Exhibit 10.2
AMENDED AND RESTATED GUARANTY AND PLEDGE AGREEMENT
Dated as of
August 9, 2007
made by
Teton Energy Corporation
and
each of the other Obligors
in favor of
JPMorgan Chase Bank, N.A.
as Administrative Agent

 

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TABLE OF CONTENTS

              Page  
Article I            Definitions
    1  
Section 1.01 Definitions
    1  
Section 1.02 Other Definitional Provisions
    4  
Section 1.03 Rules of Interpretation
    4  
 
       
Article II           Guarantee
    4  
Section 2.01 Guarantee
    4  
Section 2.02 Right of Contribution
    5  
Section 2.03 No Subrogation
    5  
Section 2.04 Guaranty Amendments, Etc. with respect to the Borrower Obligations
    6  
Section 2.05 Waivers
    6  
Section 2.06 Guaranty Absolute and Unconditional
    7  
Section 2.07 Reinstatement
    8  
Section 2.08 Payments
    8  
 
       
Article III         Grant of Security Interest
    9  
Section 3.01 Grant of Security Interest
    9  
Section 3.02 Transfer of Pledged Securities
    9  
 
       
Article IV         Representations and Warranties
    9  
Section 4.01 Representations in Credit Agreement
    9  
Section 4.02 Title; No Other Liens
    10  
Section 4.03 Perfected First Priority Liens
    10  
Section 4.04 Obligor Information
    10  
Section 4.05 Pledged Securities
    10  
Section 4.06 Benefit to the Guarantor
    11  
Section 4.07 Solvency
    11  
 
       
Article V           Covenants
    11  
Section 5.01 Maintenance of Perfected Security Interest; Further Documentation
    11  
Section 5.02 Changes in Locations, Name, Etc
    12  
Section 5.03 Pledged Securities
    12  
 
       
Article VI          Remedial Provisions
    14  
Section 6.01 Code and Other Remedies
    14  
Section 6.02 Pledged Securities
    15  
Section 6.03 Private Sales of Pledged Securities
    17  
Section 6.04 Waiver; Deficiency
    18  
Section 6.05 Non-Judicial Enforcement
    18  
 
       
Article VII        The Administrative Agent
    18  
Section 7.01 Administrative Agent’s Appointment as Attorney-in-Fact, Etc.
    18  
Section 7.02 Duty of Administrative Agent
    19  

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              Page  
Section 7.03 Filing of Financing Statements
    20  
Section 7.04 Authority of Administrative Agent
    20  
 
       
Article VIII       Subordination of Indebtedness
    20  
Section 8.01 Subordination of All Obligor Claims
    20  
Section 8.02 Claims in Bankruptcy
    21  
Section 8.03 Payments Held in Trust
    21  
Section 8.04 Liens Subordinate
    21  
Section 8.05 Notation of Records
    22  
 
       
Article IX          Miscellaneous
    22  
Section 9.01 Waiver
    22  
Section 9.02 Notices
    22  
Section 9.03 Payment of Expenses, Indemnities, Etc.
    22  
Section 9.04 Amendments in Writing
    23  
Section 9.05 Successors and Assigns
    23  
Section 9.06 Survival; Revival; Reinstatement
    23  
Section 9.07 Counterparts; Integration; Effectiveness
    24  
Section 9.08 Severability
    24  
Section 9.09 Set-Off
    24  
Section 9.10 Governing Law; Submission to Jurisdiction
    25  
Section 9.11 Headings
    26  
Section 9.12 Acknowledgments
    26  
Section 9.13 Additional Obligors and Pledgors
    26  
Section 9.14 Releases
    26  
Section 9.15 Acceptance
    27  

SCHEDULES:

         
Schedule 1
  —   Notice Addresses of Obligors
Schedule 2
  —   Description of Pledged Securities
Schedule 3
  —   Filings and Other Actions Required to Perfect Security Interests
Schedule 4
  —   Location of Jurisdiction of Organization and Chief Executive Office
 
       
ANNEXES:
       
 
       
Annex I
  —   Form of Assumption Agreement
Annex II
  —   Form of Supplement

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     This AMENDED AND RESTATED GUARANTY AND PLEDGE AGREEMENT, dated as of
August 9, 2007, is made by TETON ENERGY CORPORATION, a Delaware corporation (the
“Borrower”), and each of the signatories hereto (the Borrower and each of the
signatories hereto, together with any other Subsidiary or holding company of the
Borrower that becomes a party hereto from time to time after the date hereof,
the “Obligors”), in favor of JPMORGAN CHASE BANK, N.A., as administrative agent
(in such capacity, together with its successors in such capacity, the
“Administrative Agent”).
R E C I T A L S
     A. The Borrower has entered into that certain Credit Agreement dated as of
June 15, 2006 among the Borrower, the financial institutions party thereto (the
“Existing Lenders”), BNP Paribas, as the administrative agent for the Existing
Lenders, and the other agents party thereto (as heretofore amended, supplemented
or restated, the “Existing Credit Agreement”).
     B. As a condition precedent to the obligation of the Existing Lenders to
make their respective extensions of credit to the Borrower under the Existing
Credit Agreement, the Obligors executed and delivered that certain Guaranty and
Pledge Agreement dated as of June 15, 2006 (the “Existing Guaranty and Pledge
Agreement”) to BNP Paribas, as administrative agent for the ratable benefit of
the Existing Lenders.
     C. Contemporaneously with the execution and delivery hereof, the Existing
Credit Agreement will be amended and restated in its entirety as an Amended and
Restated Credit Agreement dated as of the date hereof by and among the Borrower,
the financial institutions party thereto (the “Lenders”) and the Administrative
Agent (as amended, supplemented or restated from time to time, the “Credit
Agreement”), pursuant to which the Lenders have agreed to extend credit to the
Borrower.
     D. It is a condition precedent to the obligation of the Lenders to make
their respective extensions of credit to the Borrower under the Credit Agreement
that the Obligors shall have executed and delivered this Agreement to the
Administrative Agent for the ratable benefit of the Lenders.
     E. Now, therefore, in consideration of the premises herein and to induce
the Administrative Agent and the Lenders to enter into the Credit Agreement and
to induce the Lenders to make their respective extensions of credit to the
Borrower thereunder, each Obligor hereby agrees with the Administrative Agent,
for the ratable benefit of the Lenders, to amend and restate the Existing
Guaranty and Pledge Agreement in its entirety in the form of this Agreement and
further agrees as follows:
ARTICLE I
Definitions
     Section 1.01 Definitions.
          (a) Unless otherwise defined herein, terms defined in the Credit
Agreement and used herein have the meanings given to them in the Credit
Agreement, and all uncapitalized terms which are defined in the UCC on the date
hereof are used herein as so defined.
          (b) The following terms have the following meanings:

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          “Agreement” means this Amended and Restated Guaranty and Pledge
Agreement, as the same may be amended, restated, supplemented or otherwise
modified from time to time.
          “Assumption Agreement” means an Assumption Agreement substantially in
the form attached hereto as Annex I.
          “Bankruptcy Code” means title 11, United States Code, as amended from
time to time.
          “Borrower Obligations” means the collective reference to the payment
and performance of all Indebtedness and all obligations of the Borrower and its
Subsidiaries under the Guaranteed Documents, including, without limitation, the
unpaid principal of and interest on the Loans and the LC Exposure and all other
obligations and liabilities of the Borrower and its Subsidiaries (including,
without limitation, interest accruing at the then applicable rate provided in
the Credit Agreement after the maturity of the Loans and LC Exposure and
interest accruing after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to
the Borrower, whether or not a claim for post-filing or post-petition interest
is allowed in such proceeding) to the Guaranteed Creditors, whether direct or
indirect, absolute or contingent, due or to become due, or now existing or
hereafter incurred, which may arise under, out of, or in connection with, the
Guaranteed Documents, whether on account of principal, interest, reimbursement
obligations, payments in respect of an early termination date, fees,
indemnities, costs, expenses or otherwise (including, without limitation, all
fees and disbursements of counsel to the Guaranteed Creditors that are required
to be paid by the Borrower pursuant to the terms of any Guaranteed Documents).
          “Collateral” has the meaning assigned such term in Section 3.01.
          “Guaranteed Creditors” means the collective reference to the
Administrative Agent, the Lenders and the Affiliates of Lenders that are parties
to Guaranteed Swap Agreements.
          “Guaranteed Documents” means the collective reference to the Credit
Agreement, the other Loan Documents, each Guaranteed Swap Agreement and any
other document made, delivered or given in connection with any of the foregoing.
          “Guaranteed Swap Agreement” means any Swap Agreement between the
Borrower or any of its Subsidiaries and any Lender or any Affiliate of any
Lender while such Person (or, in the case of an Affiliate of a Lender, the
Person affiliated therewith) is a Lender regardless of when such Swap Agreement
was entered into. For the avoidance of doubt, a Swap Agreement ceases to be a
Guaranteed Swap Agreement if the Person that is the counterparty to the Borrower
or one of its Subsidiaries under a Swap Agreement ceases to be a Lender under
the Credit Agreement (or, in the case of an Affiliate of a Lender, the Person
affiliated therewith ceases to be a Lender under the Credit Agreement).
          “Guarantor Obligations” means with respect to any Guarantor, the
collective reference to (a) the Borrower Obligations and (b) all obligations and
liabilities of such Guarantor

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which may arise under or in connection with any Guaranteed Document to which
such Guarantor is a party, in each case, whether on account of principal,
interest, guarantee obligations, reimbursement obligations, payments in respect
of an early termination date, fees, indemnities, costs, expenses or otherwise
(including, without limitation, all reasonable fees and disbursements of counsel
to any Guaranteed Creditor under any Guaranteed Document).
          “Guarantors” means the collective reference to each Obligor other than
the Borrower.
          “Issuers” means the collective reference to each issuer of a Pledged
Security.
          “LLC” means, with respect to each Pledgor, each limited liability
company described or referred to in Schedule 2 in which such Pledgor has an
interest.
          “LLC Agreement” means, with respect to each Pledgor, each operating
agreement or other governing documents relating to an LLC, as each agreement has
heretofore been, and may hereafter be, amended, restated, supplemented or
otherwise modified from time to time.
          “Obligations” means: (a) in the case of the Borrower, the Borrower
Obligations and (b) in the case of each Guarantor, its Guarantor Obligations.
          “Obligor Claims” has the meaning assigned to such term in
Section 8.01.
          “Partnership” means, with respect to each Pledgor, each partnership
described or referred to in Schedule 2 in which such Pledgor has an interest.
          “Partnership Agreement” means, with respect to each Pledgor, each
partnership agreement governing a Partnership, as each such agreement has
heretofore been, and may hereafter be, amended, restated, supplemented or
otherwise modified.
          “Pledged LLC Interests” means, with respect to each Pledgor, all
right, title and interest of such Pledgor as a member of each LLC and all right,
title and interest of any Pledgor in, to and under each LLC Agreement.
          “Pledged Partnership Interests” means, with respect to each Pledgor,
all right, title and interest of such Pledgor as a limited or general partner in
all Partnerships and all right, title and interest of any Pledgor in, to and
under the Partnership Agreements.
          “Pledged Securities” means: (a) the Equity Interests described or
referred to in Schedule 2 (as the same may be supplemented from time to time
pursuant to a Supplement); and (b) (i) the certificates or instruments, if any,
representing such Equity Interests, (ii) all dividends (cash, Equity Interests
or otherwise), cash, instruments, rights to subscribe, purchase or sell and all
other rights and Property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such securities,
(iii) all replacements, additions to and substitutions for any of the Property
referred to in this definition, including, without limitation, claims against
third parties, (iv) the proceeds, interest, profits and other income of or on
any of the Property referred to in this definition, (v) all security
entitlements in respect of any of the foregoing, if any and (vi) all books and
records relating to any of the Property referred to in this definition.

