEREAS, pursuant to the Credit Agreement, the Grantor and certain
other Persons have executed and delivered the Security Agreement dated as of
December 20, 2005 made by the Grantor and such other Persons to the
Administrative Agent (as amended, amended and restated, supplemented or
otherwise modified from time to time, the "SECURITY AGREEMENT") and the
Intellectual Property Security Agreement dated ________, ______ (as amended,
amended and restated, supplemented or otherwise modified from time to time, the
"IP SECURITY AGREEMENT").
WHEREAS, under the Security Agreement, the Grantor has granted to the
Administrative Agent, for the ratable benefit of the Secured Parties, a security
interest in the Additional Collateral (as defined in Section 1 below) of the
Grantor and has agreed as a condition thereof to execute this Supplement for
recording with the U.S. Patent and Trademark Office, the United States Copyright
Office and other governmental authorities.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Grantor agrees as follows:
SECTION 1. Grant of Security. Each Grantor hereby grants to the
Administrative Agent, for the ratable benefit of the Secured Parties, a security
interest in all of such Grantor's right, title and interest in and to the
following (the "ADDITIONAL COLLATERAL"):
(i) the patents and patent applications set forth in Schedule A
hereto;
(ii) the trademark and service mark registrations and
applications set forth in Schedule B hereto (provided that no security
interest shall be granted in United States intent-to-use trademark
applications to the extent that, and solely during the period in
which, the grant of a security interest therein would impair the
validity or enforceability of such intent-to-use trademark
applications under applicable federal law), together with the goodwill
symbolized thereby;
2
(iii) the copyright registrations and applications and exclusive
copyright licenses set forth in Schedule C hereto;
(iv) all reissues, divisions, continuations,
continuations-in-part, extensions, renewals and reexaminations of any
of the foregoing, all rights in the foregoing provided by
international treaties or conventions, all rights corresponding
thereto throughout the world and all other rights of any kind
whatsoever of such Grantor accruing thereunder or pertaining thereto;
(v) all any and all claims for damages and injunctive relief for
past, present and future infringement, dilution, misappropriation,
violation, misuse or breach with respect to any of the foregoing, with
the right, but not the obligation, to sue for and collect, or
otherwise recover, such damages; and
(vi) any and all proceeds of, collateral for, income, royalties
and other payments now or hereafter due and payable with respect to,
and supporting obligations relating to, any and all of the foregoing
or arising from any of the foregoing.
SECTION 2. Supplement to Security Agreement. Schedule VI to the
Security Agreement is, effective as of the date hereof, hereby supplemented to
add to such Schedule the Additional Collateral.
SECTION 3. Security for Obligations. The grant of a security interest
in the Additional Collateral by the Grantor under this Supplement secures the
payment of all Obligations of any Credit Party that are now or hereafter
existing under or in respect of the Loan Documents and all Lender Hedging
Obligations of any Credit Party that are now or hereafter existing, in each case
whether direct or indirect, absolute or contingent, and whether for principal,
reimbursement obligations, interest, premiums, penalties, fees,
indemnifications, contract causes of action, costs, expenses or otherwise.
SECTION 4. Recordation. The Grantor authorizes and requests that the
Register of Copyrights, the Commissioner for Patents and the Commissioner for
Trademarks and any other applicable government officer to record this
Supplement.
SECTION 5. Grants, Rights and Remedies. This Supplement has been
entered into in conjunction with the provisions of the Security Agreement. The
Grantor does hereby acknowledge and confirm that the grant of the security
interest hereunder to, and the rights and remedies of, the Administrative Agent
with respect to the Additional Collateral are more fully set forth in the
Security Agreement, the terms and provisions of which are incorporated herein by
reference as if fully set forth herein.
SECTION 6. Governing Law. This Supplement shall be governed by, and
construed in accordance with, the laws of the State of New York.
3
IN WITNESS WHEREOF, the Grantor has caused this Supplement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
[NAME OF GRANTOR]
By
-------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Address for Notices:
----------------------------------------
----------------------------------------
----------------------------------------
EXHIBIT G TO THE
SECURITY AGREEMENT
FORM OF CONSENT TO ASSIGNMENT OF LETTER OF CREDIT RIGHTS
To:
Citicorp USA, Inc., as Administrative Agent
388 Greenwich Street
New York, NY 10013
[INSERT NAME OF BENEFICIARY], as Beneficiary
[____________________]
[____________________]
[____________________]
We refer to the [INSERT ALL IDENTIFYING INFORMATION WITH RESPECT TO
RELEVANT LETTER OF CREDIT] (as it may be amended, supplemented or otherwise
modified from time to time, the "Letter of Credit. The Letter of Credit has been
established in favor of [INSERT NAME OF BENEFICIARY], as beneficiary (the
"Beneficiary"), and we are the issuing bank (the "ISSUING BANK") required to
give value thereunder pursuant to one [or more] drawing[s] upon the satisfaction
of the conditions stated in the Letter of Credit. The liability of the Issuing
Bank for action or omissions under the Letter of Credit is governed by the laws
of [INSERT RELEVANT JURISDICTION], as chosen by agreement in the Letter of
Credit. The signatories to this consent letter are the only persons obligated to
give value under the Letter of Credit.
We confirm that there is no term in the Letter of Credit or other
restriction that prohibits, restricts or requires any person's consent to the
Beneficiary's assignment of or creation of a security interest in the rights to
payment or performance under the Letter of Credit. We hereby consent to and
acknowledge the assignment by the Beneficiary of all proceeds of and rights to
payment and performance under the Letter of Credit in favor of Citibank USA,
Inc., as administrative agent (the "ADMINISTRATIVE AGENT") pursuant to the
Security Agreement dated as of December 20, 2005 executed by the Beneficiary and
other parties thereto, as grantors, in favor of the Administrative Agent, as
such agreement may be amended, amended and restated, supplemented or otherwise
modified from time to time (the "SECURITY AGREEMENT").
We agree to pay, irrespective of, and without deduction for, any
counterclaim, defense, recoupment or set-off, all proceeds of the Letter of
Credit that would otherwise be paid to the Beneficiary directly to the
Administrative Agent to the following account:
[____________________]
[____________________]
[____________________]
[____________________]
2
We confirm and agree that the Letter of Credit is, and shall continue
to be, in full force and effect and is hereby ratified and confirmed in all
respects and that the Administrative Agent shall have no liability or obligation
under or with respect to the Letter of Credit or any document related thereto as
a result of this consent letter, the Security Agreement or otherwise.
This consent letter may be executed in any number of counterparts and
by different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute but one and the same consent letter. Delivery of an executed
counterpart of a signature page to this consent letter by telecopier shall be
effective as delivery of an original executed counterpart of this consent
letter.
This consent letter shall be governed by, and construed in accordance
with, the laws of the State of New York.
[NAME OF ISSUING BANK]
By
-------------------------------------
Name:
----------------------------------
Title:
---------------------------------
[NAME OF NOMINATED PERSON]
By
-------------------------------------
Name:
----------------------------------
Title:
---------------------------------
The above is acknowledged and agreed to:
[NAME OF GRANTOR/BENEFICIARY]
By
----------------------------------
Name:
-------------------------------
Title:
------------------------------
Address for Notices:
- -------------------------------------
- -------------------------------------
- -------------------------------------