Exhibit 10.2

 

EXECUTION VERSION

 

 

 

COLLATERAL TRUST AGREEMENT

 

dated as of March 12, 2015

 

among

 

ENERGY XXI GULF COAST, INC.,

as the Company,

 

the Guarantors from time to time party hereto,

 

U.S. Bank National Association,

as Trustee under the Indenture,

 

the other Parity Lien Debt Representatives from time to time party hereto

 

and

 

U.S. Bank National Association,
as Collateral Trustee

 

 

 

 

 

 

TABLE OF CONTENTS

 

    Page       Article 1. DEFINITIONS; PRINCIPLES OF CONSTRUCTION 2

SECTION 1.1 Defined Terms 2 SECTION 1.2 Rules of Interpretation 10

      Article 2. THE TRUST ESTATE 11

SECTION 2.1 Declaration of Trust 11 SECTION 2.2 Collateral Shared Equally and
Ratably 12

      Article 3. Obligations and powers of Collateral Trustee 12

SECTION 3.1 Appointment and Undertaking of the Collateral Trustee 12 SECTION 3.2
Release or Subordination of Liens 13 SECTION 3.3 Enforcement of Liens 14 SECTION
3.4 Application of Proceeds 14 SECTION 3.5 Powers of the Collateral Trustee 15
SECTION 3.6 Documents and Communications 15 SECTION 3.7 For Sole and Exclusive
Benefit of Holders of Parity Lien Obligations 16 SECTION 3.8 Additional Parity
Lien Debt 16

      Article 4. Obligations enforceable by THE COMPANY AND THE  OTHER GRANTORS
18

SECTION 4.1 Release of Liens on Collateral 18 SECTION 4.2 Delivery of Copies to
Parity Lien Representatives 20 SECTION 4.3 Collateral Trustee not Required to
Serve, File or Record 20 SECTION 4.4 Release of Liens in Respect of Notes 21
SECTION 4.5 Release of Liens in Respect of any Series of Parity Lien Debt other
than the Notes 21

      Article 5. Immunities of the Collateral Trustee 22

SECTION 5.1 No Implied Duty 22 SECTION 5.2 Appointment of Agents and Advisors 22
SECTION 5.3 Other Agreements 22 SECTION 5.4 Solicitation of Instructions 22
SECTION 5.5 Limitation of Liability 23 SECTION 5.6 Documents in Satisfactory
Form 23 SECTION 5.7 Entitled to Rely 23 SECTION 5.8 Parity Lien Debt Default 23
SECTION 5.9 Actions by Collateral Trustee 24 SECTION 5.10 Security or Indemnity
in favor of the Collateral Trustee 24 SECTION 5.11 Rights of the Collateral
Trustee 24 SECTION 5.12 Limitations on Duty of Collateral Trustee in Respect of
Collateral 24 SECTION 5.13 Assumption of Rights, Not Assumption of Duties 25
SECTION 5.14 No Liability for Clean Up of Hazardous Materials 25 SECTION 5.15
Other Relationships with the Company or Guarantors 26

 

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Article 6. Resignation and Removal of the Collateral Trustee 26

SECTION 6.1 Resignation or Removal of Collateral Trustee 26 SECTION 6.2
Appointment of Successor Collateral Trustee 26 SECTION 6.3 Succession 27 SECTION
6.4 Merger, Conversion or Consolidation of Collateral Trustee 27 SECTION 6.5
Concerning the Collateral Trustee and the Parity Lien Representatives 27

      Article 7. miscellaneous provisions 28

SECTION 7.1 Amendment 28 SECTION 7.2 Voting 30 SECTION 7.3 Further Assurances 30
SECTION 7.4 Successors and Assigns 31 SECTION 7.5 Delay and Waiver 32 SECTION
7.6 Notices 32 SECTION 7.7 Entire Agreement 33 SECTION 7.8 Compensation;
Expenses 33 SECTION 7.9 Indemnity 34 SECTION 7.10 Severability 35 SECTION 7.11
Headings 35 SECTION 7.12 Obligations Secured 35 SECTION 7.13 Governing Law 35
SECTION 7.14 Consent to Jurisdiction 35 SECTION 7.15 Waiver of Jury Trial 36
SECTION 7.16 Counterparts, Electronic Signatures 36 SECTION 7.17 Effectiveness
36 SECTION 7.18 Grantors and Additional Grantors 37 SECTION 7.19 Insolvency 37
SECTION 7.20 Rights and Immunities of Parity Lien Representatives 37 SECTION
7.21 Intercreditor Agreement 37 SECTION 7.22 Force Majeure 38

 

EXHIBIT A – Additional Parity Lien Debt Certificate

EXHIBIT B – Form of Collateral Trust Joinder—Additional Parity Lien Debt

EXHIBIT C – Form of Collateral Trust Joinder—Additional Grantors

 

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This Collateral Trust Agreement (as amended, supplemented, amended and restated
or otherwise modified form time to time in accordance with Section 7.1 hereof,
this “Agreement”) is dated as of March 12, 2015 and is by and among Energy XXI
Gulf Coast, Inc. (the “Company”), Intermediate Holdco and the Subsidiary
Guarantors from time to time party hereto, U.S. Bank National Association, as
Trustee (as defined below), and U.S. Bank National Association, as Collateral
Trustee (in such capacity and together with its successors in such capacity, the
“Collateral Trustee”).

 

RECITALS

 

The Company intends to issue 11.000% Senior Secured Second Lien Notes due 2020
(the “Initial Notes”) in an aggregate principal amount of $1,450,000,000
pursuant to an Indenture dated as of the date hereof (as amended, supplemented,
amended and restated or otherwise modified and in effect from time to time, the
“Indenture”) among the Company, the guarantors party thereto and U.S. Bank
National Association, as trustee (in such capacity and together with its
successors in such capacity, the “Trustee”).

 

The Company, Intermediate Holdco and the Subsidiary Guarantors intend to secure
the Obligations in respect of the Initial Notes under the Indenture, any future
Parity Lien Debt and any other Parity Lien Obligations, with Liens on all
present and future Collateral to the extent that such Liens have been provided
for in the applicable Parity Lien Security Documents.

 

This Agreement sets forth the terms on which each Parity Lien Secured Party has
appointed the Collateral Trustee to act as the collateral trustee for the
present and future holders of the Parity Lien Obligations to receive, hold,
maintain, administer and distribute the Collateral at any time delivered to the
Collateral Trustee or the subject of the Parity Lien Security Documents, and to
enforce the Parity Lien Security Documents and all interests, rights, powers and
remedies of the Collateral Trustee with respect thereto or thereunder and the
proceeds thereof.

 

Capitalized terms used in this Agreement have the meanings assigned to them
above or in Article 1 below.

 

agreement

 

In consideration of the premises and the mutual agreements herein set forth, the
receipt and sufficiency of which are hereby acknowledged, the parties to this
Agreement hereby agree as follows:

 

 

 

 

Article 1.      DEFINITIONS; PRINCIPLES OF CONSTRUCTION

 

SECTION 1.1           Defined Terms. The following terms will have the following
meanings:

 

“Act of Parity Lien Debtholders” means, as to any matter at any time, a
direction in writing delivered to the Collateral Trustee by or with the written
consent of the holders of Parity Lien Debt representing the Required Parity Lien
Debtholders.

 

“Additional Notes” has the meaning set forth in the Indenture as in effect on
the date hereof.

 

“Additional Parity Lien Debt” has the meaning set forth in Section 3.8(b).

 

“Additional Parity Lien Debt Certificate” means a notice is substantially the
form of Exhibit A.

 

“Additional Secured Debt Designation” means the written agreement of the holders
of any Series of Parity Lien Debt or their Parity Lien Representative, as set
forth in the indenture, credit agreement or other agreement governing such
Series of Parity Lien Debt, for the benefit of each existing and future holder
of Priority Lien Debt, the Priority Lien Collateral Agent and each existing and
future holder of Priority Liens:

 

(1)         that all Parity Lien Obligations will be and are secured equally and
ratably by all Parity Liens at any time granted by the Company or any Guarantor
to secure any Obligations in respect of such Series of Parity Lien Debt, whether
or not upon property otherwise constituting collateral for such Series of Parity
Lien Debt, and that all such Parity Liens will be enforceable by the Collateral
Trustee for the benefit of all holders of Parity Lien Obligations equally and
ratably;

 

(2)         that the holders of Obligations in respect of such Series of Parity
Lien Debt are bound by the provisions of this Agreement, including the
provisions relating to the ranking of Parity Liens and the order of application
of proceeds from the enforcement of Parity Liens; and

 

(3)         consenting to and directing the Collateral Trustee to perform its
obligations under this Agreement and the Parity Lien Security Documents.

 

“Affiliate” of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, “control,”
as used with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities, by
agreement or otherwise; provided that beneficial ownership of 10% or more of the
Voting Stock of a Person will be deemed to be control. For purposes of this
definition, the terms “controlling,” “controlled by” and “under common control
with” have correlative meanings. For the avoidance of doubt, the Parent and any
of its existing or future Subsidiaries, in addition to the Company and its
Restricted Subsidiaries, will be considered Affiliates of the Company.

 

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“Agreement” has the meaning set forth in the preamble.

 

“Board of Directors” means: (1) with respect to a corporation, the board of
directors of the corporation; (2) with respect to a partnership, the Board of
Directors of the general partner of the partnership; and (3) with respect to any
other Person, the board or committee of such Person serving a similar function.

 

“Business Day” means each day that is not a Saturday, Sunday or other day on
which banking institutions in Houston, Texas or in New York, New York are
authorized or required by law to close.

 

“Capital Stock” means:

 

(1) in the case of a corporation, corporate stock;

 

(2) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock;

 

(3) in the case of a partnership or limited liability company, partnership
interests (whether general or limited) or membership interests; and

 

(4) any other interest or participation that confers on a Person the right to
receive a share of the profits and losses of, or distributions of assets of, the
issuing Person.

 

“Collateral” means all properties and assets of the Company and the Guarantors
now owned or at any time hereafter acquired in which Liens have been granted, or
purported to be granted, to the Collateral Trustee to secure any or all of the
Parity Lien Obligations, and from and after the time the Collateral Trustee is
required to release its Liens pursuant to Section 3.2 upon any properties or
assets, shall exclude such properties or assets; provided that if such Liens are
required to be released as a result of the sale, transfer or other disposition
of any properties or assets of the Company or any Guarantor, such assets or
properties will cease to be excluded from the Collateral if the Company or any
Guarantor thereafter acquires or reacquires such assets or properties.

 

“Collateral Trustee” has the meaning set forth in the preamble.

 

“Collateral Trust Joinder” means (i) with respect to the provisions of this
Agreement relating to any Additional Parity Lien Debt, an agreement
substantially in the form of Exhibit B, and (ii) with respect to the provisions
of this Agreement relating to the addition of additional Grantors, an agreement
substantially in the form of Exhibit C.

 

“Company” has the meaning set forth in the preamble.

 

“Credit Agreement” means the “Priority Credit Agreement” as defined in the
Intercreditor Agreement.

 

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“Credit Facilities” means one or more debt facilities (including, without
limitation, the Credit Agreement), commercial paper facilities or capital
markets financings, in each case with banks or other institutional lenders or
investors providing for revolving credit loans, term loans, receivables
financing (including through the sale of receivables to such lenders or to
special purpose entities formed to borrow from (or sell receivables to) such
lenders against such receivables), letters of credit or capital markets
financings, in each case, as amended, restated, modified, renewed, refunded,
replaced or refinanced (including refinancing with any capital markets
transaction) in whole or in part from time to time with banks or other
institutional lenders or investors.

 

“EPL” means EPL Oil & Gas, Inc., a Delaware corporation and a wholly owned
Subsidiary of the Company, together with its successors and assigns.

 

“Grantor” means each of and “Grantors” means, collectively, the Company and the
Guarantors and any other Person (if any) that at any time provides collateral
security for any Parity Lien Obligations.

 

“Guarantee” means a guarantee other than by endorsement of negotiable
instruments for collection in the ordinary course of business, direct or
indirect, in any manner including, by way of a pledge of assets or through
letters of credit or reimbursement agreements in respect thereof, of all or any
part of any Indebtedness. When used as a verb, “Guarantee” has a correlative
meaning.

 

“Guarantor” means Parent, Intermediate Holdco and each Subsidiary of the Company
who has Guaranteed payment of any Parity Lien Obligations, and their respective
successors and assigns, in each case until their respective Guarantee of all
Parity Lien Obligations is released in accordance with the terms of the
applicable Parity Lien Documents.

 

“Indebtedness” has the meaning assigned to such term in the Indenture or to such
term or other similar term in any applicable Parity Lien Document.

 

“Indemnified Liabilities” means any and all liabilities (including all
environmental liabilities), obligations, losses, damages, penalties, actions,
judgments, suits, costs, taxes, expenses or disbursements of any kind or nature
whatsoever with respect to the execution, delivery, performance, administration
or enforcement of this Agreement or any of the other Parity Lien Security
Documents, including any of the foregoing relating to the use of proceeds of any
Parity Lien Debt or the violation of, noncompliance with or liability under, any
law (including environmental laws) applicable to or enforceable against the
Company, any Subsidiary of the Company or any Guarantor or any of the Collateral
and all reasonable costs and expenses (including reasonable fees and expenses of
legal counsel selected by the Indemnitee) incurred by any Indemnitee in
connection with any claim, action, investigation or proceeding in any respect
relating to any of the foregoing, whether or not suit is brought.

 

“Indemnitee” has the meaning set forth in Section 7.9(a).

 

“Indenture” has the meaning set forth in the recitals.

 

“Initial Notes” has the meaning set forth in the recitals.