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          “Pledgor” means any Obligor that now or hereafter pledges Pledged
Securities hereunder.
          “Proceeds” means all “proceeds” as such term is defined in
Section 9.102(65) of the Uniform Commercial Code in effect in the State of Texas
on the date hereof and, in any event, shall include, without limitation, all
dividends or other income from the Pledged Securities, collections thereon or
distributions or payments with respect thereto.
          “Securities Act” shall mean the Securities Act of 1933, as amended.
          “Supplement” means a Supplement substantially in the form attached
hereto as Annex II.
          “UCC” means the Uniform Commercial Code as from time to time in effect
in the State of Texas; provided, however, that, in the event that, by reason of
mandatory provisions of law, any of the attachment, perfection or priority of
the Administrative Agent’s and the Guaranteed Creditors’ security interest in
any Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of Texas, the term “UCC” shall mean the
Uniform Commercial Code as in effect in such other jurisdiction for purposes of
the provisions hereof relating to such attachment, perfection, the effect
thereof or priority and for purposes of definitions related to such provisions.
     Section 1.02 Other Definitional Provisions. Where the context requires,
terms relating to the Collateral or any part thereof, when used in relation to a
Pledgor, refer to such Pledgor’s Collateral or the relevant part thereof.
     Section 1.03 Rules of Interpretation. Section 1.04 and Section 1.05 of the
Credit Agreement are hereby incorporated herein by reference and shall apply to
this Agreement, mutatis mutandis.
ARTICLE II
Guarantee
     Section 2.01 Guarantee.
          (a) Upon the terms and subject to the conditions of this Agreement,
each of the Guarantors hereby jointly and severally, unconditionally and
irrevocably, guarantees to the Guaranteed Creditors and each of their respective
successors, indorsees, transferees and assigns, the prompt and complete payment
in cash and performance by the Borrower when due (whether at the stated
maturity, by acceleration or otherwise) of the Borrower Obligations. This is a
guarantee of payment and not collection and the liability of each Guarantor is
primary and not secondary.
          (b) Anything herein or in any other Loan Document to the contrary
notwithstanding, the maximum liability of each Guarantor hereunder and under the
other Loan

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Documents shall in no event exceed the amount which can be guaranteed by such
Guarantor under applicable federal and state laws relating to the insolvency of
debtors (after giving effect to the right of contribution established in
Section 2.02).
          (c) Each Guarantor agrees that the Borrower Obligations may at any
time and from time to time exceed the amount of the liability of such Guarantor
hereunder without impairing the guarantee contained in this Article II or
affecting the rights and remedies of any Guaranteed Creditor hereunder.
          (d) Each Guarantor agrees that if the maturity of the Borrower
Obligations is accelerated by bankruptcy or otherwise, such maturity shall also
be deemed accelerated for the purpose of this guarantee without demand or notice
to such Guarantor. The guarantee contained in this Article II shall remain in
full force and effect until all the Borrower Obligations shall have been
satisfied by payment in full in cash, no Letter of Credit shall be outstanding
and all of the Commitments are terminated, notwithstanding that from time to
time during the term of the Credit Agreement, no Borrower Obligations may be
outstanding.
          (e) No payment made by any Obligor, any other guarantor or any other
Person or received or collected by any Guaranteed Creditor from the Borrower,
any of the Guarantors, any other guarantor or any other Person by virtue of any
action or proceeding or any set-off or appropriation or application at any time
or from time to time in reduction of or in payment of the Borrower Obligations
shall be deemed to modify, reduce, release or otherwise affect the liability of
any Guarantor hereunder which shall, notwithstanding any such payment (other
than any payment made by such Guarantor in respect of the Borrower Obligations
or any payment received or collected from such Guarantor in respect of the
Borrower Obligations), remain liable for the Borrower Obligations up to the
maximum liability of such Guarantor hereunder until the Borrower Obligations are
paid in full in cash, no Letter of Credit shall be outstanding and all of the
Commitments are terminated.
     Section 2.02 Right of Contribution. Each Guarantor hereby agrees that to
the extent that a Guarantor shall have paid more than its proportionate share of
any payment made hereunder, such Guarantor shall be entitled to seek and receive
contribution from and against any other Guarantor hereunder which has not paid
its proportionate share of such payment. Each Guarantor’s right of contribution
shall be subject to the terms and conditions of Section 2.03. The provisions of
this Section 2.02 shall in no respect limit the obligations and liabilities of
any Guarantor to the Guaranteed Creditors, and each Guarantor shall remain
liable to the Guaranteed Creditors for the full amount guaranteed by such
Guarantor hereunder.
     Section 2.03 No Subrogation. Notwithstanding any payment made by any
Guarantor hereunder or any set-off or application of funds of any Guarantor by
any Guaranteed Creditor, no Guarantor shall be entitled to be subrogated to any
of the rights of any Guaranteed Creditor against the Borrower or any other
Guarantor or any collateral security or guarantee or right of offset held by any
Guaranteed Creditor for the payment of the Borrower Obligations, nor shall any
Guarantor seek or be entitled to seek any indemnity, exoneration, participation,
contribution or reimbursement from the Borrower or any other Guarantor in
respect of payments made by such Guarantor hereunder, until all amounts owing to
the Guaranteed Creditors by the Borrower on account of the Borrower Obligations
are irrevocably and indefeasibly paid in full in cash, no

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Letter of Credit shall be outstanding and all of the Commitments are terminated.
If any amount shall be paid to any Guarantor on account of such subrogation
rights at any time when all of the Borrower Obligations shall not have been
irrevocably and indefeasibly paid in full in cash, any Letter of Credit shall be
outstanding or any of the Commitments are in effect, such amount shall be held
by such Guarantor in trust for the Guaranteed Creditors, and shall, forthwith
upon receipt by such Guarantor, be turned over to the Administrative Agent in
the exact form received by such Guarantor (duly indorsed by such Guarantor to
the Administrative Agent, if required), to be applied against the Borrower
Obligations, whether matured or unmatured, in accordance with Section 10.02(c)
of the Credit Agreement.
     Section 2.04 Guaranty Amendments, Etc. with respect to the Borrower
Obligations. Each Guarantor shall remain obligated hereunder, and such
Guarantor’s obligations hereunder shall not be released, discharged or otherwise
affected, notwithstanding that, without any reservation of rights against any
Guarantor and without notice to, demand upon or further assent by any Guarantor
(which notice, demand and assent requirements are hereby expressly waived by
such Guarantor), (a) any demand for payment of any of the Borrower Obligations
made by any Guaranteed Creditor may be rescinded by such Guaranteed Creditor or
otherwise and any of the Borrower Obligations continued; (b) the Borrower
Obligations, the liability of any other Person upon or for any part thereof or
any collateral security or guarantee therefor or right of offset with respect
thereto, may, from time to time, in whole or in part, be renewed, extended,
amended, modified, accelerated, compromised, waived, surrendered or released by,
or any indulgence or forbearance in respect thereof granted by, any Guaranteed
Creditor; (c) any Guaranteed Document may be amended, modified, supplemented or
terminated, in whole or in part, as the Guaranteed Creditors may deem advisable
from time to time; (d) any collateral security, guarantee or right of offset at
any time held by any Guaranteed Creditor for the payment of the Borrower
Obligations may be sold, exchanged, waived, surrendered or released; (e) any
additional guarantors, makers or endorsers of the Borrower’s Obligations may
from time to time be obligated on the Borrower’s Obligations or any additional
security or collateral for the payment and performance of the Borrower’s
Obligations may from time to time secure the Borrower’s Obligations; or (f) any
other event shall occur which constitutes a defense or release of sureties
generally. No Guaranteed Creditor shall have any obligation to protect, secure,
perfect or insure any Lien at any time held by it as security for the Borrower
Obligations or for the guarantee contained in this Article II or any Property
subject thereto.
     Section 2.05 Waivers. Each Guarantor hereby waives any and all notice of
the creation, renewal, extension or accrual of any of the Borrower Obligations
and notice of or proof of reliance by any Guaranteed Creditor upon the guarantee
contained in this Article II or acceptance of the guarantee contained in this
Article II; the Borrower Obligations, and any of them, shall conclusively be
deemed to have been created, contracted or incurred, or renewed, extended,
amended or waived, in reliance upon the guarantee contained in this Article II
and no notice of creation of the Borrower Obligations or any extension of credit
already or hereafter contracted by or extended to the Borrower need be given to
any Guarantor; and all dealings between the Borrower and any of the Guarantors,
on the one hand, and the Guaranteed Creditors, on the other hand, likewise shall
be conclusively presumed to have been had or consummated in reliance upon the
guarantee contained in this Article II. Each Guarantor waives diligence,
presentment, protest, demand for payment and notice of default or nonpayment to
or upon the Borrower or any of the Guarantors with respect to the Borrower
Obligations.

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     Section 2.06 Guaranty Absolute and Unconditional.
          (a) Each Guarantor understands and agrees that the guarantee contained
in this Article II is, and shall be construed as, a continuing, completed,
absolute and unconditional guarantee of payment, and each Guarantor hereby
waives any defense of a surety or guarantor or any other obligor on any
obligations arising in connection with or in respect of any of the following and
hereby agrees that its obligations hereunder shall not be discharged or
otherwise affected as a result of any of the following:
          (i) the invalidity or unenforceability of any Guaranteed Document, any
of the Borrower Obligations or any other collateral security therefor or
guarantee or right of offset with respect thereto at any time or from time to
time held by any Guaranteed Creditor;
          (ii) any defense, set-off or counterclaim (other than a defense of
payment or performance) which may at any time be available to or be asserted by
the Borrower or any other Person against any Guaranteed Creditor;
          (iii) the insolvency, bankruptcy arrangement, reorganization,
adjustment, composition, liquidation, disability, dissolution or lack of power
of the Borrower or any other Guarantor or any other Person at any time liable
for the payment of all or part of the Obligations, including any discharge of,
or bar or stay against collecting, any Obligation (or any part of them or
interest therein) in or as a result of such proceeding;
          (iv) any sale, lease or transfer of any or all of the assets of the
Borrower or any other Guarantor, or any changes in the shareholders of the
Borrower or any other Guarantor;
          (v) any change in the corporate existence (including its constitution,
laws, rules, regulations or power), structure or ownership of any Obligor or in
the relationship between the Borrower and any Obligor;
          (vi) the fact that any Collateral or Lien contemplated or intended to
be given, created or granted as security for the repayment of the Obligations
shall not be properly perfected or created, or shall prove to be unenforceable
or subordinate to any other Lien, it being recognized and agreed by each of the
Guarantors that it is not entering into this Agreement in reliance on, or in
contemplation of the benefits of, the validity, enforceability, collectability
or value of any of the Collateral for the Obligations;
          (vii) the absence of any attempt to collect the Obligations or any
part of them from any Obligor;
          (viii) (A) any Guaranteed Creditor’s election, in any proceeding
instituted under chapter 11 of the Bankruptcy Code, of the application of
Section 1111(b)(2) of the Bankruptcy Code; (B) any borrowing or grant of a Lien
by the Borrower, as debtor-in-possession, or extension of credit, under
Section 364 of the Bankruptcy Code; (C) the disallowance, under Section 502 of
the Bankruptcy Code, of

