Exhibit 10.6

 

Execution Version

 

SECOND AMENDED AND RESTATED PLEDGE AND SECURITY AGREEMENT

 

THIS SECOND AMENDED AND RESTATED PLEDGE AND SECURITY AGREEMENT (as same may be
amended, restated, amended and restated, supplemented or otherwise modified from
time to time, this “Security Agreement”) is entered into as of July 16, 2019, by
Grizzly Natural Gas, LLC, a Kentucky limited liability company (“Borrower”),
Grizzly Energy, LLC, a Delaware limited liability company (“Parent”), each of
the Subsidiaries party hereto, whether as an original signatory hereto or as an
Additional Debtor (together with Borrower and Parent, collectively, “Debtors”
and individually, a “Debtor”), in favor of Citibank, N.A. (“Citibank”), as
collateral agent (in such capacity, together with its successors in such
capacity, the “Collateral Agent”).

 

PRELIMINARY STATEMENT

 

WHEREAS, on April 1, 2019 (the “Petition Date”), Parent, Borrower, and certain
of Parent’s direct and indirect subsidiaries (such subsidiaries, collectively
with Parent and Borrower, the “Chapter 11 Debtors”) filed voluntary petitions
with the United States Bankruptcy Court for the Southern District of Texas,
Houston Division (the “Bankruptcy Court”) for relief under Chapter 11 of Title
11 of the United States Code and commenced their chapter 11 proceedings (the
“Chapter 11 Cases”);

 

WHEREAS, the Chapter 11 Debtors shall emerge from bankruptcy on the date hereof
upon the effectiveness of the Plan of Reorganization (as defined in the Credit
Agreement), which Plan of Reorganization was confirmed by the Bankruptcy Court
on July 9, 2019;

 

WHEREAS, Citibank, N.A. (“Citibank”), in its capacity as administrative agent
for the lenders thereunder (the “Prepetition Administrative Agent”), and as the
issuing bank in respect of letters of credit issued thereunder, and other
financial institutions named and defined therein as lenders, including Citibank
in its capacity as a lender (the “Prepetition Lenders” and each a “Prepetition
Lender”) entered into that certain Fourth Amended and Restated Credit Agreement
dated as of August 1, 2017 (as amended, restated, amended and restated,
supplemented or otherwise modified from time to time through the Petition Date,
the “Prepetition Credit Agreement”). Pursuant to the terms of the Plan of
Reorganization, the Prepetition Administrative Agent and the Prepetition Lenders
agreed, in settlement of their prepetition claims in accordance with the Plan of
Reorganization and on the terms and conditions set forth therein, to amend and
restate the Prepetition Credit Agreement by entering into that certain Fifth
Amended and Restated Credit Agreement, dated as of July 16, 2019 (as amended,
restated, amended and restated, supplemented, or otherwise modified from time to
time, the “Credit Agreement”), by and among Parent, Borrower, the lenders from
time to time party thereto, Citibank, N.A., as administrative agent (the
“Administrative Agent”) and the Collateral Agent;

 

WHEREAS, concurrently herewith Parent and Borrower are entering into that
certain Term Loan Credit Agreement, dated as of July 16, 2019 (as amended,
restated, amended and restated, supplemented, or otherwise modified from time to
time, the “Term Credit Agreement”), by and among Parent, Borrower, the lenders
from time to time party thereto, Citibank, N.A., as administrative agent (the
“Term Administrative Agent”) and the Collateral Agent;

 

WHEREAS, Debtors may incur Additional Priority Lien Debt and Priority Lien
Obligations (each as defined in the Collateral Agency Agreement) from time to
time, subject to the terms and conditions of the Collateral Agency Agreement;

 

WHEREAS, the Collateral Agent has agreed to act as collateral agent on behalf of
all present and future Priority Lien Secured Parties (as defined in the
Collateral Agency Agreement) with respect to the Collateral (as hereinafter
defined) and is entering into this Security Agreement in accordance with the
Collateral Agency Agreement;

 

 PAGE 1 

 

 

WHEREAS, Borrower and the other Debtors are engaged in related businesses, and
each Debtor will derive substantial direct and indirect benefit from the
extensions of credit and the incurrence of the Priority Lien Obligations; and

 

WHEREAS, to induce each Priority Lien Secured Party to (a) make the loans and
other financial accommodations from time to time as provided in the Priority
Lien Documents (as defined in the Collateral Agency Agreement) and (b) make
financial accommodations under Secured Swap Agreements and Secured Treasury
Management Agreements (each as defined in the Credit Agreement), each Debtor has
agreed to grant a security interest in the Collateral as security for the
repayment of the Priority Lien Obligations.

 

NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties do hereby agree as follows:

 

Article I

DEFINITIONS

 

1.1           Terms Defined in Credit Agreement, Term Credit Agreement and
Collateral Agency Agreement. All capitalized terms used herein and not otherwise
defined shall have the meanings assigned to such terms in the Credit Agreement,
Term Credit Agreement or Collateral Agency Agreement, as applicable.

 

1.2           Terms Defined in New York Uniform Commercial Code. Terms defined
in the New York Uniform Commercial Code which are not otherwise defined in this
Security Agreement (including by reference to the Collateral Agency Agreement or
any Priority Lien Document) are used herein as defined in Articles 8 or 9 of the
New York Uniform Commercial Code, as the context may require, as in effect on
the date hereof.

 

1.3           Definitions of Certain Terms Used Herein. As used in this Security
Agreement, in addition to the terms defined in the introductory paragraph and in
the Preliminary Statement, the following terms shall have the following
meanings:

 

“Accounts” shall have the meaning set forth in Article 9 of the UCC.

 

“Account Debtor” means any Person who is or who may become obligated to a Debtor
under, with respect to, or on account of an Account.

 

“Chattel Paper” shall have the meaning set forth in Article 9 of the UCC.

 

 PAGE 2 

 

 

“Collateral” means all of Debtors’ right, title and interest in, to and under
all of the following Property, whether now existing or hereafter arising, and
regardless of where located and, in each case, all Supporting Obligations and
all accessions to, substitutions and replacements for, Proceeds and products of
the following, together with all books and records, customer lists, credit
files, computer files, programs, printouts and other computer materials and
records related thereto and any General Intangibles at any time evidencing or
relating to any of the following and all collateral security and guarantees
given by any Person with respect to any of the following: all Accounts, Chattel
Paper, Commercial Tort Claims, Deposit Accounts (including all funds,
certificates, checks, drafts, wire transfer receipts, and other earnings,
profits, or other proceeds from time to time representing, evidencing, deposited
into, or held in Deposit Accounts), Securities Accounts, Commodities Accounts,
and all other demand, deposit, time, savings, cash management, passbook and
similar accounts maintained by such Debtor with any bank or other financial
institution, all Security Entitlements in any or all of the foregoing and all
monies, securities, Instruments and other investments deposited or required to
be deposited in any of the foregoing, Documents, Equipment, Financial Assets,
Fixtures, General Intangibles, Goods, Money, cash and Cash Equivalents, all
Contracts together with all Contract Rights arising thereunder, Instruments,
Intellectual Property, Inventory, Investment Property, letters of credit,
Letter-of-Credit Rights, Pledged Equity, Securities, Stock Rights, all other
personal property not otherwise described in the foregoing, in each case, now
owned or at any time hereafter acquired by such Debtor or in which such Debtor
now has or at any time in the future may acquire any right, title or interest.

 

“Collateral Agency Agreement” means that certain Collateral Agency Agreement,
dated as of the date hereof, by and among Parent, Borrower, the other Debtors
party thereto from time to time, the Administrative Agent, the Term
Administrative Agent, the Collateral Agent and each other secured representative
party thereto from time to time, as amended, amended and restated, supplemented
or otherwise modified from time to time.

 

“Collateral Agent” has the meaning set forth in the introductory paragraph
hereof.

 

“Commercial Tort Claims” shall have the meaning set forth in Article 9 of the
UCC.

 

“Control” shall have the meaning set forth in Article 8 or, if applicable, in
Section 9-104, 9-105, 9-106 or 9-107 of Article 9 of the UCC.

 

“Copyrights” means all United States and foreign copyrights, whether registered
or unregistered and whether published or unpublished, now or hereafter in force
throughout the world, all registrations and applications therefor, including the
registrations and applications referred to in Schedule 2 under the heading
“Copyrights”, all rights and privileges corresponding thereto throughout the
world, whether as author, assignee, transferee or otherwise, all registrations
and applications for registration, including extensions, continuations, reissues
and renewals of any thereof, the right to sue for past, present and future
infringements of any of the foregoing, and all Proceeds of the foregoing,
including, without limitation, with respect to the foregoing, Proceeds from
licenses, royalties, fees, income, payments, claims, damages and registrations,
recordings, supplemental registrations and pending applications for registration
in the relevant IP Filing Office.

 

“Debtor” has the meaning set forth in the introductory paragraph hereof.

 

“Deposit Accounts” shall have the meaning set forth in Article 9 of the UCC and
includes, without limitation, those Deposit Accounts identified on Schedule 1.

 

“Documents” shall have the meaning set forth in Article 9 of the UCC.

 

“Electronic Chattel Paper” shall have the meaning set forth in Article 9 of the
UCC.

 

“Equipment” shall have the meaning set forth in Article 9 of the UCC.

 

“Exhibit” refers to a specific exhibit to this Security Agreement, unless
another document is specifically referenced.

 

 PAGE 3 

 

 

“Excluded Account” means, as of any date of determination, each Deposit Account
that is, as of such date, (a) a payroll account containing a balance not
exceeding the amount of payroll expenses for one payroll period, (b) a tax
withholding account, (c) a zero balance account (other than any lockbox
accounts, to the extent account control agreements are permitted by the
applicable depository bank), (d) a petty cash account containing a balance not
exceeding $50,000 per account and not to exceed $250,000 for all such petty cash
accounts in the aggregate or (e) a trust account holding royalty payments and
working interest payments solely to the extent constituting property of a third
party held in trust.