 

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“Insolvency or Liquidation Proceeding” means:

 

(1)         any case commenced by or against the Company, EPL or any Guarantor
under Title 11, U.S. Code or any similar federal or state law for the relief of
debtors, any other proceeding for the reorganization, recapitalization or
adjustment or marshalling of the assets or liabilities of the Company, EPL or
any Guarantor, any receivership or assignment for the benefit of creditors
relating to the Company, EPL or any Guarantor or any similar case or proceeding
relative to the Company, EPL or any Guarantor or its creditors, as such, in each
case whether or not voluntary;

 

(2)         any liquidation, dissolution, marshalling of assets or liabilities
or other winding up of or relating to the Company, EPL or any Guarantor, in each
case whether or not voluntary and whether or not involving bankruptcy or
insolvency; or

 

(3)         any other proceeding of any type or nature in which substantially
all claims of creditors of the Company, EPL or any Guarantor are determined and
any payment or distribution is or may be made on account of such claims.

 

“Intercreditor Agreement” means that certain Intercreditor Agreement, dated as
of the date hereof, among the Company, EPL, Intermediate Holdco, the Subsidiary
Guarantors, the Collateral Trustee, on behalf of itself and the holders of the
Notes and any other Parity Lien Obligations, the Priority Lien Collateral Agent,
and the other parties from time to time party thereto, as the same may be
amended, restated, supplemented or otherwise modified or replaced from time to
time.

 

“Intermediate Holdco” means Energy XXI USA, Inc., a Delaware corporation,
together with its successors and assigns.

 

“Junior Lien” has the meaning assigned to the term “Third Lien” in the
Intercreditor Agreement.

 

“Junior Lien Debt” has the meaning assigned to the term “Third Lien Debt” in the
Intercreditor Agreement.

 

“Junior Lien Documents” has the meaning assigned to the term “Third Lien
Documents” in the Intercreditor Agreement.

 

“Lien” means, with respect to any asset, any mortgage, lien, pledge, charge,
security interest, hypothecation, or encumbrance of any kind in respect of such
asset, whether or not filed, recorded or otherwise perfected under applicable
law, including any conditional sale or other title retention agreement, any
lease in the nature thereof, any agreement to give a security interest therein
and any filing of or agreement to give any financing statement under the Uniform
Commercial Code (or equivalent statutes) of any jurisdiction.

 

“Notes” means, collectively, the Initial Notes and the Additional Notes for
which the requirements set forth in Section 3.8 of this Agreement have been
satisfied.

 

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“Note Documents” means the Indenture, the Notes, the Intercreditor Agreement and
the Notes Security Documents.

 

“Notes Intermediate Holdco Pledge Agreement” means the Second Lien Pledge
Agreement and Irrevocable Proxy, dated as of the date hereof, among Intermediate
Holdco and the Collateral Trustee, as the same may be amended, supplemented or
otherwise modified from time to time.

 

“Notes Intermediate Holdco Security Agreement” means the Second Lien Security
Agreement, dated as of the date hereof, among Intermediate Holdco and the
Collateral Trustee, as the same may be amended, supplemented or otherwise
modified from time to time.

 

“Notes Security Agreement” means the Second Lien Pledge and Security Agreement
and Irrevocable Proxy, dated as of the Issue Date, among the Company, the
Subsidiary Guarantors party thereto and the Collateral Trustee, on behalf of
itself and the holders of the Notes, as the same may be amended, supplemented or
otherwise modified or replaced from time to time.

 

“Notes Security Documents” means this Agreement, each Collateral Trust Joinder,
the Notes Security Agreement, the Notes Intermediate Holdco Pledge Agreement,
the Notes Intermediate Holdco Security Agreement and all other security
agreements, pledge agreements, collateral assignments, mortgages, deeds of
trust, collateral agency agreements, control agreements or other grants or
transfers for security executed and delivered by the Company or any Guarantor
creating (or purporting to create) a Lien upon Collateral in favor of the
Collateral Trustee, for the benefit of the holders of the Notes, in each case,
as amended, modified, renewed, restated or replaced, in whole or in part, from
time to time, in accordance with its terms and Section 7.1.

 

“Obligations” means any principal (including reimbursement obligations with
respect to letters of credit whether or not drawn), interest (including, to the
extent legally permitted, all interest accrued thereon after the commencement of
any Insolvency or Liquidation Proceeding at the rate, including any applicable
post-default rate, specified in the Parity Lien Documents, even if such interest
is not enforceable, allowable or allowed as a claim in such proceeding), premium
(if any), fees, indemnifications, reimbursements, expenses and other liabilities
payable under the documentation governing any Indebtedness.

 

“Officers’ Certificate” means a certificate with respect to compliance with a
condition or covenant provided for in this Agreement, signed on behalf of the
Company by two officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Company, including:

 

(a)          a statement that the Person making such certificate has read such
covenant or condition;

 

(b)          a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate are based;

 

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(c)          a statement that, in the opinion of such Person, he or she has made
such examination or investigation as is necessary to enable him or her to
express an informed opinion as to whether or not such covenant or condition has
been satisfied; and

 

(d)          a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been satisfied.

 

“Parent” means Energy XXI Ltd. and its permitted successors and assigns.

 

“Parity Lien” means a Lien granted by the Company or any Grantor in favor of the
Collateral Trustee pursuant to a Parity Lien Security Document, at any time,
upon any property of the Company or such Grantor to secure Parity Lien
Obligations.

 

“Parity Lien Debt” means:

 

(1)         the Initial Notes and Guarantees thereof; and

 

(2)         any other Indebtedness (other than intercompany indebtedness) of the
Company or any Subsidiary Guarantor (including Additional Notes and Guarantees
thereof) (and Indebtedness in the form of Guarantees by Parent and Intermediate
Holdco or Parity Lien Debt of the Company and the Subsidiary Guarantors) that is
secured equally and ratably with the Notes by a Parity Lien that was permitted
to be incurred and so secured under each applicable Secured Debt Document;
provided that in the case of any Indebtedness referred to in clause (2) of this
definition, that:

 

(a)          on or before the date on which such Indebtedness is incurred by the
Company or any Subsidiary Guarantor (or the date that Parent or Intermediate
Holdco guarantees Parity Lien Debt of the Company and the Subsidiary
Guarantors), such Indebtedness is designated by the Company, in an Additional
Parity Lien Debt Certificate executed and delivered in accordance with Section
3.8(b), as “Parity Lien Debt” for the purposes of the Indenture and the
Collateral Trust Agreement; provided further that no such Indebtedness may be
designated as both Parity Lien Debt and Priority Lien Debt or Junior Lien Debt;

 

(b)          other than in the case of any Additional Notes, such Indebtedness
is governed by an indenture, credit agreement or other agreement that includes
an Additional Secured Debt Designation;

 

(c)          the Parity Lien Representative for such Indebtedness executes and
delivers a Collateral Trust Joinder in accordance with Section 3.8(b); and

 

(d)          all other requirements set forth in Section 3.8 have been complied
with;

 

provided, further that in the case of any Additional Notes, on or before the
date on which Indebtedness in respect of Additional Notes is incurred, the
Company will deliver to the Collateral Trustee an Officers’ Certificate stating
that such Indebtedness is permitted by each applicable Parity Lien Document to
be incurred and secured with a Parity Lien equally and ratably with all
previously existing and future Parity Lien Debt.

 

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“Parity Lien Debt Default” means any “Event of Default” as defined in the
Indenture, or any similar event or condition set forth in any other Parity Lien
Document that causes, or permits holders of the applicable Series of Parity Lien
Debt outstanding thereunder (with or without the giving of notice or lapse of
time, or both, and whether or not notice has been given or time has lapsed) to
cause, the Parity Lien Debt outstanding thereunder to become immediately due and
payable.

 

“Parity Lien Documents” means, collectively, the Note Documents and any
additional indenture, credit agreement or other agreement governing each other
Series of Parity Lien Debt and the Parity Lien Security Documents.

 

“Parity Lien Obligations” means Parity Lien Debt and all other Obligations in
respect thereof.

 

“Parity Lien Representative” means:

 

(1)         in the case of the Notes, the Trustee; or

 

(2)         in the case of any other Series of Parity Lien Debt, the trustee,
agent or representative of the holders of such Series of Parity Lien Debt who
(A) is appointed to act for the holders of such Series of Parity Lien Debt (for
purposes related to the administration of the Parity Lien Security Documents)
pursuant to the indenture, credit agreement or other agreement governing such
Series of Parity Lien Debt, together with its successors in such capacity, and
(B) that has executed a Collateral Trust Joinder.

 

“Parity Lien Secured Parties” means the holders of Parity Lien Obligations, the
Collateral Trustee and each Parity Lien Representative.

 

“Parity Lien Security Documents” means this Agreement, each Collateral Trust
Joinder, the Indenture (insofar as the same grants a Lien on the Collateral),
the Notes Security Documents, and all other security agreements, pledge
agreements, collateral assignments, mortgages, deeds of trust, collateral agency
agreements, control agreements or other grants or transfers for security
executed and delivered by the Company or any Guarantor creating (or purporting
to create) a Lien upon Collateral in favor of the Collateral Trustee, for the
benefit of any of the Parity Lien Secured Parties, in each case, as amended,
modified, renewed, restated or replaced, in whole or in part, from time to time,
in accordance with its terms and Section 7.1.

 

“Person” means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, limited
liability company or government or other entity.

 

“Priority Lien” has the meaning assigned to such term in the Intercreditor
Agreement.

 

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“Priority Lien Collateral Agent” means The Royal Bank of Scotland plc, as agent
under the Credit Agreement and any successor thereof in such capacity under the
Credit Agreement, or if the Credit Agreement ceases to exist, the collateral
agent or other representative of lenders or holders of Priority Lien Obligations
designated pursuant to the terms of the Priority Lien Documents pursuant to
which such Priority Lien Obligations were issued and the Intercreditor
Agreement.

 

“Priority Lien Debt” has the meaning assigned to such term in the Intercreditor
Agreement.

 

“Priority Lien Documents” has the meaning assigned to such term in the
Intercreditor Agreement.

 

“Priority Lien Obligations” has the meaning assigned to such term in the
Intercreditor Agreement.

 

“Reaffirmation Agreement” means an agreement reaffirming the security interests
granted to the Collateral Trustee in substantially the form attached as Exhibit
1 to Exhibit A of this Agreement

 

“Required Parity Lien Debtholders” means, at any time, the holders of a majority
in aggregate principal amount of all Parity Lien Debt then outstanding,
calculated in accordance with the provisions of Section 7.2. For purposes of
this definition, Parity Lien Debt registered in the name of, or beneficially
owned by, the Parent or any Subsidiary of the Parent will be deemed not to be
outstanding; provided that in determining whether the Collateral Trustee shall
be protected in relying on any request, demand, authorization, direction, notice
or waiver hereunder given by the holders of a majority in aggregate principal
amount of all Parity Lien Obligations then outstanding, only those Persons whom
a Responsible Officer actually knows to be owned by the Parent or any Subsidiary
of the Parent will be disregarded.

 

“Responsible Officer”, when used with respect to the Collateral Trustee, means
any officer within the corporate trust department of the Collateral Trustee (or
any successor group of the Collateral Trustee) or any other officer of the
Collateral Trustee customarily performing functions similar to those performed
by any of the above designated officers, and also means, with respect to a
particular corporate trust matter, any other officer to whom such matter is
referred because of his or her knowledge of and familiarity with the particular
subject.

 

“Secured Debt” means Priority Lien Debt, Parity Lien Debt and Junior Lien Debt.

 

“Secured Debt Document” means the Priority Lien Documents, the Parity Lien
Documents and the Junior Lien Documents.

 

“Series of Parity Lien Debt” means, severally, the Notes and each other issue or
series of Parity Lien Debt for which a single transfer register is maintained.

 

“Subsidiary” means, with respect to any specified Person: (1) any corporation,
association or other business entity (other than a partnership) of which more
than 50% of the total voting power of Voting Stock is at the time owned or
controlled, directly or through another Subsidiary, by that Person or one or
more of the other Subsidiaries of that Person (or a combination thereof); and
(2) any partnership (a) the sole general partner or the managing general partner
of which is such Person or a Subsidiary of such Person or (b) the only general
partners of which are that Person or one or more Subsidiaries of that Person (or
any combination thereof), or (c) as to which such Person and its Subsidiaries
are entitled to receive more than 50% of the assets of such partnership upon its
dissolution.

 

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“Subsidiary Guarantor” means each Subsidiary of the Company that is a Guarantor.

 

“Trustee” has the meaning set forth in the recitals.

 

“Trust Estate” has the meaning set forth in Section 2.1.

 

“UCC” means the Uniform Commercial Code as in effect from time to time in the
State of New York or any other applicable jurisdiction.

 

“Voting Stock” of any Person as of any date means the Capital Stock of such
Person that is at the time entitled (without regard to the occurrence of any
contingency) to vote in the election of the Board of Directors of such Person.

 

SECTION 1.2           Rules of Interpretation.

 

(a)          All capitalized terms used in this Agreement and not otherwise
defined herein have the meanings assigned to them in the Indenture.

 

(b)          Unless otherwise indicated, any reference to any agreement or
instrument will be deemed to include a reference to that agreement or instrument
as assigned, amended, supplemented, amended and restated, or otherwise modified
and in effect from time to time or replaced in accordance with the terms of this
Agreement.

 

(c)          The use in this Agreement or any of the other Parity Lien Security
Documents, the word “include” or “including,” when following any general
statement, term or matter, will not be construed to limit such statement, term
or matter to the specific items or matters set forth immediately following such
word or to similar items or matters, whether or not nonlimiting language (such
as “without limitation” or “but not limited to” or words of similar import) is
used with reference thereto, but will be deemed to refer to all other items or
matters that fall within the broadest possible scope of such general statement,
term or matter. The word “will” shall be construed to have the same meaning and
effect as the word “shall.”

 

(d)          References to “Sections,” “clauses,” “recitals” and the “preamble”
will be to Sections, clauses, recitals and the preamble, respectively, of this
Agreement unless otherwise specifically provided. References to “Articles” will
be to Articles of this Agreement unless otherwise specifically provided.
References to “Exhibits” and “Schedules” will be to Exhibits and Schedules,
respectively, to this Agreement unless otherwise specifically provided.

