Exhibit 10.4

AMENDMENT

 

TO

 

SECURITY AGREEMENT

 

This Amendment (this “Amendment”), dated as of October 9, 2015 to the Security
Agreement, dated as of May 9, 2011 (as heretofore amended, the “Security
Agreement”), between TransCoastal Corporation, a Texas corporation (the
“Grantor”), and Melody Business Finance, LLC, a Delaware limited liability
company, as Secured Party and successor by purchase and assignment to Green
Bank, N.A. (the “Agent”). Capitalized terms, unless otherwise defined herein,
shall have the meanings set forth in the Security Agreement.

 

W I T N E S S E T H

 

WHEREAS, the Grantor and the Agent have agreed, subject to the terms and
conditions of this Amendment, to amend the Security Agreement as hereinafter set
forth.

 

NOW, THEREFORE, the parties agree as follows:

 

Section 1.     Amendments. The Security Agreement is hereby amended as follows:

 

(a)     The Security Agreement is hereby amended by deleting the first four
paragraphs appearing therein and inserting the following four paragraphs in lieu
thereof:

 

“THIS SECURITY AGREEMENT is entered into as of May 19, 2011 (together with all
amendments, restatements and other modifications, including joinders and
supplements, this “Security Agreement”) by TRANSCOASTAL CORPORATION, a Texas
corporation (“Debtor”), in favor of MELODY BUSINESS FINANCE, LLC, in its
capacity as Administrative Agent (and successor by purchase and assignment to
Green Bank, N.A.) (hereinafter referred to as the “Secured Party”) for the
Beneficiaries (as defined herein).

 

WHEREAS, reference is made to that certain Loan Agreement dated as of May 19,
2011 (as amended, restated or otherwise modified from time to time, the
“Agreement”), among TransCoastal Corporation, a Texas corporation (the
“Borrower”), the lenders from time to time party thereto (the “Lenders”) and
Melody Business Finance, LLC, as administrative agent for the Lenders (and
successor by purchase and assignment to Green Bank, N.A.) (in such capacity, the
“Administrative Agent”).

 

WHEREAS, to induce the Secured Party and the other Beneficiaries to make the
Loans and extensions of credit provided for in the Agreement, Debtor has agreed
to grant a security interest in certain collateral as hereinafter described as
security for the repayment of such Loans and extensions of credit.

 

 
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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 Secured Party and the other Beneficiaries
may from time to time agree to extend, the parties do hereby agree as follows:”

 

(b)     The definition of “Investment Property” contained in Appendix I of the
Security Agreement is hereby amended by inserting the phrase “(including,
without limitation, the Pledged Securities)” immediately prior to the period
appearing therein.     

 

(c)     The definition of “Security Agreement” contained in Appendix I of the
Security Agreement is hereby deleted.

 

(d)     The definition of “Security Interest” contained in Appendix I of the
Security Agreement is hereby amended by inserting the phrase “, for the benefit
of the Beneficiaries,” immediately following the reference to “Secured Party”
appearing therein.

 

(e)     Appendix I of the Security Agreement is hereby amended to add the
following definitions in proper alphabetical order to read as follows:

 

““Beneficiaries” means the Administrative Agent, the Lenders and each Lender or
Affiliate of a Lender party to a Lender Hedging Contract, and “Beneficiary”
means any of the Administrative Agent, the Lenders and each Lender or an
Affiliate of a Lender party to a Lender Hedging Contract.

 

“Pledged Securities” means, with respect to Debtor, (a) all Equity Interests
held by Debtor in any corporations or other entities (including, without
limitation, those corporations or other entities described in Exhibit 3.3 that
are directly held by Debtor), together with all depositary shares and all other
rights of such Debtor in respect of such Equity Interests, (b) all certificates,
instruments or other documents evidencing such Equity Interests and registered
or held in the name of, or otherwise in the possession of, Debtor, and (c) all
present and future payments, dividend distributions, instruments, compensation,
property, assets, interests and rights in connection with or related to the
Equity Interests included in clause (a) above, and all monies due or to become
due and payable to Debtor in connection with or related to such Equity Interests
or otherwise paid, issued or distributed in respect of or in exchange therefor
(including, without limitation, all proceeds of dissolution or liquidation).

 

(f)     Section 2.1 of the Security Agreement is hereby amended as follows:

 

 
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(i) Section 2.1 of the Security Agreement is hereby amended by inserting the
phrase “pledges, assigns and” immediately after the first instance of “Debtor”
appearing therein;

 

(ii) Section 2.1 of the Security Agreement is hereby further amended by
inserting the phrase “, on behalf of and for the benefit of the Beneficiaries,”
immediately after the first instance of “Secured Party” appearing therein.

 

(g)      Section 3.0 of the Security Agreement is hereby amended by inserting
the phrase “and the Beneficiaries” immediately after the first instance of
“Secured Party” appearing therein.

 

(h)      Section 3.1 of the Security Agreement is hereby amended by inserting
the phrase “, for the benefit of the Beneficiaries,” immediately following the
reference to “Secured Party” appearing therein.

 

(i)      Section 5.4 of the Security Agreement is hereby amended by inserting
the below sentence immediately after the last sentence appearing therein:

 

“The Secured Party shall have no obligation whatsoever to any of the
Beneficiaries to assure that the Collateral exists or is owned by the Debtors or
is cared for, protected, or insured or has been encumbered, or that the Secured
Party’s Liens have been properly or sufficiently or lawfully created, perfected,
protected, or enforced or are entitled to any particular priority, or to
exercise at all or in any particular manner or under any duty of care,
disclosure or fidelity, or to continue exercising, any of the rights,
authorities and powers granted or available to the Secured Party pursuant to
this Agreement, it being understood and agreed that in respect of the
Collateral, or any act, omission or event related thereto, subject to the terms
and conditions contained herein, the Secured Party may act in any manner it may
deem appropriate, in its sole discretion given the Secured Party’s own interest
in the Collateral in its capacity as one of the Beneficiaries and that the
Secured Party shall have no other duty or liability whatsoever to any
Beneficiary as to any of the foregoing, except as otherwise provided herein.”

 

(j) Section 10.4 of the Security Agreement is hereby amended and restated in its
entirety to read as follows:

 

“10.4 Enforcement Expenses; Indemnification.

 

(a) Debtor agrees to pay, or reimburse the Secured Party for, all out-of-pocket
costs and expenses incurred in connection with the enforcement, attempted
enforcement, exercise, or preservation of any rights or remedies under this
Security Agreement (including all such costs and expenses incurred during any
“workout” or restructuring in respect of the Obligations and during any legal
proceeding, including any proceeding under any debtor relief law), including all
attorney fees.

 

 
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(b) To the extent required pursuant to Section 4.2 of the Loan Agreement, Debtor
agrees to pay, and to indemnify and hold the Secured Party and each Beneficiary
harmless from, any and all liabilities with respect to, or resulting from any
delay in paying, any and all stamp, excise, sales or other taxes which may be
payable or determined to be payable with respect to any of the Collateral or in
connection with any of the transactions contemplated by this Security Agreement.

 

(c) Debtor shall indemnify the Secured Party (and any sub-agent thereof) and
each Beneficiary, and each Related Party of any of the foregoing Persons (each
such Person being called an “Indemnitee”) against, and hold each Indemnitee
harmless from, any and all losses, claims, damages, liabilities and related
expenses (including the reasonable fees, charges and disbursements of any
external counsel for any Indemnitee) incurred by any Indemnitee or asserted
against any Indemnitee arising out of, in connection with, or as a result of (i)
the execution or delivery of this SECURITY Agreement or any agreement or
instrument contemplated hereby, the performance by the parties hereto of their
respective obligations hereunder or the consummation of the transactions
contemplated hereby, (ii) any Loan or the use or proposed use of the proceeds
therefrom, (iii) any actual or alleged presence or release of Hazardous
Materials on or from any property owned or operated by Debtor, or any
Environmental Liability related in any way to Debtor, or (iv) any actual or
prospective claim, litigation, investigation or proceeding relating to any of
the foregoing, whether based on contract, tort or any other theory, whether
brought by a third party or by any Debtor, and regardless of whether any
Indemnitee is a party thereto, provided that such indemnity shall not, as to any
Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the BAD
FAITH, gross negligence or willful misconduct of such Indemnitee if such Debtor
has obtained a final and nonappealable judgment in its favor on such claim as
determined by a court of competent jurisdiction. Notwithstanding anything to the
contrary contained herein, any indemnification for Taxes shall be subject to the
provisions of Section 4.1 of the Loan Agreement.

 

 
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(d) To the fullest extent permitted by applicable law, Debtor shall not assert,
and hereby waives, any claim against any Indemnitee, on any theory of liability,
for special, indirect, consequential or punitive damages (as opposed to direct
or actual damages) arising out of, in connection with, or as a result of, this
Security Agreement or any agreement or instrument contemplated hereby, the
transactions contemplated hereby or thereby, any Loan or the use of the proceeds
thereof. No Indemnitee shall be liable for any damages arising from the use by
unintended recipients of any information or other materials distributed by it
through telecommunications, electronic or other information transmission systems
in connection with this Security Agreement or the transactions contemplated
hereby.

 

(e) All amounts due under this Section 10.4 shall be payable no later than ten
(10) Business Days after demand therefor.”

 

(k) Section 10.5 of the Security Agreement is hereby amended as follows:

 

(i) Section 10.5 of the Security Agreement is hereby amended by deleting the
first sentence appearing therein and inserting the following sentence in lieu
thereof:

 

“The rights of Secured Party and the Beneficiaries hereunder inure to the
benefit of Secured Party, the Beneficiaries and their respective successors and
permitted assigns.”

 

(ii) Section 10.5 of the Security Agreement is hereby further amended by
inserting the phrase “and any Beneficiary” immediately after the reference to
“Secured Party” appearing in the fourth sentence thereof.

 

(l) The Security Agreement is hereby amended to add a new Exhibit 3.3 thereto in
the form of Exhibit 3.3 hereto.

 

Section 2.     Execution in Counterparts, Etc. This Amendment may be executed in
any number of counterparts, each of which when so executed shall be deemed to be
an original and all of which when taken together shall constitute one and the
same amendment. The delivery of a signed signature page to this Amendment by
telecopy or other electronic transmission shall constitute due execution and
delivery of this Amendment for all purposes.

 

Section 3.     Agreement in Full Force and Effect. Except as expressly amended
hereby, all of the provisions of the Security Agreement and all of the
provisions of all other documentation required to be delivered with respect
thereto shall remain in full force and effect from and after the date hereof.

 

 
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Section 4.     References to Agreement. From and after the date hereof, (a) all
references in the Security Agreement to “this Agreement,” “hereof,” “herein,” or
similar terms and (b) all references to the Security Agreement in any other
agreement, instrument or document executed or delivered in connection with the
Security Agreement, shall mean and refer to the Security Agreement, as amended
by this Amendment.

 

Section 5.     Further Assurances. The parties hereto agree to execute and
deliver any and all further agreements, certificates and other documents
reasonably necessary to implement the provisions of this Amendment.

 

Section 6.     GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF TEXAS WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAWS PRINCIPLES THEREOF.

 

 
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IN WITNESS WHEREOF, the Grantor and the Agent have caused this Amendment to be
executed as of the day and year first above written.

 

 

 

 

GRANTOR:

 

        TransCoastal Corporation, a Texas corporation  

 

 

 

 

 

 

 

 

 

By:

/s/ Stuart Hagler

 

 

Name:

Stuart Hagler

 

 

Title:

CEO

 

 

 

 

Signature Page to

Amendment to Security Agreement

 

 
 

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AGENT:

 

        MELODY BUSINESS FINANCE, LLC  

 

 

 

 

 

 

 

 

 

By:

/s/ Andreas Scaminaci

 

       

 

Name:

Andreas Scaminaci

 

 

Title:

Authorized Signatory

 

 

 

 

Signature Page to

Amendment to Security Agreement

 

 
 

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EXHIBIT 3.3

 

Pledged Securities

 

LLC Interests:

 

Debtor

 

Issuer

   

Certificated (Y/N)

   

Certificate No. (if any)

   

No. of Pledged Units

   

% of Outstanding LLC Interests of Issuer

                                 

TransCoastal Corporation

 

CoreTerra Operating, LLC

   

N

   

N/A

   

N/A

    100 %