 

“Excluded Property” means the following:

 

(a)          any lease (other than an oil and gas lease), license, contract or
agreement to which any Debtor is a party or any of its rights or interests
thereunder if and only if for so long as the grant of a lien or security
interest under this Security Agreement will constitute or will result in a
termination under, or a default or a breach thereof that would give the other
party thereto (excluding any Affiliates of any Debtor) the right to terminate
any such lease, license, contract or agreement (other than (a) to the extent
that any such term would be rendered ineffective pursuant to Sections 9-406,
9-407, 9-408 or 9-409 of the UCC or any other applicable law or principles of
equity, or (b) to the extent such other party consents to the grant of such lien
or security interest on such lease, license, contract or agreement);

 

(b)          any Equity Interests of a Foreign Subsidiary, or any Domestic
Subsidiary, that has no material assets other than the Equity Interests of one
or more Foreign Subsidiaries (such Domestic Subsidiary being a “FSHCO”) in
excess of 65% of the voting rights of all outstanding Equity Interests of such
Foreign Subsidiary or FSHCO and any Equity Interests issued by any Foreign
Subsidiaries or any FSHCO other than Foreign Subsidiaries and FSHCOs directly
owned by Debtor;

 

(c)          any deposit account which is used as an escrow account or as a
fiduciary or trust account and solely contains deposits made for the benefit of
another Person (other than Parent or any of its Subsidiaries), and which such
deposits are held in such Deposit Account on behalf of, and for the benefit of,
such other Person;

 

(d)          any intent to use trademark or service mark application to the
extent, if any, that, and solely during the period, if any, in which, the grant
of a security interest used therein would impair the availability or
enforceability of such intent to use trademark or service mark application under
applicable federal law; and

 

(e)          any interests in partnerships, joint ventures and subsidiaries of
Borrower that are not wholly-owned subsidiaries which cannot be pledged without
the consent of one or more third parties other than a Debtor and/or any of their
respective subsidiaries (after giving effect to Section 9-406, 9-407, 9-408 or
9-409 of the UCC (or any successor provision or provisions) of any relevant
jurisdiction or any other applicable law);

 

provided that, Proceeds, substitutions or replacements of any Excluded Property
referred to above shall not constitute “Excluded Property” solely by virtue of
being Proceeds, substitutions or replacements thereof but shall constitute
“Excluded Property” only to the extent that such Proceeds, substitutions or
replacements otherwise independently constitute Excluded Property hereunder.

 

Notwithstanding anything to the contrary contained herein, immediately upon the
ineffectiveness, lapse or termination of any restriction or condition causing or
resulting in such Property to constitute Excluded Property pursuant to this
definition, the Collateral shall include, and the applicable Debtor shall be
deemed to have granted a continuing lien and security interest in, all relevant
previously restricted or conditioned right, title and interest in, to and under
such Property as if such restriction or condition had never been in effect.

 

 PAGE 4 

 

 

“Financial Asset” shall have the meaning set forth in Article 8 of the UCC.

 

“Fixtures” shall have the meaning set forth in Article 9 of the UCC.

 

“General Intangibles” shall have the meaning set forth in Article 9 of the UCC.

 

“Intellectual Property” means all Copyrights, Patents, Trademarks, Trade Secrets
and Intellectual Property Licenses.

 

“Intellectual Property Licenses” means any and all written agreements providing
for the granting of any right in, or to, any Person’s owned Intellectual
Property (whether such Person is licensee or licensor thereunder) and all
renewals and extensions thereof.

 

“Intellectual Property Security Agreement” means a short-form security
agreement, substantially in the form of Exhibit 2 to this Agreement, executed by
each applicable Debtor and the Collateral Agent (or any analogous agreement or
filing under applicable law, as may be reasonably requested by the Collateral
Agent or reasonably necessary to evidence the Collateral Agent’s lien and
security interest in any IP Registration).

 

“IP Filing Office” means, as applicable, the United States Patent and Trademark
Office or the United States Copyright Office.

 

“IP Registrations” means, with respect to any Debtor, (a) registrations of
Patents, Trademarks and Copyrights and (b) applications of registration or
publication thereof, in each case made with the relevant IP Filing Office.

 

“Inventory” shall have the meaning set forth in Article 9 of the UCC.

 

“Investment Property” shall have the meaning set forth in Article 9 of the UCC,
and, in any event, shall include, without limitation, all of the following,
whether now owned or hereafter acquired by such Debtor: (a) any security,
whether certificated or uncertificated; (b) any security entitlement; (c) any
Securities Account (including, without limitation, those described on Schedule
3); (d) any commodity contract; and (e) any Commodities Account (including,
without limitation, those identified on Schedule 3)

 

“Letter-of-Credit Right” shall have the meaning set forth in Article 9 of the
UCC.

 

“Patents” means all United States and foreign patents and applications therefor
throughout the world, including each patent and patent application referred to
in Schedule 2 under the heading “Patents”, all reissues, divisionals,
continuations, continuations-in-part, extensions, renewals and reexaminations of
any of the foregoing, all rights and privileges corresponding thereto throughout
the world, the right to sue for past, present and future infringements of any of
the foregoing, and all Proceeds of the foregoing, including, with respect to the
foregoing, Proceeds from licenses, royalties, fees, income, payments, claims,
damages, and suit.

 

“Pledged Collateral” means all Pledged Equity, Instruments, Securities and other
Investment Property.

 

 PAGE 5 

 

 

“Pledged Equity” means, with respect to each Debtor, all of such Debtor’s right,
title, and interest in, to and under all Equity Interests of any other Person
(as used in this definition, each, an “Issuer”), including, without limitation,
the Equity Interests of such Debtor’s subsidiaries set forth on Schedule 3, in
each case, together with the certificates (or other agreements or instruments),
if any, representing such Equity Interests, and all options and other rights,
contractual or otherwise, with respect thereto, including, but not limited to,
the following:

 

(a)          all Equity Interests representing a non-cash dividend thereon, or
representing distribution or return of capital upon or in respect thereof, or
resulting from a stock split, revision, reclassification or other exchange
therefor, and any subscriptions, warrants, rights or options issued to the
holder thereof, or otherwise in respect thereof; and

 

(b)          in the event of any consolidation or merger involving the issuer
thereof and in which such Issuer is not the surviving Person, all shares of each
class of the Equity Interests of the successor Person formed by or resulting
from such consolidation or merger, to the extent that such successor Person is a
direct subsidiary of such Debtor.

 

“Proceeds” shall have the meaning set forth in Article 9 of the UCC and, in any
event, shall include, but not be limited to, (a) any and all proceeds of any
insurance, indemnity, warranty, or guaranty payable to a Debtor from time to
time with respect to any of the Collateral, (b) any and all payments (in any
form whatsoever) made or due and payable to such Debtor from time to time in
connection with any requisition, confiscation, condemnation, seizure, or
forfeiture of all or any part of the Collateral by any Governmental Authority
(or any Person acting under color of Governmental Authority), and (c) any and
all other amounts from time to time paid or payable under or in connection with
any of the Collateral.

 

“Receivables” means the Accounts, Chattel Paper, Documents, Investment Property,
Instruments, or Commercial Tort Claims, and any other rights or claims to
receive money which are General Intangibles or which are otherwise included as
Collateral.

 

“Secured Obligations” means all Priority Lien Obligations.

 

“Security” shall have the meaning set forth in Article 8 of the UCC.

 

“Stock Rights” means any securities, dividends or other distributions and any
other right or property which a Debtor shall receive or shall become entitled to
receive for any reason whatsoever with respect to, in substitution for or in
exchange for any securities or other ownership interests in a corporation,
partnership, joint venture or limited liability company constituting Collateral
and any securities, any right to receive securities and any right to receive
earnings, in which such Debtor now has or hereafter acquires any right, issued
by an issuer of such securities.

 

“Tangible Chattel Paper” shall have the meaning set forth in Article 9 of the
UCC.

 

“UCC” means the Uniform Commercial Code as in effect in the State of New York,
as the same has been or may be amended or revised from time to time, or, if so
required with respect to the attachment, perfection or priority of the
Collateral Agent’s or any other Priority Lien Secured Party’s lien and security
interest in any Collateral by mandatory provisions of applicable law, as in
effect in such other jurisdiction.

 

The foregoing definitions shall be equally applicable to both the singular and
plural forms of the defined terms.

 

 PAGE 6 

 

 

Article II

GRANT OF SECURITY INTERESt

 

2.1           Security Interest. Each Debtor hereby pledges, assigns, mortgages,
transfers, hypothecates and grants to Collateral Agent for the ratable benefit
of the Priority Lien Secured Parties a continuing first-priority (subject to
Liens permitted by the Priority Lien Documents) security interest in all of such
Debtor’s right, title and interest in, to and under the Collateral to secure the
prompt and complete payment and performance in full of the Secured Obligations.
Administrative Agent acknowledges that the attachment of its lien and security
interest arising hereunder in any Commercial Tort Claim of a Debtor is subject
to such Debtor’s compliance with Section 5.10. Each Debtor acknowledges that the
Secured Obligations are owed to various Priority Lien Secured Parties and that
each Priority Lien Secured Party is entitled to the ratable benefit of the lien
and security interest created by this Security Agreement.

 

2.2           Debtors Remain Liable. Notwithstanding anything to the contrary
contained herein, (a) each Debtor shall remain liable under the contracts and
agreements included in the Collateral to the extent set forth therein to perform
all of its respective duties and obligations thereunder, (b) the exercise by
Collateral Agent of any of its rights hereunder shall not release any Debtor
from any of its duties or obligations under the contracts and agreements
included in the Collateral, and (c) neither the Collateral Agent nor any other
Priority Lien Secured Party shall have any obligation or liability under any of
the contracts and agreements included in the Collateral by reason of, or arising
out of, this Security Agreement , nor shall Collateral Agent or any other
Priority Lien Secured Party be obligated to perform any of the obligations or
duties of a Debtor thereunder or pursuant thereto or to take any action to
collect or enforce any claim for payment assigned, or to which the Priority Lien
Secured Parties are entitled to, hereunder.

 

2.3           Authorization to File Financing Statements. Each Debtor hereby
authorizes the Collateral Agent to file, and if requested will execute and/or
deliver to the Collateral Agent, all financing statements and other documents
and take such other actions as may from time to time be reasonably requested by
the Collateral Agent in order to maintain a first-priority, valid, enforceable,
perfected security interest in and, to the extent required hereunder, Control
of, the Collateral. Any financing statement filed by the Collateral Agent may be
filed in any filing office in any relevant UCC jurisdiction and may indicate
such Debtor’s Collateral (i) as all assets of such Debtor or words of similar
effect, regardless of whether any particular asset comprised in the Collateral
falls within the scope of Article 9 of the UCC or such jurisdiction, or (ii) by
any other description which reasonably approximates the description contained in
this Security Agreement, and contain any other information required by part 5 of
Article 9 of the UCC for the sufficiency or filing office acceptance of any
financing statement or amendment, including whether such Debtor is an
organization, the type of organization and any organization identification
number issued to such Debtor, and (iii) in the case of a financing statement
filed as a fixture filing or indicating such Debtor’s Collateral as as-extracted
collateral or timber to be cut, a sufficient description of real property to
which the Collateral relates. Such Debtor also agrees to furnish any such
information to the Collateral Agent promptly upon request. Such Debtor also
ratifies its authorization for the Collateral Agent to file, on or prior to the
date hereof, in any UCC jurisdiction, any financing statements or amendments
thereto.

 

2.4           Limited Exclusions. Notwithstanding Section 2.1 or the definition
of “Collateral” to the contrary, the lien and security interest granted
hereunder shall not extend to, and the term “Collateral” shall not include, any
Excluded Property.

 

 PAGE 7 

 

 

Article III

REPRESENTATIONS AND WARRANTIES

 

Each Debtor represents and warrants to Collateral Agent that:

 

3.1        Title, Authorization, Validity, Perfection and Enforceability. Such
Debtor has good title to the Collateral and none of the Collateral is subject to
any Lien, except for Liens permitted by the Priority Lien Documents, and has
full power and authority to grant to Collateral Agent the lien and security
interest in such Collateral pursuant hereto and the other Security Instruments.
The execution and delivery by such Debtor of this Security Agreement has been
duly authorized by necessary corporate, limited liability company or
partnership, as applicable, action and this Security Agreement constitutes a
legal, valid, and binding obligation of each Debtor. When UCC financing
statements in appropriate form in accordance with the UCC have been filed in the
appropriate offices against such Debtor in the locations listed on Schedule 5
and in the case of Pledged Equity constituting a Security, delivery of a stock
certificate or equivalent certificate accompanied by duly executed instruments
of transfer or assignment in blank, the Collateral Agent will have a fully
perfected, first-priority (subject to Liens permitted by the Priority Lien
Documents) lien and security interest in that Collateral of the Debtor upon
which a security interest may be perfected by such filings or, in the case of
Pledged Equity, perfection by control.

 

3.2           Conflicting Laws and Contracts. Neither the execution and delivery
by such Debtor of this Security Agreement, the creation and perfection of the
security interest in the Collateral granted hereunder, nor compliance with the
terms and provisions hereof will violate any applicable law, any order of any
Governmental Authority or such Debtor’s Organizational Documents, the provisions
of any indenture, instrument or agreement to which such Debtor is a party or is
subject, or by which it, or its property, is bound, or conflict with or
constitute a default thereunder, or result in the creation or imposition of any
Lien pursuant to the terms of any such indenture, instrument or agreement (other
than any Lien permitted by the Priority Lien Documents).

 

3.3           Principal Location. As of the Effective Date, such Debtor’s
address for notices and the location of its chief executive office are disclosed
in Schedule 4.

 

3.4           [Reserved].

 

3.5           Deposit, Commodity, and Securities Account. Schedule 1 (as such
schedule may be updated by Borrower from time to time) correctly identifies all
Deposit Accounts, Commodities Accounts, and Securities Accounts maintained by,
or on behalf of, such Debtor and the institutions holding such accounts.

 

3.6           Pledged Equity and Other Investment Property. Schedule 3 (as such
schedule may be updated by Borrower from time to time) sets forth a complete and
accurate list of the Pledged Collateral in which such Debtor has any right,
title or interest. Except as set forth on Schedule 3 (as such schedule may be
updated by Borrower from time to time), such Debtor is the direct and beneficial
owner of all Pledged Collateral listed on Schedule 3 (as such schedule may be
updated by Borrower from time to time). Such Debtor further represents and
warrants that (i) all of such Debtor’s Pledged Equity is duly and validly
issued, and fully paid and non-assessable and (ii) with respect to any
certificates delivered to Collateral Agent representing an ownership interest in
any Issuer of Pledged Equity, such certificates are Securities as defined in
Article 8 of the UCC of the applicable jurisdiction as a result of actions by
the issuer or otherwise. All certificates or instruments representing or
evidencing the Pledged Collateral, which, if acquired by any Debtor after the
Effective Date, would be required to be delivered pursuant to the Priority Lien
Documents and Section 5.3 hereof, have been delivered to the Collateral Agent in
suitable form for transfer by delivery or accompanied by duly executed
instruments of transfer or assignment in blank and that the Collateral Agent has
a perfected first-priority (subject only to Liens permitted by the Priority Lien
Documents) lien and security interest therein.

 

 PAGE 8 

 

 

3.7           No Financing Statements. No financing statement describing all or
any portion of the Collateral, to the extent not lapsed or terminated, naming
such Debtor as debtor is filed or of record in any jurisdiction except
(i) financing statements naming Collateral Agent as the secured party, and
(ii) financing statements filed with respect to Liens permitted by the Priority
Lien Documents.

 

3.8           Identification Numbers. Such Debtor’s Federal employer
identification number and state organizational identification number are listed
on Schedule 5.

 

The failure of any of these representations or warranties or any description of
Collateral therein to be accurate or complete shall not impair the security
interest in any such Collateral.

 

Article IV

CONCERNING INTELLECTUAL PROPERTY

 

4.1           Registrations. Schedule 2 sets forth, as of the Effective Date, a
true and complete list of any Intellectual Property in which each Debtor has any
right, title or interest.

 

4.2           Intellectual Property.

 

(a)          Upon filing of appropriate financing statements with the Secretary
of State (or equivalent office) of the state of organization of such Debtor and
the filing of the Intellectual Property Security Agreement with the appropriate
IP Filing Office, the Collateral Agent shall have a fully perfected
first-priority (except for Liens permitted by the Priority Lien Documents) Lien
on the Collateral constituting United States issued, registered or applied for
Patents, Trademarks and Copyrights under the UCC and the laws of the United
States for the ratable benefit of the Priority Lien Secured Parties, and such
perfected security interests shall be enforceable as such as against any and all
creditors of and purchasers from Debtors, subject to applicable law.

 

(b)          No Debtor has knowledge of (i) any third-party claim (A) that any
of its owned Patent, Trademark or Copyright registrations or applications is
invalid or unenforceable, or (B) challenging such Debtor’s rights to such
registrations and applications or (ii) any basis for such claims other than, in
each case, to the extent any such third-party claim would not reasonably be
expected to have a Material Adverse Effect.

 

4.3           Covenants.

 

(a)          (i) At any time when a Priority Lien Debt Default exists and is
continuing and upon the written request of the Collateral Agent, each Debtor
will (i) use its commercially reasonable efforts to obtain all consents and
approvals necessary for the assignment to or for the benefit of the Collateral
Agent of any material Intellectual Property License held by such Debtor in the
United States to enable the Collateral Agent to enforce the security interests
granted hereunder and (ii) to the extent required pursuant to any material
Intellectual Property License in the United States under which such Debtor is
the licensee, deliver to the licensor thereunder any notice of the grant of
security interest hereunder or such other notices required to be delivered
thereunder in order to permit the security interest created or permitted to be
created hereunder pursuant to the terms of such Intellectual Property License.

 

 PAGE 9 

 

 

(b)          Each Debtor shall notify the Collateral Agent promptly if it knows
that any application for or registration of any Patent, Trademark or Copyright
(now or hereafter existing) has become abandoned or dedicated to the public, or
of any determination or development (including the institution of, or any such
determination or development in, any proceeding in any IP Filing Office or any
court) abandoning such Debtor’s ownership of any such Patent, Trademark or
Copyright, its right to register the same, or to keep and maintain the same,
except, in each case, to the extent the same is permitted or not restricted by
the Priority Lien Documents or where the same, individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect.

 

(c)          In the event that any Debtor files an application for the
registration of any IP Filing Office, acquires any such application or
registration by purchase or assignment, in each case, after the Effective Date
and to the extent the same constitutes Collateral (and other than as a result of
an application that is then subject to an Intellectual Property Security
Agreement becoming registered), it shall, (or such longer period as the
Collateral Agent may reasonably agree), notify the Collateral Agent and,
promptly upon the Collateral Agent’s request, execute and deliver to the
Collateral Agent, at such Debtor’s sole cost and expense, any Intellectual
Property Security Agreement or other instrument as the Collateral Agent may
reasonably request and require, promptly (in any event, on or before the next
date on which a certificate required by any Priority Lien Document is required
to be delivered (or such longer period as the Collateral Agent may agree)) to
evidence the Collateral Agent’s security interest in such registered Patent,
Trademark or Copyright (or application therefor), and the General Intangibles of
such Debtor relating thereto or represented thereby.

 

(d)          Each Debtor shall take all actions reasonably necessary to
(i) maintain and pursue each application for, and to obtain and maintain the
registration of each material Patent, Trademark and, to the extent consistent
with past practice, Copyright included in the Collateral (now or hereafter
existing), including by filing applications for renewal, affidavits of use,
affidavits of noncontestability and, if necessary (as determined by such Debtor
in the exercise of its good faith and reasonable business judgment), by
initiating opposition and interference and cancellation proceedings against
third parties and (ii) otherwise protect and preserve such Debtor’s rights in,
and the validity or enforceability of, its Intellectual Property Collateral, in
each case except where failure to do so (A) could not reasonably be expected to
result in a Material Adverse Effect, or (B) is otherwise permitted under the
Priority Lien Documents.

 

(e)          Each Debtor shall promptly notify the Agent of any material
infringement or misappropriation of such Debtor’s Patents, Trademarks or
Copyrights of which it becomes aware and shall take such actions as are
reasonable and appropriate, in the good faith and reasonable business judgment
of the applicable Debtor, under the circumstances to protect such Patent,
Trademark or Copyright, except where such infringement or misappropriation could
not reasonably be expected to cause a Material Adverse Effect.

 

 PAGE 10 

 

 

Article V

COVENANTS

 

From the date of this Security Agreement, and thereafter until the earlier of
(x) the Discharge of Priority Lien Obligations and (y) the release of such
Debtor in accordance with the Collateral Agency Agreement, each Debtor agrees as
follows:

 

5.1           General

 

5.1.1           Priority Lien Document Covenants. Reference is hereby made to
the covenants of Borrower set forth in the Priority Lien Documents. Each Debtor
agrees to comply with such covenants on the terms and provisions set forth
therein.

 

5.1.2           Financing Statements and Other Actions; Defense of Title. Each
Debtor agrees to take any and all actions reasonably necessary to defend title
to the Collateral against all Persons (other than Liens permitted by the
Priority Lien Documents to the extent such Liens are permitted to have priority
over the Collateral Agent’s lien and security interest) and to defend the lien
and security interest of the Collateral Agent in the Collateral and the priority
thereof against any Lien that is not permitted by the Priority Lien Documents.