 

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(e)          Notwithstanding anything to the contrary in this Agreement, any
references contained herein to any section, clause, paragraph, definition or
other provision of the Indenture (including any definition contained therein)
shall be deemed to be a reference to such section, clause, paragraph, definition
or other provision as in effect on the date of this Agreement; provided that any
reference to any such section, clause, paragraph or other provision shall refer
to such section, clause, paragraph or other provision of the Indenture
(including any definition contained therein) as amended or modified from time to
time if such amendment or modification has been made in accordance with the
Indenture. Unless otherwise set forth herein, references to principal amount
shall include, without duplication, any reimbursement obligations with respect
to a letter of credit and the face amount of any outstanding letter of credit
(whether or not such amount is, at the time of determination, drawn or available
to be drawn).

 

This Agreement and the other Parity Lien Security Documents will be construed
without regard to the identity of the party who drafted it and as though the
parties participated equally in drafting it. Consequently, each of the parties
acknowledges and agrees that any rule of construction that a document is to be
construed against the drafting party will not be applicable either to this
Agreement or the other Parity Lien Security Documents.

 

Article 2.          THE TRUST ESTATE

 

SECTION 2.1           Declaration of Trust.

 

To secure the payment of the Parity Lien Obligations and in consideration of the
premises and the mutual agreements set forth herein, each of the Grantors hereby
confirms the grant of Liens in favor of the Collateral Trustee, and the
Collateral Trustee hereby accepts and agrees to hold, in trust under this
Agreement for the benefit of all current and future Parity Lien Secured Parties,
on all of such Grantor’s right, title and interest in, to and under all
Collateral and on all Liens now or hereafter granted to the Collateral Trustee
by each Grantor under any Parity Lien Security Document for the benefit of the
Parity Lien Secured Parties, together with all of the Collateral Trustee’s
right, title and interest in, to and under the Parity Lien Security Documents,
and all interests, rights, powers and remedies of the Collateral Trustee
thereunder or in respect thereof and all cash and non-cash proceeds thereof
(collectively, the “Trust Estate”).

 

The Collateral Trustee and its successors and assigns under this Agreement will
hold the Trust Estate in trust for the benefit solely and exclusively of all
current and future Parity Lien Secured Parties as security for the payment of
all present and future Parity Lien Obligations.

 

Notwithstanding the foregoing, if at any time:

 

(1)         all Liens securing the Parity Lien Obligations have been released as
provided in Section 4.1;

 

(2)         the Collateral Trustee holds no other property in trust as part of
the Trust Estate;

 

(3)         no monetary obligation (other than indemnification and other
contingent obligations not then due and payable and letters of credit that have
been cash collateralized at the lower of (A) 105% of the aggregate undrawn
amount and (B) the percentage of the aggregate undrawn amount required for
release of Liens under the terms of the applicable Parity Lien Documents) is
outstanding and payable under this Agreement to the Collateral Trustee or any of
its co-trustees or agents (whether in an individual or representative capacity);
and

 

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(4)         the Company delivers to the Collateral Trustee an Officers’
Certificate stating that all Parity Liens of the Collateral Trustee have been
released in compliance with all applicable provisions of the Parity Lien
Documents and that the Grantors are not required by any Parity Lien Document to
grant any Parity Lien upon any property,

 

then the Trust Estate arising hereunder will terminate, except that all
provisions set forth in Sections 7.8 and 7.9 that are enforceable by the
Collateral Trustee or any of its co-trustees or agents (whether in an individual
or representative capacity) will remain enforceable in accordance with their
terms.

 

The parties further declare and covenant that the Trust Estate will be held and
distributed by the Collateral Trustee subject to the further agreements herein.

 

SECTION 2.2           Collateral Shared Equally and Ratably . The parties to
this Agreement agree that the payment and satisfaction of all of the Parity Lien
Obligations will be secured equally and ratably by the Parity Lien established
in favor of the Collateral Trustee for the benefit of the Parity Lien Secured
Parties, notwithstanding the time of incurrence of any Parity Lien Obligations
or time or method of creation or perfection of any Parity Liens securing such
Parity Lien Obligations.

 

SECTION 2.3           Similar Collateral and Agreements. The parties to this
Agreement agree that it is their intention that the Parity Lien be identical. In
furtherance of the foregoing, the parties hereto agree that the Parity Lien
Security Documents (other than the Notes Security Documents) shall be in all
material respects the same forms of documents as the respective Notes Security
Documents creating Liens on the Collateral.

 

Article 3.          Obligations and powers of Collateral Trustee

 

SECTION 3.1           Appointment and Undertaking of the Collateral Trustee.

 

(a)          Each Parity Lien Secured Party acting through its respective Parity
Lien Representative hereby appoints the Collateral Trustee to serve as
collateral trustee hereunder on the terms and conditions set forth herein.
Subject to, and in accordance with, this Agreement, the Collateral Trustee will,
as collateral trustee, for the benefit solely and exclusively of the present and
future Parity Lien Secured Parties:

 

(1)         accept, enter into, hold, maintain, administer and enforce all
Parity Lien Security Documents, including all Collateral subject thereto, and
all Liens created thereunder, perform its obligations hereunder and under the
Parity Lien Security Documents and protect, exercise and enforce the interests,
rights, powers and remedies granted or available to it under, pursuant to or in
connection with the Parity Lien Security Documents;

 

(2)         take all lawful and commercially reasonable actions permitted under
the Parity Lien Security Documents that it may deem necessary or advisable to
protect or preserve its interest in the Collateral subject thereto and such
interests, rights, powers and remedies;

 

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(3)         deliver and receive notices pursuant to this Agreement and the
Parity Lien Security Documents;

 

(4)         sell, assign, collect, assemble, foreclose on, institute legal
proceedings with respect to, or otherwise exercise or enforce the rights and
remedies of a secured party (including a mortgagee, trust deed beneficiary and
insurance beneficiary or loss payee) with respect to the Collateral under the
Parity Lien Security Documents and its other interests, rights, powers and
remedies;

 

(5)         remit as provided in Section 3.4 all cash proceeds received by the
Collateral Trustee from the collection, foreclosure or enforcement of its
interest in the Collateral under the Parity Lien Security Documents or any of
its other interests, rights, powers or remedies;

 

(6)         execute and deliver amendments to the Parity Lien Security Documents
as from time to time authorized pursuant to Section 7.1 accompanied by an
Officers’ Certificate to the effect that the amendment was permitted under
Section 7.1;

 

(7)         release or subordinate any Lien granted to it by any Parity Lien
Security Document upon any Collateral if and as required by Section 3.2; and

 

(8)         enter into and perform its obligations and protect, exercise and
enforce its interest, rights, powers and remedies under the Intercreditor
Agreement.

 

(b)          Each party to this Agreement acknowledges and consents to the
undertaking of the Collateral Trustee set forth in Section 3.1(a) and agrees to
each of the other provisions of this Agreement applicable to the Collateral
Trustee.

 

(c)          Notwithstanding anything to the contrary contained in this
Agreement, the Collateral Trustee will not commence any exercise of remedies or
any foreclosure actions or otherwise take any action or proceeding against any
of the Collateral (other than actions as necessary to prove, protect or preserve
the Liens securing the Parity Lien Obligations) unless and until it shall have
been directed by written notice of an Act of Parity Lien Debtholders and then
only in accordance with the provisions of this Agreement and the Intercreditor
Agreement.

 

(d)          Notwithstanding anything to the contrary contained in this
Agreement, neither the Company nor any of its Affiliates may serve as Collateral
Trustee.

 

SECTION 3.2           Release or Subordination of Liens. The Collateral Trustee
will not release or subordinate any Lien of the Collateral Trustee or consent to
the release or subordination of any Lien of the Collateral Trustee, except:

 

(a)          as directed by an Act of Parity Lien Debtholders accompanied by an
Officers’ Certificate to the effect that the release or subordination was
permitted by each applicable Parity Lien Document and otherwise setting forth
the requirements of Section 4.1(b)(1) and (b)(2);

 

(b)          as required by Article 4;

 

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(c)          as ordered pursuant to applicable law under a final and
nonappealable order or judgment of a court of competent jurisdiction; or

 

(d)          for the subordination of the Trust Estate and the Parity Liens to
the extent required by the Intercreditor Agreement.

 

SECTION 3.3           Enforcement of Liens. If the Collateral Trustee at any
time receives written notice from a Parity Lien Representative stating that any
event has occurred that constitutes a default under any Parity Lien Document
entitling the Collateral Trustee to foreclose upon, collect or otherwise enforce
its Liens under the Parity Lien Security Documents, the Collateral Trustee will
promptly deliver written notice thereof to each Parity Lien Representative.
Thereafter, the Collateral Trustee may await direction by an Act of Parity Lien
Debtholders and, subject to the terms of the Intercreditor Agreement, will act,
or decline to act, as directed by an Act of Parity Lien Debtholders, in the
exercise and enforcement of the Collateral Trustee’s interests, rights, powers
and remedies in respect of the Collateral or under the Parity Lien Security
Documents or applicable law and, following the initiation of such exercise of
remedies, the Collateral Trustee will act, or decline to act, with respect to
the manner of such exercise of remedies as directed by an Act of Parity Lien
Debtholders. Unless it has been directed to the contrary by an Act of Parity
Lien Debtholders, the Collateral Trustee in any event may (but will not be
obligated to) take or refrain from taking such action with respect to any
default under any Parity Lien Document as it may deem advisable and in the best
interest of the holders of Parity Lien Obligations.

 

SECTION 3.4           Application of Proceeds.

 

(a)          Subject to the terms of the Intercreditor Agreement, the Collateral
Trustee will apply the proceeds of any collection, sale, foreclosure or other
realization upon, or exercise of any right or remedy with respect to, any
Collateral and the proceeds of any title insurance or other insurance policy
required under any Parity Lien Document or otherwise covering the Collateral,
and any condemnation proceeds with respect to the Collateral, in the following
order of application:

 

FIRST, to the payment of all amounts payable under this Agreement on account of
the Collateral Trustee’s fees and any reasonable legal fees, costs and expenses
or other liabilities of any kind incurred by the Collateral Trustee or any
co-trustee or agent of the Collateral Trustee in connection with any Parity Lien
Security Document (including, but not limited to, indemnification obligations);

 

SECOND, to the respective Parity Lien Representatives equally and ratably for
application to the payment of all outstanding Parity Lien Debt and any other
Parity Lien Obligations that are then due and payable in such order as may be
provided in the Parity Lien Documents in an amount sufficient to pay in full in
cash all outstanding Parity Lien Debt and all other Parity Lien Obligations that
are then due and payable (including, to the extent legally permitted, all
interest accrued thereon after the commencement of any Insolvency or Liquidation
Proceeding at the rate, including any applicable post-default rate, specified in
the Parity Lien Documents, even if such interest is not enforceable, allowable
or allowed as a claim in such proceeding), and including the discharge or cash
collateralization (at the lower of (1) 105% of the aggregate undrawn amount and
(2) the percentage of the aggregate undrawn amount required for release of Liens
under the terms of the applicable Parity Lien Document) of all outstanding
letters of credit constituting Parity Lien Debt;

 

14

 

 

THIRD, to the repayment of Indebtedness and other Obligations secured by a
permitted Junior Lien on the Collateral sold or realized upon;

 

FOURTH, any surplus remaining after the payment in full in cash of the amounts
described in the preceding clauses will be paid to the Company or the applicable
Guarantor, as the case may be, its successors or assigns, or as a court of
competent jurisdiction may direct.

 

(b)          This Section 3.4 is intended for the benefit of, and will be
enforceable as a third party beneficiary by, each present and future holder of
Parity Lien Obligations, each present and future Parity Lien Representative and
the Collateral Trustee as holder of Parity Liens. The Parity Lien Representative
of each future issuance of Additional Notes and each future Series of Parity
Lien Debt will be required to deliver a Collateral Trust Joinder including an
Additional Secured Debt Designation as provided in Section 3.8 at the time of
incurrence of such Series of Parity Lien Debt.

 

(c)          In connection with the application of proceeds pursuant to Section
3.4(a), except as otherwise directed by an Act of Parity Lien Debtholders, the
Collateral Trustee may sell any non-cash proceeds for cash prior to the
application of the proceeds thereof.

 

(d)          In making the determinations and allocations in accordance with
Section 3.4(a), the Collateral Trustee may conclusively rely upon information
supplied by the relevant Parity Lien Representative as to the amounts of unpaid
principal and interest and other amounts outstanding with respect to its
respective Parity Lien Debt and any other Parity Lien Obligations.

 

SECTION 3.5           Powers of the Collateral Trustee.

 

(a)          The Collateral Trustee is irrevocably authorized and empowered to
enter into and perform its obligations and protect, perfect, exercise and
enforce its interest, rights, powers and remedies under the Parity Lien Security
Documents and applicable law and in equity and to act as set forth in this
Article 3 or, subject to the other provisions of this Agreement, as requested in
any lawful directions given to it from time to time in respect of any matter by
an Act of Parity Lien Debtholders.

 

(b)          No Parity Lien Representative or holder of Parity Lien Obligations
(other than the Collateral Trustee) will have any liability whatsoever for any
act or omission of the Collateral Trustee, and the Collateral Trustee will have
no liability whatsoever for any act or omission of any Parity Lien
Representative or any holder of Parity Lien Obligations.

 

SECTION 3.6           Documents and Communications. The Collateral Trustee will
permit each Parity Lien Representative and each holder of Parity Lien
Obligations upon reasonable written notice and at reasonable times from time to
time to inspect and copy, at the cost and expense of the party requesting such
copies, any and all Parity Lien Security Documents and other documents, notices,
certificates, instructions or communications received by the Collateral Trustee
in its capacity as such.