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all or any portion of any Guaranteed Creditor’s claim (or claims) for repayment
of the Obligations; (D) any use of cash collateral under Section 363 of the
Bankruptcy Code; (E) any agreement or stipulation as to the provision of
adequate protection in any bankruptcy proceeding; (F) the avoidance of any Lien
in favor of the Guaranteed Creditors or any of them for any reason; or
(G) failure by any Guaranteed Creditor to file or enforce a claim against the
Borrower or its estate in any bankruptcy or insolvency case or proceeding; or
          (ix) any other circumstance or act whatsoever, including any action or
omission of the type described in Section 2.04 (with or without notice to or
knowledge of the Borrower or such Guarantor), which constitutes, or might be
construed to constitute, an equitable or legal discharge of the Borrower for the
Borrower Obligations, or of such Guarantor under the guarantee contained in this
Article II, in bankruptcy or in any other instance.
          (b) When making any demand hereunder or otherwise pursuing its rights
and remedies hereunder against any Guarantor, any Guaranteed Creditor may, but
shall be under no obligation to, join or make a similar demand on or otherwise
pursue or exhaust such rights and remedies as it may have against the Borrower,
any other Guarantor or any other Person or against any collateral security or
guarantee for the Borrower Obligations or any right of offset with respect
thereto, and any failure by any Guaranteed Creditor to make any such demand, to
pursue such other rights or remedies or to collect any payments from the
Borrower, any other Guarantor or any other Person or to realize upon any such
collateral security or guarantee or to exercise any such right of offset, or any
release of the Borrower, any other Guarantor or any other Person or any such
collateral security, guarantee or right of offset, shall not relieve any
Guarantor of any obligation or liability hereunder, and shall not impair or
affect the rights and remedies, whether express, implied or available as a
matter of law, of any Guaranteed Creditor against any Guarantor. For the
purposes hereof “demand” shall include the commencement and continuance of any
legal proceedings.
     Section 2.07 Reinstatement. The guarantee contained in this Article II
shall continue to be effective, or be reinstated, as the case may be, if at any
time payment, or any part thereof, of any of the Borrower Obligations is
rescinded or must otherwise be restored or returned by any Guaranteed Creditor
upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of
the Borrower or any Guarantor, or upon or as a result of the appointment of a
receiver, intervenor or conservator of, or trustee or similar officer for, the
Borrower or any Guarantor or any substantial part of its Property, or otherwise,
all as though such payments had not been made.
     Section 2.08 Payments. Each Guarantor hereby guarantees that payments
hereunder will be paid to the Administrative Agent, for the ratable benefit of
the Guaranteed Creditors, without set-off, deduction or counterclaim, in
dollars, in immediately available funds, at the offices of the Administrative
Agent specified in Section 12.01 of the Credit Agreement.

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ARTICLE III
Grant of Security Interest
     Section 3.01 Grant of Security Interest. Each Pledgor hereby pledges,
assigns and transfers to the Administrative Agent, and hereby grants to the
Administrative Agent, for the ratable benefit of the Guaranteed Creditors, a
security interest in all of the following Property now owned or at any time
hereafter acquired by such Pledgor or in which such Pledgor now has or at any
time in the future may acquire any right, title or interest (collectively, the
“Collateral”), as collateral security for the prompt and complete payment and
performance when due (whether at the stated maturity, by acceleration or
otherwise) of such Pledgor’s Obligations:
          (a) all Pledged Securities;
          (b) all books and records pertaining to the Collateral; and
          (c) to the extent not otherwise included, all Proceeds and products of
any and all of the foregoing and all collateral security and guarantees given by
any Person with respect to any of the foregoing.
     Section 3.02 Transfer of Pledged Securities. All certificates or
instruments representing or evidencing such Pledged Securities shall be
delivered to and held pursuant hereto by the Administrative Agent or a Person
designated by the Administrative Agent and shall be in suitable form for
transfer by delivery, or shall be accompanied by duly executed instruments of
transfer or assignment in blank, and accompanied by any required transfer tax
stamps to effect the pledge of the Pledged Securities to the Administrative
Agent. Notwithstanding the preceding sentence, at the Administrative Agent’s
reasonable discretion, all such Pledged Securities must be delivered or
transferred in such manner as to permit the Administrative Agent to be a
“protected purchaser” to the extent of its security interest as provided in
Section 8.303 of the UCC (if the Administrative Agent otherwise qualifies as a
protected purchaser). During the continuance of an Event of Default, the
Administrative Agent, subject to its compliance with applicable federal and
state securities laws, shall have the right, at any time in its discretion and
without notice, to transfer to or to register in the name of the Administrative
Agent or any of its nominees any or all of the Pledged Securities, subject only
to the revocable rights specified in Section 6.03. In addition, during the
continuance of an Event of Default, the Administrative Agent shall have the
right at any time to exchange certificates or instruments representing or
evidencing Pledged Securities for certificates or instruments of smaller or
larger denominations.
ARTICLE IV
Representations and Warranties
     To induce the Administrative Agent and the Lenders to enter into the Credit
Agreement and to induce the Lenders to make their respective extensions of
credit to the Borrower thereunder and to induce the Lenders (and their
Affiliates) to enter into Swap Agreements with the Borrower and its
Subsidiaries, each Obligor hereby represents and warrants to the Administrative
Agent and each Lender that:
     Section 4.01 Representations in Credit Agreement. In the case of each
Guarantor, the representations and warranties set forth in Article VII of the
Credit Agreement as they relate to

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such Guarantor or to the Loan Documents to which such Guarantor is a party are
true and correct in all material respects, provided that each reference in each
such representation and warranty to the Borrower’s knowledge shall, for the
purposes of this Section 4.01, be deemed to be a reference to such Guarantor’s
knowledge.
     Section 4.02 Title; No Other Liens. Except for the security interest
granted to the Administrative Agent for the ratable benefit of the Guaranteed
Creditors pursuant to this Agreement, such Pledgor is the record and beneficial
owner of its respective items of the Collateral free and clear of any and all
Liens and has rights in or the power to transfer each item of the Collateral in
which a Lien is granted by it hereunder, free and clear of any Lien. No
financing statement or other public notice with respect to all or any part of
the Collateral is on file or of record in any public office, except such as have
been filed in favor of the Administrative Agent, for the ratable benefit of the
Guaranteed Creditors, pursuant to this Agreement or the Security Instruments.
     Section 4.03 Perfected First Priority Liens. The security interests granted
pursuant to this Agreement (a) upon the completion of the filings and the other
actions specified on Schedule 3 constitute valid perfected security interests in
all of the Collateral in favor of the Administrative Agent, for the ratable
benefit of the Guaranteed Creditors, as collateral security for such Pledgor’s
Obligations, enforceable in accordance with the terms hereof against all
creditors of such Pledgor and any Persons purporting to purchase any Collateral
from such Pledgor and (b) are prior to all other Liens on the Collateral in
existence on the date hereof.
     Section 4.04 Obligor Information. On the date hereof, the correct legal
name of such Obligor, all names and trade names that such Obligor has used in
the last five years, such Obligor’s jurisdiction of organization and each
jurisdiction of organization of such Obligor over the last five years,
organizational number, taxpayor identification number, and the location(s) of
such Obligor’s chief executive office or sole place of business over the last
five years are specified on Schedule 4.
     Section 4.05 Pledged Securities.
          (a) The Pledged Securities required to be pledged hereunder and under
the Credit Agreement by such Pledgor are listed in Schedule 2. The shares of
Pledged Securities pledged by such Pledgor hereunder constitute all the issued
and outstanding shares of all classes of the Equity Interests of each Issuer
owned by such Pledgor. All the shares of the Pledged Securities have been duly
and validly issued and are fully paid and nonassessable; and such Pledgor is the
record and beneficial owner of, and has good title to, the Pledged Securities
pledged by it hereunder, free of any and all Liens or options in favor of, or
claims of, any other Person, except the security interest created by this
Agreement, and has rights in or the power to transfer the Pledged Securities in
which a Lien is granted by it hereunder, free and clear of any Lien.
          (b) There are no restrictions on transfer (that have not been waived
or otherwise consented to) in the LLC Agreement governing any Pledged LLC
Interest and the Partnership Agreement governing any Pledged Partnership
Interest or any other agreement relating thereto which would limit or restrict
(i) the grant of a security interest in the Pledged

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LLC Interests and the Pledged Partnership Interests, (ii) the perfection of such
security interest or (iii) the exercise of remedies in respect of such perfected
security interest in the Pledged LLC Interests and the Pledged Partnership
Interests, in each case, as contemplated by this Agreement. Upon the exercise of
remedies in respect of the Pledged LLC Interests and the Pledged Partnership
Interests, a transferee or assignee of a membership interest or partnership
interest, as the case may be, of such LLC or Partnership, as the case may be,
shall become a member or partner, as the case may be, of such LLC or
Partnership, as the case may be, entitled to participate in the management
thereof and, upon the transfer of the entire interest of such Pledgor, such
Pledgor ceases to be a member or partner, as the case may be.
     Section 4.06 Benefit to the Guarantor. The Borrower is a member of an
affiliated group of companies that includes each Guarantor, and the Borrower and
the other Guarantors are engaged in related businesses. Each Guarantor is a
Subsidiary of the Borrower and its guaranty and surety obligations pursuant to
this Agreement may reasonably be expected to benefit, directly or indirectly,
such Subsidiary; and each Guarantor has determined that this Agreement is
necessary and convenient to the conduct, promotion and attainment of the
business of such Guarantor and the Borrower.
     Section 4.07 Solvency. Each Obligor (a) is not insolvent as of the date
hereof and will not be rendered insolvent as a result of this Agreement (after
giving effect to Section 2.02), (b) is not engaged in business or a transaction,
or about to engage in a business or a transaction, for which any Property
remaining with it constitutes unreasonably small capital, and (c) does not
intend to incur, or believe it will incur, Debt that will be beyond its ability
to pay as such Debt matures.
ARTICLE V
Covenants
     Each Obligor covenants and agrees with the Administrative Agent and the
Lenders that, from and after the date of this Agreement until the Borrower
Obligations shall have been paid in full in cash, no Letter of Credit shall be
outstanding and all of the Commitments shall have terminated:
     Section 5.01 Maintenance of Perfected Security Interest; Further
Documentation. Each Pledgor agrees that:
          (a) it shall maintain the security interest created by this Agreement
as a perfected security interest having at least the priority described in
Section 4.03 and shall defend such security interest against the claims and
demands of all Persons whomsoever.
          (b) it will furnish to the Administrative Agent from time to time
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as the Administrative Agent
may reasonably request, all in reasonable detail.
          (c) At any time and from time to time, upon the written request of the
Administrative Agent, and at the sole expense of such Pledgor, it will promptly
and duly execute and deliver, and have recorded, such further instruments and
documents and take such further