 

5.1.3           [Reserved.]

 

5.1.4           Other Financing Statements. Such Debtor will not file or
authorize the filing on its behalf of any financing statement naming it as
debtor covering all or any portion of the Collateral, except in connection with
Liens permitted by the Priority Lien Documents.

 

5.2           Safekeeping of Inventory; Inventory Covenants. Collateral Agent
shall not be responsible for (i) the safekeeping of the Inventory; (ii) any loss
or damage thereto or destruction thereof occurring or arising in any manner or
fashion from any cause; (iii) any diminution in the value of Inventory or
(iv) any act or default of any carrier, warehouseman, bailee or forwarding
agency or any other Person in any way dealing with or handling the Inventory,
except to the extent that such Debtor incurs any loss, cost, claim or damage
from any of the foregoing as a result of the gross negligence or willful
misconduct of Collateral Agent. All risk of loss, damage, distribution or
diminution in value of the Inventory shall, except as noted in the previous
sentence, be borne by such Debtor.

 

5.3           Instruments, Securities, Chattel Paper, and Documents. Each Debtor
will (i) on the Effective Date (or such later date agreed to by the Collateral
Agent), deliver to Collateral Agent originals of all Pledged Collateral
accompanied by instruments of transfer or assignment duly executed in blank,
(ii) after the Effective Date, hold in trust for Collateral Agent upon receipt
and promptly thereafter (but in any event not to exceed five (5) Business Days)
deliver to Collateral Agent all Pledged Collateral otherwise required to be
delivered hereunder accompanied by instruments of transfer or assignment duly
executed in blank, and (iii) upon Collateral Agent’s request, promptly (but in
any event not to exceed five (5) Business Days) deliver to Collateral Agent (and
thereafter hold in trust for Collateral Agent upon receipt and promptly (but in
any event not to exceed five (5) Business Days) deliver to Collateral Agent) any
Document evidencing or constituting Collateral.

 

 PAGE 11 

 

 

5.4           Uncertificated Securities and Certain Other Investment Property.
Such Debtor will permit Collateral Agent from time to time to cause the
appropriate issuers (and, if held with a securities intermediary, such
securities intermediary) of uncertificated securities or other types of
Investment Property not represented by certificates which are Collateral to mark
their books and records with the numbers and face amounts of all such
uncertificated securities or other types of Investment Property not represented
by certificates and all rollovers and replacements therefor to reflect the Lien
and security interest of Collateral Agent granted pursuant to this Security
Agreement. Such Debtor will take any actions necessary to cause (i) the issuers
of uncertificated securities which are Collateral and which are Securities and
(ii) any financial intermediary which is the holder of any Investment Property,
to cause Collateral Agent to have and retain Control over such Securities or
other Investment Property. Without limiting the foregoing, such Debtor will,
with respect to Investment Property held with financial intermediary, cause such
financial intermediary to enter into an Account Control Agreement with
Collateral Agent in form and substance satisfactory to Collateral Agent.

 

5.5           Stock and Other Ownership Interests.

 

5.5.1           Issuance of Additional Securities. Such Debtor will not permit
or suffer the issuer of privately held corporate securities or other ownership
interests in a corporation, partnership, joint venture or limited liability
company constituting Collateral to issue any such securities or other ownership
interests, any right to receive the same or any right to receive earnings,
except to such Debtor.

 

5.5.2           Registration in Nominee Name. The Collateral Agent, on behalf of
the Priority Lien Secured Parties, shall hold certificated Pledged Collateral,
required under this Security Agreement to be delivered to the Collateral Agent,
in the name of the applicable Debtor, endorsed or assigned in blank or in favor
of the Collateral Agent.

 

5.5.3           Issuance of Securities. Such Debtor shall not permit any limited
partnership interests or ownership interests in a limited liability company, in
each case constituting Pledged Equity, to at any time constitute a Security or
consent to the issuer of any such Pledged Equity taking any action to have such
Pledged Equity treated as a Security unless (i) all certificates or other
document constituting such Pledged Equity have been delivered to Collateral
Agent and such Pledged Equity is properly defined as a Security under Article 8
of the UCC of the applicable jurisdiction, whether as a result of actions by the
issuer thereof or otherwise, or (ii) Collateral Agent has entered into control
agreement with the issuer of such Security or with a securities intermediary
relating to such Security and such Security is defined as such under Article 8
of the UCC of the applicable jurisdiction, whether as a result of actions by the
issuer thereof or otherwise.

 

5.6          Accounts.

 

5.6.1           Verification of Accounts. The Collateral Agent may at any time
and from time to time in the Collateral Agent's own name, in the name of a
nominee of the Collateral Agent, or in the name of any Debtor communicate (by
mail, telephone, facsimile or otherwise) with the Account Debtors of such
Debtor, parties to contracts with such Debtor and obligors in respect of
Instruments of such Debtor to verify with such Persons, to the Collateral
Agent's reasonable satisfaction, the existence, amount, terms of, and any other
matter relating to, Accounts, Instruments, Chattel Paper, payment intangibles
and/or other Receivables that are Collateral.

 

 PAGE 12 

 

 

5.6.2           Appointment of the Agent as Attorney-in-Fact. Such Debtor hereby
irrevocably designates, makes, constitutes and appoints Collateral Agent (and
all Persons designated by Collateral Agent), exercisable after a Priority Lien
Debt Default has occurred and is continuing, as its true and lawful
attorney-in-fact, and authorizes Collateral Agent, in such Debtor’s or
Collateral Agent’s name, to: (i) demand payment of Accounts; (ii) enforce
payment of Accounts by legal proceedings or otherwise; (iii) exercise all of
such Debtor’s rights and remedies with respect to proceedings brought to collect
an Account; (iv) sell or assign any Account upon such terms, for such amount and
at such time or times as Collateral Agent deems advisable; (v) settle, adjust,
compromise, extend or renew an Account; (vi) discharge and release any Account;
(vii) take control in any manner of any item of payment or proceeds thereof;
(viii) prepare, file and sign such Debtor’s name on any proof of claim in
bankruptcy or other similar document against an Account Debtor; (ix) endorse
such Debtor’s name upon any items of payment or proceeds thereof and deposit the
same in Collateral Agent’s account on account of the Secured Obligations;
(x) endorse such Debtor’s name upon any chattel paper, document, instrument,
invoice, or similar document or agreement relating to any Account or any goods
pertaining thereto; (xi) sign such Debtor’s name on any verification of Accounts
and notices thereof to Account Debtor; (xii) notify the post office authorities
to change the address for delivery of such Debtor’s mail to an address
designated by Collateral Agent, have access to any lock box or postal box into
which any of such Debtor’s mail is deposited, and open and dispose of all mail
addressed to such Debtor, and (xiii) do all acts and things which are necessary,
in Collateral Agent’s sole discretion, to fulfill such Debtor’s obligations
under this Security Agreement.

 

5.6.3           Notice to Account Debtor. Collateral Agent may, in its sole
discretion, at any time or times after a Priority Lien Debt Default has occurred
and is continuing, and without prior notice to such Debtor, notify any or all
Account Debtors that the Accounts have been assigned to Collateral Agent and
that Collateral Agent has a security interest therein. Collateral Agent may
direct any or all Account Debtors to make all payments upon the Accounts
directly to Collateral Agent. Collateral Agent shall furnish such Debtor with a
copy of such notice.

 

5.7           Deposit Accounts. Subject to the Priority Lien Documents, for each
Deposit Account, Securities Account and Commodities Account (other than Excluded
Accounts) that such Debtor at any time maintains, such Debtor will,
substantially contemporaneously with the later of (a) the Effective Date and (b)
the date such Deposit Account, Securities Account or Commodities Account (other
than Excluded Accounts) is established or created, pursuant to an Account
Control Agreement in form and substance reasonably satisfactory to the
Collateral Agent, cause the depository bank that maintains such Deposit Account,
securities intermediary that maintains such Securities Account, or commodities
intermediary that maintains such Commodities Account, as applicable, to agree
to, after the occurrence and during the continuance of a Priority Lien Debt
Default, comply at any time with instructions from the Collateral Agent to such
depository bank, securities intermediary or commodities intermediary directing
the disposition of funds from time to time credited to such Deposit Account,
Securities Account or Commodities Account, without further consent of such
Debtor, or take such other action as the Collateral Agent may request in order
to perfect the Collateral Agent’s security interest in such Deposit Account,
Securities Account or Commodities Account.

 

5.8           Federal, State or Municipal Claims. Such Debtor will notify
Collateral Agent of any Collateral which constitutes a claim against a
Governmental Authority, the assignment of which claim is restricted by federal,
state or municipal law.

 

5.9           Warehouse Receipts Non-Negotiable. Such Debtor agrees that if any
warehouse receipt or receipt in the nature of a warehouse receipt is issued with
respect to any of its inventory, such warehouse receipt or receipt in the nature
thereof shall not be “negotiable” (as such term is used in Section 7-104 of the
UCC).

 

5.10         Commercial Tort Claims. If such Debtor at any time holds or
acquires a Commercial Tort Claim with a value in excess of $250,000 individually
or $500,000 in the aggregate, such Debtor shall immediately notify Collateral
Agent in writing of the details thereof and grant to Collateral Agent in writing
a security interest therein or lien thereon and in the Proceeds thereof, in form
and substance satisfactory to Collateral Agent.

 

 PAGE 13 

 

 

5.11         Letters-of-Credit Rights. If such Debtor is at any time a
beneficiary under a letter of credit with a value in excess of $250,000
individually or $500,000 in the aggregate, now or hereafter issued in favor of
such Debtor, such Debtor shall promptly notify Collateral Agent thereof in
writing and, at Collateral Agent’s request, such Debtor shall, pursuant to an
agreement in form and substance satisfactory to Collateral Agent, either
(a) arrange for the issuer or any confirmer of such letter of credit to consent
to an assignment to Collateral Agent of the proceed of any drawing under the
letter of credit or (b) arrange for Collateral Agent to become the transferee
beneficiary of the letter of credit, with Collateral Agent agreeing, in each
case, that the proceeds of any drawing under the letter of credit are to be
applied as provided in the Credit Agreement.

 

Article VI

 

REMEDIES

 

6.1         Acceleration and Remedies. (a) Upon the occurrence and during the
continuation of a Priority Lien Debt Default, subject to the terms and
conditions in the Collateral Agency Agreement, the Collateral Agent shall
exercise any or all of the following rights and remedies:

 

(i)          Those rights and remedies provided in this Security Agreement, the
Collateral Agency Agreement, any other Security Instrument or any Priority Lien
Document.

 

(ii)         Those rights and remedies available to a secured party under the
UCC (whether or not the UCC applies to the affected Collateral) or under any
other applicable law (including, without limitation, any law governing the
exercise of a bank's right of setoff or bankers' lien) when a debtor is in
default under a security agreement.

 

(iii)        Without notice, except as specifically provided in Section 6.3 or
elsewhere herein, demand or advertisement of any kind to any Debtor or any other
Person, enter the premises of any Debtor where any Collateral is located
(through self-help and without judicial process) to collect, receive, assemble,
process, appropriate, sell, lease, assign, grant an option or options to
purchase or otherwise dispose of, deliver, or realize upon, the Collateral or
any part thereof in one or more parcels at public or private sale or sales
(which sales may be adjourned or continued from time to time with or without
notice and may take place at any Debtor's premises or elsewhere), for cash, on
credit or for future delivery without assumption of any credit risk, and upon
such other terms as the Collateral Agent may deem commercially reasonable.

 

(iv)        Concurrently with written notice to the applicable Debtor, transfer
and register in its name or in the name of its nominee the whole or any part of
the Pledged Equity, to exchange certificates or instruments representing or
evidencing Pledged Equity for certificates or instruments of smaller or larger
denominations, to exercise the voting and all other rights as a holder with
respect thereto, to collect and receive all cash dividends, interest, principal
and other distributions made thereon and to otherwise act with respect to the
Pledged Equity as though the Collateral Agent was the outright owner thereof.

 

 PAGE 14 

 

 

(v)         With respect to any Collateral consisting of Intellectual Property
or an Intellectual Property License, on demand, cause the security interest to
become an assignment, transfer and conveyance of any or all of such Collateral
by the applicable Debtors to the Collateral Agent, or to license or sublicense,
whether general, special or otherwise, and whether on an exclusive or
non-exclusive basis, any such Collateral throughout the world on such terms and
conditions and in such manner as the Collateral Agent may determine (other than
where such assignment, transfer, conveyance, license or sublicense would
constitute a breach or violation of any then-existing Intellectual Property
Licenses or any other licensing arrangements to the extent that waivers cannot
be obtained or to the extent such assignment, transfer or conveyance would
impair the validity or enforceability of, or result in the abandonment of, such
Intellectual Property or Intellectual Property License).

 

(b)          The Collateral Agent, on behalf of the Priority Lien Secured
Parties, may comply with any applicable state or federal law requirements in
connection with a disposition of the Collateral and compliance will not be
considered to adversely affect the commercial reasonableness of any sale of the
Collateral.

 

(c)          The Collateral Agent 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 for the benefit of the Collateral Agent and the Priority Lien
Secured Parties, the whole or any part of the Collateral so sold, free of any
right of equity redemption, which equity redemption the Debtor hereby expressly
releases.

 

(d)          Until the Collateral Agent is able to effect a sale, lease, or
other disposition of Collateral, the Collateral Agent shall have the right to
hold or use Collateral, or any part thereof, to the extent that it deems
appropriate for the purpose of preserving Collateral or its value or for any
other purpose deemed appropriate by the Collateral Agent. The Collateral Agent
may, if it so elects, seek the appointment of a receiver or keeper to take
possession of Collateral and to enforce any of the Collateral Agent’s remedies
(for the benefit of the Collateral Agent and Priority Lien Secured Parties),
with respect to such appointment without prior notice or hearing as to such
appointment.

 

(e)          Notwithstanding the foregoing, neither the Collateral Agent nor any
Priority Lien Secured Party shall be required to (i) make any demand upon, or
pursue or exhaust any of their rights or remedies against, any Debtor, any other
obligor, guarantor, pledgor or any other Person with respect to the payment of
the Indebtedness or to pursue or exhaust any of their rights or remedies with
respect to any Collateral therefor or any direct or indirect guarantee thereof,
(ii) marshal the Collateral or any guarantee of the Indebtedness or to resort to
the Collateral or any such guarantee in any particular order, or (iii) effect a
public sale of any Collateral.

 

(f)          Each Debtor recognizes that the Collateral Agent may be unable to
effect a public sale of any or all the Pledged Equity and may be compelled to
resort to one or more private sales thereof in accordance with clause (a) above.
Each Debtor also acknowledges that any private sale may result in prices and
other terms less favorable to the seller than if such sale were a public sale
and, notwithstanding such circumstances, agrees that any such private sale shall
not be deemed to have been made in a commercially unreasonable manner solely by
virtue of such sale being private. The Collateral Agent shall be under no
obligation to delay a sale of any of the Pledged Equity for the period of time
necessary to permit any Debtor or the issuer of the Pledged Equity to register
such securities for public sale under the Securities Act of 1933, as amended, or
under applicable state securities laws, even if the applicable Debtor and the
issuer would agree to do so.

 

 PAGE 15 

 

 

6.2          Debtor's Obligations Upon Default. Upon the request of the
Collateral Agent after the occurrence of a Priority Lien Debt Default and during
its continuation, each Debtor will:

 

(a)          assemble and make available to the Collateral Agent the Collateral
and all books and records relating thereto at any place or places specified by
the Collateral Agent, whether at a Debtor's premises or elsewhere;

 

(b)          permit the Collateral Agent, by the Collateral Agent's
representatives and agents, to enter, occupy and use any premises where all or
any part of the Collateral, or the books and records relating thereto, or both,
are located, to take possession of all or any part of the Collateral or the
books and records relating thereto, or both, to remove all or any part of the
Collateral or the books and records relating thereto, or both, and to conduct
sales of the Collateral, without any obligation to pay the Debtor for such use
and occupancy;

 

(c)          at its own expense, cause the independent certified public
accountants then engaged by each Debtor to prepare and deliver to the Collateral
Agent and each Lender, at any time, and from time to time, promptly upon the
Collateral Agent’s request, the following reports with respect to the applicable
Debtor: (i) a reconciliation of all Accounts; (ii) an aging of all Accounts;
(iii) trial balances; and (iv) a test verification of such Accounts;

 

(d)          use its commercially reasonable efforts to obtain all requisite
consents or approvals by the licensor of each Intellectual Property License to
effect the assignment of all of such Debtor’s right, title and interest
thereunder to the Collateral Agent or its designee; and

 

(e)          grant to the Collateral Agent an irrevocable (except for failure to
comply with the terms and conditions set forth herein), non-exclusive license
(exercisable without payment of royalty or other compensation to Debtors) to
use, license or sub-license, on a non-exclusive basis only, any of the
Collateral consisting of Intellectual Property (other than where such use,
license, or sublicense would constitute a breach or violation of any
then-existing Intellectual Property Licenses or any other license arrangements),
subject, in the case of Trademarks, to sufficient rights to quality control and
inspection in favor of such Debtor to avoid the risk of abandonment,
invalidation, unenforceability or dilution of such Trademark, now owned or
hereafter acquired by such Debtor, and wherever the same may be located, and
including in such license reasonable access to all media in which any of the
licensed items may be recorded or stored and to all computer software and
programs used for the compilation or printout thereof. Such license to the
Collateral Agent may be exercised, at the option of the Collateral Agent, only
upon the occurrence and during the continuance of a Priority Lien Debt Default;
provided that any license, sub-license or other transaction entered into by the
Collateral Agent in accordance herewith will be binding upon Debtors
notwithstanding any subsequent cure or waiver of a Priority Lien Debt Default.

 

No Debtor shall have any obligation to register or qualify any Pledged Equity
whether to enable the Collateral Agent to consummate a public sale or other
disposition of the Pledged Equity or otherwise.

 

6.3          Notice of Disposition of Collateral. Each Debtor hereby agrees that
notice of the time and place of any public sale or the time after which any
private sale or other disposition of all or any part of the Collateral may be
made shall be deemed reasonable if sent to such Debtor, addressed as set forth
in Section 8.16, at least ten (10) days prior to (i) the date of any such public
sale or (ii) the time after which any such private sale or other disposition may
be made.

 

 PAGE 16 

 

 

6.4           Deficiency. In the event that the proceeds of any sale, collection
or realization, of or upon, Collateral by Collateral Agent are insufficient to
pay all Secured Obligations and any other amounts to which Collateral Agent and
the other Priority Lien Secured Parties are legally entitled, Debtors shall be
jointly and severally liable for the deficiency, together with interest thereon
as provided in the Priority Lien Documents, or, if no interest is so provided,
at such other rate as shall be fixed by applicable law, together with the costs
of collection and the fees of any counsel employed by Collateral Agent to
collect such deficiency in accordance with Section 12.03(a) of the Credit
Agreement.

 

6.5           Non-Judicial Remedies. In granting to Collateral Agent the power
to enforce its rights hereunder without prior judicial process or judicial
hearing, each Debtor expressly waives, renounces and knowingly relinquishes any
legal right which might otherwise require Collateral Agent to enforce its rights
by judicial process. In so providing for non-judicial remedies, each Debtor
recognizes and concedes that such remedies are consistent with the usage of
trade, are responsive to commercial necessity, and are the result of a bargain
at arm’s length. Nothing herein is intended, however, to prevent Collateral
Agent from resorting to judicial process at its option.

 

6.6           Cumulative Rights; Obligations Not Affected.

 

6.6.1        All rights of Collateral Agent and each other Priority Lien Secured
Party under the Collateral Agency Agreement, the Security Instruments and the
Priority Lien Documents are cumulative of each other and of every other right
which Collateral Agent and each other Priority Lien Secured Party may otherwise
have at law or in equity or under any other agreement. The exercise of one or
more rights shall not prejudice or impair the concurrent or subsequent exercise
of other rights. Any exercise by Collateral Agent of any of its rights hereunder
shall be subject to the Collateral Agency Agreement.

 

6.6.2        To the fullest extent not prohibited by applicable law, the
obligations of each Debtor under this Security Agreement shall remain in full
force and effect without regard to, and shall not be impaired or affected by:

 

(a)          any amendment, addition, or supplement to, or restatement of any
Priority Lien Document or any instrument delivered in connection therewith or
any assignment or transfer thereof;

 

(b)          any exercise, non-exercise, or waiver by Collateral Agent or any
other Priority Lien Secured Party of any right, remedy, power, or privilege
under or in respect of, or any release of any guaranty, any collateral, or the
Collateral or any part thereof provided pursuant to this Security Agreement, any
other Security Instrument or any Priority Lien Document;

 

(c)          any waiver, consent, extension, indulgence, or other action or
inaction in respect of this Security Agreement, any other Security Instrument or
any Priority Lien Document or any assignment or transfer of any thereof; or

 

(d)          any other event which may give Debtor or any other Loan Party a
defense to, or a discharge of, any of its obligations under any Priority Lien
Document.

 

 PAGE 17 

 

 

6.7           Limitation on Duty of Collateral Agent in Respect of Collateral.
Beyond the exercise of reasonable care in the custody thereof, Collateral Agent
shall have no duty as to any Collateral in its possession or control or in the
possession or control of any agent or bailee or as to the preservation of rights
against prior parties or any other rights pertaining thereto. Collateral Agent
shall be deemed to have exercised reasonable care in the custody of the
Collateral in its possession if the Collateral is accorded treatment
substantially equal to that which it accords its own property, and shall not be
liable or responsible for any loss or damage to any of the Collateral, or for
any diminution in the value thereof, by reason of the act or omission of any
warehouseman, carrier, forwarding agency, consignee or other agent or bailee
selected by Collateral Agent in good faith.

 

Article VII

PROCEEDS; COLLECTION OF RECEIVABLE

 

7.1           Lockboxes. Upon request of Collateral Agent, each Debtor shall
execute and deliver to Collateral Agent irrevocable lockbox agreements in the
form provided by or otherwise acceptable to Collateral Agent, which agreements
shall be accompanied by a control agreement executed by the bank where the
lockbox is located granting Control to the Collateral Agent and providing the
Collateral Agent the right to deliver irrevocable instructions to wire all
amounts collected therein to a special collateral account subject to an Account
Control Agreement (such account, a “Controlled Account”).

 

7.2           Collection of Receivables. Upon the occurrence and during the
continuation of a Priority Lien Debt Default, Collateral Agent may at any time
in its sole discretion, by giving any Debtor written notice, elect to require
that the Receivables be paid directly to a Controlled Account. In such event,
such Debtor shall, and shall permit Collateral Agent to, promptly notify the
Account Debtors or obligors under the Receivables of Collateral Agent’s interest
therein and direct such Account Debtors or obligors to make payment of all
amounts then or thereafter due under the Receivables directly to the applicable
Controlled Account. Upon receipt of any such notice from Collateral Agent, such
Debtor shall thereafter hold in trust for Collateral Agent, all amounts and
proceeds received by it with respect to the Receivables and other Collateral and
immediately and at all times thereafter deliver to the applicable Controlled
Account all such amounts and proceeds in the same form as so received, whether
by cash, check, draft or otherwise, with any necessary endorsements. Collateral
Agent shall hold and apply funds received as provided by the terms of Sections
7.3 and 7.4.

 

7.3           Special Collateral Account. Collateral Agent may require all cash
proceeds of the Collateral to be deposited in a special non-interest bearing
cash collateral account subject to an Account Control Agreement and held there
as security for the Secured Obligations. No Debtor shall have control whatsoever
over said cash collateral account. If no Priority Lien Debt Default has occurred
or is continuing, Collateral Agent shall from time to time deposit the collected
balances in said cash collateral account into such Debtor’s general operating
account or another account designated by the applicable Debtor. If any Priority
Lien Debt Default has occurred and is continuing, Collateral Agent may, from
time to time, apply the collected balances in said cash collateral account to
the payment of the Secured Obligations whether or not the Secured Obligations
shall then be due.

 

7.4           Application of Proceeds. After the occurrence and during the
continuation of a Priority Lien Debt Default, the proceeds of the Collateral
shall be applied by Collateral Agent to payment of the Secured Obligations as
provided in the Collateral Agency Agreement.

 

 PAGE 18 

 

 

Article VIII

 

GENERAL PROVISIONS

 

8.1           Additional Debtors. From time to time subsequent to the date
hereof, additional Persons may become parties hereto as additional Debtors
(each, an “Additional Debtor”), by executing a Joinder Agreement in the form of
Exhibit A hereto. Upon delivery of any such Joinder Agreement to Collateral
Agent, notice of which is hereby waived by Debtors, each Additional Debtor shall
be a Debtor and shall be as fully a party hereto as if Additional Debtor were an
original signatory hereto. Each Debtor expressly agrees that its obligations
arising hereunder shall not be affected or diminished by the addition or release
of any other Debtor hereunder, nor by any election of Collateral Agent not to
cause any Subsidiary or Affiliate of Borrower to become an Additional Debtor
hereunder. This Security Agreement shall be fully effective as to any Debtor
that is or becomes a party hereto regardless of whether any other Person becomes
or fails to become or ceases to be a Debtor hereunder.

 

8.2           Preservation of Rights. No delay or omission of Collateral Agent
to exercise any right or remedy granted under this Security Agreement shall
impair such right or remedy or be construed to be a waiver of any Priority Lien
Debt Default, or an acquiescence therein, and any single or partial exercise of
any such right or remedy shall not preclude any other or further exercise
thereof or the exercise of any other right or remedy. All rights and remedies
contained in this Security Agreement or by law afforded shall be cumulative and
all shall be available to Collateral Agent until the Secured Obligations have
been paid in full.

 

8.3           Waiver; Amendment. No waiver, amendment or other variation of the
terms, conditions or provisions of this Security Agreement whatsoever shall be
valid unless in writing signed by Collateral Agent and then only to the extent
in such writing specifically set forth.

 

8.4           Compromises and Collection of Collateral. Each Debtor and
Collateral Agent recognize that setoffs, counterclaims, defenses and other
claims may be asserted by obligors with respect to certain of the Receivables,
that certain of the Receivables may be or become uncollectible in whole or in
part and that the expense and probability of success in litigating a disputed
Receivable may exceed the amount that reasonably may be expected to be recovered
with respect to a Receivable. In view of the foregoing, each Debtor agrees that
Collateral Agent may at any time and from time to time, if a Priority Lien Debt
Default has occurred and is continuing, compromise with the obligor on any
Receivable, accept in full payment of any Receivable such amount as Collateral
Agent in its sole discretion shall determine or abandon any Receivable, and any
such action by Collateral Agent shall be commercially reasonable so long as
Collateral Agent acts in good faith based on information known to it at the time
it takes any such action.

 

8.5           Collateral Agent Performance of Debtor’s Obligations. Without
having any obligation to do so, Collateral Agent may perform or pay any
obligation which any Debtor has agreed to perform or pay in this Security
Agreement and such Debtor shall, reimburse Collateral Agent for any amounts paid
by Collateral Agent pursuant to this Section 8.5. Each Debtor’s obligation to
reimburse Collateral Agent pursuant to the preceding sentence shall be a Secured
Obligation payable on demand.

 

8.6           Authorization for Collateral Agent to Take Certain Action. Each
Debtor irrevocably authorizes Collateral Agent at any time and from time to time
in the sole discretion of Collateral Agent and appoints Collateral Agent as its
attorney in fact (i) to execute on behalf of such Debtor as debtor and to file
financing statements necessary or desirable in Collateral Agent’s sole
discretion to perfect and to maintain the perfection and priority of Collateral
Agent’s security interest in the Collateral, (ii) to endorse and collect any
cash proceeds of the Collateral, (iii) to file a carbon, photographic or other
reproduction of this Security Agreement or any financing statement with respect
to the Collateral as a financing statement in such offices as Collateral Agent
in its sole discretion deems necessary or desirable to perfect and to maintain
the perfection and priority of Collateral Agent’s security interest in the
Collateral, (iv) to contact and enter into one or more agreements with the
issuers of uncertificated securities which are Collateral and which are
Securities or with financial intermediaries holding other Investment Property as
may be necessary or advisable to give Collateral Agent Control over such
Securities or other Investment Property, (v) subject to the terms of Section
7.2, to enforce payment of the Receivables in the name of Collateral Agent or
such Debtor, (vi) to apply the proceeds of any Collateral received by Collateral
Agent to the Secured Obligations as provided in Article VII and (vii) to
discharge past due taxes, assessments, charges, fees or Liens on the Collateral
(except for such Liens as are specifically permitted under the Credit
Agreement), and such Debtor agrees to reimburse Collateral Agent on demand for
any payment made or any expense incurred by Collateral Agent in connection
therewith, provided that this authorization shall not relieve such Debtor of any
of its obligations under this Security Agreement or under any Priority Lien
Document.

 

 PAGE 19 

 

 

8.7          Use and Possession of Certain Premises. If a Priority Lien Debt
Default has occurred and is continuing, Collateral Agent shall be entitled to
occupy and use any premises owned or leased by any Debtor where any of the
Collateral or any records relating to the Collateral are located until the
Secured Obligations are paid or the Collateral is removed therefrom, whichever
first occurs, without any obligation to pay such Debtor for such use and
occupancy.

 

8.8          Dispositions Not Authorized. No Debtor is authorized to sell or
otherwise dispose of the Collateral except as permitted by the Priority Lien
Documents and notwithstanding any course of dealing between any Debtor and
Collateral Agent or other conduct of Collateral Agent, no authorization to sell
or otherwise dispose of the Collateral (except as permitted by the Priority Lien
Documents) shall be binding upon Collateral Agent unless such authorization is
in writing signed by Collateral Agent.

 

8.9          Benefit of Agreement. The terms and provisions of this Security
Agreement shall be binding upon and inure to the benefit of each Debtor,
Collateral Agent and their respective successors and assigns, except that no
Debtor shall have the right to assign its rights or delegate its obligations
under this Security Agreement or any interest herein, without the prior written
consent of Collateral Agent.

 

8.10         Survival of Representations. All representations and warranties of
each Debtor contained in this Security Agreement shall survive the execution and
delivery of this Security Agreement.

 

8.11         Expenses; INDEMNITY. The provisions of Sections 7.8 and 7.9 of the
Collateral Agency Agreement are incorporated herein, mutatis mutandis, for all
purposes.

 

8.12         Headings. The title of and section headings in this Security
Agreement are for convenience of reference only, and shall not govern the
interpretation of any of the terms and provisions of this Security Agreement.

 

8.13         Termination. This Security Agreement shall continue in effect
(notwithstanding the fact that from time to time there may be no Secured
Obligations outstanding) until the Discharge of Priority Lien Obligations.

 

8.14         Entire Agreement. This Security Agreement embodies the entire
agreement and understanding between Debtors and Collateral Agent relating to the
Collateral and supersedes all prior agreements and understandings between
Debtors and Collateral Agent relating to the Collateral.

 

8.15        Governing Law; Consent to Jurisdiction; Waiver of Jury Trial. The
provisions of Section 7.13 of the Collateral Agency Agreement entitled
“Governing Law; Submission to Jurisdiction; Waiver of Venue; Waiver of Jury
Trial” are incorporated herein, mutatis mutandis, for all purposes.

 

8.16         Notices. Any notice required or permitted to be given under this
Security Agreement shall be sent (and deemed received) in the manner and to the
addresses set forth in Section 7.6 of the Collateral Agency Agreement.

 

 PAGE 20 

 

 

8.17         Amendment and Restatement.

 

8.17.1         On the Effective Date, the Amended and Restated Pledge and
Security Agreement, dated as of August 1, 2017, among Borrower, Parent and
certain subsidiaries of Parent as Debtors thereunder and the Administrative
Agent (as in effect immediately before the effectiveness hereof, the “Existing
Agreement”) shall be amended and restated in its entirety by this Security
Agreement, and the Existing Agreement shall thereafter be of no further force
and effect, except that Debtors, the Collateral Agent and the Priority Lien
Secured Parties agree that (i) Liens created under the Existing Agreement shall
continue to exist under and be evidenced by this Security Agreement and (ii) the
Existing Agreement shall continue to evidence the representations and warranties
made by Debtors prior to the Effective Date. This Security Agreement is not in
any way intended to constitute a novation of the obligations and liabilities
existing under the Existing Agreement.

 

8.17.2         The terms and conditions of this Security Agreement and the
Collateral Agent’s and the Priority Lien Secured Parties’ rights and remedies
under this Security Agreement and the other Priority Lien Documents shall apply
to all of the Obligations incurred under the Existing Credit Agreement as
amended and restated by the Credit Agreement and the Letters of Credit issued
thereunder.

 

8.17.3         On and after the Effective Date, (i) all references to the
Existing Agreement (or to any amendment or any amendment and restatement
thereof) in the Priority Lien Documents (other than this Security Agreement)
shall be deemed to refer to the Existing Agreement, as amended and restated
hereby, (ii) all references to any section (or subsection) of the Existing
Agreement or in any Priority Lien Document (but not herein) shall be amended to
become, mutatis mutandis, references to the corresponding provisions of this
Security Agreement and (iii) except as the context otherwise provides, on or
after the Effective Date, all references to this Security Agreement herein
(including for purposes of indemnification and reimbursement of fees) shall be
deemed to be references to the Existing Agreement, as amended and restated
hereby.

 

8.17.4         This amendment and restatement is limited as written and is not a
consent to any other amendment, restatement or waiver, whether or not similar
and, except as expressly provided herein or in any other Priority Lien Document,
all terms and conditions of the Priority Lien Documents remain in full force and
effect unless specifically amended hereby or by any other Priority Lien
Document.

 

8.18         Collateral Agency Agreement. Reference is made to the Collateral
Agency Agreement, dated as of the date hereof, among Parent, Borrower, the
subsidiaries of Borrower from time to time party thereto, the Collateral Agent,
the Administrative Agent, the Term Administrative Agent and the other agents and
parties party thereto from time to time (the “Collateral Agency Agreement”).
Each Person that is secured hereunder, by accepting the benefits of the security
provided hereby, (i) agrees (or is deemed to agree) that it will be bound by,
and will take no actions contrary to, the provisions of the Collateral Agency
Agreement, (ii) authorizes (or is deemed to authorize) the Collateral Agent on
behalf of such Person to enter into, and perform the obligations of the
Collateral Agent under, the Collateral Agency Agreement and (iii) acknowledges
(or is deemed to acknowledge) that a copy of the Collateral Agency Agreement was
delivered, or made available, to such Person.

 

Notwithstanding any other provision contained herein, this Agreement, the liens
created hereby and the rights, remedies, duties and obligations provided for
herein are subject in all respects to the provisions of the Collateral Agency
Agreement and, to the extent provided therein, the applicable Security
Instruments (as defined in the Collateral Agency Agreement). In the event of any
conflict or inconsistency between the provisions of this Agreement and the
Collateral Agency Agreement, the provisions of the Collateral Agency Agreement
shall control.

 

It is understood that any reference to the Collateral Agent taking any action,
making any determinations, requests, directions, consents or elections, deeming
any action or document reasonable, appropriate or satisfactory, exercising
discretion, or exercising any rights or duties under this Security Agreement
shall be pursuant to written direction from the Controlling Priority Lien
Representative.

 

[Remainder of page intentionally left blank; signature pages follow]

 

 PAGE 21 

 

 

IN WITNESS WHEREOF, Debtors and Collateral Agent have executed this Security
Agreement as of the date first above written.

 

  GRIZZLY NATURAL GAS, LLC       By: /s/ Ryan Midgett   Name: Ryan Midgett  
Title:    Chief Financial Officer       GRIZZLY ENERGY, LLC       By: /s/ Ryan
Midgett   Name: Ryan Midgett   Title:    Chief Financial Officer       GRIZZLY
HOLDINGS, LLC   By: Grizzly Natural Gas, LLC     its Sole Member       By: /s/
Ryan Midgett   Name: Ryan Midgett   Title:   Chief Financial Officer      
GRIZZLY OPERATING, LLC   By: Grizzly Natural Gas, LLC     its Sole Member      
By: /s/ Ryan Midgett   Name: Ryan Midgett   Title:   Chief Financial Officer    
  GRIZZLY ACQUISITION PARTNERSHIP, LLC   By: GRIZZLY UPSTREAM DEVELOPMENT
COMPANY, LLC,     its general partner       By: /s/ Ryan Midgett   Name: Ryan
Midgett   Title:   Chief Financial Officer

 

[Signature Page to 2nd Amended and Restated Security Agreement]

 

 

 

 

  GRIZZLY ACQUISITION PARTNERSHIP II, LLC   By: GRIZZLY UPSTREAM DEVELOPMENT
COMPANY II, LLC,     its general partner       By: /s/ Ryan Midgett   Name: Ryan
Midgett   Title:   Chief Financial Officer       GRIZZLY ENERGY ACQUISITION CO.,
LLC       By: /s/ Ryan Midgett   Name: Ryan Midgett   Title:    Chief Financial
Officer       GRIZZLY ENERGY ACQUISITION CO. II, LLC       By: /s/ Ryan Midgett
  Name: Ryan Midgett   Title:    Chief Financial Officer       GRIZZLY UPSTREAM
DEVELOPMENT COMPANY, LLC       By: /s/ Ryan Midgett   Name: Ryan Midgett  
Title:    Chief Financial Officer       GRIZZLY UPSTREAM DEVELOPMENT COMPANY II,
LLC       By: /s/ Ryan Midgett   Name: Ryan Midgett   Title:    Chief Financial
Officer       ESCAMBIA ASSET CO. LLC       By: /s/ Ryan Midgett   Name: Ryan
Midgett   Title:    Chief Financial Officer

 

[Signature Page to 2nd Amended and Restated Security Agreement]

 

 

 

  

  ESCAMBIA OPERATING CO. LLC         By: /s/ Ryan Midgett   Name: Ryan Midgett  
Title:    Chief Financial Officer

 

[Signature Page To 2Nd Amended And Restated Security Agreement]

 

 

 

 

COLLATERAL AGENT:       CITIBANK, N.A.,   as Collateral Agent  

 

By:  /s/ Phil Ballard   Name: Phil Ballard   Title: Vice President  

 

[Signature Page To 2Nd Amended And Restated Security Agreement]

  

 

 

 

EXHIBIT A

 

Form of Joinder Agreement

JOINDER AGREEMENT

 

THIS JOINDER AGREEMENT (this “Agreement”) is entered into as of ____________,
20[●] by the undersigned (“Additional Debtor”), being a Subsidiary or Affiliate
of Grizzly Natural Gas, LLC (“Borrower”), in favor of Citibank, N.A., as
Collateral Agent under the Security Agreement described below (in such capacity,
“Collateral Agent”).

 

WHEREAS, Grizzly Energy, LLC., a Delaware limited liability company (“Parent”),
Borrower and certain Subsidiaries and Affiliates of Borrower entered into that
certain Second Amended and Restated Pledge and Security Agreement dated as of
July 16, 2019, in favor of Collateral Agent (as same may be amended, restated or
modified from time to time, this “Security Agreement”) in order to, among other
things, induce the Lenders to enter into and extend credit to Borrower under the
Priority Lien Documents; and

 

WHEREAS, Additional Debtor is a Subsidiary or Affiliate of Borrower, and
Additional Debtor desires that the Priority Lien Secured Parties extend credit
to Borrower as contemplated by the Priority Lien Documents, and Additional
Debtor will directly or indirectly benefit from the use of the loan proceeds by
Borrower for the purposes for which the credit is being extended pursuant to the
Priority Lien Documents; and

 

WHEREAS, Additional Debtor, by and through the action of its governing body, has
determined that it may reasonably be expected to benefit, directly or
indirectly, from granting a lien upon the Collateral described in the Security
Agreement to secure Borrower’s indebtedness and the other obligations under the
Priority Lien Documents as provided therein.

 

NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged and to extend such additional credit as the Lenders may from time
to time agree to extend, Additional Debtor does hereby agree with Collateral
Agent as follows:

 

1.          Definitions. All capitalized terms used herein and not otherwise
defined shall have the meanings assigned to such terms in the Security
Agreement.

 

2.          Party to Security Agreement; Grant of Security Interest. Additional
Debtor hereby acknowledges, agrees and confirms that, by its execution of this
Agreement, Additional Debtor will be deemed to be a party to the Security
Agreement and a “Debtor” for all purposes of the Security Agreement, and shall
have all of the obligations of a Debtor thereunder as if it had executed the
Security Agreement. Additional Debtor hereby ratifies, as of the date hereof,
and agrees to be bound by, all of the terms, provisions and conditions
applicable to Debtors contained in the Security Agreement. Without limiting the
generality of the foregoing terms of this Section 2, Additional Debtor hereby
pledges, assign and grants to Collateral Agent for the benefit of the Priority
Lien Secured Parties a continuing security interest in all of Additional
Debtor’s right, title and interest in, to and under the Collateral of Additional
Debtor to secure the prompt and complete payment and performance in full of the
Secured Obligations. If the security interest granted hereby in any rights of
Additional Debtor under any contract included in the Collateral is expressly
prohibited by such contract, then the security interest hereby granted therein
nonetheless mains effective to the extent allowed by Article or Chapter 9 of the
UCC or other applicable law but is otherwise limited by that prohibition.

 

 

 

 

3.          Representations and Warranties. Additional Debtor hereby makes each
representation and warranty set forth in the Security Agreement with respect to
itself and its Collateral.

 

4.          Address for Notice Purposes. The address of Additional Debtor for
purposes of all notices and other communications is set forth on the signature
page hereof.

 

5.          Information for Schedules.

 

(a)          Additional Debtor’s information for purposes of Schedule 1 to the
Security Agreement is set forth on Schedule 1 attached hereto.

 

(b)          Additional Debtor’s information for purposes of Schedule 2 to the
Security Agreement is set forth on Schedule 2 attached hereto.

 

(c)          Additional Debtor’s information for purposes of Schedule 3 to the
Security Agreement is set forth on Schedule 3 attached hereto.

 

(d)          Additional Debtor’s information for purposes of Schedule 4 to the
Security Agreement is set forth on Schedule 4 attached hereto.

 

(e)          Additional Debtor’s information for purposes of Schedule 5 to the
Security Agreement is set forth on Schedule 5 attached hereto.

 

6.            Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original but all of which when
taken together shall constitute one contract.

 

7.            Loan Document. This Agreement is a Priority Lien Document for all
purposes and each reference in any Priority Lien Document to the “Security
Agreement” shall mean the Security Agreement as supplemented by this Agreement.

 

8.            Section 8.15 of the Security Agreement is hereby incorporated
herein, mutatis mutandis, for all purposes.

 

 

 

 

IN WITNESS WHEREOF, the undersigned Additional Debtor and Collateral Agent have
executed this Security Agreement as of the date first above written.

 

  ADDITIONAL DEBTOR        

 

  By:       Name:       Title:             Notice Address:

 

 

 

 

  COLLATERAL AGENT       CITIBANK, N.A.,   as Collateral Agent

 

  By:       Name:       Title:  

 

 

 

 

EXHIBIT B

 

[FORM OF]
INTELLECTUAL PROPERTY SECURITY AGREEMENT

 

THIS INTELLECTUAL PROPERTY SECURITY AGREEMENT (this “Agreement”) is entered into
as of ____________, 201__, by the undersigned (“Grantor”), being a Subsidiary or
Affiliate of Grizzly Natural Gas, LLC (“Borrower”), in favor of Citibank, N.A.,
as Collateral Agent for the Priority Lien Secured Parties (in such capacity,
“Collateral Agent”), and is executed and delivered pursuant to that Second
Amended and Restated Pledge and Security Agreement dated as of July 16, 2019, in
favor of Collateral Agent (as same may be amended, restated or modified from
time to time, this “Security Agreement”) in order to, among other things, induce
the Priority Lien Secured Parties to enter into and extend credit to Borrower
under the Priority Lien Documents.

 

The parties hereto agree as follows:

 

SECTION 1. Terms. Capitalized terms used in this Agreement and not otherwise
defined herein have the meanings specified in the Security Agreement.

 

SECTION 2. Grant of Security Interest. As security for the prompt and complete
payment or performance, as the case may be, in full of the Secured Obligations,
[each][the] Grantor, pursuant to the Security Agreement, did and hereby does
pledge, collaterally assign, mortgage, transfer and grant to the Collateral
Agent, its successors and permitted assigns, on behalf of and for the ratable
benefit of the Priority Lien Secured Parties, a continuing security interest in
all of its right, title or interest in, to or under all of the following assets,
whether now owned or at any time hereafter acquired by or arising in favor of
[such][the] Grantor and regardless of where located (collectively, the “IP
Collateral”):

 

(A)         all Trademarks, including the Trademark registrations and
registration applications in the United States Patent and Trademark Office
listed on Schedule I hereto but excluding any intent-to-use Trademark
application prior to the filing and acceptance of a “Statement of Use”,
“Declaration of Use”, “Amendment to Allege Use” or similar notice and/or filing
with respect thereto, only to the extent, if any, that, and solely during the
period if any, in which, the grant of such security interest may impair the
validity or enforceability, or result in the voiding, of such intent-to-use
Trademark application or any registration issuing therefrom under applicable
Requirements of Law;

 

(B)         all Patents, including the Patent registrations and pending
applications in the United States Patent and Trademark Office listed on
Schedule II hereto

 

(C)         all Copyrights, including the Copyright registrations and pending
applications for registration in the United States Copyright Office listed on
Schedule III; [and]

 

(D)         all proceeds of the foregoing;

 

in each case to the extent the foregoing items constitute Collateral.

 

SECTION 3. Security Agreement. The security interests granted to the Collateral
Agent herein are granted in furtherance, and not in limitation of, the security
interests granted to the Collateral Agent pursuant to the Security Agreement.
[Each][The] Grantor hereby acknowledges and affirms that the rights and remedies
of the Collateral Agent with respect to the IP Collateral are more fully set
forth in the Security Agreement, the terms and provisions of which are hereby
incorporated herein by reference as if fully set forth herein. In the event of
any conflict between the terms of this Agreement and the Security Agreement, the
terms of the Security Agreement shall govern.

 

SECTION 4. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York.

 

[Signature Pages Follow]

 

 

 

 

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the day and year first above written.

 

  [Grantor]

 

  By:     Name:     Title:  

 

 

 

 

  COLLATERAL AGENT       CITIBANK, N.A.,   as Collateral Agent

 

  By:       Name:       Title:  

 

 

 

 

SCHEDULE I

 

TRADEMARKS

 

REGISTERED OWNER   REGISTRATION NUMBER   TRADEMARK                    

 

TRADEMARK APPLICATIONS

 

APPLICANT   APPLICATION NO.   TRADEMARK                    

 

 Schedule I 

 

 

SCHEDULE II

 

PATENTS

 

REGISTERED OWNER   SERIAL NUMBER   DESCRIPTION                    

 

PATENT APPLICATIONS

 

APPLICANT   APPLICATION NO.   DESCRIPTION                    

 

 Schedule II 

 

 

SCHEDULE III

 

COPYRIGHTS

 

REGISTERED OWNER   REGISTRATION NUMBER   TITLE                    

 

COPYRIGHT APPLICATIONS

 

APPLICANT   APPLICATION NUMBER   TITLE                    

 

 Schedule III 

 

 

Schedule 1

 

Deposit Accounts, Commodities Accounts and Securities Accounts

 

Account Name   Entity   Account Description   Last 4 Digits
Account
Number   Bank Vanguard Operating, LLC   Grizzly Operating, LLC   Parent/Primary
Operating Account, bank service fees, lockbox   4917   Capital One Vanguard
Natural Gas, LLC   Grizzly Natural Gas, LLC   Credit Facility, Hedges and G&A
expenses, sweeps to VO, ending daily balance of $250k   1814   Capital One
Vanguard Natural Gas, LLC   Grizzly Natural Gas, LLC   Fund Check Outsourcing
Fees   1301   Wells Fargo Vanguard Natural Resources, Inc   Grizzly Energy, LLC
  Parent Company Account - no activity   5603   Capital One Vanguard Operating  
Grizzly Operating, LLC   Depository Account for Wyoming oil royalties   7000  
US Bank Vanguard Operating, LLC - Utilities   Grizzly Operating, LLC   Adequate
assurance for utilities   1271   Capital One Vanguard Natural Resources, Inc  
Grizzly Energy, LLC   Restricted Account – Cure Payments Account   1360  
Capital One Vanguard Natural Resources, Inc   Grizzly Energy, LLC   Restricted
Account – General Unsecured Creditor Account   1352   Capital One Vanguard
Natural Resources, Inc   Grizzly Energy, LLC   Escrow Account – Professional
Fees   2464   Citibank

 

 36 

 

 

Schedule 2

 

Copyrights, Patents, Trademarks

 

None.

 

 37 

 

 

Schedule 3

Investment Property, Pledged Equity

 

Grantor   Name of Issuer   Description of
Collateral   Certificate
Number   Number
of
Shares   Percentage of
Outstanding
Equity Interests
Owned by Debtor Grizzly Energy, LLC   Grizzly Natural Gas, LLC   Limited
liability company interest   N/A   N/A   100% Grizzly Natural Gas, LLC   Grizzly
Operating, LLC   Limited liability company interest   N/A   N/A   100% Grizzly
Natural Gas, LLC   Grizzly Energy Holdings, LLC   Limited liability company
interest   N/A   N/A   100% Grizzly Operating, LLC   Escambia Asset Co. LLC  
Limited liability company interest   N/A   N/A   100% Grizzly Operating, LLC  
Escambia Operating Co. LLC   Limited liability company interest   N/A   N/A  
100% Grizzly Operating, LLC   Grizzly Energy Acquisition Co., LLC   Limited
liability company interest   N/A   N/A   100% Grizzly Operating, LLC   Grizzly
Energy Acquisition Co. II, LLC   Limited liability company interest   N/A   N/A
  100% Grizzly Energy Acquisition Co., LLC   Grizzly Upstream Development
Company, LLC   Limited liability company interest   N/A   N/A   100% Grizzly
Energy Acquisition Co. II, LLC   Grizzly Upstream Development Company II, LLC  
Limited liability company interest   N/A   N/A   100% Grizzly Upstream
Development Company, LLC   Grizzly Acquisition Partnership, LLC   Limited
liability company interest   N/A   N/A   100% Grizzly Upstream Development
Company II, LLC   Grizzly Acquisition Partnership II, LLC   Limited liability
company interest   N/A   N/A   100%

 

 38 

 

 

Schedule 4

Principal Location

 

5847 San Felipe, Suite 3000

Houston, Texas 77057-3399

 

 39 

 

 

Schedule 5

Identification Information

 

Name   Jurisdiction   Federal EIN   Organizational ID Grizzly Natural Gas, LLC  
Kentucky   20-1951004   0601349 Grizzly Energy, LLC   Delaware   80-0411494  
4686581 Grizzly Operating, LLC   Delaware   30-0839331   5407161 Grizzly Energy
Holdings, LLC   Delaware   38-3756371   4328433 Escambia Asset Co. LLC  
Delaware   20-4942000   4154040 Escambia Operating Co. LLC   Delaware  
20-4943869   4164275 Grizzly Energy Acquisition Co., LLC   Delaware   26-0604564
  4393164 Grizzly Energy Acquisition Co. II, LLC   Delaware   26-2463364  
4537128 Grizzly Upstream Development Company, LLC   Delaware   20-1560113  
3779972 Grizzly Upstream Development Company II, LLC   Delaware   20-1477453  
3843535 Grizzly Acquisition Partnership, LLC   Delaware   26-1206706   4404235
Grizzly Acquisition Partnership II, LLC   Delaware   26-2830903   4541467

  

 40