 

15

 

 

SECTION 3.7           For Sole and Exclusive Benefit of Holders of Parity Lien
Obligations. The Collateral Trustee will accept, hold, administer and enforce
all Liens on the Collateral at any time transferred or delivered to it and all
other interests, rights, powers and remedies at any time granted to or
enforceable by the Collateral Trustee and all other property of the Trust Estate
solely and exclusively for the benefit of the present and future holders of
present and future Parity Lien Obligations, and will distribute all proceeds
received by it in realization thereon or from enforcement thereof solely and
exclusively pursuant to the provisions of Section 3.4.

 

SECTION 3.8           Additional Parity Lien Debt.

 

(a)          The Collateral Trustee will, as trustee hereunder, perform its
undertakings set forth in Section 3.1(a) with respect to any Parity Lien
Obligations constituting Additional Notes or a Series of Parity Lien Debt that
is issued or incurred after the date hereof that:

 

(1)         such Parity Lien Obligations are identified as Parity Lien Debt in
accordance with the procedures set forth in Section 3.8(b); and

 

(2)         the designated Parity Lien Representative identified pursuant to
Section 3.8(b) signs a Collateral Trust Joinder and delivers the same to the
Collateral Trustee.

 

(b)          The Company will be permitted to designate as an additional holder
of Parity Lien Debt hereunder each Person who is, or who becomes, the registered
holder of Parity Lien Debt incurred by the Company or any Subsidiary Guarantor
(and Indebtedness in the form of Guarantees by Parent and Intermediate Holdco of
Parity Lien Debt of the Company and the Subsidiary Guarantors) after the date of
this Agreement in accordance with the terms of all applicable Parity Lien
Documents. The Company may only effect such designation by delivering to the
Collateral Trustee an Additional Parity Lien Debt Certificate that:

 

(1)         states that the Company or applicable Grantor intends to incur
additional Parity Lien Debt (“Additional Parity Lien Debt”) that is permitted by
each applicable Parity Lien Document to be secured with a Parity Lien equally
and ratably with all previously existing and future Parity Lien Debt;

 

(2)         specifies the name, address and contact information of the Parity
Lien Representative for such series of Additional Parity Lien Debt for purposes
of Section 7.6;

 

(3)         attaches as Exhibit 1 to such Additional Parity Lien Debt
Certificate a Reaffirmation Agreement in substantially the form attached as
Exhibit 1 to Exhibit A of this Agreement, which Reaffirmation Agreement has been
duly executed by the Company and each Guarantor; and

 

16

 

 

(4)         states that the Company has caused a copy of the Additional Parity
Lien Debt Certificate and the related Collateral Trust Joinder to be delivered
to each then existing Parity Lien Representative.

 

Although the Company shall be required to deliver a copy of each Additional
Parity Lien Debt Certificate and each Collateral Trust Joinder to each then
existing Parity Lien Representative, the failure to so deliver a copy of the
Additional Parity Lien Debt Certificate and/or Collateral Trust Joinder to any
then existing Parity Lien Representative shall not affect the status of such
debt as Additional Parity Lien Debt if the other requirements of this Section
3.8 are complied with. Each of the Collateral Trustee and the other then
existing Parity Lien Representatives shall have the right to request that the
Company shall provide a legal opinion or opinions of counsel (subject to
customary assumptions and qualifications) as to the Additional Parity Lien Debt
being secured by a valid and perfected security interest in the Collateral;
provided that (i) such legal opinion or opinions need not address any collateral
of a type not previously covered by any legal opinion delivered by or on behalf
of the Company and (ii) nothing shall preclude such legal opinion or opinions
from being delivered on a post-closing basis after the incurrence of such
Additional Parity Lien Debt if permitted by the Parity Lien Representative for
such Additional Parity Lien Debt. Notwithstanding the foregoing, nothing in this
Agreement will be construed to allow the Company or any Subsidiary Guarantor to
incur additional Indebtedness (including Additional Notes) (or, in the case of
Parent and Intermediate Holdco, additional Guarantees of Indebtedness of the
Company and the Subsidiary Guarantors) unless otherwise permitted by the terms
of all applicable Parity Lien Documents.

 

(c)          With respect to any Parity Lien Obligations constituting Additional
Notes or a Series of Parity Lien Debt that is issued or incurred after the date
hereof, the Company and each of the Guarantors agrees to take such actions (if
any) as may from time to time reasonably be requested by the Collateral Trustee,
any Parity Lien Representative or any Act of Parity Lien Debtholders, and enter
into such technical amendments, modifications and/or supplements to the then
existing Guarantees and Parity Lien Security Documents (or execute and deliver
such additional Parity Lien Security Documents) as may from time to time be
reasonably requested by such Persons (including as contemplated by clause (d)
below), to ensure that the Additional Notes or the Additional Parity Lien Debt,
as applicable, is secured by, and entitled to the benefits of, the Parity Lien
Security Documents, and each Parity Lien Secured Party (by its acceptance of the
benefits hereof) hereby agrees to, and authorizes the Collateral Trustee to
enter into, any such technical amendments, modifications and/or supplements (and
additional Parity Lien Security Documents). The Company and each Guarantor
hereby further agrees that, if there are any recording, filing or other similar
fees payable in connection with any of the actions to be taken pursuant to this
Section 3.8(c) or Section 3.8(d), all such amounts shall be paid by, and shall
be for the account of, the Company and the respective Guarantors, on a joint and
several basis.

 

(d)          Without limitation of the foregoing, each Grantor agrees to take
the following actions with respect to any real property Collateral (including
Oil and Gas Properties (as defined in the Indenture as in effect on the date
hereof) with respect to all Additional Parity Lien Debt (it being understood
that any such actions may be taken following the incurrence of any such
Additional Parity Lien Debt on a post-closing basis if permitted by the Parity
Lien Representative for such Additional Parity Lien Debt):

 

17

 

 

(1)         each applicable Grantor shall enter into, and deliver to the
Collateral Trustee a mortgage modification or new mortgage or deed of trust with
regard to each real property subject to a mortgage or deed of trust (each such
mortgage or deed of trust a “Mortgage” and each such property a “Mortgaged
Property”), in proper form for recording in all applicable jurisdictions, in a
form and substance reasonably satisfactory to the Collateral Trustee;

 

(2)         each applicable Grantor will cause to be delivered a local counsel
opinion (subject to customary assumptions and qualifications) to the effect that
the Collateral Trustee has a valid and perfected Lien with respect to each such
Mortgaged Property; and

 

(3)         each applicable Grantor will cause a title company to have delivered
to the Collateral Trustee an endorsement to each title insurance policy for any
real property Collateral (excluding Oil and Gas Properties), if any, then in
effect for the benefit of the Parity Lien Secured Parties, date down(s) or other
evidence (which may include a new title insurance policy) (each such delivery, a
“Title Datedown Product”), in each case insuring that (i) the priority of the
Liens of the applicable Mortgage(s) as security for the Parity Lien Obligations
has not changed and, if a new Mortgage is entered into, that the Lien of such
new Mortgage securing the Parity Lien Debt then being incurred shall have the
same priority as any existing Mortgage securing then existing Parity Lien
Obligations, (ii) since the later of the original date of such title insurance
product and the date of the Title Datedown Product delivered most recently prior
to (and not in connection with) such additional Indebtedness, there has been no
change in the condition of title and (iii) there are no intervening liens or
encumbrances which may then or thereafter take priority over the Lien of the
applicable Mortgage(s), in each case other than with respect to Liens permitted
by each Parity Lien Document.

 

The Company will deliver an Officers’ Certificate to the Collateral Trustee
confirming that the foregoing conditions have been satisfied.

 

Article 4.          Obligations enforceable by THE COMPANY AND THE OTHER
GRANTORS

 

SECTION 4.1           Release of Liens on Collateral.

 

(a)          The Collateral Trustee’s Liens upon the Collateral will be
automatically released:

 

(1)         in whole, upon (A) payment in full in cash and discharge of all
outstanding Parity Lien Debt and all other Parity Lien Obligations that are
outstanding, due and payable at the time all of the Parity Lien Debt is paid in
full in cash and discharged, (B) termination or expiration of all commitments to
extend credit under all Parity Lien Documents and (C) the cancellation or
termination or cash collateralization (at the lower of (1) 105% of the aggregate
undrawn amount and (2) the percentage of the aggregate undrawn amount required
for release of Liens under the terms of the applicable Parity Lien Documents) of
all outstanding letters of credit issued pursuant to any Parity Lien Documents;

 

18

 

 

(2)         as to any Collateral of a Guarantor that is (A) released as a
Guarantor under each Parity Lien Document and (B) is not obligated (as primary
obligor or guarantor) with respect to any other Parity Lien Obligations and so
long as the respective release does not violate the terms of any Parity Lien
Document which then remains in effect;

 

(3)         as to any Collateral of the Company or a Subsidiary Guarantor that
is sold, transferred or otherwise disposed of by the Company or any Guarantor to
a Person that is not (either before or after such sale, transfer or disposition)
the Company or a Restricted Subsidiary (as defined in the Indenture) of the
Company in a transaction or other circumstance that complies with Section 4.10
of the Indenture (other than the obligation to apply proceeds of such Asset Sale
(as defined in the Indenture) as provided in such Section) and is permitted by
all of the other Parity Lien Documents, at the time of such sale, transfer or
other disposition or to the extent of the interest sold, transferred or
otherwise disposed of; provided that the Collateral Trustee’s Liens upon the
Collateral will not be released if the sale or other disposition is subject to
Section 5.01 of the Indenture;

 

(4)         as to a release of less than all or substantially all of the
Collateral, if consent to the release of all Parity Liens on such Collateral has
been given by an Act of Parity Lien Debtholders;

 

(5)         in whole, if the Liens on such Collateral have been released in
accordance with the terms of each Series of Parity Lien Debt;

 

(6)         as to a release of all or substantially all of the Collateral, if
(A) consent to the release of that Collateral has been given by the requisite
percentage or number of holders of each Series of Parity Lien Debt at the time
outstanding as provided for in the applicable Parity Lien Documents and (B) the
Company has delivered an Officers’ Certificate to the Collateral Trustee
certifying that all such necessary consents have been obtained;

 

(7)         as to any Collateral that becomes an Excluded Asset; or

 

(8)         if and to the extent, and in the manner, required by Section 4.01 of
the Intercreditor Agreement.

 

(b)          The Collateral Trustee agrees for the benefit of the Company and
the other Grantors that if the Collateral Trustee at any time receives:

 

(1)         an Officers’ Certificate stating that (A) the signing officer has
read Article 4 of this Agreement and understands the provisions and the
definitions relating hereto, (B) such officer has made such examination or
investigation as is necessary to enable him or her to express an informed
opinion as to whether or not the conditions precedent in this Agreement, the
Intercreditor Agreement and all other Parity Lien Documents, if any, relating to
the release of the Collateral have been complied with and (C) in the opinion of
such officer, such conditions precedent, if any, have been complied with; and

 

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(2)         the proposed instrument or instruments releasing such Lien as to
such property in recordable form, if applicable;

 

then, promptly following receipt by the Collateral Trustee of the items required
by this Section 4.1(b), upon request of the Company, the Collateral Trustee will
execute (with such acknowledgements and/or notarizations as are required) and
deliver evidence of such release to the Company or other applicable Grantor;
provided that, in the case of a release of Liens under Section 4.1(a)(7), the
Collateral Trustee shall execute and deliver such proposed instruments releasing
its Liens contemporaneously with the execution and delivery of such similar
instruments by the Priority Lien Collateral Agent in accordance with the terms
of the Intercreditor Agreement.

 

(c)          The Collateral Trustee hereby agrees that:

 

(1)         in the case of any release pursuant to Section 4.1(a)(3), if the
terms of any such sale, transfer or other disposition require the payment of the
purchase price to be contemporaneous with the delivery of the applicable
release, then, subject to the Intercreditor Agreement and at the written request
of and at the expense of the Company or other applicable Grantor, the Collateral
Trustee will either (A) be present at and deliver the release at the closing of
such transaction or (B) deliver the release under customary escrow arrangements
that permit such contemporaneous payment and delivery of the release; and

 

(2)         at any time when a Parity Lien Debt Default has occurred and is
continuing, within one Business Day of the receipt by it of any Act of Parity
Lien Debtholders pursuant to Section 4.1(a)(4), the Collateral Trustee will
deliver a copy of such Act of Parity Lien Debtholders to each Parity Lien
Representative.

 

SECTION 4.2           Delivery of Copies to Parity Lien Representatives. The
Company will deliver to each Parity Lien Representative a copy of each Officers’
Certificate delivered to the Collateral Trustee pursuant to Section 4.1(b),
together with copies of all documents delivered to the Collateral Trustee with
such Officers’ Certificate. The Parity Lien Representatives will not be
obligated to take notice thereof or to act thereon. Each Parity Lien
Representative shall, within one Business Day of the receipt by it of the
Officers’ Certificate and proposed release instrument(s) delivered to the
Collateral Trustee pursuant to Section 4.1(b), deliver a copy of such notice to
each registered holder of the Series of Parity Lien Debt for which it acts as
Parity Lien Representative.

 

SECTION 4.3           Collateral Trustee not Required to Serve, File or Record.
Subject to Section 3.2, the Collateral Trustee is not required to serve, file,
register or record any instrument releasing or subordinating its Liens on any
Collateral; provided that if the Company or any other Grantor shall make a
written demand for a termination statement under Section 9-513(c) of the UCC,
the Collateral Trustee shall comply with the written request of the Company or
Grantor to comply with the requirements of such UCC provision; provided,
further, that the Collateral Trustee must first confirm with the Parity Lien
Representatives that the requirements of such UCC provisions have been
satisfied.