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actions as the Administrative Agent may reasonably deem necessary for the
purpose of obtaining or preserving the full benefits of this Agreement and of
the rights and powers herein granted, including, without limitation, the
delivery of certificated securities and the filing of any financing or
continuation statements under the UCC (or other similar laws) in effect in any
jurisdiction with respect to the security interests created hereby.
     Section 5.02 Changes in Locations, Name, Etc. Such Obligor recognizes that
financing statements pertaining to the Collateral have been or may be filed
where such Obligor maintains any Collateral or is organized. Without limitation
of Section 8.01(l) of the Credit Agreement or any other covenant herein, such
Obligor will not cause or permit any change in its (a) corporate name or in any
trade name used to identify it in the conduct of its business or in the
ownership of its Properties, (b) the location of its chief executive office or
principal place of business, (c) its identity or corporate structure or in the
jurisdiction in which it is incorporated or formed, (d) its jurisdiction of
organization or its organizational identification number in such jurisdiction of
organization or (e) its federal taxpayer identification number, unless, in each
case, such Obligor shall have first (i) notified the Administrative Agent of
such change at least thirty (30) days prior to the effective date of such
change, and (ii) taken all action reasonably requested by the Administrative
Agent for the purpose of maintaining the perfection and priority of the
Administrative Agent’s security interests under this Agreement. In any notice
furnished pursuant to this Section 5.02, such Obligor will expressly state in a
conspicuous manner that the notice is required by this Agreement and contains
facts that may require additional filings of financing statements or other
notices for the purposes of continuing perfection of the Administrative Agent’s
security interest in the Collateral. At the request of the Administrative Agent,
on or prior to the occurrence of such event, the Borrower will provide to the
Administrative Agent and the Lenders an opinion of counsel, in form and
substance reasonably satisfactory to the Administrative Agent, to the effect
that such event will not impair the validity of the security interests
hereunder, the perfection and priority thereof, the enforceability of the Loan
Documents, and such other matters as may be reasonably requested by the
Administrative Agent.
     Section 5.03 Pledged Securities.
          (a) If such Pledgor shall become entitled to receive or shall receive
any stock certificate (including, without limitation, any certificate
representing a stock dividend or a distribution in connection with any
reclassification, increase or reduction of capital or any certificate issued in
connection with any reorganization), option or rights in respect of the Equity
Interests of any Issuer, whether in addition to, in substitution of, as a
conversion of, or in exchange for, any shares of the Pledged Securities, or
otherwise in respect thereof, such Pledgor shall accept the same as the agent of
the Guaranteed Creditors, hold the same in trust for the Guaranteed Creditors,
segregated from other Property of such Pledgor, and deliver the same forthwith
to the Administrative Agent in the exact form received, duly indorsed by such
Pledgor to the Administrative Agent, if required, together with an undated stock
power covering such certificate duly executed in blank by such Pledgor and with,
if the Administrative Agent so requests, signature guaranteed, to be held by the
Administrative Agent, subject to the terms hereof, as additional collateral
security for the Obligations.

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          (b) Without the prior written consent of the Administrative Agent,
such Pledgor will not (i) unless otherwise expressly permitted hereby or under
the other Loan Documents, vote to enable, or take any other action to permit,
any Issuer to issue any Equity Interests of any nature or to issue any other
securities convertible into or granting the right to purchase or exchange for
any Equity Interests of any nature of any Issuer, (ii) sell, assign, transfer,
exchange, or otherwise dispose of, or grant any option with respect to, the
Pledged Securities or Proceeds thereof (except pursuant to a transaction
expressly permitted by the Credit Agreement), (iii) create, incur or permit to
exist any Lien or option in favor of, or any claim of any Person with respect
to, any of the Pledged Securities or Proceeds thereof, or any interest therein,
except for the security interests created by this Agreement or (iv) enter into
any agreement or undertaking restricting the right or ability of such Pledgor or
the Administrative Agent to sell, assign or transfer any of the Pledged
Securities or Proceeds thereof.
          (c) In the case of each Pledgor that is an Issuer, such Issuer agrees
that (i) it will be bound by the terms of this Agreement relating to the Pledged
Securities issued by it and will comply with such terms insofar as such terms
are applicable to it, (ii) it will notify the Administrative Agent promptly in
writing of the occurrence of any of the events described in Section 5.03(a) with
respect to the Pledged Securities issued by it and (iii) the terms of Sections
Section 6.02(a) and Section 6.03 shall apply to it, mutatis mutandis, with
respect to all actions that may be required of it pursuant to Section 6.02(d) or
Section 6.03 with respect to the Pledged Securities issued by it.
          (d) In the case of each Pledgor that is a partner in a Partnership,
such Pledgor hereby consents to the extent required by the applicable
Partnership Agreement to the pledge by each other Pledgor, pursuant to the terms
hereof, of the Pledged Partnership Interests in such Partnership and to the
transfer of such Pledged Partnership Interests to the Administrative Agent or
its nominee and to the substitution of the Administrative Agent or its nominee
as a substituted partner in such Partnership with all the rights, powers and
duties of a general partner or a limited partner, as the case may be. In the
case of each Pledgor member of an LLC, such Pledgor hereby consents to the
extent required by the applicable LLC Agreement to the pledge by each other
Pledgor, pursuant to the terms hereof, of the Pledged LLC Interests in such LLC
and to the transfer of such Pledged LLC Interests to the Administrative Agent or
its nominee and to the substitution of the Administrative Agent or its nominee
as a substituted member of the LLC with all the rights, powers and duties of a
member of the LLC in question.
          (e) Such Pledgor shall not agree to any amendment of a Partnership
Agreement or LLC Agreement that in any way adversely affects the perfection of
the security interest of the Administrative Agent in the Pledged Partnership
Interests or Pledged LLC Interests pledged by such Pledgor hereunder, including
any amendment electing to treat the membership interest or partnership interest
of such Pledgor as a security under Section 8-103 of the UCC.
          (f) Each Pledgor shall furnish to the Administrative Agent such stock
powers and other instruments as may be required by the Administrative Agent to
assure the transferability of the Pledged Securities when and as often as may be
reasonably requested by the Administrative Agent.

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          (g) The Pledged Securities will at all times constitute not less than
100% of the Equity Interests of the Issuer thereof owned by any Pledgor. Each
Pledgor will not permit any Issuer of any of the Pledged Securities to issue any
new shares of any class of Equity Interests of such Issuer without the prior
written consent of the Administrative Agent.
ARTICLE VI
Remedial Provisions
     Section 6.01 Code and Other Remedies.
          (a) Upon the occurrence and during the continuance of an Event of
Default, the Administrative Agent, on behalf of the Guaranteed Creditors, may
exercise, in addition to all other rights and remedies granted to them in this
Agreement, the other Loan Documents and in any other instrument or agreement
securing, evidencing or relating to the Obligations, all rights and remedies of
a secured party under the UCC or any other applicable law or otherwise available
at law or equity. Without limiting the generality of the foregoing, the
Administrative Agent, without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except any notice
required by law referred to below) to or upon any Pledgor or any other Person
(all and each of which demands, defenses, advertisements and notices are hereby
waived), may in such circumstances forthwith collect, receive, appropriate and
realize upon the Collateral, or any part thereof, and/or may forthwith sell,
lease, assign, give option or options to purchase, or otherwise dispose of and
deliver the Collateral or any part thereof (or contract to do any of the
foregoing), in one or more parcels at public or private sale or sales, at any
exchange, broker’s board or office of any Guaranteed Creditor or elsewhere upon
such terms and conditions as it may deem advisable and at such prices as it may
deem best, for cash or on credit or for future delivery without assumption of
any credit risk. Any Guaranteed Creditor shall have the right upon any such
public sale or sales, and, to the extent permitted by law, upon any such private
sale or sales, to purchase the whole or any part of the Collateral so sold, free
of any right or equity of redemption in any Pledgor, which right or equity is
hereby waived and released. If applicable to any particular item of Collateral,
each Pledgor further agrees, at the Administrative Agent’s request, to assemble
the Collateral and make it available to the Administrative Agent at places which
the Administrative Agent shall reasonably select, whether at such Pledgor’s
premises or elsewhere. Any such sale or transfer by the Administrative Agent
either to itself or to any other Person shall be absolutely free from any claim
of right by Pledgor, including any equity or right of redemption, stay or
appraisal which Pledgor has or may have under any rule of law, regulation or
statute now existing or hereafter adopted (and such Pledgor hereby waives any
rights it may have in respect thereof). Upon any such sale or transfer, the
Administrative Agent shall have the right to deliver, assign and transfer to the
purchaser or transferee thereof the Collateral so sold or transferred. The
Administrative Agent shall apply the net proceeds of any action taken by it
pursuant to this Section 6.01, after deducting all reasonable costs and expenses
of every kind incurred in connection therewith or incidental to the care or
safekeeping of any of the Collateral or in any way relating to the Collateral or
the rights of the Administrative Agent and the Guaranteed Creditors hereunder,
including, without limitation, reasonable attorneys’ fees and disbursements, to
the payment in whole or in part of the Obligations, in accordance with
Section 10.02(c) of the Credit Agreement, and only after such application and
after the payment by the Administrative Agent of any other amount required by
any provision of law, including, without limitation, Section 9.615 of the UCC,
need the

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Administrative Agent account for the surplus, if any, to any Pledgor. To the
extent permitted by applicable law, each Pledgor waives all claims, damages and
demands it may acquire against the Administrative Agent or any Guaranteed
Creditor arising out of the exercise by them of any rights hereunder except to
the extent caused by the gross negligence or willful misconduct of the
Administrative Agent or such Guaranteed Creditor or their respective agents. If
any notice of a proposed sale or other disposition of Collateral shall be
required by law, such notice shall be deemed reasonable and proper if given at
least 10 days before such sale or other disposition.
          (b) In the event that the Administrative Agent elects not to sell the
Collateral, the Administrative Agent retains its rights to dispose of or utilize
the Collateral or any part or parts thereof in any manner authorized or
permitted by law or in equity, and to apply the proceeds of the same towards
payment of the Obligations. Each and every method of disposition of the
Collateral described in this Agreement shall constitute disposition in a
commercially reasonable manner.
          (c) The Administrative Agent may appoint any Person as agent to
perform any act or acts necessary or incident to any sale or transfer of the
Collateral.
     Section 6.02 Pledged Securities.
          (a) Unless an Event of Default shall have occurred and be continuing
and the Administrative Agent shall have given notice to the relevant Pledgor of
the Administrative Agent’s intent to exercise its corresponding rights pursuant
to Section 6.02(c), each Pledgor shall be permitted to receive all cash
dividends paid in respect of the Pledged Securities paid in the normal course of
business of the relevant Issuer (other than liquidating or distributing
dividends), to the extent permitted in the Credit Agreement. Any sums paid upon
or in respect of any Pledged Securities upon the liquidation or dissolution of
any issuer of any Pledged Securities, any distribution of capital made on or in
respect of any Pledged Securities or any property distributed upon or with
respect to any Pledged Securities pursuant to the recapitalization or
reclassification of the capital of any issuer of Pledged Collateral or pursuant
to the reorganization thereof shall, unless otherwise subject to a perfected
security interest in favor of the Administrative Agent, be delivered to the
Administrative Agent to be held by it hereunder as additional collateral
security for the Obligations. If any sum of money or property so paid or
distributed in respect of any Pledged Securities shall be received by such
Pledgor, such Pledgor shall, until such money or property is paid or delivered
to the Administrative Agent, hold such money or property in trust for the
Administrative Agent, segregated from other funds of such Pledgor, as additional
security for the Obligations.
          (b) Unless an Event of Default shall have occurred and be continuing
and the Administrative Agent shall have given notice to the relevant Pledgor of
the Administrative Agent’s intent to exercise its corresponding rights pursuant
to Section 6.02(c), each Pledgor shall be entitled to exercise all voting,
consent and corporate, partnership or limited liability rights with respect to
the Pledged Securities; provided, however, that no vote shall be cast, consent
given or right exercised or other action taken by such Pledgor that would impair
the Collateral, be inconsistent with or result in any violation of any provision
of the Credit Agreement, this Agreement or any other Loan Document or, without
the prior consent of the Administrative Agent and the Lenders, enable or permit
any issuer of Pledged Collateral to issue any Equity