 

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SECTION 4.4           Release of Liens in Respect of Notes. In addition to any
release pursuant to Section 4.1 hereof, the Collateral Trustee’s Parity Liens
will no longer secure the Notes outstanding under the Indenture or any other
Obligations under the Note Documents, and the right of the holders of the Notes
to the benefits and proceeds of the Collateral Trustee’s Parity Liens on the
Collateral will terminate and be discharged:

 

(1)         upon satisfaction and discharge of the Indenture as set forth under
Article 10 of the Indenture;

 

(2)         upon a Legal Defeasance or Covenant Defeasance of the Notes as set
forth under Article 8 of the Indenture;

 

(3)         upon payment in full in cash and discharge of all Notes outstanding
under the Indenture and all other Obligations that are outstanding, due and
payable under the Indenture and the other Note Documents at the time the Notes
are paid in full in cash and discharged;

 

(4)         as to any Collateral of the Company or a Subsidiary Guarantor that
is sold, transferred or otherwise disposed of by the Company or any Subsidiary
Guarantor to a Person that is not (either before or after such sale, transfer or
disposition) the Company or a Restricted Subsidiary of the Company in a
transaction or other circumstance that complies with Section 4.10 of the
Indenture (other than the obligation to apply proceeds of such Asset Sale as
provided in such Section) and is permitted by all of the other Note Documents,
at the time of such sale, transfer or other disposition or to the extent of the
interest sold, transferred or otherwise disposed of; provided that the
Collateral Trustee’s Liens upon the Collateral will not be released if the sale
or other disposition is subject to Section 5.01 of the Indenture;

 

(5)         in whole or in part, with the consent of the holders of the
requisite percentage of Notes in accordance with Article 9 of the Indenture;

 

(6)         with respect to the assets of any Guarantor, at the time that such
Guarantor is released from its Guarantee in accordance with Section 12.05 of the
Indenture; or

 

(8)         if and to the extent required by the provisions of this Agreement or
the Intercreditor Agreement.

 

SECTION 4.5           Release of Liens in Respect of any Series of Parity Lien
Debt other than the Notes.

 

In addition to any release pursuant to Section 4.1 hereof, as to any Series of
Parity Lien Debt other than the Notes, the Collateral Trustee’s Parity Lien will
no longer secure such Series of Parity Lien Debt if such Parity Lien Debt has
been paid in full, all commitments to extent credit in respect of such Series of
Parity Lien Debt have been terminated and all other Parity Lien Obligations
related thereto that are outstanding and unpaid at the time such Series of
Parity Lien Debt is paid are also paid in full, or if otherwise required by the
terms of such Parity Lien Debt or the Intercreditor Agreement.

 

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Article 5.          Immunities of the Collateral Trustee

 

SECTION 5.1           No Implied Duty. The Collateral Trustee will not have any
fiduciary duties nor will it have responsibilities or obligations other than
those expressly assumed by it in this Agreement, the other Parity Lien Security
Documents and the Intercreditor Agreement. No implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement, the other Parity Lien Documents or the Intercreditor Agreement, or
otherwise exist against the Collateral Trustee. Without limiting the generality
of the foregoing sentences, the use of the term “trustee” in this Agreement with
reference to the Collateral Trustee is not intended to connote any fiduciary or
other implied (or express) obligations arising under agency doctrine of any
applicable law. Instead, such term is used merely as a matter of market custom,
and is intended to create or reflect only an administrative relationship between
independent contracting parties. The Collateral Trustee will not be required to
take any action that is contrary to applicable law or any provision of this
Agreement, the other Parity Lien Security Documents or the Intercreditor
Agreement.

 

SECTION 5.2           Appointment of Agents and Advisors. The Collateral Trustee
may execute any of the trusts or powers hereunder or perform any duties
hereunder either directly or by or through agents, attorneys, accountants,
appraisers or other experts or advisors selected by it in good faith as it may
reasonably require and will not be responsible for any misconduct or negligence
on the part of any of them.

 

SECTION 5.3           Other Agreements. The Collateral Trustee has accepted its
appointment as collateral trustee hereunder and is bound by the Parity Lien
Security Documents executed by the Collateral Trustee as of the date of this
Agreement and the Collateral Trustee shall at the request of the Company execute
additional Parity Lien Security Documents delivered to it after the date of this
Agreement (including to secure Obligations arising under Additional Parity Lien
Debt to the extent such Obligations are permitted to be incurred and secured
under the Parity Lien Documents); provided that such additional Parity Lien
Security Documents do not adversely affect the rights, privileges, benefits and
immunities of the Collateral Trustee or conflict with the terms of the
Intercreditor Agreement.  The Collateral Trustee will not otherwise be bound by,
or be held obligated by, the provisions of any credit agreement, indenture or
other agreement governing Parity Lien Debt (other than this Agreement and the
other Parity Lien Security Documents to which it is a party).

 

SECTION 5.4           Solicitation of Instructions.

 

(a)          The Collateral Trustee may at any time solicit written confirmatory
instructions, in the form of an Act of Parity Lien Debtholders, an Officers’
Certificate or an order of a court of competent jurisdiction, as to any action
that it may be requested or required to take, or that it may propose to take, in
the performance of any of its obligations under this Agreement or the other
Parity Lien Security Documents.

 

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(b)          No written direction given to the Collateral Trustee by an Act of
Parity Lien Debtholders that in the sole judgment of the Collateral Trustee
imposes, purports to impose or might reasonably be expected to impose upon the
Collateral Trustee any obligation or liability not set forth in or arising under
this Agreement and the other Parity Lien Security Documents will be binding upon
the Collateral Trustee unless the Collateral Trustee elects, at its sole option,
to accept such direction.

 

(c)          The Collateral Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Agreement at the request, order or
direction of the Required Parity Lien Debtholders pursuant to the provisions of
this Agreement, unless such holders shall have furnished to the Collateral
Trustee reasonable security or indemnity satisfactory to it against the costs,
expenses and liabilities which may be incurred therein or thereby.

 

SECTION 5.5           Limitation of Liability. The Collateral Trustee will not
be responsible or liable for any action taken or omitted to be taken by it
hereunder or under any other Parity Lien Security Document, except for its own
negligence, bad faith or willful misconduct as determined by a court of
competent jurisdiction.

 

SECTION 5.6           Documents in Satisfactory Form. The Collateral Trustee
will be entitled to require that all agreements, certificates, opinions,
instruments and other documents at any time submitted to it, including those
expressly provided for in this Agreement, be delivered to it in a form and with
substantive provisions reasonably satisfactory to it.

 

SECTION 5.7           Entitled to Rely. The Collateral Trustee may seek and rely
upon, and shall be fully protected in relying upon, any judicial order or
judgment, upon any advice, opinion or statement of legal counsel, independent
consultants and other experts selected by it in good faith and upon any
certification, instruction, notice or other writing delivered to it by the
Company or any Guarantor in compliance with the provisions of this Agreement or
delivered to it by any Parity Lien Representative as to the holders of Parity
Lien Obligations for whom it acts, without being required to determine the
authenticity thereof or the correctness of any fact stated therein or the
propriety or validity of service thereof. The Collateral Trustee may act in
reliance upon any instrument comporting with the provisions of this Agreement or
any signature believed by it in good faith to be genuine and may assume that any
Person purporting to give notice or receipt or advice or make any statement or
execute any document in connection with the provisions hereof or the other
Parity Lien Security Documents has been duly authorized to do so. To the extent
an Officers’ Certificate or opinion of counsel is required or permitted under
this Agreement to be delivered to the Collateral Trustee in respect of any
matter, the Collateral Trustee may rely conclusively on an Officers’ Certificate
or opinion of counsel as to such matter and such Officers’ Certificate or
opinion of counsel shall be full warranty and protection to the Collateral
Trustee for any action taken, suffered or omitted by it under the provisions of
this Agreement and the other Parity Lien Security Documents.

 

SECTION 5.8           Parity Lien Debt Default. The Collateral Trustee will not
be required to inquire as to the occurrence or absence of any Parity Lien Debt
Default and will not be affected by or required to act upon any notice or
knowledge as to the occurrence of any Parity Lien Debt Default unless and until
it is directed by an Act of Parity Lien Debtholders.

 

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SECTION 5.9           Actions by Collateral Trustee. As to any matter not
expressly provided for by this Agreement or the other Parity Lien Security
Documents, the Collateral Trustee will act or refrain from acting as directed by
an Act of Parity Lien Debtholders and will be fully protected if it does so, and
any action taken, suffered or omitted pursuant to hereto or thereto shall be
binding on the holders of Parity Lien Obligations.

 

SECTION 5.10         Security or Indemnity in favor of the Collateral Trustee.
The Collateral Trustee will not be required to advance or expend any funds or
otherwise incur any financial liability in the performance of its duties or the
exercise of its powers or rights hereunder unless it has been provided with
security or indemnity reasonably satisfactory to it against any and all
liability or expense which may be incurred by it by reason of taking or
continuing to take such action.

 

SECTION 5.11         Rights of the Collateral Trustee. In the event of any
conflict between any terms and provisions set forth in this Agreement and those
set forth in any other Parity Lien Security Document, the terms and provisions
of this Agreement shall supersede and control the terms and provisions of such
other Parity Lien Security Document. In the event there is any bona fide, good
faith disagreement between the other parties to this Agreement or any of the
other Parity Lien Security Documents resulting in adverse claims being made in
connection with Collateral held by the Collateral Trustee and the terms of this
Agreement or any of the other Parity Lien Security Documents do not
unambiguously mandate the action the Collateral Trustee is to take or not to
take in connection therewith under the circumstances then existing, or the
Collateral Trustee is in doubt as to what action it is required to take or not
to take hereunder or under the other Parity Lien Security Documents, it will be
entitled to refrain from taking any action (and will incur no liability for
doing so) until directed otherwise in writing by a request signed jointly by the
parties hereto entitled to give such direction or by order of a court of
competent jurisdiction.

 

SECTION 5.12         Limitations on Duty of Collateral Trustee in Respect of
Collateral.

 

(a)          Beyond the exercise of reasonable care in the custody of Collateral
in its possession, the Collateral Trustee will have no duty as to any Collateral
in its possession or control or in the possession or control of any agent or
bailee or any income thereon or as to preservation of rights against prior
parties or any other rights pertaining thereto and the Collateral Trustee will
not be responsible for filing any financing or continuation statements or
recording any documents or instruments in any public office at any time or times
or otherwise perfecting or maintaining the perfection of any Liens on the
Collateral; provided that, notwithstanding the foregoing, the Collateral Trustee
will execute, file or record UCC-3 continuation statements and other documents
and instruments to preserve, protect or perfect the security interests granted
to the Collateral Trustee (subject to the priorities set forth herein) if it
shall receive a specific written request to execute, file or record the
particular continuation statement or other specific document or instrument by
any Parity Lien Representative. The Collateral Trustee shall deliver to each
other Parity Lien Representative a copy of any such written request. The
Collateral Trustee will be deemed to have exercised reasonable care in the
custody of the Collateral in its possession if the Collateral is accorded
treatment substantially equal to that which it accords its own property, and the
Collateral Trustee will not be liable or responsible for any loss or diminution
in the value of any of the Collateral by reason of the act or omission of any
carrier, forwarding agency or other agent or bailee selected by the Collateral
Trustee in good faith.

 

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(b)          Except as provided in paragraph 5.12(a), the Collateral Trustee
will not be responsible for the existence, genuineness or value of any of the
Collateral or for the validity, perfection, priority or enforceability of the
Liens in any of the Collateral, for the validity or sufficiency of the
Collateral or any agreement or assignment contained therein, for the validity of
the title of any Grantor to the Collateral, for insuring the Collateral or for
the payment of taxes, charges, assessments or Liens upon the Collateral or
otherwise as to the maintenance of the Collateral. The Collateral Trustee hereby
disclaims any representation or warranty to the current and future holders of
the Parity Lien Obligations concerning the perfection of the security interests
granted to it or in the value of any Collateral. The Collateral Trustee shall
not be under any obligation to the Trustee or any holder of Parity Lien Debt to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this or any other Parity Lien
Security Document or the Intercreditor Agreement or to inspect the properties,
books or records of the Company or any Guarantor.

 

SECTION 5.13         Assumption of Rights, Not Assumption of Duties.
Notwithstanding anything to the contrary contained herein:

 

(1)         each of the parties thereto will remain liable under each of the
Parity Lien Security Documents (other than this Agreement) to the extent set
forth therein to perform all of their respective duties and obligations
thereunder to the same extent as if this Agreement had not be executed;

 

(2)         the exercise by the Collateral Trustee of any of its rights,
remedies or powers hereunder will not release such parties from any of their
respective duties or obligations under the other Parity Lien Security Documents;
and

 

(3)         the Collateral Trustee will not be obligated to perform any of the
obligations or duties of the Company or any Grantor.

 

SECTION 5.14         No Liability for Clean Up of Hazardous Materials. In the
event that the Collateral Trustee is required to acquire title to an asset for
any reason, or take any managerial action of any kind in regard thereto, in
order to carry out any fiduciary or trust obligation for the benefit of another,
which in the Collateral Trustee’s sole discretion may cause the Collateral
Trustee to be considered an “owner or operator” under any environmental laws or
otherwise cause the Collateral Trustee to incur, or be exposed to, any
environmental liability or any liability under any other federal, state or local
law, the Collateral Trustee reserves the right, instead of taking such action,
either to resign as Collateral Trustee or to arrange for the transfer of the
title or control of the asset to a court appointed receiver. The Collateral
Trustee will not be liable to any Person for any environmental liability or any
environmental claims or contribution actions under any federal, state or local
law, rule or regulation by reason of the Collateral Trustee’s actions and
conduct as authorized, empowered and directed hereunder or relating to any kind
of discharge or release or threatened discharge or release of any hazardous
materials into the environment.

 

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SECTION 5.15         Other Relationships with the Company or Guarantors. U.S.
Bank National Association and its Affiliates (and any successor Collateral
Trustee and its Affiliates) may make loans to, issue letters of credit for the
account of, accept deposits from, acquire equity interests in and generally
engage in any kind of banking, trust, financial advisory, underwriting or other
business with the Company or any Guarantor and its Affiliates as though it was
not the Collateral Trustee hereunder and without notice to or consent of the
Trustee. The Trustee and the holders of the Parity Lien Obligations acknowledge
that, pursuant to such activities, U.S. Bank National Association or its
Affiliates (and any successor Collateral Trustee and its Affiliates) may receive
information regarding the Company or any Guarantor or its Affiliates (including
information that may be subject to confidentiality obligations in favor of the
Company, such Guarantor or such Affiliate) and acknowledge that the Collateral
Trustee shall not be under any obligation to provide such information to the
Trustee or the holders of the Parity Lien Obligations. Nothing herein shall
impose or imply any obligation on the part of U.S. Bank National Association (or
any successor Collateral Trustee) to advance funds.

 

Article 6.          Resignation and Removal of the Collateral Trustee

 

SECTION 6.1           Resignation or Removal of Collateral Trustee. Subject to
the appointment of a successor Collateral Trustee as provided in Section 6.2 and
the acceptance of such appointment by the successor Collateral Trustee:

 

(a)          the Collateral Trustee may resign at any time by giving not less
than 30 days’ notice of resignation to each Parity Lien Representative and the
Company; and

 

(b)          the Collateral Trustee may be removed at any time, with or without
cause, by an Act of Parity Lien Debtholders.

 

SECTION 6.2           Appointment of Successor Collateral Trustee. Upon any such
resignation or removal, a successor Collateral Trustee may be appointed by an
Act of Parity Lien Debtholders. If no successor Collateral Trustee has been so
appointed and accepted such appointment within 30 days after the predecessor
Collateral Trustee gave notice of resignation or was removed, the retiring
Collateral Trustee may (at the expense of the Company), at its option, appoint a
successor Collateral Trustee, or petition a court of competent jurisdiction for
appointment of a successor Collateral Trustee, which must be a bank or trust
company:

 

(1)         authorized to exercise corporate trust powers; and

 

(2)         having a combined capital and surplus of at least $250,000,000.

 

The Collateral Trustee will fulfill its obligations hereunder until a successor
Collateral Trustee meeting the requirements of this Section 6.2 has accepted its
appointment as Collateral Trustee and the provisions of Section 6.3 have been
satisfied.

 

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SECTION 6.3           Succession. When the Person so appointed as successor
Collateral Trustee accepts such appointment:

 

(1)         such Person will succeed to and become vested with all the rights,
powers, privileges and duties of the predecessor Collateral Trustee, and the
predecessor Collateral Trustee will be discharged from its duties and
obligations hereunder; and

 

(2)         the predecessor Collateral Trustee will (at the expense of the
Company) promptly transfer all Liens and collateral security and other property
of the Trust Estate within its possession or control to the possession or
control of the successor Collateral Trustee and will execute instruments and
assignments as may be necessary or desirable or reasonably requested by the
successor Collateral Trustee to transfer to the successor Collateral Trustee all
Liens, interests, rights, powers and remedies of the predecessor Collateral
Trustee in respect of the Parity Lien Security Documents or the Trust Estate.

 

Thereafter the predecessor Collateral Trustee will remain entitled to enforce
the immunities granted to it in Article 5 and the provisions of Sections 7.8 and
7.9, and said provisions will survive termination of this Agreement for the
benefit of the predecessor of the Collateral Trustee.

 

SECTION 6.4           Merger, Conversion or Consolidation of Collateral Trustee.
Any Person into which the Collateral Trustee may be merged or converted or with
which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which the Collateral Trustee shall be a party, or
any Person succeeding to the business of the Collateral Trustee shall be the
successor of the Collateral Trustee pursuant to Section 6.3, provided that
(i) without the execution or filing of any paper with any party hereto or any
further act on the part of any of the parties hereto, except where an instrument
of transfer or assignment is required by law to effect such succession, anything
herein to the contrary notwithstanding, such Person satisfies the eligibility
requirements specified in clauses (1) through (4) of Section 6.2 and (ii) prior
to any such merger, conversion or consolidation, the Collateral Trustee shall
have notified the Company and each Parity Lien Representative thereof in
writing.

 

SECTION 6.5           Concerning the Collateral Trustee and the Parity Lien
Representatives.

 

(a)          Notwithstanding anything contained herein to the contrary, it is
expressly understood and agreed by the parties hereto that this Agreement has
been signed by each Parity Lien Representative not in its individual capacity or
personally but solely in its capacity as trustee, representative or agent for
the benefit of the related holders of the applicable Series of Parity Lien Debt
in the exercise of the powers and authority conferred and vested in it under the
related Parity Lien Documents, and in no event shall such Parity Lien
Representative, in its individual capacity, have any liability for the
representations, warranties, covenants, agreements or other obligations of any
other party under this Agreement, any Parity Lien Document or in any of the
certificates, reports, documents, data notices or agreements delivered by such
other party pursuant hereto or thereto.

 

27

 

 

(b)          Notwithstanding anything contained herein to the contrary, it is
expressly understood and agreed by the parties hereto that this Agreement has
been signed by U.S. Bank National Association, not in its individual capacity or
personally but solely in its capacity as Collateral Trustee, and in no event
shall U.S. Bank National Association, in its individual capacity, have any
liability for the representations, warranties, covenants, agreements or other
obligations of any other party under this Agreement, any Parity Lien Document or
in any of the certificates, reports, documents, data notices or agreements
delivered by such other party pursuant hereto or thereto.

 

(c)          Notwithstanding anything contained herein to the contrary, it is
expressly understood and agreed by the parties hereto that this Agreement has
been signed by U.S. Bank National Association not in its individual capacity or
personally but solely in its capacity as Trustee, and in no event shall U.S.
Bank National Association or any other Parity Lien Representative, in its
individual capacity, have any liability for the representations, warranties,
covenants, agreements or other obligations of any other party under this
Agreement, any Parity Lien Document or in any of the certificates, reports,
documents, data notices or agreements delivered by such other party pursuant
hereto or thereto.

 

(d)          In entering into this Agreement, the Collateral Trustee shall be
entitled to the benefit of every provision of the Indenture relating to the
rights, exculpations or conduct of, affecting the liability of or otherwise
affording protection to the “Collateral Trustee” thereunder. In no event will
the Collateral Trustee be liable for any act or omission on the part of the
Grantors or any Parity Lien Representative.

 

(e)          Except as otherwise set forth herein, neither the Collateral
Trustee nor any Parity Lien Representative shall be required to exercise any
discretion or take any action, but shall be required to act or refrain from
acting (and shall be fully protected in so acting or refraining from acting)
solely upon the instructions of the applicable Required Parity Lien Debtholders
as provided in the Indenture or the related Parity Lien Document; provided that
neither the Collateral Trustee nor any Parity Lien Representative shall be
required to take any action that (i) it in good faith believes exposes it to
personal liability unless it receives an indemnification satisfactory to it from
the applicable holders of the Parity Lien Obligations with respect to such
action or (ii) is contrary to this Agreement, the Intercreditor Agreement or
applicable law.

 

Article 7.      miscellaneous provisions

 

SECTION 7.1           Amendment.

 

(a)          Except as provided in the Intercreditor Agreement, no amendment or
supplement to the provisions of any Parity Lien Security Document will be
effective without the approval of the Collateral Trustee acting as directed by
an Act of Parity Lien Debtholders, except that:

 

(1)         any amendment or supplement that has the effect solely of:

 

(A)          adding or maintaining Collateral, securing additional Parity Lien
Debt that was otherwise permitted by the terms of the Parity Lien Documents to
be secured by the Collateral or preserving, perfecting or establishing the Liens
thereon or the rights of the Collateral Trustee therein; or

 

28

 

 

(B)         providing for the assumption of the Company or any Guarantor’s
obligations under any Parity Lien Document in the case of a merger or
consolidation or sale of all or substantially all of the properties or assets of
the Company or such Guarantor to the extent permitted by the terms of the
Indenture and the other Parity Lien Documents, as applicable;

 

will become effective when executed and delivered by the Company or any other
applicable Grantor party thereto and the Collateral Trustee;

 

(2)         no amendment or supplement that reduces, impairs or adversely
affects the right of any holder of Parity Lien Obligations:

 

(A)         to vote its outstanding Parity Lien Debt as to any matter described
as subject to an Act of Parity Lien Debtholders or direction by the Required
Parity Lien Debtholders (or amends the provisions of this clause (2) or the
definition of “Act of Parity Lien Debtholders” or “Required Parity Lien
Debtholders”),

 

(B)         to share in the order of application described in Section 3.4 in the
proceeds of enforcement of or realization on any Collateral; or

 

(C)         to require that Liens securing Parity Lien Obligations be released
only as set forth in the provisions described in Sections 4.1, 4.4 or 4.5,

 

will become effective without the consent of the requisite percentage or number
of holders of each Series of Parity Lien Debt so adversely affected under the
applicable Parity Lien Document; and

 

(3)         no amendment or supplement that imposes any obligation upon the
Collateral Trustee or any Parity Lien Representative or adversely affects the
rights of the Collateral Trustee or any Parity Lien Representative,
respectively, in its individual capacity as such will become effective without
the consent of the Collateral Trustee or such Parity Lien Representative,
respectively.

 

(b)          Notwithstanding Section 7.1(a) but subject to Sections 7.1(a)(2)
and 7.1(a)(3):

 

(1)         any mortgage or other Parity Lien Security Document may be amended
or supplemented with the approval of the Collateral Trustee acting as directed
in writing by the Required Parity Lien Debtholders, unless such amendment or
supplement would not be permitted under the terms of this Agreement, the
Intercreditor Agreement or any Priority Lien Document;

 

29

 

 

(2)         any amendment or waiver of, or any consent under, any provision of
any security document that secures Priority Lien Obligations will apply
automatically to any comparable provision of any comparable Parity Lien Security
Document without the consent of or notice to any holder of Parity Lien
Obligations and without any action by the Company or any Guarantor or any holder
of Notes or other Parity Lien Obligations; and

 

(3)         any mortgage or other Parity Lien Security Document may be amended
or supplemented with the approval of the Collateral Trustee (but without the
consent of or notice to any holder of Parity Lien Obligations and without any
action by any holder of Notes or other Parity Lien Obligations) (i) to cure any
ambiguity, defect or inconsistency, or (ii) to make other changes that do not
have an adverse effect on the validity of the Lien created thereby.

 

(c)          The Collateral Trustee will not enter into any amendment or
supplement unless it has received an Officers’ Certificate to the effect that
such amendment or supplement will not result in a breach of any provision or
covenant contained in the Intercreditor Agreement or any of the Parity Lien
Documents. Prior to executing any amendment or supplement pursuant to this
Section 7.1, the Collateral Trustee will be entitled to receive an opinion of
counsel of the Company to the effect that the execution of such document is
authorized or permitted hereunder, and with respect to amendments adding
Collateral, an opinion of counsel of the Company addressing customary creation
and perfection, and if such additional Collateral consists of equity interests
of any Person which equity interests constitute certificated securities,
priority matters with respect to such additional Collateral (which opinion may
be subject to customary assumptions and qualifications).

 

SECTION 7.2           Voting. In connection with any matter under this Agreement
requiring a vote of holders of Parity Lien Debt, each Series of Parity Lien Debt
will cast its votes in accordance with the Parity Lien Documents governing such
Series of Parity Lien Debt. The amount of Parity Lien Debt to be voted by a
Series of Parity Lien Debt will equal (1) the aggregate principal amount of
Parity Lien Debt held by such Series of Parity Lien Debt (including outstanding
letters of credit whether or not then available or drawn), plus (2) other than
in connection with an exercise of remedies, the aggregate unfunded commitments
to extend credit which, when funded, would constitute Indebtedness of such
Series of Parity Lien Debt. Following and in accordance with the outcome of the
applicable vote under its Parity Lien Documents, the Parity Lien Representative
of each Series of Parity Lien Debt will vote the total amount of Parity Lien
Debt under that Series of Parity Lien Debt as a block in respect of any vote
under this Agreement.

 

SECTION 7.3           Further Assurances.

 

(a)          The Company and each of the Guarantors will do or cause to be done
all acts and things that may be required, or that the Collateral Trustee from
time to time may reasonably request, to assure and confirm that the Collateral
Trustee holds, for the benefit of the holders of Parity Lien Obligations, duly
created and enforceable and perfected Liens upon the Collateral (including any
property or assets that are acquired or otherwise become, or are required by any
Parity Lien Document to become, Collateral after the date hereof), in each case,
as contemplated by, and with the Lien priority required under, the Parity Lien
Documents and in connection with any merger, consolidation or sale of assets of
the Company or any Subsidiary Guarantor, the property and assets of the Person
which is consolidated or merged with or into the Company or any Subsidiary
Guarantor, to the extent that they are property or assets of the types which
would constitute Collateral under the security documents, shall be treated as
after-acquired property and the Company or such Subsidiary Guarantor shall take
such action as may be reasonably necessary to cause such property and assets to
be made subject to the Parity Liens, in the manner and to the extent required
under the Parity Lien Documents.

 

30

 

 

(b)          Upon the reasonable request of the Collateral Trustee or any Parity
Lien Representative at any time and from time to time, the Company and each of
the Guarantors will promptly execute, acknowledge and deliver such security
documents, instruments, certificates, notices and other documents, and take such
other actions as may be reasonably required, or that the Collateral Trustee may
reasonably request, to create, perfect, protect, assure or enforce the Liens and
benefits intended to be conferred, in each case as contemplated by the Parity
Lien Documents for the benefit of holders of Parity Lien Obligations; provided
that no such security document, instrument or other document shall be materially
more burdensome upon the Company and the Guarantors than the Parity Lien
Document executed and delivered by the Company and the Guarantors in connection
with the issuance of the Notes on or about the date hereof.

 

(c)          From and after the date hereof, the Company shall, or shall cause
the applicable Guarantor to, deliver such documents and takes such actions as
are required by Section 13.03(c) of the Indenture.

 

(d)          Upon the request of the Collateral Trustee, the Company and the
Guarantors will permit the Collateral Trustee or any of its agents or
representatives, at reasonable times and intervals upon reasonable prior notice,
to visit their offices and sites and inspect any of the Collateral and to
discuss matters relating to the Collateral with their respective officers and
independent public accountants. The Company and the Guarantors shall, at any
reasonable time and from time to time upon reasonable prior notice, permit the
Collateral Trustee or any of its agents or representatives to examine and make
copies of and abstracts from the records and books of account of the Company and
the Guarantors and their Subsidiaries, all at the Company’s expense.