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Interest or to issue any other securities convertible into or granting the right
to purchase or exchange for any Stock of any issuer of Pledged Collateral other
than as permitted by the Credit Agreement.
          (c) Upon the occurrence and during the continuance of an Event of
Default, upon notice by the Administrative Agent of its intent to exercise such
rights to the relevant Pledgor or Pledgors, (i) the Administrative Agent shall
have the right to receive any and all cash dividends, payments, Property or
other Proceeds paid in respect of the Pledged Securities and make application
thereof to the Borrower Obligations in accordance with Section 10.02(c) of the
Credit Agreement, and (ii) any or all of the Pledged Securities shall be
registered in the name of the Administrative Agent or its nominee, and (iii) the
Administrative Agent or its nominee may exercise (A) all voting, consent,
corporate, partnership or limited liability and other rights pertaining to such
Pledged Securities at any meeting of shareholders, partners or members (or other
equivalent body), as the case may be, of the relevant Issuer or Issuers or
otherwise and (B) any and all rights of conversion, exchange and subscription
and any other rights, privileges or options pertaining to such Pledged
Securities as if it were the absolute owner thereof (including, without
limitation, the right to exchange at its discretion any and all of the Pledged
Securities upon the merger, consolidation, reorganization, recapitalization or
other fundamental change in the organizational structure of any Issuer, or upon
the exercise by any Pledgor or the Administrative Agent of any right, privilege
or option pertaining to such Pledged Securities, and in connection therewith,
the right to deposit and deliver any and all of the Pledged Securities with any
committee, depositary, transfer agent, registrar or other designated agency upon
such terms and conditions as the Administrative Agent may determine), all
without liability except to account for Property actually received by it, but
the Administrative Agent shall have no duty to any Pledgor to exercise any such
right, privilege or option and shall not be responsible for any failure to do so
or delay in so doing.
          (d) Upon the occurrence and during the continuance of an Event of
Default, in order to permit the Administrative Agent to exercise the voting and
other consensual rights that it may be entitled to exercise pursuant hereto and
to receive all dividends and other distributions that it may be entitled to
receive hereunder, (i) each Pledgor shall promptly execute and deliver (or cause
to be executed and delivered) to the Administrative Agent all such proxies,
dividend payment orders and other instruments as the Administrative Agent may
from time to time reasonably request and (ii) without limiting the effect of
clause (i) above, such Pledgor hereby grants to the Administrative Agent an
irrevocable proxy to vote all or any part of the Pledged Securities and to
exercise all other rights, powers, privileges and remedies to which a holder of
the Pledged Securities would be entitled (including giving or withholding
written consents of shareholders, partners or members, as the case may be,
calling special meetings of shareholders, partners or members, as the case may
be, and voting at such meetings), which proxy shall be effective, automatically
and without the necessity of any action (including any transfer of any Pledged
Securities on the record books of the Issuer thereof) by any other Person
(including the Issuer of such Pledged Collateral or any officer or agent
thereof).
          (e) Each Pledgor hereby authorizes and instructs each Issuer of any
Pledged Securities pledged by such Pledgor hereunder to (i) comply with any
instruction received by it from the Administrative Agent in writing that
(A) states that an Event of Default has occurred and is continuing and (B) is
otherwise in accordance with the terms of this Agreement, without

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any other or further instructions from such Pledgor, and each Pledgor agrees
that each Issuer shall be fully protected in so complying, and (ii) unless
otherwise expressly permitted hereby, pay any dividends or other payments with
respect to the Pledged Securities directly to the Administrative Agent.
          (f) Upon the occurrence and during the continuance of an Event of
Default, if the Issuer of any Pledged Securities is the subject of bankruptcy,
insolvency, receivership, custodianship or other proceedings under the
supervision of any Governmental Authority, then all rights of the Pledgor in
respect thereof to exercise the voting and other consensual rights which such
Pledgor would otherwise be entitled to exercise with respect to the Pledged
Securities issued by such Issuer shall cease, and all such rights shall
thereupon become vested in the Administrative Agent who shall thereupon have the
sole right to exercise such voting and other consensual rights, but the
Administrative Agent shall have no duty to exercise any such voting or other
consensual rights and shall not be responsible for any failure to do so or delay
in so doing.
     Section 6.03 Private Sales of Pledged Securities.
          (a) Each Pledgor recognizes that the Administrative Agent may be
unable to effect a public sale of any or all the Pledged Securities, by reason
of certain prohibitions contained in the Securities Act and applicable state
securities laws or otherwise or may determine that a public sale is
impracticable or not commercially reasonable and, accordingly, and may resort to
one or more private sales thereof to a restricted group of purchasers which will
be obliged to agree, among other things, to acquire such securities for their
own account for investment and not with a view to the distribution or resale
thereof. Each Pledgor acknowledges and agrees that any such private sale may
result in prices and other terms less favorable than if such sale were a public
sale and, notwithstanding such circumstances, agrees that any such private sale
shall be deemed to have been made in a commercially reasonable manner. Subject
to its compliance with federal and state securities laws applicable to private
sales, the Administrative Agent shall be under no obligation to delay a sale of
any of the Pledged Securities for the period of time necessary to permit the
Issuer thereof to register such securities for public sale under the Securities
Act, or under applicable state securities laws, even if such Issuer would agree
to do so.
          (b) Each Pledgor agrees to use its best efforts to do or cause to be
done all such other acts as may reasonably be necessary to make such sale or
sales of all or any portion of the Pledged Securities pursuant to this
Section 6.03 valid and binding and in compliance with any and all other
applicable Governmental Requirements. Each Pledgor further agrees that a breach
of any of the covenants contained in this Section 6.03 will cause irreparable
injury to the Guaranteed Creditors, that the Guaranteed Creditors have no
adequate remedy at law in respect of such breach and, as a consequence, that
each and every covenant contained in this Section 6.03 shall be specifically
enforceable against such Pledgor, and such Pledgor hereby waives and agrees not
to assert any defenses against an action for specific performance of such
covenants except for a defense that no Event of Default has occurred or is
continuing under the Credit Agreement.

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     Section 6.04 Waiver; Deficiency. Each Pledgor shall remain liable for any
deficiency if the proceeds of any sale or other disposition of the Collateral
are insufficient to pay its Obligations and the fees and disbursements of any
attorneys employed by the Administrative Agent or any Guaranteed Creditor to
collect such deficiency.
     Section 6.05 Non-Judicial Enforcement. Provided that there is no breach of
the peace, the Administrative Agent may enforce its rights hereunder without
prior judicial process or judicial hearing, and to the extent permitted by and
carried out in accordance with applicable law, each Pledgor expressly waives any
and all legal rights which might otherwise require the Administrative Agent to
enforce its rights by judicial process.
ARTICLE VII
The Administrative Agent
     Section 7.01 Administrative Agent’s Appointment as Attorney-in-Fact, Etc.
          (a) Each Pledgor hereby irrevocably constitutes and appoints the
Administrative Agent and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of such Pledgor and in the name of
such Pledgor or in its own name, for the purpose of carrying out the terms of
this Agreement, to take any and all reasonably appropriate action and to execute
any and all documents and instruments which may be reasonably necessary or
desirable to accomplish the purposes of this Agreement, and, without limiting
the generality of the foregoing, each Pledgor hereby gives the Administrative
Agent the power and right, on behalf of such Pledgor, without notice to or
assent by such Pledgor, to do any or all of the following; provided, the
Administrative Agent agrees that it will not exercise any of the following
rights under such power of attorney unless an Event of Default shall have
occurred and be continuing:
          (i) in the name of such Pledgor or its own name, or otherwise, take
possession of and indorse and collect any check, draft, note, acceptance or
other instrument for the payment of moneys due with respect to any Collateral
and file any claim or take any other action or proceeding in any court of law or
equity or otherwise deemed appropriate by the Administrative Agent for the
purpose of collecting any such moneys due with respect to any other Collateral
whenever payable;
          (ii) unless being disputed under Section 8.04 of the Credit Agreement,
pay or discharge Taxes and Liens levied or placed on or threatened against the
Collateral, effect any repairs or any insurance called for by the terms of this
Agreement or any other Loan Document and pay all or any part of the premiums
therefor and the costs thereof;
          (iii) execute, in connection with any sale provided for in
Section 6.01 or Section 6.03, any endorsements, assignments or other instruments
of conveyance or transfer with respect to the Collateral; and
          (iv) (A) direct any party liable for any payment under any of the
Collateral to make payment of any and all moneys due or to become due thereunder
directly to the Administrative Agent or as the Administrative Agent shall
direct; (B) ask or demand for, collect, and receive payment of and receipt for,
any and all moneys,

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claims and other amounts due or to become due at any time in respect of or
arising out of any Collateral; (C) commence and prosecute any suits, actions or
proceedings at law or in equity in any court of competent jurisdiction to
collect the Collateral or any portion thereof and to enforce any other right in
respect of any Collateral; (D) defend any suit, action or proceeding brought
against such Pledgor with respect to any Collateral; (E) settle, compromise or
adjust any such suit, action or proceeding and, in connection therewith, give
such discharges or releases as the Administrative Agent may deem appropriate;
and (F) generally, sell, transfer, pledge and make any agreement with respect to
or otherwise deal with any of the Collateral as fully and completely as though
the Administrative Agent were the absolute owner thereof for all purposes, and
do, at the Administrative Agent’s option and such Pledgor’s expense, at any
time, or from time to time, all acts and things which the Administrative Agent
deems necessary to protect, preserve or realize upon the Collateral and the
Administrative Agent’s and the Guaranteed Creditors’ security interests therein
and to effect the intent of this Agreement, all as fully and effectively as such
Pledgor might do.
          (b) If any Obligor fails to perform or comply with any of its
agreements contained herein within the applicable grace periods, the
Administrative Agent, at its option, but without any obligation so to do, may
perform or comply, or otherwise cause performance or compliance, with such
agreement.
          (c) The reasonable expenses of the Administrative Agent incurred in
connection with actions undertaken as provided in this Section 7.01, together
with interest thereon at a rate per annum equal to the post-default rate
specified in Section 3.02(c) of the Credit Agreement, but in no event to exceed
the Highest Lawful Rate, from the date of payment by the Administrative Agent to
the date reimbursed by the relevant Obligor, shall be payable by such Obligor to
the Administrative Agent on demand.
          (d) Each Obligor hereby ratifies all that said attorneys shall
lawfully do or cause to be done by virtue and in compliance hereof. All powers,
authorizations and agencies contained in this Agreement are coupled with an
interest and are irrevocable until this Agreement is terminated.
     Section 7.02 Duty of Administrative Agent. The Administrative Agent’s sole
duty with respect to the custody, safekeeping and physical preservation of the
Collateral in its possession, under Section 9.207 of the UCC or otherwise, shall
be to deal with it in the same manner as the Administrative Agent deals with
similar Property for its own account and shall be deemed to have exercised
reasonable care in the custody and preservation of the Collateral in its
possession if the Collateral is accorded treatment substantially equal to that
which comparable secured parties accord comparable collateral. Neither the
Administrative Agent, any Guaranteed Creditor nor any of their Related Parties
shall be liable for failure to demand, collect or realize upon any of the
Collateral or for any delay in doing so or shall be under any obligation to sell
or otherwise dispose of any Collateral upon the request of any Pledgor or any
other Person or to take any other action whatsoever with regard to the
Collateral or any part thereof. The powers conferred on the Administrative Agent
and the Guaranteed Creditors hereunder are solely to protect the Administrative
Agent’s and the Guaranteed Creditors’ interests in the Collateral and shall not
impose any duty upon the Administrative Agent or any Guaranteed Creditor to
exercise

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any such powers. The Administrative Agent and the Guaranteed Creditors shall be
accountable only for amounts that they actually receive as a result of the
exercise of such powers, and neither they nor any of their Related Parties shall
be responsible to any Obligor for any act or failure to act hereunder, except
for their own gross negligence or willful misconduct. To the fullest extent
permitted by applicable law, the Administrative Agent shall be under no duty
whatsoever to make or give any presentment, notice of dishonor, protest, demand
for performance, notice of non-performance, notice of intent to accelerate,
notice of acceleration, or other notice or demand in connection with any
Collateral or the Obligations, or to take any steps necessary to preserve any
rights against any Pledgor or other Person or ascertaining or taking action with
respect to calls, conversions, exchanges, maturities, tenders or other matters
relative to any Collateral, whether or not it has or is deemed to have knowledge
of such matters. Each Obligor, to the extent permitted by applicable law, waives
any right of marshaling in respect of any and all Collateral, and waives any
right to require the Administrative Agent or any Guaranteed Creditor to proceed
against any Obligor or other Person, exhaust any Collateral or enforce any other
remedy which the Administrative Agent or any Guaranteed Creditor now has or may
hereafter have against any Obligor or other Person.
     Section 7.03 Filing of Financing Statements. Pursuant to the UCC and any
other applicable law, each Pledgor authorizes the Administrative Agent to file
or record financing statements and other filing or recording documents or
instruments with respect to the Collateral without the signature of such Pledgor
in such form and in such offices as the Administrative Agent reasonably
determines appropriate to perfect the security interests of the Administrative
Agent under this Agreement. A photographic or other reproduction of this
Agreement shall be sufficient as a financing statement or other filing or
recording document or instrument for filing or recording in any jurisdiction.
     Section 7.04 Authority of Administrative Agent. Each Obligor acknowledges
that the rights and responsibilities of the Administrative Agent under this
Agreement with respect to any action taken by the Administrative Agent or the
exercise or non-exercise by the Administrative Agent of any option, voting
right, request, judgment or other right or remedy provided for herein or
resulting or arising out of this Agreement shall, as between the Administrative
Agent and the Guaranteed Creditors, be governed by the Credit Agreement and by
such other agreements with respect thereto as may exist from time to time among
them, but, as between the Administrative Agent and the Obligors, the
Administrative Agent shall be conclusively presumed to be acting as agent for
the Guaranteed Creditors with full and valid authority so to act or refrain from
acting, and no Obligor shall be under any obligation, or entitlement, to make
any inquiry respecting such authority.
ARTICLE VIII
Subordination of Indebtedness
     Section 8.01 Subordination of All Obligor Claims. As used herein, the term
“Obligor Claims” shall mean all debts and obligations of the Borrower or any
other Obligor to any other Obligor, whether such debts and obligations now exist
or are hereafter incurred or arise, or whether the obligation of the debtor
thereon be direct, contingent, primary, secondary, several, joint and several,
or otherwise, and irrespective of whether such debts or obligations be evidenced
by note, contract, open account, or otherwise, and irrespective of the Person or

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Persons in whose favor such debts or obligations may, at their inception, have
been, or may hereafter be created, or the manner in which they have been or may
hereafter be acquired. After and during the continuation of an Event of Default,
no Obligor shall receive or collect, directly or indirectly, from any other
obligor in respect thereof any amount upon the Obligor Claims.
     Section 8.02 Claims in Bankruptcy. In the event of receivership,
bankruptcy, reorganization, arrangement, debtor’s relief, or other insolvency
proceedings involving any Obligor, the Administrative Agent on behalf of the
Administrative Agent and the Guaranteed Creditors shall have the right to prove
their claim in any proceeding, so as to establish their rights hereunder and
receive directly from the receiver, trustee or other court custodian, dividends
and payments which would otherwise be payable upon Obligor Claims. Each Obligor
hereby assigns such dividends and payments to the Administrative Agent for the
benefit of the Administrative Agent and the Guaranteed Creditors for application
against the Borrower Obligations as provided under Section 10.02(c) of the
Credit Agreement. Should any Agent or Guaranteed Creditor receive, for
application upon the Obligations, any such dividend or payment which is
otherwise payable to any Obligor, and which, as between such Obligors, shall
constitute a credit upon the Obligor Claims, then upon payment in full in cash
of the Borrower Obligations, the expiration of all Letters of Credit outstanding
under the Credit Agreement and the termination of all of the Commitments, the
intended recipient shall become subrogated to the rights of the Administrative
Agent and the Guaranteed Creditors to the extent that such payments to the
Administrative Agent and the Guaranteed Creditors on the Obligor Claims have
contributed toward the liquidation of the Obligations, and such subrogation
shall be with respect to that proportion of the Obligations which would have
been unpaid if the Administrative Agent and the Guaranteed Creditors had not
received dividends or payments upon the Obligor Claims.
     Section 8.03 Payments Held in Trust. In the event that, notwithstanding
Section 8.01 and Section 8.02, any Obligor should receive any funds, payments,
claims or distributions which is prohibited by such Sections, then it agrees:
(a) to hold in trust for the Administrative Agent and the Guaranteed Creditors
an amount equal to the amount of all funds, payments, claims or distributions so
received, and (b) that it shall have absolutely no dominion over the amount of
such funds, payments, claims or distributions except to pay them promptly to the
Administrative Agent, for the benefit of the Guaranteed Creditors; and each
Obligor covenants promptly to pay the same to the Administrative Agent.
     Section 8.04 Liens Subordinate. Each Obligor agrees that, until the
Borrower Obligations are paid in full in cash, no Letter of Credit shall be
outstanding and the termination of all of the Commitments, any Liens securing
payment of the Obligor Claims shall be and remain inferior and subordinate to
any Liens securing payment of the Obligations, regardless of whether such
encumbrances in favor of such Obligor, the Administrative Agent or any
Guaranteed Creditor presently exist or are hereafter created or attach. Without
the prior written consent of the Administrative Agent, no Obligor, during the
period in which any of the Borrower Obligations are outstanding or the
Commitments are in effect, shall (a) exercise or enforce any creditor’s right it
may have against any debtor in respect of the Obligor Claims, or (b) foreclose,
repossess, sequester or otherwise take steps or institute any action or
proceeding (judicial or otherwise, including without limitation the commencement
of or joinder in any liquidation, bankruptcy, rearrangement, debtor’s relief or
insolvency proceeding) to enforce any Lien securing payment of the Obligor
Claims held by it.

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     Section 8.05 Notation of Records. Upon the request of the Administrative
Agent, all promissory notes and all accounts receivable ledgers or other
evidence of the Obligor Claims accepted by or held by any Obligor shall contain
a specific written notice thereon that the indebtedness evidenced thereby is
subordinated under the terms of this Agreement.
ARTICLE IX
Miscellaneous
     Section 9.01 Waiver. No failure on the part of the Administrative Agent or
any Lender to exercise and no delay in exercising, and no course of dealing with
respect to, any right, power, privilege or remedy or any abandonment or
discontinuance of steps to enforce such right, power, privilege or remedy under
this Agreement or any other Loan Document shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power, privilege or remedy
under this Agreement or any other Loan Document preclude or be construed as a
waiver of any other or further exercise thereof or the exercise of any other
right, power, privilege or remedy. The remedies provided herein are cumulative
and not exclusive of any remedies provided by law or equity.
     Section 9.02 Notices. All notices and other communications provided for
herein shall be given in the manner and subject to the terms of Section 12.01 of
the Credit Agreement; provided that any such notice, request or demand to or
upon any Guarantor shall be addressed to such Guarantor at its notice address
set forth on Schedule 1.
     Section 9.03 Payment of Expenses, Indemnities, Etc.
          (a) Each Guarantor agrees to pay or reimburse each Guaranteed Creditor
and the Administrative Agent for all out-of-pocket expenses incurred by such
Person, including the fees, charges and disbursements of any counsel for the
Administrative Agent or any Guaranteed Creditor, in connection with the
enforcement or protection of its rights in connection with this Agreement or any
other Loan Document, including, without limitation, all costs and expenses
incurred in collecting against such Guarantor under the guarantee contained in
Article II or otherwise enforcing or preserving any rights under this Agreement
and the other Loan Documents to which such Guarantor is a party in accordance
with the applicable provisions of the Credit Agreement.
          (b) Each Guarantor agrees to pay, and to save the Administrative Agent
and the Guaranteed Creditors harmless from, any and all liabilities with respect
to, or resulting from any delay in paying, any and all Other Taxes which may be
payable or determined to be payable with respect to any of the Collateral or in
connection with any of the transactions contemplated by this Agreement.
          (c) Each Guarantor agrees to pay, and to save the Administrative Agent
and the Guaranteed Creditors harmless from, any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever with respect to the
execution, delivery, enforcement, performance and administration of this
Agreement to the extent the Borrower would be required to do so pursuant to
Section 12.03 of the Credit Agreement.

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     Section 9.04 Amendments in Writing. None of the terms or provisions of this
Agreement may be waived, amended, supplemented or otherwise modified except in
accordance with Section 12.02 of the Credit Agreement.
     Section 9.05 Successors and Assigns. The provisions of this Agreement shall
be binding upon the Obligors and their successors and assigns and shall inure to
the benefit of the Administrative Agent and the Guaranteed Creditors and their
respective successors and assigns; provided that except as set forth in
Section 9.11 of the Credit Agreement, no Obligor may assign, transfer or
delegate any of its rights or obligations under this Agreement without the prior
written consent of the Administrative Agent and the Lenders, and any such
purported assignment, transfer or delegation shall be null and void.
     Section 9.06 Survival; Revival; Reinstatement.
          (a) All covenants, agreements, representations and warranties made by
any Obligor herein and in the certificates or other instruments delivered in
connection with or pursuant to this Agreement or any other Loan Document to
which it is a party shall be considered to have been relied upon by the
Administrative Agent, the other Agents, the Issuing Bank and the Lenders and
shall survive the execution and delivery of this Agreement and the making of any
Loans and issuance of any Letters of Credit, regardless of any investigation
made by any such other party or on its behalf and notwithstanding that the
Administrative Agent, the other Agents, the Issuing Bank or any Lender may have
had notice or knowledge of any Default or incorrect representation or warranty
at the time any credit is extended hereunder, and shall continue in full force
and effect as long as the principal of or any accrued interest on any Loan or
any fee or any other amount payable under the Credit Agreement is outstanding
and unpaid or any Letter of Credit is outstanding and so long as the Commitments
have not expired or terminated. The provisions of Section 9.03 shall survive and
remain in full force and effect regardless of the consummation of the
transactions contemplated hereby, the repayment of the Loans, the expiration or
termination of the Letters of Credit and the Commitments or the termination of
this Agreement, any other Loan Document or any provision hereof or thereof in
accordance with Section 12.05 of the Credit Agreement.
          (b) To the extent that any payments on the Guarantor Obligations or
proceeds of any Collateral are subsequently invalidated, declared to be
fraudulent or preferential, set aside or required to be repaid to a trustee,
debtor in possession, receiver or other Person under any bankruptcy law, common
law or equitable cause, then to such extent, the Guarantor Obligations so
satisfied shall be revived and continue as if such payment or proceeds had not
been received and the Administrative Agent’s and the Guaranteed Creditors’
Liens, security interests, rights, powers and remedies under this Agreement and
each other Loan Document shall continue in full force and effect. In such event,
each Loan Document shall be automatically reinstated and the Borrower shall take
such action as may be reasonably requested by the Administrative Agent and the
Guaranteed Creditors to effect such reinstatement.

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     Section 9.07 Counterparts; Integration; Effectiveness.
          (a) This Agreement may be executed in counterparts (and by different
parties hereto on different counterparts), each of which shall constitute an
original, but all of which when taken together shall constitute a single
contract.
          (b) This Agreement, the other Loan Documents and any separate letter
agreements with respect to fees payable to the Administrative Agent constitute
the entire contract among the parties relating to the subject matter hereof and
thereof and supersede any and all previous agreements and understandings, oral
or written, relating to the subject matter hereof and thereof. THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS (OTHER THAN THE LETTERS OF CREDIT AND THE LETTER OF
CREDIT AGREEMENTS) REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES HERETO AND
THERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
          (c) This Agreement shall become effective when it shall have been
executed by the Administrative Agent and when the Administrative Agent shall
have received counterparts hereof which, when taken together, bear the
signatures of each of the other parties hereto, and thereafter shall be binding
upon and inure to the benefit of the parties hereto, the Lenders and their
respective successors and assigns. Delivery of an executed counterpart of a
signature page of this Agreement by telecopy shall be effective as delivery of a
manually executed counterpart of this Agreement.
     Section 9.08 Severability. Any provision of this Agreement or any other
Loan Document held to be invalid, illegal or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such invalidity,
illegality or unenforceability without affecting the validity, legality and
enforceability of the remaining provisions hereof or thereof; and the invalidity
of a particular provision in a particular jurisdiction shall not invalidate such
provision in any other jurisdiction.
     Section 9.09 Set-Off. If an Event of Default shall have occurred and be
continuing, each Lender and each of its Affiliates is hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held and other obligations (of whatsoever kind, including,
without limitations obligations under Swap Agreements) at any time owing by such
Lender or Affiliate to or for the credit or the account of any Obligor against
any of and all the obligations of the Obligor owed to such Lender now or
hereafter existing under this Agreement or any other Loan Document, irrespective
of whether or not such Lender shall have made any demand under this Agreement or
any other Loan Document and although such obligations may be unmatured. The
rights of each Lender under this Section 9.09 are in addition to other rights
and remedies (including other rights of setoff) which such Lender or its
Affiliates may have.

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     Section 9.10 Governing Law; Submission to Jurisdiction.
          (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF TEXAS.
          (b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT SHALL BE BROUGHT IN THE COURTS OF THE STATE OF TEXAS OR
OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF TEXAS, AND, BY
EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE PARTIES HEREBY ACCEPTS FOR
ITSELF AND (TO THE EXTENT PERMITTED BY LAW) IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. EACH
PARTY HEREBY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, WITHOUT LIMITATION,
ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH
ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS.
          (c) EACH PARTY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY
OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF
COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO IT AT THE
ADDRESS SPECIFIED IN SECTION 12.01 OF THE CREDIT AGREEMENT (OR SUCH OTHER
ADDRESS AS IS SPECIFIED PURSUANT TO SECTION 12.01 OF THE CREDIT AGREEMENT) OR
SCHEDULE 1 HERETO, AS APPLICABLE, SUCH SERVICE TO BECOME EFFECTIVE THIRTY
(30) DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF A PARTY
OR ANY HOLDER OF A NOTE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR
TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANOTHER PARTY IN ANY
OTHER JURISDICTION.
          (d) EACH PARTY HEREBY (1) IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY LAW, TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY
COUNTERCLAIM THEREIN; (2) IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT NOT
PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH
LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES, OR DAMAGES
OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES; (3) CERTIFIES THAT NO PARTY
HERETO NOR ANY REPRESENTATIVE OR AGENT OF COUNSEL FOR ANY PARTY HERETO HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD NOT, IN
THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS, AND
(4) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT, THE
OTHER LOAN DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED IN THIS
SECTION 9.10.

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     Section 9.11 Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
     Section 9.12 Acknowledgments. Each Obligor hereby acknowledges that:
          (a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents to which it is a party;
          (b) neither the Administrative Agent nor any Guaranteed Creditor has
any fiduciary relationship with or duty to any Obligor arising out of or in
connection with this Agreement or any of the other Loan Documents, and the
relationship between the Obligors, on the one hand, and the Administrative Agent
and Guaranteed Creditors, on the other hand, in connection herewith or therewith
is solely that of debtor and creditor; and
          (c) no joint venture is created hereby or by the other Loan Documents
or otherwise exists by virtue of the transactions contemplated hereby among the
Guaranteed Creditors or among the Obligors and the Guaranteed Creditors.
          (d) Each of the parties hereto specifically agrees that it has a duty
to read this Agreement, the Security Instruments and the other Loan Documents
and agrees that it is charged with notice and knowledge of the terms of this
Agreement, the Security Instruments and the other Loan Documents; that it has in
fact read this Agreement, the Security Instruments and the other Loan Documents
and is fully informed and has full notice and knowledge of the terms, conditions
and effects thereof; that it has been represented by independent legal counsel
of its choice throughout the negotiations preceding its execution of this
Agreement and the Security Instruments; and has received the advice of its
attorney in entering into this Agreement and the Security Instruments; and that
it recognizes that certain of the terms of this Agreement and the Security
Instruments result in one party assuming the liability inherent in some aspects
of the transaction and relieving the other party of its responsibility for such
liability. EACH PARTY HERETO AGREES AND COVENANTS THAT IT WILL NOT CONTEST THE
VALIDITY OR ENFORCEABILITY OF ANY EXCULPATORY PROVISION OF THIS AGREEMENT AND
THE SECURITY INSTRUMENTS ON THE BASIS THAT THE PARTY HAD NO NOTICE OR KNOWLEDGE
OF SUCH PROVISION OR THAT THE PROVISION IS NOT “CONSPICUOUS.”
     Section 9.13 Additional Obligors and Pledgors. Each Subsidiary of the
Borrower that is required to become a party to this Agreement pursuant to
Section 8.14 of the Credit Agreement shall become an Obligor for all purposes of
this Agreement upon execution and delivery by such Subsidiary of an Assumption
Agreement and shall thereafter have the same rights, benefits and obligations as
an Obligor party hereto on the date hereof. Each Guarantor that is required to
pledge Equity Interests of its Subsidiaries shall execute and deliver a
Supplement, if such Equity Interests were not previously pledged.
     Section 9.14 Releases.
          (a) Release Upon Payment in Full. The grant of a security interest
hereunder and all of rights, powers and remedies in connection herewith shall
remain in full force and

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effect until the Administrative Agent has (i) retransferred and delivered all
Collateral in its possession to the Pledgors, and (ii) executed a written
release or termination statement and reassigned to the Pledgors without recourse
or warranty any remaining Collateral and all rights conveyed hereby. Upon the
complete payment of the Borrower Obligations, the termination of all of the
Commitments and the compliance by the Obligors with all covenants and agreements
hereof, the Administrative Agent, at the expense of the Borrower, will promptly
release, reassign and transfer the Collateral to the Pledgors and declare this
Agreement to be of no further force or effect.
          (b) Partial Releases. If any of the Collateral shall be sold,
transferred or otherwise disposed of by any Pledgor in a transaction permitted
by the Credit Agreement, then the Administrative Agent, at the request and sole
expense of such Pledgor, shall promptly execute and deliver to such Pledgor all
releases or other documents reasonably necessary or desirable for the release of
the Liens created hereby on such Collateral and the Equity Interests of the
Issuer thereof. At the request and sole expense of the Borrower, a Guarantor
shall be released from its obligations hereunder in the event that all the
Equity Interests of such Guarantor shall be sold, transferred or otherwise
disposed of in a transaction permitted by the Credit Agreement; provided that
the Borrower shall have delivered to the Administrative Agent, at least ten
Business Days prior to the date of the proposed release, a written request of a
Responsible Officer of the Borrower for release identifying the relevant
Guarantor and the terms of the sale or other disposition in reasonable detail,
including the price thereof and any expenses in connection therewith, together
with a certification by the Borrower stating that such transaction is in
compliance with the Credit Agreement and the other Loan Documents.
          (c) Retention in Satisfaction. Except as may be expressly applicable
pursuant to Section 9.620 of the UCC, no action taken or omission to act by the
Administrative Agent or the Guaranteed Creditors hereunder, including, without
limitation, any exercise of voting or consensual rights or any other action
taken or inaction, shall be deemed to constitute a retention of the Collateral
in satisfaction of the Obligations or otherwise to be in full satisfaction of
the Obligations, and the Obligations shall remain in full force and effect,
until the Administrative Agent and the Guaranteed Creditors shall have applied
payments (including, without limitation, collections from Collateral) towards
the Obligations in the full amount then outstanding or until such subsequent
time as is provided in Section 9.14(a).
     Section 9.15 Acceptance. Each Obligor hereby expressly waives notice of
acceptance of this Agreement, acceptance on the part of the Administrative Agent
and the Guaranteed Creditors being conclusively presumed by their request for
this Agreement and delivery of the same to the Administrative Agent.
     Section 9.16 Restatement. This Agreement is a restatement of, and an
amendment and supplement to, the Existing Guaranty and Pledge Agreement. This
Agreement does not in any way constitute a novation of the Existing Guaranty and
Pledge Agreement, but is an amendment and restatement of the same.
[Remainder of page intentionally left blank; signature pages follow]

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

                  BORROWER:   TETON ENERGY CORPORATION    
 
               
 
  By:                          
 
  Name:                          
 
  Title:                           GUARANTORS:   TETON NORTH AMERICA LLC        
By:   Teton Energy Corporation, its sole member    
 
               
 
               
 
      By:        
 
      Name:  
 
   
 
      Title:  
 
   
 
         
 
   
 
                    TETON PICEANCE LLC         By:   Teton North America LLC,
its sole member    
 
               
 
      By:        
 
      Name:  
 
   
 
      Title:  
 
   
 
         
 
   
 
                    TETON DJ LLC         By:   Teton North America LLC, its sole
member    
 
      By:        
 
         
 
   
 
      Name:        
 
         
 
   
 
      Title:        
 
         
 
        TETON WILLISTON LLC         By:   Teton North America LLC, its sole
member    
 
               
 
      By:        
 
      Name:  
 
   
 
      Title:  
 
   
 
         
 
   

Signature Page
Amended and Restated Guaranty and Pledge Agreement

 

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                      TETON BIG HORN LLC         By:   Teton North America LLC,
its sole member    
 
               
 
      By:        
 
      Name:  
 
   
 
      Title:  
 
   
 
         
 
   

Signature Page
Amended and Restated Guaranty and Pledge Agreement

 

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Acknowledged and Agreed to as of the
date hereof by:

          ADMINISTRATIVE AGENT:   JPMORGAN CHASE BANK, N.A.
 
       
 
  By:    
 
       
 
      J. Scott Fowler
 
      Senior Vice President

Signature Page
Amended and Restated Guaranty and Pledge Agreement

 

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Schedule 1
NOTICE ADDRESSES OF OBLIGORS
Teton Energy Corporation
410 17th Street, Suite 1850
Denver, Colorado 80202
Attention: Bill I. Pennington
Teton North America LLC
410 17th Street, Suite 1850
Denver, Colorado 80202
Attention: Bill I. Pennington
Teton Piceance LLC
410 17th Street, Suite 1850
Denver, Colorado 80202
Attention: Bill I. Pennington
Teton DJ LLC
410 17th Street, Suite 1850
Denver, Colorado 80202
Attention: Bill I. Pennington
Teton Williston LLC
410 17th Street, Suite 1850
Denver, Colorado 80202
Attention: Bill I. Pennington
Teton Big Horn LLC
410 17th Street, Suite 1850
Denver, Colorado 80202
Attention: Bill I. Pennington

Schedule 1-1

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Schedule 2
DESCRIPTION OF PLEDGED SECURITIES
Pledged Securities:

                                                  Class of Stock or        
Percentage   Percentage   other Owner   Issuer   Owned   Pledged   Equity
Interest
Teton Energy Corporation
  Teton North America LLC     100 %     100 %   Limited Liability
Company Interests
 
                       
Teton North America LLC
  Teton Piceance LLC     100 %     100 %   Limited Liability
Company Interests
 
                       
Teton North America LLC
  Teton DJ LLC     100 %     100 %   Limited Liability
Company Interests
 
                       
Teton North America LLC
  Teton Williston LLC     100 %     100 %   Limited Liability
Company Interests
 
                       
Teton North America LLC
  Teton Big Horn LLC     100 %     100 %   Limited Liability
Company Interests

Schedule 2-1

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Schedule 3
FILINGS AND OTHER ACTIONS
REQUIRED TO PERFECT SECURITY INTERESTS

1.   Filing of UCC-3 Financing Statement for the purpose of assigning that
certain UCC-1 Financing Statement filed with the Secretary of State of the State
of Delaware on September 13, 2006, as File No. 63164845 from BNP Paribas, as
administrative agent for the ratable benefit of the Existing Lenders, to
Administrative Agent, as secured party.   2.   Filing of UCC-3 Financing
Statement for the purpose of assigning that certain UCC-1 Financing Statement
filed with the Secretary of State of Colorado on September 13, 2006, as File No.
2006089386 from BNP Paribas, as administrative agent for the ratable benefit of
the Existing Lenders, to Administrative Agent, as secured party, and for the
purpose of amending the description of the Collateral.

Schedule 3-1

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Schedule 4
LOCATION OF JURISDICTION OF ORGANIZATION AND CHIEF EXECUTIVE OFFICE

     
Legal name of the Borrower:
Address:

  Teton Energy Corporation
410 17th Street, Suite1850,
Denver, Colorado 80202
All names and trade names that the Borrower has used in the last five years:
Jurisdictions of organization over the last five years:
Current jurisdiction of organization:
Organizational number:
Taxpayer identification number:
Location of chief executive office or sole place of business over the last five
years:
  None
Delaware
Delaware
2896826
84-1482290
410 17th Street, Suite1850,
Denver, Colorado 80202
 
   
Legal name of the Obligor:
Address:
  Teton North America LLC
410 17th Street, Suite 1850,
Denver, Colorado 80202
All names and trade names that the Borrower has used in the last five years:
Jurisdictions of organization over the last five years:
Current jurisdiction of organization:
Organizational number:
Location of chief executive office or sole place of business over the last five
years:
  None
Colorado
Colorado
20051069170
410 17th Street, Suite 1850,
Denver, Colorado 80202
 
   
Legal name of the Obligor:
Address:
  Teton Piceance LLC
410 17th Street,
Suite 1850,
Denver, Colorado 80202
All names and trade names that the Borrower has used in the last five years:
Jurisdictions of organization over the last five years:
Current jurisdiction of organization:
Organizational number:
Location of chief executive office or sole place of business over the last five
years:
  None
Colorado
Colorado
20051069213
410 17th Street,Suite 1850,
Denver, Colorado 80202

Schedule 4-1

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Legal name of the Obligor:
Address:
  Teton DJ LLC
410 17th Street,
Suite 1850,
Denver, Colorado 80202
All names and trade names that the Borrower has used in the last five years:
Jurisdictions of organization over the last five years:
Current jurisdiction of organization:
Organizational number:
Location of chief executive office or sole place of business over the last five
years:
  None
Colorado
Colorado
20051069240
410 17th Street, Suite 1850,
Denver, Colorado 80202
 
   
Legal name of the Obligor:
Address:
  Teton Williston LLC
410 17th Street,
Suite 1850,
Denver, Colorado 80202
All names and trade names that the Borrower has used in the last five years:
Jurisdictions of organization over the last five years:
Current jurisdiction of organization:
Organizational number:
Location of chief executive office or sole place of business over the last five
years:
  None
Colorado
Colorado
20061183886
410 17th Street, Suite 1850,
Denver, Colorado 80202

Schedule 4-2

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ACKNOWLEDGMENT AND CONSENT
     The undersigned hereby acknowledges receipt of a copy of the Amended and
Restated Guaranty and Pledge Agreement dated as of August 9, 2007 (the “Guaranty
and Pledge Agreement”), made by the Obligors parties thereto for the benefit of
JPMORGAN CHASE BANK, N.A., as Administrative Agent. The undersigned agrees for
the benefit of the Administrative Agent and the Guaranteed Creditors as follows:
     1. The undersigned will be bound by the terms of the Guaranty and Pledge
Agreement and will comply with such terms insofar as such terms are applicable
to the undersigned.
     2. The terms of Section 6.01(a) and Section 6.03 of the Guaranty and Pledge
Agreement shall apply to it, mutatis mutandis, with respect to all actions that
may be required of it pursuant to Section 6.02(a) or Section 6.03 of the
Guaranty and Pledge Agreement.

                  [NAME OF ISSUER]    
 
           
 
  By:        
 
  Name:  
 
   
 
  Title:  
 
   
 
     
 
   
 
                Address for Notices:    
 
                     
 
                     
 
                     
 
  Fax:        
 
     
 
   

 

*   This consent is necessary only with respect to any Issuer which is not also
an Obligor. This consent may be modified or eliminated with respect to any
Issuer that is not controlled by a Obligor.

Schedule 4-3

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Annex I
Assumption Agreement
     ASSUMPTION AGREEMENT, dated as of [                    ], 200[___], made by
[                    ], a [                    ] (the “Additional Obligor”), in
favor of JPMORGAN CHASE BANK, N.A., as administrative agent (in such capacity,
the “Administrative Agent”) for the Guaranteed Creditors (used herein as defined
in the Guaranty and Pledge Agreement referred to below). All capitalized terms
not defined herein shall have the meaning ascribed to them in the Credit
Agreement referred to below.
W I T N E S S E T H:
     WHEREAS, Teton Energy Corporation, a Delaware corporation (the “Borrower”),
the Administrative Agent, and certain financial institutions have entered into
that certain Amended and Restated Credit Agreement, dated as of August 9, 2007
(as amended, restated, supplemented or otherwise modified from time to time, the
“Credit Agreement”);
     WHEREAS, in connection with the Credit Agreement, the Borrower and certain
of its Affiliates (other than the Additional Obligor) have entered into an
Amended and Restated Guaranty and Pledge Agreement, dated as of August 9, 2007
(as amended, restated, supplemented or otherwise modified from time to time, the
“Guaranty and Pledge Agreement”) in favor of the Administrative Agent for the
benefit of the Guaranteed Creditors;
     WHEREAS, the Credit Agreement requires the Additional Obligor to become a
party to the Guaranty and Pledge Agreement; and
     WHEREAS, the Additional Obligor has agreed to execute and deliver this
Assumption Agreement in order to become a party to the Guaranty and Pledge
Agreement;
     NOW, THEREFORE, IT IS AGREED:
     1. Guaranty and Pledge Agreement. By executing and delivering this
Assumption Agreement, the Additional Obligor, as provided in Section 9.13 of the
Guaranty and Pledge Agreement, hereby becomes a party to the Guaranty and Pledge
Agreement as an Obligor thereunder with the same force and effect as if
originally named therein as an Obligor and, without limiting the generality of
the foregoing, hereby expressly assumes all obligations and liabilities of an
Obligor thereunder and expressly grants to the Administrative Agent, for the
benefit of the Guaranteed Creditors, a security interest in all Collateral owned
by such Additional Obligor to secure all of such Additional Obligor’s
obligations and liabilities thereunder. The information set forth in Annex 1-A
hereto is hereby added to the information set forth in Schedules 1 through 4 to
the Guaranty and Pledge Agreement. The Additional Obligor hereby represents and
warrants that each of the representations and warranties contained in Article IV
of the Guaranty and Pledge Agreement is true and correct on and as the date
hereof (after giving effect to this Assumption Agreement) as if made on and as
of such date.

Annex I-1

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     2. Governing Law. This Assumption Agreement shall be governed by, and
construed in accordance with, the laws of the State of Texas.
     IN WITNESS WHEREOF, the undersigned has caused this Assumption Agreement to
be duly executed and delivered as of the date first above written.

                  [ADDITIONAL OBLIGOR]    
 
           
 
  By:        
 
  Name:  
 
   
 
  Title:  
 
   
 
     
 
   

Annex I-2

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Annex II
Supplement
     SUPPLEMENT, dated as of [                    ], 200[___], made by
[                    ], a [                    ] (the “Additional Pledgor”), in
favor of JPMORGAN CHASE BANK, N.A., as administrative agent (in such capacity,
the “Administrative Agent”) for the Guaranteed Creditors (used herein as defined
in the Guaranty and Pledge Agreement referred to below). All capitalized terms
not defined herein shall have the meaning ascribed to them in such Credit
Agreement referred to below.
W I T N E S S E T H:
     WHEREAS, Teton Energy Corporation, a Delaware corporation (the “Borrower”),
the Administrative Agent, and certain financial institutions have entered into
an Amended and Restated Credit Agreement, dated as of August 9, 2007 (as
amended, restated, supplemented or otherwise modified from time to time, the
“Credit Agreement”);
     WHEREAS, in connection with the Credit Agreement, the Borrower and certain
of its Affiliates (other than the Additional Pledgor) have entered into an
Amended and Restated Guaranty and Pledge Agreement, dated as of August 9, 2007
(as amended, restated, supplemented or otherwise modified from time to time, the
“Guaranty and Pledge Agreement”) in favor of the Administrative Agent for the
benefit of the Guaranteed Creditors;
     WHEREAS, the Credit Agreement requires the Additional Pledgor to pledge the
Equity Interests described hereto on Schedule 2-S; and
     WHEREAS, the Additional Pledgor has agreed to execute and deliver this
Supplement in order to pledge such Equity Interests;
     NOW, THEREFORE, IT IS AGREED:
     1. Guaranty and Pledge Agreement. By executing and delivering this
Supplement, the Additional Pledgor, as provided in Section 9.13 of the Guaranty
and Pledge Agreement, hereby becomes a party to the Guaranty and Pledge
Agreement as an Obligor thereunder with the same force and effect as if
originally named as an Obligor therein, and without limiting the generality of
the foregoing, hereby pledges and grants a security interest in (a) the
securities described or referred to in Schedule 2-S and (b) (i) the certificates
or instruments, if any, representing such securities, (ii) all dividends (cash,
Equity Interests or otherwise), cash, instruments, rights to subscribe, purchase
or sell and all other rights and Property from time to time received, receivable
or otherwise distributed in respect of or in exchange for any or all of such
securities, (iii) all replacements, additions to and substitutions for any of
the Property referred to in this definition, including, without limitation,
claims against third parties, (iv) the proceeds, interest, profits and other
income of or on any of the Property referred to in this definition, (v) all
security entitlements in respect of any of the foregoing, if any, (vi) all books
and records relating to any of the Property referred to in this definition and
(vii) all proceeds of any of the foregoing (collectively, the “Collateral”).
Upon execution of this Supplement, such

Annex II-1

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securities will constitute “Pledged Securities” for purposes of the Guaranty and
Pledge Agreement with the same force and effect as if originally listed on
Schedule 2 thereto and, without limiting the generality of the foregoing, the
Additional Pledgor hereby expressly assumes all obligations and liabilities of a
Pledgor thereunder and expressly grants to the Administrative Agent, for the
benefit of the Guaranteed Creditors, a security interest in all Collateral owned
by such Additional Pledgor to secure all of such its obligations and liabilities
thereunder. The information set forth in Schedule 2-S hereto is hereby added to
the information set forth in Schedule 2 to the Guaranty and Pledge Agreement.
The Additional Pledgor hereby represents and warrants that each of the
representations and warranties contained in Article IV of the Guaranty and
Pledge Agreement is true and correct on and as the date hereof (after giving
effect to this Supplement) as if made on and as of such date.
     2. Governing Law. This Supplement shall be governed by, and construed in
accordance with, the laws of the State of Texas.
     IN WITNESS WHEREOF, the undersigned has caused this Supplement to be duly
executed and delivered as of the date first above written.

                  [ADDITIONAL PLEDGOR]    
 
           
 
  By:        
 
  Name:  
 
   
 
  Title:  
 
   
 
     
 
   

Annex II-2