 

SECTION 7.4           Successors and Assigns.

 

(a)          Except as provided in Section 5.2, the Collateral Trustee may not,
in its capacity as such, delegate any of its duties or assign any of its rights
hereunder, and any attempted delegation or assignment of any such duties or
rights will be null and void. All obligations of the Collateral Trustee
hereunder will inure to the sole and exclusive benefit of, and be enforceable
by, each Parity Lien Representative and each present and future holder of Parity
Lien Obligations, each of whom will be entitled to enforce this Agreement as a
third-party beneficiary hereof, and all of their respective successors and
assigns.

 

(b)          Neither the Company nor any Guarantor may delegate any of its
duties or assign any of its rights hereunder, and any attempted delegation or
assignment of any such duties or rights will be null and void. All obligations
of the Company and the Guarantors hereunder will inure to the sole and exclusive
benefit of, and be enforceable by, the Collateral Trustee, each Parity Lien
Representative and each present and future holder of Parity Lien Obligations,
each of whom will be entitled to enforce this Agreement as a third-party
beneficiary hereof, and all of their respective successors and assigns.

 

31

 

 

SECTION 7.5           Delay and Waiver. No failure to exercise, no course of
dealing with respect to the exercise of, and no delay in exercising, any right,
power or remedy arising under this Agreement or any of the other Parity Lien
Security Documents will impair any such right, power or remedy or operate as a
waiver thereof. No single or partial exercise of any such right, power or remedy
will preclude any other or future exercise thereof or the exercise of any other
right, power or remedy. The remedies herein are cumulative and are not exclusive
of any remedies provided by law.

 

SECTION 7.6           Notices. Any communications, including notices and
instructions, between the parties hereto or notices provided herein to be given
may be given to the following addresses:

 

If to the Collateral Trustee:

U.S. Bank National Association

5555 San Felipe Street, 11th Floor

Houston, Texas 77056

Telephone: (713) 235-9206

Fax: (713) 235-9213

Attention: Corporate Trust Services

 

with a copy to:

 

Charles I. McGuire

McGuire, Craddock & Strother, P.C.

2501 N. Harwood, Suite 1800

Dallas, Texas  75201

Telephone: (214) 954-6818

Fax:  (214) 954-6868

 

If to the Company or any

    other Grantor:      Energy XXI Gulf Coast, Inc.

1021 Main, Suite 2626

Houston, Texas 77002

Facsimile: (713) 351-3300

Attention: Bo Boyd, Senior Vice

President of Legal

 

    If to the Trustee:     U.S. Bank National Association

5555 San Felipe Street, 11th Floor

Houston, Texas 77056

Telephone: (713) 235-9206

Fax: (713) 235-9213

Attention: Corporate Trust Services

 

32

 

 

with a copy to:

 

Charles I. McGuire

McGuire, Craddock & Strother, P.C.

2501 N. Harwood, Suite 1800

Dallas, Texas  75201

Telephone: (214) 954-6818

Fax:  (214) 954-6868

 

and if to any other Parity Lien Representative, to such address as it may
specify by written notice to the parties named above.

 

All notices and communications will be mailed by first class mail, certified or
registered, return receipt requested, or by overnight air courier guaranteeing
next day delivery, to the relevant address set forth above or, as to holders of
Parity Lien Debt, its address shown on the register kept by the office or agency
where the relevant Parity Lien Debt may be presented for registration of
transfer or for exchange. Failure to mail a notice or communication to a holder
of Parity Lien Debt or any defect in it will not affect its sufficiency with
respect to other holders of Parity Lien Debt.

 

If a notice or communication is mailed in the manner provided above within the
time prescribed, it is duly given, whether or not the addressee receives it.

 

SECTION 7.7           Entire Agreement. This Agreement states the complete
agreement of the parties relating to the undertaking of the Collateral Trustee
set forth herein and supersedes all oral negotiations and prior writings in
respect of such undertaking.

 

SECTION 7.8           Compensation; Expenses. The Grantors jointly and severally
agree to pay, promptly upon demand:

 

(1)         such compensation to the Collateral Trustee and its agents as the
Company and the Collateral Trustee may agree in writing from time to time;

 

(2)         all reasonable costs and expenses incurred by the Collateral Trustee
and its agents in the preparation, execution, delivery, filing, recordation,
administration or enforcement of this Agreement or any other Parity Lien
Security Document or any consent, amendment, waiver or other modification
relating hereto or thereto;

 

(3)         all reasonable fees, expenses and disbursements of legal counsel and
any auditors, accountants, consultants or appraisers or other professional
advisors and agents engaged by the Collateral Trustee or any Parity Lien
Representative incurred in connection with the negotiation, preparation,
closing, administration, performance or enforcement of this Agreement and the
other Parity Lien Security Documents or any consent, amendment, waiver or other
modification relating hereto or thereto and any other document or matter
requested by the Company or any Guarantor;

 

33

 

 

(4)         all reasonable costs and expenses incurred by the Collateral Trustee
and its agents in creating, perfecting, preserving, releasing or enforcing the
Collateral Trustee’s Liens on the Collateral, including filing and recording
fees, expenses and taxes, stamp or documentary taxes, search fees, and title
insurance premiums;

 

(5)         all other reasonable costs and expenses incurred by the Collateral
Trustee and its agents in connection with the negotiation, preparation and
execution of the Parity Lien Security Documents and any consents, amendments,
waivers or other modifications thereto and the transactions contemplated thereby
or the exercise of rights or performance of obligations by the Collateral
Trustee thereunder; and

 

(6)         after the occurrence of any Parity Lien Debt Default, all costs and
expenses incurred by the Collateral Trustee, its agents and any Parity Lien
Representative in connection with the preservation, collection, foreclosure or
enforcement of the Collateral subject to the Parity Lien Security Documents or
any interest, right, power or remedy of the Collateral Trustee or in connection
with the collection or enforcement of any of the Parity Lien Obligations or the
proof, protection, administration or resolution of any claim based upon the
Parity Lien Obligations in any Insolvency or Liquidation Proceeding, including
all fees and disbursements of attorneys, accountants, auditors, consultants,
appraisers and other professionals engaged by the Collateral Trustee, its agents
or the Parity Lien Representatives.

 

The agreements in this Section 7.8 will survive repayment of all other Parity
Lien Obligations and the removal or resignation of the Collateral Trustee and
termination of this Agreement.

 

SECTION 7.9           Indemnity.

 

(a)          The Grantors jointly and severally agree to defend, indemnify, pay
and hold harmless the Collateral Trustee, each Parity Lien Representative, each
holder of Parity Lien Obligations and each of their respective Affiliates and
each and all of the directors, officers, partners, trustees, employees,
attorneys and agents, and (in each case) their respective heirs,
representatives, successors and assigns (each of the foregoing, an “Indemnitee”)
from and against any and all Indemnified Liabilities; provided that no
Indemnitee will be entitled to indemnification hereunder with respect to any
Indemnified Liability to the extent such Indemnified Liability is found by a
final and nonappealable decision of a court of competent jurisdiction to have
resulted from the gross negligence or willful misconduct of such Indemnitee.
THIS INDEMNITY COVERS ORDINARY NEGLIGENCE OF ANY OF THE FOREGOING PARTIES.

 

(b)          All amounts due under this Section 7.9 will be payable upon demand.

 

(c)          To the extent that the undertakings to defend, indemnify, pay and
hold harmless set forth in Section 7.9(a) may be unenforceable in whole or in
part because they violate any law or public policy, each of the Grantors will
contribute the maximum portion that it is permitted to pay and satisfy under
applicable law to the payment and satisfaction of all Indemnified Liabilities
incurred by Indemnitees or any of them.

 

34

 

 

(d)          No Grantor will ever assert any claim against any Indemnitee, on
any theory of liability, for any lost profits or special, indirect or
consequential damages or (to the fullest extent a claim for punitive damages may
lawfully be waived) any punitive damages arising out of, in connection with, or
as a result of, this Agreement or any other Parity Lien Document or any
agreement or instrument or transaction contemplated hereby or relating in any
respect to any Indemnified Liability, and each of the Grantors hereby forever
waives, releases and agrees not to sue upon any claim for any such lost profits
or special, indirect, consequential or (to the fullest extent lawful) punitive
damages, whether or not accrued and whether or not known or suspected to exist
in its favor.

 

(e)          The agreements in this Section 7.9 will survive repayment of all
other Parity Lien Obligations and the removal or resignation of the Collateral
Trustee and termination of this Agreement.

 

SECTION 7.10         Severability. If any provision of this Agreement is
invalid, illegal or unenforceable in any respect or in any jurisdiction, the
validity, legality and enforceability of such provision in all other respects
and of all remaining provisions, and of such provision in all other
jurisdictions, will not in any way be affected or impaired thereby.

 

SECTION 7.11         Headings. Section headings herein have been inserted for
convenience of reference only, are not to be considered a part of this Agreement
and will in no way modify or restrict any of the terms or provisions hereof.

 

SECTION 7.12         Obligations Secured. All obligations of the Grantors set
forth in or arising under this Agreement will be Parity Lien Obligations and are
secured by all Liens granted by the Parity Lien Security Documents.

 

SECTION 7.13         Governing Law. THE INTERNAL LAW OF THE STATE OF NEW YORK
WILL GOVERN AND BE USED TO CONSTRUE THIS AGREEMENT.

 

SECTION 7.14         Consent to Jurisdiction. All judicial proceedings brought
against any party hereto arising out of or relating to this Agreement or any of
the other Parity Lien Security Documents may be brought in any state or federal
court of competent jurisdiction in the State, County and City of New York. By
executing and delivering this Agreement, each party hereto irrevocably:

 

(1)         accepts generally and unconditionally the exclusive jurisdiction and
venue of such courts;

 

(2)         waives any defense of forum non conveniens;

 

(3)         agrees that service of all process in any such proceeding in any
such court may be made by registered or certified mail, return receipt
requested, to such party at its address provided in accordance with Section 7.6;

 

35

 

 

(4)         agrees that service as provided in clause (3) above is sufficient to
confer personal jurisdiction over such party in any such proceeding in any such
court and otherwise constitutes effective and binding service in every respect;
and

 

(5)         agrees each party hereto retains the right to serve process in any
other manner permitted by law or to bring proceedings against any party in the
courts of any other jurisdiction.

 

SECTION 7.15         Waiver of Jury Trial. Each party to this Agreement waives
its rights to a jury trial of any claim or cause of action based upon or arising
under this Agreement or any of the other Parity Lien Security Documents or any
dealings between them relating to the subject matter of this Agreement or the
intents and purposes of the other Parity Lien Security Documents. The scope of
this waiver is intended to be all-encompassing of any and all disputes that may
be filed in any court and that relate to the subject matter of this Agreement
and the other Parity Lien Security Documents, including contract claims, tort
claims, breach of duty claims and all other common law and statutory claims.
Each party to this Agreement acknowledges that this waiver is a material
inducement to enter into a business relationship, that each party hereto has
already relied on this waiver in entering into this Agreement, and that each
party hereto will continue to rely on this waiver in its related future
dealings. Each party hereto further warrants and represents that it has reviewed
this waiver with its legal counsel and that it knowingly and voluntarily waives
its jury trial rights following consultation with legal counsel. This waiver is
irrevocable, meaning that it may not be modified either orally or in writing
(other than by a mutual written waiver specifically referring to this
Section 7.15 and executed by each of the parties hereto), and this waiver will
apply to any subsequent amendments, renewals, supplements or modifications of or
to this Agreement or any of the other Parity Lien Security Documents or to any
other documents or agreements relating thereto. In the event of litigation, this
Agreement may be filed as a written consent to a trial by the court.

 

SECTION 7.16         Counterparts, Electronic Signatures. This Agreement may be
executed in any number of counterparts (including by facsimile), each of which
when so executed and delivered will be deemed an original, but all such
counterparts together will constitute but one and the same instrument. The
parties hereto may sign this Agreement and any Collateral Trust Joinder and
transmit the executed copy by electronic means, including facsimile or
noneditable *.pdf files. The electronic copy of the executed Agreement and any
Collateral Trust Joinder is and shall be deemed an original signature.

 

SECTION 7.17         Effectiveness. This Agreement will become effective upon
the execution of a counterpart hereof by each of the parties hereto and receipt
by each party of written notification of such execution and written or
telephonic authorization of delivery thereof.

 

36

 

 

SECTION 7.18         Grantors and Additional Grantors. Each Grantor represents
and warrants that it has duly executed and delivered this Agreement. The Company
will cause each Person that hereafter becomes a Grantor or is required by any
Parity Lien Document to become a party to this Agreement to become a party to
this Agreement, for all purposes of this Agreement, by causing such Person to
execute and deliver to the Collateral Trustee a Collateral Trust Joinder,
whereupon such Person will be bound by the terms hereof to the same extent as if
it had executed and delivered this Agreement as of the date hereof. The Company
shall promptly provide each Parity Lien Representative with a copy of each
Collateral Trust Joinder executed and delivered pursuant to this Section 7.18;
provided that the failure to so deliver a copy of the Collateral Trust Joinder
to any then existing Parity Lien Representative shall not affect the inclusion
of such Person as a Grantor if the other requirements of this Section 7.18 are
complied with.

 

SECTION 7.19         Insolvency. This Agreement will be applicable both before
and after the commencement of any Insolvency or Liquidation Proceeding by or
against any Grantor. The relative rights, as provided for in this Agreement,
will continue after the commencement of any such Insolvency or Liquidation
Proceeding on the same basis as prior to the date of the commencement of any
such case, as provided in this Agreement.

 

SECTION 7.20         Rights and Immunities of Parity Lien Representatives. The
Trustee and the Collateral Trustee will be entitled, to the extent applicable to
such entity, to all of the rights, protections, immunities and indemnities set
forth in the Indenture and any future Parity Lien Representative will be
entitled to all of the rights, protections, immunities and indemnities set forth
in the credit agreement, indenture or other agreement governing the applicable
Parity Lien Debt with respect to which such Person will act as representative,
in each case as if specifically set forth herein. In no event will any Parity
Lien Representative be liable for any act or omission on the part of the
Grantors or the Collateral Trustee hereunder.

 

SECTION 7.21         Intercreditor Agreement. Each Person that is secured
hereunder, by accepting the benefits of the security provided hereby, (i)
consents (or is deemed to consent), to the subordination of Liens in favor of
the Collateral Trustee as provided for in the Intercreditor Agreement, (ii)
agrees (or is deemed to agree) that it will be bound by, and will take no
actions contrary to, the provisions of the Intercreditor Agreement, (iii)
authorizes (or is deemed to authorize) and instructs (or is deemed to instruct)
the Collateral Trustee on behalf of such Person to enter into, and perform
under, the Intercreditor Agreement as “Second Lien Collateral Trustee” (as
defined in the Intercreditor Agreement). The Collateral Trustee agrees to enter
into any amendments or joinders to the Intercreditor Agreement, without the
consent of any Holder or the Trustee, to add additional Indebtedness as Priority
Lien Debt, Parity Lien Debt or Junior Lien Debt (to the extent permitted to be
incurred and secured by the applicable Secured Debt Documents) and add other
parties (or any authorized agent or trustee therefor) holding such Indebtedness
thereto and to establish that the Lien on any Collateral securing such
Indebtedness ranks equally with the Liens on such Collateral securing the other
Priority Lien Debt, Parity Lien Debt or Junior Lien Debt, as applicable, then
outstanding. The foregoing provisions are intended as an inducement to the
lenders under the Credit Agreement to extend credit to the Company, as the
borrower under the Credit Agreement, and such lenders are intended third party
beneficiaries of this provision and the provisions of the Intercreditor
Agreement. Notwithstanding anything to the contrary contained herein, to the
extent that any Lien on any Collateral is perfected by the possession or control
of such Collateral or of any account in which such Collateral is held, and if
such Collateral or any such account is in fact in the possession or under the
control of the Priority Lien Representative, or of agents or bailees of the
Priority Lien Representative, the perfection actions and related deliverables
described in this Agreement or the other Parity Lien Security Documents shall
not be required.

 

37

 

 

SECTION 7.22         Force Majeure. The Collateral Trustee shall not be liable
for delays or failures in performance resulting from acts of God, strikes,
lockouts, riots, acts of war, epidemics, governmental regulations superimposed
after the fact, fire, communication line failures, computer viruses, power
failures, earthquakes or other disasters or similar acts beyond its control.

 

38

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Collateral Trust
Agreement to be executed by their respective officers or representatives as of
the day and year first above written.

 

  ENERGY XXI GULF COAST, INC.         By /s/ Antonio de Pinho   Name: Antonio de
Pinho   Title: President         ENERGY XXI USA, INC.         By /s/ Antonio de
Pinho   Name: Antonio de Pinho   Title: President         ENERGY XXI TEXAS
ONSHORE, LLC   ENERGY XXI ONSHORE, LLC   ENERGY XXI GOM, LLC   ENERGY XXI
PIPELINE, LLC   ENERGY XXI PIPELINE II, LLC   ENERGY XXI LEASEHOLD, LLC   MS
ONSHORE, LLC         By /s/ Antonio de Pinho   Name: Antonio de Pinho   Title:
President

 

Signature Page to Collateral Trust Agreement

 

 

 

 

  U.S. Bank National Association, as Trustee under the Indenture         By: /s/
Steven A. Finklea   Name: Steven A. Finklea   Title: Vice President         U.S.
Bank National Association, as Collateral Trustee         By: /s/ Steven A.
Finklea   Name: Steven A. Finklea   Title: Vice President

 

Signature Page to Collateral Trust Agreement

 

 

 

 

[EXHIBIT A
to Collateral Trust Agreement]

 

[FORM OF]
ADDITIONAL PARITY LIEN DEBT CERTIFICATE

 

Reference is made to the Collateral Trust Agreement, dated as of March 12, 2015
(as amended, supplemented, amended and restated or otherwise modified and in
effect from time to time, the “Collateral Trust Agreement”), among Energy XXI
Gulf Coast, Inc., a Delaware corporation (the “Company”), the Guarantors from
time to time party thereto, U.S. Bank National Association, as Trustee under the
Indenture (as defined therein), and U.S. Bank National Association, as
Collateral Trustee. Capitalized terms used but not otherwise defined herein have
the meanings assigned to them in the Collateral Trust Agreement. This Additional
Parity Lien Debt Certificate is being executed and delivered in order to
designate additional secured debt as Parity Lien Debt entitled to the benefit of
the Collateral Trust Agreement.

 

The undersigned, the duly appointed [specify title] of the Company hereby
certifies on behalf of [the Company or applicable Grantor] that:

 

(A)         [the Company or applicable Grantor] intends to incur additional
Parity Lien Debt (“Additional Parity Lien Debt”) which will be permitted by each
applicable Parity Lien Document to be secured by a Parity Lien equally and
ratably with all previously existing and future Parity Lien Debt;

 

(B)         the name and address of the Parity Lien Debt Representative for the
Additional Parity Lien Debt for purposes of Section 7.6 of the Collateral Trust
Agreement is:

 

_____________________________

 

_____________________________

 

Telephone:  ___________________

 

Fax:   _______________________

 

(C)         Attached as Exhibit 1 hereto is a Reaffirmation Agreement duly
executed by the Company and each Guarantor, and

 

(D)         the Company has caused a copy of this Additional Parity Lien Debt
Certificate and the related Collateral Trust Joinder to be delivered to each
existing Parity Lien Representative.

 

IN WITNESS WHEREOF, the Company has caused this Additional Parity Lien Debt
Certificate to be duly executed by the undersigned officer as of
___________________, 20____.

 

 

 

 

  ENERGY XXI GULF COAST, INC.         By     Name:   Title:

 

Acknowledgement of Receipt

 

The undersigned, the duly appointed Collateral Trustee under the Collateral
Trust Agreement, hereby acknowledges receipt of an executed copy of this
Additional Parity Lien Debt Certificate.

 

  U.S. Bank National Association,         By:     Name:     Title:  

 

 

 

 

EXHIBIT 1 TO ADDITIONAL PARITY LIEN DEBT CERTIFICATE

 

[FORM OF]

 

REAFFIRMATION AGREEMENT

 

Reference is made to the Collateral Trust Agreement , dated as of March 12, 2015
(as amended, supplemented, amended and restated or otherwise modified and in
effect from time to time, the “Collateral Trust Agreement”), among Energy XXI
Gulf Coast, Inc., a Delaware corporation (the “Company”), the Guarantors from
time to time party thereto, U.S. Bank National Association, as Trustee under the
Indenture (as defined therein), and U.S. Bank National Association, as
Collateral Trustee. Capitalized terms used but not otherwise defined herein have
the meanings assigned to them in the Collateral Trust Agreement. This
Reaffirmation Agreement is being executed and delivered as of __________, 20__
in connection with an Additional Parity Lien Debt Certificate of even date
herewith which Additional Parity Lien Debt Certificate has designated additional
Parity Lien Debt entitled to the benefit of the Collateral Trust Agreement.

 

Each of the undersigned hereby consents to the designation of additional secured
debt as Parity Lien Debt as set forth in the Additional Parity Lien Debt
Certificate of even date herewith and hereby confirms its respective guarantees,
pledges, grants of security interests and other obligations, as applicable,
under and subject to the terms of each of the Parity Lien Documents to which it
is party, and agrees that, notwithstanding the designation of such additional
indebtedness or any of the transactions contemplated thereby, such guarantees,
pledges, grants of security interests and other obligations, and the terms of
each Parity Lien Document to which it is a party, shall continue to be in full
force and effect and such additional secured debt shall be entitled to all of
the benefits of such Parity Lien Documents.

 

Governing Law and Miscellaneous Provisions. The provisions of Article 7 of the
Collateral Trust Agreement will apply with like effect to this Reaffirmation
Agreement.

 

IN WITNESS WHEREOF, each of the undersigned has caused this Reaffirmation
Agreement to be duly executed as of the date written above.

 

  [names of the Company and Guarantors]                 Name:     Title:

 

 

 

 

[EXHIBIT B
to Collateral Trust Agreement]

 

[FORM OF]
COLLATERAL TRUST JOINDER – ADDITIONAL DEBT

 

Reference is made to the Collateral Trust Agreement , dated as of March 12, 2015
(as amended, supplemented, amended and restated or otherwise modified and in
effect from time to time, the “Collateral Trust Agreement”), among Energy XXI
Gulf Coast, Inc., a Delaware corporation (the “Company”), the Guarantors from
time to time party thereto, U.S. Bank National Association, as Trustee under the
Indenture (as defined therein), and U.S. Bank National Association, as
Collateral Trustee. Capitalized terms used but not otherwise defined herein have
the meanings assigned to them in the Collateral Trust Agreement. This Collateral
Trust Joinder is being executed and delivered pursuant to Section 3.8 of the
Collateral Trust Agreement as a condition precedent to the debt for which the
undersigned is acting as agent being entitled to the benefits of being
additional Parity Lien Debt under the Collateral Trust Agreement.

 

[1. Joinder. The undersigned, _____________________, a _______________, (the
“New Representative”) as [trustee, administrative agent] under that certain
[described applicable indenture, credit agreement or other document governing
the additional secured debt] hereby agrees to become party as a Parity Lien
Representative under the Collateral Trust Agreement for all purposes thereof on
the terms set forth therein, and to be bound by the terms of the Collateral
Trust Agreement as fully as if the undersigned had executed and delivered the
Collateral Trust Agreement as of the date thereof.]1

 

[1][2]. Additional Secured Debt Designation

 

The undersigned, on behalf of itself and each holder of Obligations in respect
of the [Additional Notes][Series of Parity Lien Debt] for which the undersigned
is acting as Parity Lien Representative hereby agrees, for the enforceable
benefit of each existing and future holder of Priority Lien Obligations, the
Priority Lien Collateral Agent, all holders of each current and future Series of
Parity Lien Debt, each other current and future Parity Lien Representative and
each current and future holder of Parity Lien Obligations and as a condition to
being treated as Parity Lien Debt under the Collateral Trust Agreement that:

 

(a)          all Parity Lien Obligations will be and are secured equally and
ratably by all Parity Liens at any time granted by the Company or any other
Grantor to secure any Obligations in respect of any [Additional Notes][Series of
Parity Lien Debt], whether or not upon property otherwise constituting
collateral for such Series of Parity Lien Debt, and that all such Parity Liens
will be enforceable by the Collateral Trustee for the benefit of all holders of
Parity Lien Obligations equally and ratably;

 

 

1 Delete if Additional Parity Lien Debt constitutes Additional Notes.

 

 

 

 

(b)          the undersigned and each holder of Obligations in respect of the
[Additional Notes][Series of Parity Lien Debt] for which the undersigned is
acting as Parity Lien Representative are bound by the provisions of this
Agreement, including the provisions relating to the ranking of Parity Liens and
the order of application of proceeds from the enforcement of Parity Liens; and

 

(c)          the Collateral Trustee shall perform its obligations under the
Collateral Trust Agreement, the other Parity Lien Security Documents and the
Intercreditor Agreement.

 

3. Governing Law and Miscellaneous Provisions. The provisions of Article 7 of
the Collateral Trust Agreement will apply with like effect to this Collateral
Trust Joinder.

 

IN WITNESS WHEREOF, the parties hereto have caused this Collateral Trust Joinder
to be executed by their respective officers or representatives as of
___________________, 20____.

 

  [insert name of the new representative or the Trustee]           By:      
Name:       Title:  

 

The Collateral Trustee hereby acknowledges receipt of this Collateral Trust
Joinder and agrees to act as Collateral Trustee for the [New
Representative][Trustee] and the holders of the Obligations represented thereby:

 

  U.S. Bank National Association, as Collateral Trustee           By:      
Name:       Title:  

 

 

 

 

[EXHIBIT C
to Collateral Trust Agreement]

 

[FORM OF]
COLLATERAL TRUST JOINDER – ADDITIONAL GRANTOR

 

Reference is made to the Collateral Trust Agreement , dated as of March 12, 2015
(as amended, supplemented, amended and restated or otherwise modified and in
effect from time to time, the “Collateral Trust Agreement”), among Energy XXI
Gulf Coast, Inc., a Delaware corporation (the “Company”), the Guarantors from
time to time party thereto, U.S. Bank National Association, as Trustee under the
Indenture (as defined therein), and U.S. Bank National Association, as
Collateral Trustee. Capitalized terms used but not otherwise defined herein have
the meanings assigned to them in the Collateral Trust Agreement. This Collateral
Trust Joinder is being executed and delivered pursuant to Section 7.18 of the
Collateral Trust Agreement.

 

1. Joinder. The undersigned, _____________________, a _______________, hereby
agrees to become party as a Grantor under the Collateral Trust Agreement for all
purposes thereof on the terms set forth therein, and to be bound by the terms of
the Collateral Trust Agreement as fully as if the undersigned had executed and
delivered the Collateral Trust Agreement as of the date thereof.

 

2. Governing Law and Miscellaneous Provisions. The provisions of Article 7 of
the Collateral Trust Agreement will apply with like effect to this Collateral
Trust Joinder.

 

IN WITNESS WHEREOF, the parties hereto have caused this Collateral Trust Joinder
to be executed by their respective officers or representatives as of
___________________, 20____.

 

  [___________________________________]           By:       Name:       Title:  

 

The Collateral Trustee hereby acknowledges receipt of this Collateral Trust
Joinder and agrees to act as Collateral Trustee with respect to the Collateral
pledged by the new Grantor:

 

  U.S. Bank National Association, as Collateral Trustee           By:      
Name:       Title: