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Exhibit 10.3    
    


PAYMENT
OF THIS INSTRUMENT SHALL, TO THE EXTENT SET FORTH IN ANNEX II OF THE SECOND LIEN TERM LOAN AGREEMENT DATED NOVEMBER 23, 2004 BY AND AMONG PETROHAWK ENERGY CORPORATION, BNP PARIBAS, AS
ADMINISTRATIVE AGENT AND THE TERM LENDERS PARTIES THERETO, BE SUBORDINATE AND JUNIOR IN RIGHT OF PAYMENT TO THE PRIOR PAYMENT IN FULL OF ALL SENIOR INDEBTEDNESS, THE PROVISIONS OF WHICH ANNEX II OF
SUCH SECOND LIEN TERM LOAN AGREEMENT BEING INCORPORATED HEREIN AND BY THIS REFERENCE BEING MADE A PART HEREOF. 


 
 

SECOND LIEN TERM LOAN AGREEMENT    
    
    GUARANTEE AND COLLATERAL AGREEMENT    
    


made
by 


each
of the Grantors (as defined herein) 


in
favor of 




BNP PARIBAS,  


as Administrative Agent 




Dated
as of November 23, 2004 







 
 
 

TABLE OF CONTENTS    
    



	ARTICLE I Definitions	 	1
	

 	

Section 1.01	

Definitions	
 	

1
	 	Section 1.02	Other Definitional Provisions; References	 	2
	
ARTICLE II Guarantee	
 	

2
	

 	

Section 2.01	

Guarantee	
 	

2
	 	Section 2.02	Payments	 	3
	
ARTICLE III Grant of Security Interest	
 	

3
	

 	

Section 3.01	

Grant of Security Interest	
 	

3
	 	Section 3.02	Transfer of Pledged Securities	 	4
	 	Section 3.03	Grantors Remains Liable under Accounts, Chattel Paper and Payment Intangibles	 	4
	
ARTICLE IV Acknowledgments, Waivers and Consents	
 	

4
	

 	

Section 4.01	

Acknowledgments, Waivers and Consents	
 	

4
	 	Section 4.02	No Subrogation, Contribution or Reimbursement	 	6
	
ARTICLE V Representations and Warranties	
 	

7
	

 	

Section 5.01	

Representations in Term Loan Agreement	
 	

7
	 	Section 5.02	Benefit to the Guarantor	 	7
	 	Section 5.03	Solvency	 	7
	 	Section 5.04	Title; No Other Liens	 	7
	 	Section 5.05	Perfected First Priority Liens	 	8
	 	Section 5.06	Legal Name, Organizational Status, Chief Executive Office	 	8
	 	Section 5.07	Prior Names, Addresses, Locations of Tangible Assets	 	8
	 	Section 5.08	Pledged Securities	 	8
	 	Section 5.09	Goods	 	8
	 	Section 5.10	Instruments and Chattel Paper	 	8
	 	Section 5.11	Truth of Information; Accounts	 	8
	 	Section 5.12	Governmental Obligors	 	9
	
ARTICLE VI Covenants	
 	

11
	

 	

Section 6.01	

Covenants in Term Loan Agreement	
 	

9
	 	Section 6.02	Maintenance of Perfected Security Interest; Further Documentation	 	9
	 	Section 6.03	Maintenance of Records	 	10
	 	Section 6.04	Right of Inspection	 	10
	 	Section 6.05	Further Identification of Collateral	 	10
	 	Section 6.06	Changes in Locations, Name, etc.	 	10
	 	Section 6.07	Compliance with Contractual Obligations	 	11
	 	Section 6.08	Limitations on Dispositions of Collateral	 	11
	 	Section 6.09	Pledged Securities	 	11
	 	Section 6.10	Limitations on Modifications, Waivers, Extensions of Agreements Giving Rise to Accounts	 	12
	 	Section 6.11	Analysis of Accounts, Etc	 	12
	 	Section 6.12	Instruments and Tangible Chattel Paper	 	12
	 	Section 6.13	Maintenance of Equipment	 	12
	 	Section 6.14	Commercial Tort Claims	 	13
	 	 	 	 	 





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ARTICLE VII Remedial Provisions	
 	

13
	

 	

Section 7.01	

Pledged Securities	
 	

13
	 	Section 7.02	Collections on Accounts, Etc	 	14
	 	Section 7.03	Proceeds	 	14
	 	Section 7.04	Texas UCC and Other Remedies	 	15
	 	Section 7.05	Private Sales of Pledged Securities	 	16
	 	Section 7.06	Waiver; Deficiency	 	16
	 	Section 7.07	Non-Judicial Enforcement	 	16
	
ARTICLE VIII The Administrative Agent	
 	

16
	

 	

Section 8.01	

Administrative Agent's Appointment as Attorney-in-Fact, Etc	
 	

16
	 	Section 8.02	Duty of Administrative Agent	 	18
	 	Section 8.03	Execution of Financing Statements	 	18
	 	Section 8.04	Authority of Administrative Agent	 	19
	
ARTICLE IX Subordination of Indebtedness	
 	

19
	

 	

Section 9.01	

Subordination of All Guarantor Claims	
 	

19
	 	Section 9.02	Claims in Bankruptcy	 	19
	 	Section 9.03	Payments Held in Trust	 	19
	 	Section 9.04	Liens Subordinate	 	20
	 	Section 9.05	Notation of Records	 	20
	
ARTICLE X Miscellaneous	
 	

20
	

 	

Section 10.01	

Waiver	
 	

20
	 	Section 10.02	Notices	 	20
	 	Section 10.03	Payment of Expenses, Indemnities, Etc	 	20
	 	Section 10.04	Amendments in Writing	 	21
	 	Section 10.05	Successors and Assigns	 	21
	 	Section 10.06	Invalidity	 	21
	 	Section 10.07	Counterparts	 	21
	 	Section 10.08	Survival	 	21
	 	Section 10.09	Captions	 	21
	 	Section 10.10	No Oral Agreements	 	21
	 	Section 10.11	Governing Law; Submission to Jurisdiction	 	22
	 	Section 10.12	Acknowledgments	 	22
	 	Section 10.13	Additional Grantors	 	23
	 	Section 10.14	Set-Off	 	23
	 	Section 10.15	Releases	 	23
	 	Section 10.16	Reinstatement	 	24
	 	Section 10.17	Acceptance	 	24




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SCHEDULES:  



	 	1.	Notice Addresses of Guarantors
	 	2.	Description of Pledged Securities
	 	3.	Filings and Other Actions Required to Perfect Security Interests
	 	4.	Legal Name, Location of Jurisdiction of Organization, Organizational Identification Number, Taxpayor Identification Number and Chief Executive Office
	 	5.	Prior Names, Prior Chief Executive Office, Location of Tangible Assets
	
ANNEX:
	

 	

I.	

Form of Assumption Agreement




iii











        This GUARANTEE AND COLLATERAL AGREEMENT, dated as of November 23, 2004, is made by Petrohawk Energy Corporation, a corporation duly formed and existing under the laws of the State
of Delaware (the "Borrower"), and each of the other signatories hereto other than the Administrative Agent (the Borrower and each of the other
signatories hereto other than the Administrative Agent, together with any other Subsidiary of the Borrower that becomes a party hereto from time to time after the date hereof, the
"Grantors"), in favor of BNP Paribas, as administrative agent (in such capacity, together with its successors in such capacity, the
"Administrative Agent"), for the banks and other financial institutions (the "Lenders") from time to
time parties to the Second Lien Term Loan Agreement, dated as of November 23, 2004 (as amended, supplemented or otherwise modified from time to time, the "Term Loan
Agreement"), among the Borrower, the Administrative Agent and the Lenders. 


        NOW,
THEREFORE, in consideration of the premises and to induce the Administrative Agent and the Lenders to enter into the Term Loan Agreement and to induce the Lenders to make their
respective extensions of credit to the Borrower thereunder, each Grantor hereby agrees with the Administrative Agent, for the ratable benefit of the Lenders, as follows: 


 
 

ARTICLE I
  Definitions    
    


        Section 1.01    Definitions.    



        (a)   As
used in this Agreement, each term defined above shall have the meaning indicated above. Unless otherwise defined herein, terms defined in the Term Loan Agreement and
used herein shall have the meanings given to them in the Term Loan Agreement, and the following terms as well as all uncapitalized terms which are defined in the Texas UCC on the date hereof are used
herein as so defined: Accounts, As-Extracted Collateral, Chattel Paper, Commercial Tort Claims, Deposit Accounts, Documents, Electronic Chattel Paper, Equipment, Fixtures, General
Intangibles, Goods, Instruments, Inventory, Investment Property, Letter-of-Credit Rights, Payment Intangibles, Proceeds, Supporting Obligations, and Tangible Chattel Paper. 


        (b)   The
following terms shall have the following meanings: 




        "Account Debtor" shall mean a Person (other than any Grantor) obligated on an Account, Chattel Paper, or General Intangible. 



        "Agreement" shall mean this Guarantee and Collateral Agreement, as the same may be amended, supplemented or otherwise modified from time
to time. 


        "Collateral" shall have the meaning assigned such term in Section 3.01. 


        "Guarantors" shall mean, collectively, each Grantor other than the Borrower. 


        "Issuers" shall mean, collectively, each issuer of a Pledged Security. 



        "Obligations" shall mean, collectively, all Indebtedness, liabilities and obligations of the Borrower and each Guarantor to the
Administrative Agent and the Lenders, of whatsoever nature and howsoever evidenced, due or to become due, now existing or hereafter arising, whether direct or indirect, absolute or contingent, which
may arise under, out of, or in connection with the Term Loan Agreement, the other Loan Documents, and all other agreements, guarantees, notes and other documents entered into by any party in
connection therewith, and any amendment, restatement or modification of any of the foregoing, including, but not limited to, the full and punctual payment when due of any unpaid principal of the
Loans, interest (including, without limitation, interest accruing at any post-default rate and interest accruing after the filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding), fees, guaranty obligations,
penalties, indemnities, legal and other fees, charges and expenses, and amounts advanced by and expenses incurred in order to preserve any collateral or security interest, whether due after
acceleration or otherwise. 







 



        "Pledged Securities" shall mean: (i) the Equity Interests described or referred to in Schedule 2; and
(ii) (a) the certificates or instruments, if any, representing such Equity Interests, (b) all dividends (cash, stock or otherwise), cash, instruments, rights to subscribe,
purchase or sell and all other rights and property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such Equity Interests, (c) all
replacements, additions to and substitutions for any of the
property referred to in this definition, including, without limitation, claims against third parties, (d) the proceeds, interest, profits and other income of or on any of the property referred
to in this definition and (e) all books and records relating to any of the property referred to in this definition. 



        "Secured Parties" shall mean, collectively, the Administrative Agent and the Lenders. 


        "Securities Act" shall mean the Securities Act of 1933, as amended. 


        "Texas UCC" shall mean the Uniform Commercial Code, as it may be amended, from time to time in effect in the State of Texas. 


        Section 1.02    Other Definitional Provisions; References.    The meanings given to terms defined herein shall
be equally applicable to both the singular and plural forms of such terms. The gender of all words shall include the masculine, feminine, and neuter, as appropriate. The words "herein," "hereof,"
"hereunder" and other words of similar import when used in this Agreement refer to this Agreement as a whole, and not to any particular article, section or subsection. Any reference herein to a
Section shall be deemed to refer to the applicable Section of this Agreement unless otherwise stated herein. Any reference herein to an exhibit, schedule or annex shall be deemed to refer to the
applicable exhibit, schedule or annex attached hereto unless otherwise stated herein. Where the context requires, terms relating to the Collateral or any part thereof, when used in relation to a
Grantor, shall refer to such Grantor's Collateral or the relevant part thereof. 


 
 

ARTICLE II
  Guarantee    
    


        Section 2.01    Guarantee.    



        (a)   Each
of the Guarantors hereby, jointly and severally, unconditionally and irrevocably, guarantees to the Administrative Agent, for the ratable benefit of the Secured
Parties and each of their respective successors, endorsees, transferees and assigns, the prompt and complete payment and performance by the Borrower and the Guarantors when due (whether at the stated
maturity, by acceleration or otherwise) of the Obligations. This is a guarantee of payment and not collection and the liability of each Guarantor is primary and not secondary. 


        (b)   Anything
herein or in any other Loan Document to the contrary notwithstanding, the maximum liability of each Guarantor hereunder and under the other Loan Documents shall
in no event exceed the amount which can be guaranteed by such Guarantor under applicable federal and state laws relating to the insolvency of debtors. 



        (c)   Each
Guarantor agrees that the Obligations may at any time and from time to time exceed the amount of the liability of such Guarantor hereunder without impairing the
guarantee contained in this Article II or affecting the rights and remedies of the Administrative Agent or any Secured Party hereunder. 


        (d)   Each
Guarantor agrees that if the maturity of any of the Obligations is accelerated by bankruptcy or otherwise, such maturity shall also be deemed accelerated for the
purpose of this guarantee without demand or notice to such Guarantor. The guarantee contained in this Article II shall remain in full force and effect until all the Obligations shall have been
satisfied by payment in full and the Term Loan Agreement has terminated. 



2







 




        (e)   No
payment made by the Borrower, any of the Guarantors, any other guarantor or any other Person or received or collected by the Administrative Agent or any other Secured
Party from the Borrower, any of the Guarantors, any other guarantor or any other Person by virtue of any action or proceeding or any set-off or appropriation or application at any time or
from time to time in reduction of or in payment of the Obligations shall be deemed to modify, reduce, release or otherwise affect the liability of any Guarantor hereunder which shall, notwithstanding
any such payment (other than any payment made by such Guarantor in respect of the Obligations or any payment received or collected from such Guarantor in respect of the Obligations), remain liable for
the Obligations up to the maximum liability of such Guarantor hereunder until the Obligations are paid in full and the Term Loan Agreement has terminated. 




        Section 2.02    Payments.    Each Guarantor hereby agrees and guarantees that payments hereunder will be paid
to the Administrative Agent without set-off or counterclaim in Dollars at the Principal Office of the Administrative Agent specified pursuant to the Term Loan Agreement. 


 
 

ARTICLE III
  Grant of Security Interest    
    


        Section 3.01    Grant of Security Interest.    Each Grantor hereby pledges, assigns and transfers to the
Administrative Agent, and grants to the Administrative Agent, for the ratable benefit of the Secured Parties, a security interest in all of the following property now owned or at any time hereafter
acquired by such Grantor or in which such Grantor now has or at any time in the future may acquire any right, title or interest and whether now existing or hereafter coming into existence
(collectively, the "Collateral"), as collateral security for the prompt and complete payment and performance when due (whether at the stated maturity,
by acceleration or otherwise) of the Obligations: 



        (1)   all
Accounts; 


        (2)   all
Chattel Paper (whether Tangible Chattel Paper or Electronic Chattel Paper); 



        (3)   all
Commercial Tort Claims; 


        (4)   all
Deposit Accounts other than payroll, withholding tax and other fiduciary Deposit Accounts; 


        (5)   all
Documents; 


        (6)   all
General Intangibles (including, without limitation, rights in and under any Hedging Agreements); 


        (7)   all
Goods (including, without limitation, all Inventory and all Equipment, but excluding all Fixtures); 


        (8)   all
Instruments; 


        (9)   all
Investment Property; 


        (10) all
Letter-of-Credit Rights (whether or not the letter of credit is evidenced by a writing; 


        (11) all
Pledged Securities; 


        (12) all
Supporting Obligations; 


        (13) all
books and records pertaining to the Collateral; and 


        (14) to
the extent not otherwise included, all Proceeds and products of any and all of the foregoing and all collateral security, income, royalties and other payments now or
hereafter due and payable with respect to, and guarantees and supporting obligations relating to, any and all of the Collateral and, to the extent not otherwise included, all payments of insurance
(whether or not 



3







 




the
Administrative Agent is the loss payee thereof), or any indemnity, warranty or guaranty, payable by reason of loss or damage to or otherwise with respect to any of the foregoing Collateral, all
other claims, including all cash, guarantees and other Supporting Obligations given with respect to any of the foregoing. 




        Section 3.02    Transfer of Pledged Securities.    All certificates and instruments, if any, representing or
evidencing the Pledged Securities shall be delivered to and held pursuant hereto by the Administrative Agent or a Person designated by the Administrative Agent and, in the case of an instrument or
certificate in registered form, shall be duly indorsed to the Administrative Agent or in blank by an effective endorsement (whether on the certificate or instrument or on a separate writing), and
accompanied by any required transfer tax stamps to effect the pledge of the Pledged Securities to the Administrative Agent. Notwithstanding the preceding sentence, all Pledged Securities must be
delivered or transferred in such manner, and each Grantor shall take all such further action as may be requested by the Administrative Agent, as to permit the Administrative Agent to be a "protected
purchaser" to the extent of its security interest as provided in Section 8.303 of the Texas UCC (if the Administrative Agent otherwise qualifies as a protected purchaser). 



        Section 3.03    Grantors Remains Liable under Accounts, Chattel Paper and Payment Intangibles.    Anything
herein to the contrary notwithstanding, each Grantor shall remain liable under each of the Accounts, Chattel Paper and Payment Intangibles to observe and perform all the conditions and obligations to
be observed and performed by it thereunder, all in accordance with the terms of any agreement giving rise to each such Account, Chattel Paper or Payment Intangible. Neither the Administrative Agent
nor any other Secured Party shall have any obligation or liability under any Account, Chattel Paper or Payment Intangible (or any agreement giving rise thereto) by reason of or arising out of this
Agreement or the receipt by the Administrative Agent or any such other Secured Party of any payment relating to such Account, Chattel Paper or Payment Intangible, pursuant hereto, nor shall the
Administrative Agent or any other Secured Party be obligated in any manner to perform any of the obligations of any Grantor under or pursuant to any Account, Chattel Paper or Payment Intangible (or
any agreement giving rise thereto), to make any payment, to make any inquiry as to the nature or the sufficiency of any payment received by it or as to the sufficiency of any performance by any party
under any Account, Chattel Paper or Payment Intangible (or any agreement giving rise thereto), to present or file any claim, to
take any action to enforce any performance or to collect the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or times. 


 
 

ARTICLE IV
  Acknowledgments, Waivers and Consents    
    


        Section 4.01    Acknowledgments, Waivers and Consents.    



        (a)   Each
Grantor acknowledges and agrees that the obligations undertaken by it under this Agreement involve the guarantee and the provision of collateral security for the
obligations of Persons other than such Grantor and that such Grantor's guarantee and provision of collateral security for the Obligations are absolute, irrevocable and unconditional under any and all
circumstances. In full recognition and furtherance of the foregoing, each Grantor understands and agrees, to the fullest extent permitted under applicable law and except as may otherwise be expressly
and specifically provided in the Loan Documents, that each Grantor shall remain obligated hereunder (including, without limitation, with respect to the guarantee made such Grantor hereby and the
collateral security provided by such Grantor herein) and the enforceability and effectiveness of this Agreement and the liability of such Grantor, and the rights, remedies, powers and privileges of
the Administrative Agent and the other Secured Parties under this 



4







 

Agreement
and the other Loan Documents shall not be affected, limited, reduced, discharged or terminated in any way: 



        (i)    notwithstanding
that, without any reservation of rights against any Grantor and without notice to or further assent by any Grantor, (A) any demand for payment of
any of the Obligations made by the Administrative Agent or any other Secured Party may be rescinded by the Administrative Agent or such other Secured Party and any of the Obligations continued;
(B) the Obligations, the liability of any other Person upon or for any part thereof or any collateral security or guarantee therefor or right of offset with respect thereto, may, from time to
time, in whole or in part, be renewed, extended, amended, modified, accelerated, compromised, waived, surrendered or released by, or any indulgence or forbearance in respect thereof granted by, the
Administrative Agent or any other Secured Party; (C) the Term Loan Agreement, the other Loan Documents and any other documents executed and delivered in connection therewith may be amended,
modified, supplemented or terminated, in whole or in part, as the Administrative Agent (or the Required Lenders, the Majority Lenders or all Lenders, as the case may be) may deem advisable from time
to time; (D) the Borrower, any Grantor or any other Person may from time to time accept or enter into new or additional agreements, security documents, guarantees or other instruments in
addition to, in exchange for or relative to, any Loan Document, all or any part of the Obligations or any Collateral now or in the future serving as security for the
Obligations; (E) any collateral security, guarantee or right of offset at any time held by the Administrative Agent or any other Secured Party for the payment of the Obligations may be sold,
exchanged, waived, surrendered or released; and (F) any other event shall occur which constitutes a defense or release of sureties generally; and 


        (ii)   without
regard to, and each Grantor hereby expressly waives to the fullest extent permitted by law any defense now or in the future arising by reason of, (A) the
illegality, invalidity or unenforceability of the Term Loan Agreement, any other Loan Document, any of the Obligations or any other collateral security therefor or guarantee or right of offset with
respect thereto at any time or from time to time held by the Administrative Agent or any other Secured Party, (B) any defense, set-off or counterclaim (other than a defense of
payment or performance) which may at any time be available to or be asserted by any Grantor or any other Person against the Administrative Agent or any other Secured Party, (C) the insolvency,
bankruptcy arrangement, reorganization, adjustment, composition, liquidation, disability, dissolution or lack of power of any Grantor or any other Person at any time liable for the payment of all or
part of the Obligations or the failure of the Administrative Agent or any other Secured Party to file or enforce a claim in bankruptcy or other proceeding with respect to any Person; or any sale,
lease or transfer of any or all of the assets of the any Grantor, or any changes in the partners of any Grantor; (D) the fact that any Collateral or Lien contemplated or intended to be given,
created or granted as security for the repayment of the Obligations shall not be properly perfected or created, or shall prove to be unenforceable or subordinate to any other Lien, it being recognized
and agreed by each of the Grantors that it is not entering into this Agreement in reliance on, or in contemplation of the benefits of, the validity, enforceability, collectability or value of any of
the Collateral for the Obligations; (E) any failure of the Administrative Agent or any other Secured Party to marshal assets in favor of any Grantor or any other Person, to exhaust any
collateral for all or any part of the Obligations, to pursue or exhaust any right, remedy, power or privilege it may have against any Grantor or any other Person or to take any action whatsoever to
mitigate or reduce any Grantor's liability under this Agreement or any other Loan Document; (F) any law which provides that the obligation of a surety or guarantor must neither be larger in
amount nor in other respects more burdensome than that of the principal or which reduces a surety's or guarantor's obligation in proportion to the principal obligation; (G) the possibility that
the 




5







 





Obligations
may at any time and from time to time exceed the aggregate liability of such Grantor under this Agreement; or (H) any other circumstance or act whatsoever, including any action or
omission of the type described (with or without notice to or knowledge of any Grantor), which constitutes, or might be construed to constitute, an equitable or legal discharge or defense of the
Borrower for the Obligations, or of such Grantor under the guarantee contained in Article II or with respect to the collateral security provided by such Grantor herein, or which might be
available to a surety or guarantor, in bankruptcy or in any other instance. 




        (b)   Each
Grantor hereby waives to the extent permitted by law: (i) except as expressly provided otherwise in any Loan Document, all notices to such Grantor, or to any
other Person, including but not limited to, notices of the acceptance of this Agreement, the guarantee contained in Article II or the provision of collateral security provided herein, or the
creation, renewal, extension, modification, accrual of any Obligations, or notice of or proof of reliance by the Administrative Agent or any other Secured Party upon the guarantee contained in
Article II or upon the collateral security provided herein, or of default in the payment or performance of any of the Obligations owed to the
Administrative Agent or any other Secured Party and enforcement of any right or remedy with respect thereto; or notice of any other matters relating thereto; the Obligations, and any of them, shall
conclusively be deemed to have been created, contracted or incurred, or renewed, extended, amended or waived, in reliance upon the guarantee contained in Article II and the collateral security
provided herein and no notice of creation of the Obligations or any extension of credit already or hereafter contracted by or extended to the Borrower need be given to any Grantor; and all dealings
between the Borrower and any of the Grantors, on the one hand, and the Administrative Agent and the other Secured Parties, on the other hand, likewise shall be conclusively presumed to have been had
or consummated in reliance upon the guarantee contained in Article II and on the collateral security provided herein; (ii) diligence and demand of payment, presentment, protest, dishonor
and notice of dishonor; (iii) any statute of limitations affecting any Grantor's liability hereunder or the enforcement thereof; (iv) all rights of revocation with respect to the
Obligations, the guarantee contained in Article II and the provision of collateral security herein; and (v) all principles or provisions of law which conflict with the terms of this
Agreement and which can, as a matter of law, be waived. 


        (c)   When
making any demand hereunder or otherwise pursuing its rights and remedies hereunder against any Grantor, the Administrative Agent or any other Secured Party may,
but shall be under no obligation to, join or make a similar demand on or otherwise pursue or exhaust such rights and remedies as it may have against the Borrower, any other Grantor or any other Person
or against any collateral security or guarantee for the Obligations or any right of offset with respect thereto, and any failure by the Administrative Agent or any other Secured Party to make any such
demand, to pursue such other rights or remedies or to collect any payments from the Borrower, any other Grantor or any other Person or to realize upon any such collateral security or guarantee or to
exercise any such right of offset, or any release of the Borrower, any Grantor or any other Person or any such collateral security, guarantee or right of offset, shall not relieve any Grantor of any
obligation or liability hereunder, and shall not impair or affect the rights and remedies, whether express, implied or available as a matter of law, of the Administrative Agent or any other Secured
Party against any Grantor. For the purposes hereof "demand" shall include the commencement and continuance of any legal proceedings. Neither the Administrative Agent nor any other Secured Party shall
have any obligation to protect, secure, perfect or insure any Lien at any time held by it as security for the Obligations or for the guarantee contained in Article II or any property subject
thereto. 




        Section 4.02    No Subrogation, Contribution or Reimbursement.    Notwithstanding any payment made by any
Grantor hereunder or any set-off or application of funds of any Grantor by the 


6







 

Administrative
Agent or any other Secured Party, no Grantor shall be entitled to be subrogated to any of the rights of the Administrative Agent or any other Secured Party against the Borrower or any
other Grantor or any collateral security or guarantee or right of offset held by the Administrative Agent or any other Secured Party for the payment of the Obligations, nor shall any Grantor seek or
be entitled to seek any indemnity, exoneration, participation, contribution or reimbursement from the Borrower or any other Grantor in respect of payments made by such Grantor hereunder, and each
Grantor hereby expressly waives, releases, and agrees not to exercise any all such rights of subrogation, reimbursement, indemnity and contribution. Each Grantor further agrees that to the extent that
such waiver and release set forth herein is found by a court of competent jurisdiction to be void or voidable for any reason, any rights of subrogation, reimbursement, indemnity and contribution such
Grantor may have against the Borrower, any other Grantor or against any collateral or security or guarantee or right of offset held by the Administrative Agent or any other Secured Party shall be
junior and subordinate to any rights the Administrative Agent and the other Secured Parties may have against the Borrower and such Grantor and to all right, title and interest the Administrative Agent
and the other Secured Parties may have in any collateral or security or guarantee or right of offset. The Administrative Agent, for the benefit of the Secured Parties, may use, sell or dispose of any
item of Collateral or security as it sees fit without regard to any subrogation rights any Grantor may have, and upon any disposition or sale, any rights of subrogation any Grantor may have shall
terminate. 


 
 

ARTICLE V
  Representations and Warranties    
    


        To induce the Administrative Agent and the other Secured Parties to enter into the Term Loan Agreement and to induce the Lenders to make their respective term
loans to the Borrower thereunder, each Grantor hereby represents and warrants to the Administrative Agent and each other Secured Party that: 


        Section 5.01    Representations in Term Loan Agreement.    In the case of each Guarantor, the representations
and warranties set forth in Article VII of the Term Loan Agreement as they relate to such Guarantor (in its capacity as a Subsidiary of the Borrower) or to the Loan Documents to which such
Guarantor is a party are true and correct in all material respects, provided that each reference in each such representation and warranty to the Borrower's knowledge shall, for the purposes of this
Section 5.01, be deemed to be a reference to such Guarantor's knowledge. 


        Section 5.02    Benefit to the Guarantor.    The Borrower is a member of an affiliated group of companies that
includes each Guarantor, and the Borrower and the Guarantors are engaged in related businesses. Each Guarantor is a Subsidiary of the Borrower and its guaranty and surety obligations pursuant to this
Agreement reasonably may be expected to benefit, directly or indirectly, it; and it has determined that
this Agreement is necessary and convenient to the conduct, promotion and attainment of the business of such Guarantor and the Borrower. 


        Section 5.03    Solvency.    Such Grantor (i) is not insolvent as of the date hereof and will not be
rendered insolvent as a result of this Agreement (after giving effect to Section 2.01(a)), (ii) is not engaged in a business or a transaction, or about to engage in a business or a
transaction, for which any Property or assets remaining with it constitute unreasonably small capital, and (iii) does not intend to incur, or believe it will incur, debts that will be beyond
its ability to pay as such debts mature. 


        Section 5.04    Title; No Other Liens.    Except for the security interest granted to the Administrative Agent
for the ratable benefit of the Secured Parties pursuant to this Agreement and Excepted Liens, such Grantor is the legal and beneficial owner of its respective items of the Collateral free and clear of
any and all Liens. No financing statement or other public notice with respect to all or any part of the Collateral is on file or of record in any public office, except such as have been filed in favor
of the Administrative Agent, for the ratable benefit of the Secured Parties, pursuant to this Agreement, the 


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Security
Instruments or as are filed to secure Liens permitted by Section 9.03 of the Term Loan Agreement. 


        Section 5.05    Perfected Second Priority Liens.    The security interests granted pursuant to this Agreement
(a) upon completion of the filings and other actions specified on Schedule 3 (which, in the case of all filings and other documents referred to on said Schedule, have been delivered to
the Administrative Agent in completed and duly executed form) will constitute valid perfected security interests in all of the Collateral in favor of the Administrative Agent, for the ratable benefit
of the Secured Parties, as collateral security for such Grantor's obligations, enforceable in accordance with the terms hereof against all creditors of such Grantor and any Persons purporting to
purchase any Collateral from such Grantor and (b) are prior to all other Liens on the Collateral in existence on the date hereof except for the Liens securing the obligations under the Senior
Revolving Credit Agreement which have priority over. 


        Section 5.06    Legal Name, Organizational Status, Chief Executive Office.    On the date hereof, the correct
legal name of such Grantor, such Grantor's jurisdiction of organization, organizational number, taxpayor identification number and the location of such Grantor's chief executive office or sole place
of business are specified on Schedule 4. 


        Section 5.07    Prior Names, Addresses, Locations of Tangible Assets.    Schedule 5 correctly sets forth
(a) all names and trade names that such Grantor has used in the last five years and (b) the chief executive office of such Grantor over the last five years (if different from that which
is set forth in Section 5.06 above). 


        Section 5.08    Pledged Securities.    The shares (or such other interests) of Pledged Securities pledged by
such Grantor hereunder constitute all the issued and outstanding shares (or such other interests) of all classes of the capital stock or other Equity Interests of each Issuer owned by such Grantor.
All the shares (or such other interests) of the Pledged Securities have been duly and validly issued and, in the case of shares of stock of a corporation, are fully paid and nonassessable; and such
Grantor is the record and beneficial owner of, and has good title to, the Pledged Securities pledged by it hereunder, free of any and all Liens except Excepted Liens or options, warrants, puts, calls
or other rights of any other Person, and restrictions or options in favor of, or claims of, any other Person, except the security interest created by this Agreement. The pledged LLC interests and the
pledged partnership interests do not, by their terms, provide that they are securities to be governed by Article 8 of the Code—Investment Securities. 


        Section 5.09    Goods.    No portion of the Collateral constituting Goods is in the possession of a bailee that
has issued a negotiable or non-negotiable document covering such Collateral. 



        Section 5.10    Instruments and Chattel Paper.    Such Grantor has delivered to the Administrative Agent all
Collateral constituting Instruments and Chattel Paper. No Collateral constituting Chattel Paper or Instruments contains any statement therein to the effect that such Collateral has been assigned to an
identified party other than the Administrative Agent, and the grant of a security interest in such Collateral in favor of the Administrative Agent hereunder does not violate the rights of any other
Person as a secured party. 


        Section 5.11    Truth of Information; Accounts.    All information with respect to the Collateral set forth in
any schedule, certificate or other writing at any time heretofore or hereafter furnished by such Grantor to the Administrative Agent or any other Secured Party, and all other written information
heretofore or hereafter furnished by such Grantor to the Administrative Agent or any other Secured Party is and will be true and correct in all material respects as of the date furnished. The amount
represented by such Grantor to the Administrative Agent and the Lenders from time to time as owing by each Account Debtor or by all Account Debtors in respect of the Accounts, Chattel Paper and
Payment Intangibles will at such time be the correct amount actually owing by such Account Debtor or 


8







 



Account
Debtors thereunder. The place where each Grantor keeps its records concerning the Accounts, Chattel Paper and Payment Intangibles is 1100 Louisiana, Suite 4400, Houston, Texas 77002. 


        Section 5.12    Governmental Obligors.    None of the Account Debtors on such Grantor's Accounts, Chattel Paper
or Payment Intangibles is a Governmental Authority. 


 
 

ARTICLE VI
  Covenants    
    


        Each Grantor covenants and agrees with the Administrative Agent and the other Secured Parties that, from and after the date of this Agreement until the
Obligations shall have been paid in full: 


        Section 6.01    Covenants in Term Loan Agreement.    In the case of each Guarantor, such Guarantor shall take,
or shall refrain from taking, as the case may be, each action that is necessary to be taken or not taken, as the case may be, so that no Default or Event of Default is caused by the failure to take
such action or to refrain from taking such action by such Guarantor or any of its Subsidiaries. 



        Section 6.02    Maintenance of Perfected Security Interest; Further Documentation.    



        (a)   Such
Grantor shall maintain the security interest created by this Agreement as a perfected security interest having at least the priority described in
Section 5.05 and shall defend such security interest against the claims and demands of all Persons whomsoever except for Excepted Liens. 


        (b)   At
any time and from time to time, upon the request of the Administrative Agent or any other Secured Party, and at the sole expense of such Grantor, such Grantor will
promptly and duly give, execute, deliver, indorse, file or record any and all financing statements, continuation statements, amendments, notices (including, without limitation, notifications to
financial institutions and any other Person), contracts, agreements, assignments, certificates, stock powers or other instruments, obtain any and all governmental approvals and consents and take or
cause to be taken any and all steps or acts that may be necessary or advisable or as the Administrative Agent may reasonably request to create, perfect, establish the priority of, or to preserve the
validity, perfection or priority of, the Liens granted by this Agreement or to enable the Administrative Agent or any other Secured Party to enforce its rights, remedies, powers and privileges under
this Agreement with respect to such Liens or to otherwise obtain or preserve the full benefits of this Agreement and the rights, powers and privileges herein granted. 



        (c)   Without
limiting the obligations of the Grantors under Section 5.02(b): (i)upon the request of the Administrative Agent or any other Secured Party, such Grantor
shall take or cause to be taken all actions (other than any actions required to be taken by the Administrative Agent or any Lender) requested by the Administrative Agent to cause the Administrative
Agent to (A) have "control" (within the meaning of Sections 9-104, 9-105, 9-106, and 9-107 of the UCC) over any Collateral constituting Deposit
Accounts, Electronic Chattel Paper, Investment Property (including the Pledged Securities), or Letter-of-Credit Rights, including, without limitation, executing and delivering
any agreements, in form and substance satisfactory to the Administrative Agent, with securities intermediaries, Issuers or other Persons in order to establish "control", and each Grantor shall
promptly notify the Administrative Agent and the other Secured Parties of such Grantor's acquisition of any such Collateral, and (B) be a "protected purchaser" (as defined in
Section 8.303 of the Texas UCC); (ii) with respect to Collateral other than certificated securities and goods covered by a document in the possession of a Person other than such Grantor
or the Administrative Agent, such Grantor shall obtain written acknowledgment that such Person holds possession for the Administrative Agent's benefit; and (iii) with respect to any Collateral
constituting Goods that are in the possession of a bailee, such Grantor shall provide prompt notice to the Administrative Agent and the other Secured Parties of any such Collateral then in the 



9







 




possession
of such bailee, and such Grantor shall take or cause to be taken all actions (other than any actions required to be taken by the Administrative Agent or any other Secured Party) necessary
or requested by the Administrative Agent to cause the Administrative Agent to have a perfected security interest in such Collateral under applicable law. 


        (d)   This
Section 6.02 and the obligations imposed on each Grantor by this Section 6.02 shall be interpreted as broadly as possible in favor of the
Administrative Agent and the other Secured Parties in order to effectuate the purpose and intent of this Agreement. 




        Section 6.03    Maintenance of Records.    Such Grantor will keep and maintain at its own cost and expense
satisfactory and complete records of the Collateral, including, without limitation, a record of all payments received and all credits granted with respect to the Accounts. For the Administrative
Agent's and the other Secured Parties' further security, the Administrative Agent, for the ratable benefit of the Secured Parties, shall have a security interest in all of such Grantor's books and
records pertaining to the Collateral, and such Grantor shall turn over any such books and records to the Administrative Agent or to its representatives during normal business hours at the request of
the Administrative Agent and shall provide such clerical and other assistance as may be reasonably requested with regard thereto. 


        Section 6.04    Right of Inspection.    The Administrative Agent and the other Secured Parties and their
respective representatives shall at all times have full and free access during normal business hours to all the books, correspondence and records of such Grantor, and the Administrative Agent and the
other Secured Parties and their respective representatives may examine the same, take extracts therefrom and make photocopies thereof and shall at all times also have the right to enter into and upon
any premises where any of the Collateral (including, without limitation, Inventory or Equipment) is located for the purpose of inspecting the same, observing its use or otherwise protecting its
interests therein, and such
Grantor agrees to render to the Administrative Agent and the other Secured Parties and their respective representatives, at such Grantor's sole cost and expense, such clerical and other assistance as
may be reasonably requested with regard to any of the foregoing. The Administrative Agent and the other Secured Parties and their respective representatives shall use reasonable efforts to give
Grantors prior written notice of such entry and to use reasonable efforts to not disturb Grantors' ordinary course of business 



        Section 6.05    Further Identification of Collateral.    Such Grantor will furnish to the Administrative Agent
and the Lenders from time to time, at such Grantor's sole cost and expense, statements and schedules further identifying and describing the Collateral and such other reports in connection with the
Collateral as the Administrative Agent may reasonably request, all in reasonable detail. 


        Section 6.06    Changes in Locations, Name, etc.    Such Grantor recognizes that financing statements
pertaining to the Collateral have been or may be filed where such Grantor maintains any Collateral or is organized. Without limitation of any other covenant herein, such Grantor will not cause or
permit (i) any change to be made in its name, identity or corporate structure or (ii) any change to (A) the identity of any warehouseman, common carrier, other third-party
transporter, bailee or any agent or processor in possession or control of any Collateral or (iii) such Grantor's jurisdiction of organization or (iv) the location of any Collateral,
unless such Grantor shall have first (1) notified the Administrative Agent and the other Secured Parties of such change at least ten (10) days prior to the effective date of such change,
and (2) taken all action reasonably requested by the Administrative Agent or any other Secured Party for the purpose of maintaining the perfection and priority of the Administrative Agent's
security interests under this Agreement. In any notice furnished pursuant to this Section 6.06, such Grantor will expressly state in a conspicuous manner that the notice is required by this
Agreement and contains facts that may require additional filings of financing statements or other notices for the purposes of continuing perfection of the Administrative Agent's security interest in
the Collateral. 


10









  





        Section 6.07    Compliance with Contractual Obligations.    Such Grantor will perform and comply in all
material respects with all its contractual obligations relating to the Collateral (including, without limitation, with respect to the goods or services, the sale or lease or rendition of which gave
rise or will give rise to each Account). 


        Section 6.08    Limitations on Dispositions of Collateral.    The Administrative Agent and the other Secured
Parties do not authorize, and such Grantor agrees not to sell, transfer, lease or otherwise dispose of any of the Collateral, or attempt, offer or contract to do so except to the extent expressly
permitted by the Term Loan Agreement. 


        Section 6.09    Pledged Securities.    



        (a)   If
such Grantor shall become entitled to receive or shall receive any stock certificate or other instrument (including, without limitation, any certificate or instrument
representing a dividend or a distribution in connection with any reclassification, increase or reduction of capital or any certificate or instrument issued in connection with any reorganization),
option or rights in respect of the capital stock or other Equity Interests of any Issuer, whether in addition to, in substitution of, as a conversion of, or in exchange for, any shares (or such other
interests) of the Pledged Securities, or otherwise in respect thereof, such Grantor shall accept the same as the agent of the Administrative Agent and the other Secured Parties, hold the same in trust
for the Administrative Agent and the other Secured Parties and deliver the same forthwith to the Administrative Agent in the exact form received, duly indorsed by such Grantor to the Administrative
Agent, if required, together with an undated stock power or other equivalent instrument of transfer, if applicable, acceptable to the Administrative Agent covering such certificate or instrument duly
executed in blank by such Grantor and with, if the Administrative Agent so requests, signature guaranteed, to be held by the Administrative Agent, subject to the terms hereof, as additional collateral
security for the Obligations. 


        (b)   Without
the prior written consent of the Administrative Agent, such Grantor will not (i) unless otherwise permitted hereby, vote to enable, or take any other
action to permit, any Issuer to issue any stock or other Equity Interests of any nature or to issue any other securities or interests convertible into or granting the right to purchase or exchange for
any stock or other Equity Interests of any nature of any Issuer, (ii) sell, assign, transfer, exchange or otherwise dispose of, or grant any option with respect to, the Pledged Securities or
Proceeds thereof (except pursuant to a transaction expressly permitted by the Term Loan Agreement), (iii) create, incur or permit to exist any Lien except for Excepted Liens or option in favor
of, or any claim of any Person with respect to, any of the Pledged Securities or Proceeds thereof, or any interest therein, except for the security interests created by this Agreement or
(iv) enter into any agreement or undertaking restricting the right or ability of such
Grantor or the Administrative Agent to sell, assign or transfer any of the Pledged Securities or Proceeds thereof. 


        (c)   In
the case of each Grantor which is an Issuer, such Issuer agrees that (i) it will be bound by the terms of this Agreement relating to the Pledged Securities
issued by it and will comply with such terms insofar as such terms are applicable to it, (ii) it will notify the Administrative Agent promptly in writing of the occurrence of any of the events
described in Section 6.09(a) with respect to the Pledged Securities issued by it and (iii) the terms of Section 7.01(c) and Section 7.05 shall apply to it,  mutatis mutandis, with
respect to all actions that may be required of it pursuant to Section 7.01(c) or Section 7.05 with respect to the
Pledged Securities issued by it. 


        (d)   Such
Grantor shall furnish to the Administrative Agent such stock powers and other equivalent instruments of transfer, if applicable, as may be required by the
Administrative Agent to assure the transferability of and the perfection of the security interest in the Pledged Securities when and as often as may be reasonably requested by the Administrative
Agent. 



11







 




        (e)   The
Pledged Securities will at all times constitute not less than 100% of the capital stock or other Equity Interests of the Issuer thereof owned by any Grantor. Each
Grantor will not permit any Issuer of any of the Pledged Securities to issue any new shares (or other interests) of any class of capital stock or other Equity Interests of such Issuer without the
prior written consent of the Administrative Agent. 


        (f)    Each
Pledgor shall not agree to any amendment of a partnership agreement, LLC agreement or other organic document relating to any Pledged Security that in any way
adversely affects the perfection of the security interest of the Administrative Agent in the Pledged Securities, including any amendment electing to treat the membership interest or partnership
interest of such Pledgor as a security under Section 8-103 of the Texas UCC. In the event of a foreclosure or a taking of Pledged Securities consisting of partnership interests or
LLC interests in lieu of foreclosure pursuant to any Security Instrument executed in connection with the Term Loan Agreement, the Administrative Agent or its assignee or transferee, at any of their
option, will, without any further action or consent, become a member or partner upon the exercise of such option by the Administrative Agent, its assignee or transferee, having all of the rights,
powers and privileges of a member or partner with respect to such Equity Interest, including, without limitation, the right to participate in the management of the business, to vote such Equity
Interest and to receive distributions hereunder. 




        Section 6.10    Limitations on Modifications, Waivers, Extensions of Agreements Giving Rise to
Accounts.    Such Grantor will not (i) amend, modify, terminate or waive any provision of any Chattel Paper, Instrument or any agreement giving rise to an
Account or Payment Intangible in any manner which could reasonably be expected to materially adversely affect the value of such Chattel Paper, Instrument, Payment Intangible or Account as Collateral,
or (ii) fail to exercise promptly and diligently each and
every material right which it may have under any Chattel Paper, Instrument and each agreement giving rise to an Account or Payment Intangible (other than any right of termination). Such Grantor shall
deliver to the Administrative Agent a copy of each material demand, notice or document received by it relating in any way to any Chattel Paper, Instrument or any agreement giving rise to an Account or
Payment Intangible. 


        Section 6.11    Analysis of Accounts, Etc.    The Administrative Agent shall have the right from time to time
to make test verifications of the Accounts, Chattel Paper and Payment Intangibles in any manner and through any medium that it reasonably considers advisable, and each Grantor, at such Grantor's sole
cost and expense, shall furnish all such assistance and information as the Administrative Agent may reasonably require in connection therewith. At any time and from time to time, upon the
Administrative Agent's request and at the expense of each Grantor, such Grantor shall furnish to the Administrative Agent reports showing reconciliations, aging and test verifications of, and trial
balances for, the Accounts, Chattel Paper and Payment Intangibles, and all original and other documents evidencing, and relating to, the agreements and transactions which gave rise to the Accounts,
Chattel Paper and Payment Intangibles, including, without limitation, all original orders, invoices and shipping receipts. 



        Section 6.12    Instruments and Tangible Chattel Paper.    If any amount payable under or in connection with
any of the Collateral shall be or become evidenced by any Instrument or Tangible Chattel Paper, such Instrument or Tangible Chattel Paper shall be immediately delivered to the Administrative Agent,
duly endorsed in a manner satisfactory to the Administrative Agent, to be held as Collateral pursuant to this Agreement. 


        Section 6.13    Maintenance of Equipment.    Such Grantor will maintain each item of Equipment in good
operating condition, ordinary wear and tear and immaterial impairments of value and damage by the elements excepted, and will provide all maintenance, service and repairs necessary for such purpose. 


12







 



        Section 6.14    Commercial Tort Claims.    If such Grantor shall at any time hold or acquire a Commercial Tort
Claim that satisfies the requirements of the following sentence, such Grantor shall, within thirty (30) days after such Commercial Tort Claim satisfies such requirements, notify the
Administrative Agent and the other Secured Parties in a writing signed by such Grantor containing a brief description thereof, and granting to the Administrative Agent in such writing (for the benefit
of the Secured Parties) a security interest therein and in the Proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance satisfactory to the Administrative
Agent and the other Secured Parties. The provisions of the preceding sentence shall apply only to a Commercial Tort Claim that satisfies the following requirements: (i) the monetary value
claimed by or payable to the relevant Grantor in connection with such Commercial Tort Claim shall exceed $1,000,000, and either (ii) (A) such Grantor shall have filed a law suit or
counterclaim or otherwise commenced legal proceedings (including, without limitation, arbitration proceedings) against the Person against whom such Commercial Tort Claim is made, or (B) such
Grantor and the Person against whom such Commercial
Tort Claim is asserted shall have entered into a settlement agreement with respect to such Commercial Tort Claim. In addition, to the extent that the existence of any Commercial Tort Claim held or
acquired by any Grantor is disclosed by such Grantor in any public filing with the Securities Exchange Commission or any successor thereto or analogous Governmental Authority, or to the extent that
the existence of any such Commercial Tort Claim is disclosed in any press release issued by any Grantor, then, upon the request of the Administrative Agent, the relevant Grantor shall, within thirty
(30) days after such request is made, transmit to the Administrative Agent and the other Secured Parties a writing signed by such Grantor containing a brief description of such Commercial Tort
Claim and granting to the Administrative Agent in such writing (for the benefit of the Secured Parties) a security interest therein and in the Proceeds thereof, all upon the terms of this Agreement,
with such writing to be in form and substance satisfactory to the Administrative Agent and the other Secured Parties. 


 
 

ARTICLE VII
  Remedial Provisions    
    


        Section 7.01    Pledged Securities.    



        (a)   Unless
an Event of Default shall have occurred and be continuing and the Administrative Agent shall have given notice to the relevant Grantor of the Administrative
Agent's intent to exercise its corresponding rights pursuant to Section 7.01(b), each Grantor shall be permitted to receive all cash dividends paid in respect of the Pledged Securities paid in
the normal course of business of the relevant Issuer, to the extent permitted in the Term Loan Agreement, and to exercise all voting and corporate rights with respect to the Pledged Securities. 


        (b)   If
an Event of Default shall occur and be continuing, then at any time in the Administrative Agent's discretion without notice, (i) the Administrative Agent shall
have the right to receive any and all cash dividends, payments or other Proceeds paid in respect of the Pledged Securities and make application thereof to the Obligations in accordance with
Section 10.02 of the Term Loan Agreement, and (ii) any or all of the Pledged Securities shall be registered in the name of the Administrative Agent or its nominee, and the Administrative
Agent or its nominee may thereafter exercise (x) all voting, corporate and other rights pertaining to such Pledged Securities at any meeting of shareholders (or other equivalent body) of the
relevant Issuer or Issuers or otherwise and (y) any and all rights of conversion, exchange and subscription and any other rights, privileges or options pertaining to such Pledged Securities as
if it were the absolute owner thereof (including, without limitation, the right to exchange at its discretion any and all of the Pledged Securities upon the merger, consolidation, reorganization,
recapitalization or other fundamental change in the organizational structure of any Issuer, or upon the exercise by any Grantor or the Administrative Agent of any right, privilege or option pertaining
to such Pledged Securities, and in 



13







 




connection
therewith, the right to deposit and deliver any and all of the Pledged Securities with any committee, depositary, transfer agent, registrar or other designated agency upon such terms and
conditions as the Administrative Agent may determine), all without liability except to account for property actually received by it, but the Administrative Agent shall have no duty to any Grantor to
exercise any such right, privilege or option and shall not be responsible for any failure to do so or delay in so doing. 



        (c)   Each
Grantor hereby authorizes and instructs each Issuer of any Pledged Securities pledged by such Grantor hereunder (and each Issuer party hereto hereby agrees) to
(i) comply with any instruction received by it from the Administrative Agent in writing that (x) states that an Event of Default has occurred and is continuing and (y) is
otherwise in accordance with the terms of this Agreement, without any other or further instructions from such Grantor, and each Grantor agrees that each Issuer shall be fully protected in so
complying, and (ii) unless otherwise expressly permitted hereby, pay any dividends or other payments with respect to the Pledged Securities directly to the Administrative Agent. 



        (d)   After
the occurrence and during the continuation of an Event of Default, if the Issuer of any Pledged Securities is the subject of bankruptcy, insolvency, receivership,
custodianship or other proceedings under the supervision of any Governmental Authority, then all rights of the Grantor in respect thereof to exercise the voting and other consensual rights which such
Grantor would otherwise be entitled to exercise with respect to the Pledged Securities issued by such Issuer shall cease, and all such rights shall thereupon become vested in the Administrative Agent
who shall thereupon have the sole right to exercise such voting and other consensual rights, but the Administrative Agent shall have no duty to exercise any such voting or other consensual rights and
shall not be responsible for any failure to do so or delay in so doing. 




        Section 7.02    Collections on Accounts, Etc.    The Administrative Agent hereby authorizes each Grantor to
collect upon the Accounts, Instruments, Chattel Paper and Payment Intangibles subject to the Administrative Agent's direction and control, and the Administrative Agent may curtail or terminate said
authority at any time after the occurrence and during the continuance of an Event of Default.
Upon the request of the Administrative Agent at any time after the occurrence and during the continuance of an Event of Default, each Grantor shall notify the Account Debtors that the applicable
Accounts, Chattel Paper and Payment Intangibles have been assigned to the Administrative Agent for the ratable benefit of the Secured Parties and that payments in respect thereof shall be made
directly to the Administrative Agent. The Administrative Agent may in its own name or in the name of others communicate with the Account Debtors to verify with them to its satisfaction the existence,
amount and terms of any Accounts, Chattel Paper or Payment Intangibles. 


        Section 7.03    Proceeds.    If required by the Administrative Agent at any time after the occurrence and
during the continuance of an Event of Default, any payments of Accounts, Instruments, Chattel Paper and Payment Intangibles, when collected or received by each Grantor, and any other cash or
non-cash Proceeds received by each Grantor upon the sale or other disposition of any Collateral, shall be forthwith (and, in any event, within two Business Days) deposited by such Grantor
in the exact form received, duly indorsed by such Grantor to the Administrative Agent if required, in a special collateral account maintained by the Administrative Agent, subject to withdrawal by the
Administrative Agent for the ratable benefit of the Secured Parties only, as hereinafter provided, and, until so turned over, shall be held by such Grantor in trust for the Administrative Agent for
the ratable benefit of the Secured Parties, segregated from other funds of any such Grantor. Each deposit of any such Proceeds shall be accompanied by a report identifying in reasonable detail the
nature and source of the payments included in the deposit. All Proceeds (including, without limitation, Proceeds constituting collections of Accounts, Chattel Paper, Instruments) while held by the
Administrative Agent (or by any Grantor in trust for the Administrative Agent for the ratable benefit of the Secured Parties) shall continue to be collateral security for all of the Obligations and
shall not constitute payment thereof until applied as 


14







 



hereinafter
provided. At such intervals as may be agreed upon by each Grantor and the Administrative Agent, or, if an Event of Default shall have occurred and be continuing, at any time at the
Administrative Agent's election, the Administrative Agent shall apply all or any part of the funds on deposit in said special collateral account on account of the Obligations in such order as the
Administrative Agent may elect, and any part of such funds which the Administrative Agent elects not so to apply and deems not required as collateral security for the Obligations shall be paid over
from time to time by the Administrative Agent to each Grantor or to whomsoever may be lawfully entitled to receive the same. 


        Section 7.04    Texas UCC and Other Remedies.    



        (a)   If
an Event of Default shall occur and be continuing, the Administrative Agent, on behalf of the Secured Parties, may exercise in its discretion, in addition to all
other rights, remedies, powers and privileges granted to them in this Agreement, the other Loan Documents and in any other instrument or agreement securing, evidencing or relating to the Obligations,
all rights, remedies, powers and privileges of a secured party under the Texas UCC (whether the Texas UCC is in effect in the jurisdiction where such rights, remedies, powers or privileges are
asserted) or any other applicable law or otherwise available at law or equity. Without limiting the generality of the foregoing, the Administrative Agent, without demand of performance or other
demand, presentment, protest, advertisement or notice of any kind (except any notice required by law referred to below) to or upon any Grantor or any other Person (all and each of which demands,
defenses, advertisements and notices are hereby waived), may in such circumstances forthwith collect, receive, appropriate and realize upon the Collateral, or any part thereof, and/or may forthwith
sell, lease, assign, give option or options to purchase, or otherwise dispose of and deliver the Collateral or any part thereof (or contract to do any of the foregoing), in one or more parcels at
public or private sale or sales, at any exchange, broker's board or office of the Administrative Agent or any other Secured Party or elsewhere upon such terms and conditions as it may deem advisable
and at such prices as it may deem best, for cash or on credit or for future delivery without assumption of any credit risk. The Administrative Agent or any other Secured Party shall have the right
upon any such public sale or sales, and, to the extent permitted by law, upon any such private sale or sales, to purchase the whole or any part of the Collateral so sold, free of any right or equity
of redemption in any Grantor, which right or equity is hereby waived and released. If an Event of Default shall occur and be continuing, each Grantor further agrees, at the Administrative Agent's
request, to assemble the Collateral and make it available to the Administrative Agent at places which the Administrative Agent shall reasonably select, whether at such Grantor's premises or elsewhere.
Any such sale or transfer by the Administrative Agent either to itself or to any other Person shall be absolutely free from any claim of right by Grantor, including any equity or right of redemption,
stay or appraisal which Grantor has or may have under any rule of law, regulation or statute now existing or hereafter adopted. Upon any such sale or transfer, the Administrative Agent shall have the
right to deliver, assign and transfer to the purchaser or transferee thereof the Collateral so sold or transferred. The Administrative Agent shall apply the net proceeds of any action taken by it
pursuant to this Section 7.04, after deducting all reasonable costs and expenses of every kind incurred in connection therewith or incidental to the care or safekeeping of any of the Collateral
or in any way relating to the Collateral or the rights of the Administrative Agent and the other Secured Parties hereunder, including, without limitation, reasonable attorneys' fees and disbursements,
to the payment in whole or in part of the Obligations, in accordance with Section 10.02 of the Term Loan Agreement, and only after such application and after the payment by the Administrative
Agent of any other amount required by any provision of law, including, without limitation, Section 9.615 of the Texas UCC, need the Administrative Agent account for the surplus, if any, to any
Grantor. To the extent permitted by applicable law, each Grantor waives all claims, damages and demands it may acquire against the Administrative Agent or any other Secured Party arising out of the
exercise by them of any rights 



15







 

hereunder.
If any notice of a proposed sale or other disposition of Collateral shall be required by law, such notice shall be deemed reasonable and proper if given at least 10 days before such
sale or other disposition. 


        (b)   In
the event that the Administrative Agent elects not to sell the Collateral, the Administrative Agent retains its rights to dispose of or utilize the Collateral or any
part or parts thereof in any manner authorized or permitted by law or in equity, and to apply the proceeds of the same towards payment of the Obligations. Each and every method of disposition of the
Collateral described in this Agreement
shall constitute disposition in a commercially reasonable manner. The Administrative Agent may appoint any Person as agent to perform any act or acts necessary or incident to any sale or transfer of
the Collateral. 




        Section 7.05    Private Sales of Pledged Securities.    Each Grantor recognizes that the Administrative Agent
may be unable to effect a public sale of any or all the Pledged Securities, by reason of certain prohibitions contained in the Securities Act and applicable state securities laws or otherwise, and may
be compelled to resort to one or more private sales thereof to a restricted group of purchasers which will be obliged to agree, among other things, to acquire such securities for their own account for
investment and not with a view to the distribution or resale thereof. Each Grantor acknowledges and agrees that any such private sale may result in prices and other terms less favorable than if such
sale were a public sale and, notwithstanding such circumstances, agrees that any such private sale shall be deemed to have been made in a commercially reasonable manner. The Administrative Agent shall
be under no obligation to delay a sale of any of the Pledged Securities for the period of time necessary to permit the Issuer thereof to register such securities for public sale under the Securities
Act, or under applicable state securities laws, even if such Issuer would agree to do so. Each Grantor agrees to use its best efforts to do or cause to be done all such other acts as may reasonably be
necessary to make such sale or sales of all or any portion of the Pledged Securities pursuant to this Section 7.05 valid and binding and in compliance with any and all other applicable
Governmental Requirements. Each Grantor further agrees that a breach of any of the covenants contained in this Section 7.05 will cause irreparable injury to the Administrative Agent and the
other Secured Parties, that the Administrative Agent and the other Secured Parties have no adequate remedy at law in respect of such breach and, as a consequence, that each and every covenant
contained in this Section 7.05 shall be specifically enforceable against such Grantor, and such Grantor hereby waives and agrees not to assert any defenses against an action for specific
performance of such covenants. 


        Section 7.06    Waiver; Deficiency.    Each Grantor waives and agrees not to assert any rights or privileges
which it may acquire under the Texas UCC or any other applicable law. Each Grantor shall remain liable for any deficiency if the proceeds of any sale or other disposition of the Collateral are
insufficient to pay its Obligations and the fees and disbursements of any attorneys employed by the Administrative Agent or any other Secured Party to collect such deficiency. 


        Section 7.07    Non-Judicial Enforcement.    The Administrative Agent may enforce its rights
hereunder without prior judicial process or judicial hearing, and to the extent permitted by law, each Grantor expressly waives any and all legal rights which might otherwise require the
Administrative Agent to enforce its rights by judicial process. 


 
 

ARTICLE VIII
  The Administrative Agent    
    


        Section 8.01    Administrative Agent's Appointment as Attorney-in-Fact, Etc.    



        (a)   Each
Grantor hereby irrevocably constitutes and appoints the Administrative Agent and any officer or agent thereof, with full power of substitution, as its true and
lawful attorney-in-fact with full irrevocable power and authority in the place and stead of such Grantor and in the name of such Grantor or in its own name, for the purpose of
carrying out the terms of this Agreement, 



16







 

to
take any and all reasonably appropriate action and to execute any and all documents and instruments which may be reasonably necessary or desirable to accomplish the purposes of this Agreement, and,
without limiting the generality of the foregoing, each Grantor hereby gives the Administrative Agent the power and right, on behalf of such Grantor, without notice to or assent by such Grantor, to do
any or all of the following: 



        (i)    unless
being disputed under Section 9.03(a) of the Term Loan Agreement, pay or discharge taxes and Liens levied or placed on or threatened against the Collateral,
effect any repairs or any insurance called for by the terms of this Agreement and pay all or any part of the premiums therefor and the costs thereof; 



        (ii)   execute,
in connection with any sale provided for in Section 7.04 or Section 7.05, any endorsements, assignments or other instruments of conveyance or
transfer with respect to the Collateral; and 


        (iii)  (A)
direct any party liable for any payment under any of the Collateral to make payment of any and all moneys due or to become due thereunder directly to the
Administrative Agent or as the Administrative Agent shall direct; (B) take possession of and indorse and collect any checks, drafts, notes, acceptances or other instruments for the payment of
moneys due under any Account, Instrument, General Intangible, Chattel Paper or Payment Intangible or with respect to any other Collateral, and to file any claim or to take any other action or
proceeding in any court of law or equity or otherwise deemed appropriate by the Administrative Agent for the purpose of collecting any all such moneys due under any Account, Instrument or General
Intangible or with respect to any other Collateral whenever payable; (C) ask or demand for, collect, and receive payment of and receipt for, any and all moneys, claims and other amounts due or
to become due at any time in respect of or arising out of any Collateral; (D) sign and indorse any invoices, freight or express bills, bills of lading, storage or warehouse receipts, drafts
against debtors, assignments, verifications, notices and other documents in connection with any of the Collateral; (E) receive, change the address for delivery, open and dispose of mail
addressed to any Grantor, and to execute, assign and indorse negotiable and other instruments for the payment of money, documents of title or other evidences of payment, shipment or storage for any
form of Collateral on behalf of and in the name of any Grantor; (F) commence and prosecute any suits, actions or proceedings at law or in equity in any court of competent jurisdiction to
collect the Collateral or any portion thereof and to enforce any other right in respect of any Collateral; (G) defend any suit, action or proceeding brought against such Grantor with respect to
any Collateral; (H) settle, compromise or adjust any such suit, action or proceeding and, in connection therewith, give
such discharges or releases as the Administrative Agent may deem appropriate; and (I) generally, sell, transfer, pledge and make any agreement with respect to or otherwise deal with any of the
Collateral as fully and completely as though the Administrative Agent were the absolute owner thereof for all purposes, and do, at the Administrative Agent's option and such Grantor's expense, at any
time, or from time to time, all acts and things which the Administrative Agent deems necessary to protect, preserve or realize upon the Collateral and the Administrative Agent's and the other Secured
Parties' security interests therein and to effect the intent of this Agreement, all as fully and effectively as such Grantor might do. 




        Anything
in this Section 8.01(a) to the contrary notwithstanding, the Administrative Agent agrees that it will not exercise any rights under the power of attorney provided for in
this Section 8.01(a) unless an Event of Default shall have occurred and be continuing. 



        (b)   If
any Grantor fails to perform or comply with any of its agreements contained herein within the applicable grace periods, the Administrative Agent, at its option, but
without any 



17







 




obligation
so to do, may perform or comply, or otherwise cause performance or compliance, with such agreement. 


        (c)   The
expenses of the Administrative Agent incurred in connection with actions undertaken as provided in this Section 8.01, together with interest thereon at the
Post-Default Rate from the date of payment by the Administrative Agent to the date reimbursed by the relevant Grantor, shall be payable by such Grantor to the Administrative Agent on
demand. 


        (d)   Each
Grantor hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue and in compliance hereof. All powers, authorizations and agencies
contained in this Agreement are coupled with an interest and are irrevocable until this Agreement is terminated and the security interests created hereby are released. 




        Section 8.02    Duty of Administrative Agent.    The Administrative Agent's sole duty with respect to the
custody, safekeeping and physical preservation of the Collateral in its possession, under Section 9.207 of the Texas UCC or otherwise, shall be to deal with it in the same manner as the
Administrative Agent deals with similar property for its own account and shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral in its possession if the
Collateral is accorded treatment substantially equal to that which comparable secured parties accord comparable collateral. Neither the Administrative Agent, any other Secured Party nor any of their
respective officers, directors, employees or agents shall be liable for failure to demand, collect or realize upon any of the Collateral or for any delay in doing so or shall be under any obligation
to sell or otherwise dispose of any Collateral upon the request of any Grantor or any other Person or to take any other action whatsoever with regard to the Collateral or any part thereof. The powers
conferred on the
Administrative Agent and the other Secured Parties hereunder are solely to protect the Administrative Agent's and the other Secured Parties' interests in the Collateral and shall not impose any duty
upon the Administrative Agent or any other Secured Party to exercise any such powers. The Administrative Agent and the other Secured Parties shall be accountable only for amounts that they actually
receive as a result of the exercise of such powers, and neither they nor any of their officers, directors, employees or agents shall be responsible to any Grantor for any act or failure to act
hereunder, except for their own gross negligence or willful misconduct. To the fullest extent permitted by applicable law, the Administrative Agent shall be under no duty whatsoever to make or give
any presentment, notice of dishonor, protest, demand for performance, notice of non-performance, notice of intent to accelerate, notice of acceleration, or other notice or demand in
connection with any Collateral or the Obligations, or to take any steps necessary to preserve any rights against any Grantor or other Person or ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative to any Collateral, whether or not it has or is deemed to have knowledge of such matters. Each Grantor, to the extent permitted by
applicable law, waives any right of marshaling in respect of any and all Collateral, and waives any right to require the Administrative Agent or any other Secured Party to proceed against any Grantor
or other Person, exhaust any Collateral or enforce any other remedy which the Administrative Agent or any other Secured Party now has or may hereafter have against each Grantor, any Grantor or other
Person. 


        Section 8.03    Execution of Financing Statements.    Pursuant to the Texas UCC and any other applicable law,
each Grantor authorizes the Administrative Agent, its counsel or its representative, at any time and from time to time, to file or record financing statements, continuation statements, amendments
thereto and other filing or recording documents or instruments with respect to the Collateral without the signature of such Grantor in such form and in such offices as the Administrative Agent
reasonably determines appropriate to perfect the security interests of the Administrative Agent under this Agreement. Additionally, each Grantor authorizes the Administrative Agent, its counsel or its
representative, at any time and from time to time, to file or record such financing statements that describe the collateral covered thereby as "all assets of the Grantor", "all personal property of
the Grantor" or words of similar effect. A photographic or other reproduction of this Agreement shall be 


18







 



sufficient
as a financing statement or other filing or recording document or instrument for filing or recording in any jurisdiction. 


        Section 8.04    Authority of Administrative Agent.    Each Grantor acknowledges that the rights and
responsibilities of the Administrative Agent under this Agreement with respect to any action taken by the Administrative Agent or the exercise or non-exercise by the Administrative Agent
of any option, voting right, request, judgment or other right or remedy provided for herein or resulting or arising out of this Agreement shall, as between the Administrative Agent and the other
Secured Parties, be governed by the Term Loan Agreement and by such other agreements with respect thereto as may exist from time to time among them, but, as between the Administrative Agent and the
Grantors, the Administrative Agent shall be conclusively presumed to be acting as agent for the Secured Parties with full and valid authority so to act or refrain from acting, and no Grantor shall be
under any obligation, or entitlement, to make any inquiry respecting such authority. 


 
 

ARTICLE IX
  Subordination of Indebtedness    
    


        Section 9.01    Subordination of All Guarantor Claims.    As used herein, the term "Guarantor Claims" shall
mean all debts and obligations of the Borrower or any other Grantor to any Grantor, whether such debts and obligations now exist or are hereafter incurred or arise, or whether the obligation of the
debtor thereon be direct, contingent, primary, secondary, several, joint and several, or otherwise, and irrespective of whether such debts or obligations be evidenced by note, contract, open account,
or otherwise, and irrespective of the Person or Persons in whose favor such debts or obligations may, at their inception, have been, or may hereafter be created, or the manner in which they have been
or may hereafter be acquired by. After and during the continuation of an Event of Default, no Grantor shall receive or collect, directly or indirectly, from any obligor in respect thereof any amount
upon the Guarantor Claims. 


        Section 9.02    Claims in Bankruptcy.    In the event of receivership, bankruptcy, reorganization, arrangement,
debtor's relief or other insolvency proceedings involving any Grantor, the Administrative Agent on behalf of the Secured Parties shall have the right to prove their claim in any proceeding, so as to
establish their rights hereunder and receive directly from the receiver, trustee or other court custodian, dividends and payments which would otherwise be payable upon Guarantor Claims. Each Grantor
hereby assigns such dividends and payments to the Administrative Agent for the benefit of the Secured Parties for application against the Obligations as provided under Section 10.02 of the Term
Loan Agreement. Should any Agent or Secured Party receive, for application upon the Obligations, any such dividend or payment which is otherwise payable to any Grantor, and which, as between such
Grantor, shall constitute a credit upon the Guarantor Claims, then upon payment in full of the Obligations, the intended recipient shall become subrogated to the rights of the Administrative Agent and
the other Secured Parties to the extent that such payments to the Administrative Agent and the other Secured Parties on the Guarantor Claims have contributed toward the liquidation of the Obligations,
and such subrogation shall be with respect to that proportion of the Obligations which would have been unpaid if the Administrative Agent and the other Secured Parties had not received dividends or
payments upon the Guarantor Claims. 


        Section 9.03    Payments Held in Trust.    In the event that notwithstanding Section 9.01 and
Section 9.02, any Grantor should receive any funds, payments, claims or distributions which is prohibited by such Sections, then it agrees: (a) to hold in trust for the Administrative
Agent and the other Secured Parties an amount equal to the amount of all funds, payments, claims or distributions so received, and (b) that it shall have absolutely no dominion over the amount
of such funds, payments, claims or distributions except to pay them promptly to the Administrative Agent, for the benefit of the Secured Parties; and each Grantor covenants promptly to pay the same to
the Administrative Agent. 


19







 



        Section 9.04    Liens Subordinate.    Each Grantor agrees that, until the Obligations are paid in full, any
Liens securing payment of the Guarantor Claims shall be and remain inferior and subordinate to any Liens securing payment of the Obligations, regardless of whether such encumbrances in favor of such
Grantor, the Administrative Agent or any other Secured Party presently exist or are hereafter created or attach. Without the prior written consent of the Administrative Agent, no Grantor, during the
period in which any of the Obligations are outstanding, shall (a) exercise or enforce any creditor's right it may have against any debtor in respect of the Guarantor Claims, or
(b) foreclose, repossess, sequester or otherwise take steps or institute any action or proceeding (judicial or otherwise, including without limitation the commencement of or joinder in any
liquidation, bankruptcy, rearrangement, debtor's relief or insolvency proceeding) to enforce any Lien held by it. 



        Section 9.05    Notation of Records.    Upon the request of the Administrative Agent, all promissory notes and
all accounts receivable ledgers or other evidence of the Guarantor Claims accepted by or held by any Grantor shall contain a specific written notice thereon that the indebtedness evidenced thereby is
subordinated under the terms of this Agreement. 


 
 

ARTICLE X
  Miscellaneous    
    



        Section 10.01    Waiver.    No failure on the part of the Administrative Agent or any other Secured Party to
exercise and no delay in exercising, and no course of dealing with respect to, any right, remedy, power or privilege under any of the Loan Documents shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, power or privilege under any of the Loan Documents preclude any other or further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges provided herein are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law. The exercise by the
Administrative Agent of any one or more of the rights, powers and remedies herein shall not be construed as a waiver of any other rights, powers and remedies, including, without limitation, any rights
of set-off. 


        Section 10.02    Notices.    All notices and other communications provided for herein shall be given in the
manner and subject to the terms of Section 12.01 of the Term Loan Agreement; provided that any such notice, request or demand to or upon any Guarantor shall be addressed to such Guarantor at
its notice address set forth on Schedule 1. 


        Section 10.03    Payment of Expenses, Indemnities, Etc.    



        (a)   Each
Grantor agrees to pay or promptly reimburse the Administrative Agent and each other Secured Party for all advances, charges, costs and expenses (including, without
limitation, all costs and expenses of holding, preparing for sale and selling, collecting or otherwise realizing upon the Collateral and all attorneys' fees, legal expenses and court costs) incurred
by any Secured Party in connection with the exercise of its respective rights and remedies hereunder, including, without limitation, any advances, charges, costs and expenses that may be incurred in
any effort to enforce any of the provisions of this Agreement or any obligation of any Grantor in respect of the Collateral or in connection with (i) the preservation of the Lien of, or the
rights of the Administrative Agent or any other Secured Party under this Agreement, (ii) any actual or attempted sale, lease, disposition, exchange, collection, compromise, settlement or other
realization in respect of, or care of, the Collateral, including all such costs and expenses incurred in any bankruptcy, reorganization, workout or other similar proceeding, or (iii) collecting
against such Grantor under the guarantee contained in Article II or otherwise enforcing or preserving any rights under this Agreement and the other Loan Documents to which such Grantor is a
party. 


        (b)   Each
Grantor agrees to pay, and to save the Administrative Agent and the other Secured Parties harmless from, any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever (including, 



20







 




without
limitation, court costs and attorneys' fees, 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 Agreement) incurred because of, incident to, or with
respect to, the Collateral (including, without limitation, any exercise of rights or remedies in connection therewith) or the execution, delivery, enforcement, performance and administration of this
Agreement, to the extent the Borrower would be required to do so pursuant to Section 12.03 of the Term Loan Agreement. All amounts for which any Grantor is liable pursuant to this
Section 10.03 shall be due and payable by such Grantor to the Secured Parties upon demand. 




        Section 10.04    Amendments in Writing.    None of the terms or provisions of this Agreement may be waived,
amended, supplemented or otherwise modified except in accordance with Section 12.04 of the Term Loan Agreement. 


        Section 10.05    Successors and Assigns.    This Agreement shall be binding upon the successors and assigns of
each Grantor and shall inure to the benefit of the Administrative Agent and the other Secured Parties and their successors and assigns; provided that except as set forth in Section 8.14 or
Section 9.13 of the Term Loan Agreement, no Grantor may assign, transfer or delegate any of its rights or obligations under this Agreement without the prior written consent of the
Administrative Agent and the Lenders. 


        Section 10.06    Invalidity.    In the event that any one or more of the provisions contained in this Agreement
or in any of the Loan Documents to which a Grantor is a party shall, for any reason, be held invalid,
illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement or such other Loan Document. 



        Section 10.07    Counterparts.    This Agreement may be executed in any number of counterparts, all of which
taken together shall constitute one and the same instrument and any of the parties hereto may execute this Agreement by signing any such counterpart. 


        Section 10.08    Survival.    The obligations of the parties under Section 10.03 shall survive the
repayment of the Loans and termination of the Term Loan Agreement. To the extent that any payments on the Obligations or proceeds of any Collateral are subsequently invalidated, declared to be
fraudulent or preferential, set aside or required to be repaid to a trustee, debtor in possession, receiver or other Person under any bankruptcy law, common law or equitable cause, then to such
extent, the Obligations so satisfied shall be revived and continue as if such payment or proceeds had not been received and the Administrative Agent's and the other Secured Parties' Liens, security
interests, rights, powers and remedies under this Agreement and each Security Instrument shall continue in full force and effect. In such event, each Security Instrument shall be automatically
reinstated and each Grantor shall take such action as may be reasonably requested by the Administrative Agent and the other Secured Parties to effect such reinstatement. 



        Section 10.09    Captions.    Captions and section headings appearing herein are included solely for
convenience of reference and are not intended to affect the interpretation of any provision of this Agreement. 


        Section 10.10    No Oral Agreements.    The Loan Documents embody the entire agreement and understanding
between the parties and supersede all other agreements and understandings between such parties relating to the subject matter hereof and thereof. The Loan Documents represent the final agreement
between the parties and may not be contradicted by evidence of prior, contemporaneous or subsequent oral agreements of the parties. There are no unwritten oral agreements between the parties. 


21







 



        Section 10.11    Governing Law; Submission to Jurisdiction.    



        (a)   This
Agreement shall be governed by, and construed in accordance with, the laws of the state of Texas. 



        (b)   Any
legal action or proceeding with respect to this Agreement or any other Loan Documents to which a Grantor is a party shall be brought in the courts of the State of
Texas or of the United States of America for the Southern District of Texas, and each of the Lenders, the Administrative Agent and the Grantors hereby accepts for itself and (to the extent permitted
by law) in respect of its Property, generally and unconditionally, the jurisdiction of the aforesaid courts. Each of the Lenders, the Administrative Agent and the Grantors hereby irrevocably waives
any objection, including, without limitation, any objection to the laying of venue or based on the grounds of forum non conveniens, which it may now or hereafter have to the bringing of any such
action or proceeding in such respective jurisdictions. This submission to jurisdiction is non-exclusive and does not preclude the Administrative Agent or any Lender from obtaining
jurisdiction over such Grantor in any court otherwise having jurisdiction. 


        (c)   Each
of the Lenders, the Administrative Agent and the Grantors irrevocably consents to the service of process of any of the aforementioned courts in any such action or
proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, to such Person at the address specified on its signature page of this Agreement or the Term Loan
Agreement, as applicable, such service to become effective thirty (30) days after such mailing. Nothing herein shall affect the right of the Administrative Agent or any Lender or any holder of
a Note or Grantor to serve process in any other manner permitted by law or to commence legal proceedings or otherwise proceed against such Grantor in any other jurisdiction. 


        (d)   Each
Grantor and each Lender hereby (i) irrevocably and unconditionally waive, to the fullest extent permitted by law, trial by jury in any legal action or
proceeding relating to this Agreement or any other Loan Document and for any counterclaim therein; (ii) irrevocably waive, to the maximum extent not prohibited by law, any right it may have to
claim or recover in any such litigation any special, exemplary, punitive or consequential damages, or damages other than, or in addition to, actual damages; (iii) certify that no party hereto
nor any representative or agent of counsel for any party hereto has represented, expressly or otherwise, or implied that such party would not, in the event of litigation, seek to enforce the foregoing
waivers, and (iv) acknowledge that it has been induced to enter into this Agreement, the Loan Documents and the transactions contemplated hereby and thereby by, among other things, the mutual
waivers and certifications contained in this Section 9.12. 




        Section 10.12    Acknowledgments.    Each Grantor hereby acknowledges that: 



        (a)   it
has been advised by counsel in the negotiation, execution and delivery of this Agreement and the other Loan Documents to which it is a party; 


        (b)   neither
the Administrative Agent nor any other Secured Party has any fiduciary relationship with or duty to any Grantor arising out of or in connection with this
Agreement or any of the other Loan Documents, and the relationship between the Grantors, on the one hand, and the Administrative Agent and the other Secured Parties, on the other hand, in connection
herewith or therewith is solely that of debtor and creditor; and 


        (c)   no
joint venture is created hereby or by the other Loan Documents or otherwise exists by virtue of the transactions contemplated hereby among the Secured Parties or
among the Grantors and the Lenders. 


        (d)   Each
of the parties hereto specifically agrees that it has a duty to read this Agreement and the Security Instruments and agrees that it is charged with notice and
knowledge of the terms 



22







 




of
this Agreement and the Security Instruments; that it has in fact read this Agreement and is fully informed and has full notice and knowledge of the terms, conditions and effects of this Agreement;
that it has been represented by independent legal counsel of its choice throughout the negotiations preceding its execution of this Agreement and the Security Instruments; and has received the advice
of its attorney in entering into this Agreement and the Security Instruments; and that it recognizes that certain of the terms of this Agreement and the Security Instruments result in one party
assuming the liability inherent in some aspects of the transaction and relieving the other party of its responsibility for such liability. Each party hereto agrees and covenants that it will not
contest the validity or enforceability of any exculpatory provision of this Agreement and the Security Instruments on the basis that the party had no notice or knowledge of such provision or that the
provision is not "conspicuous." 


        (e)   Each
Grantor warrants and agrees that each of the waivers and consents set forth in this Agreement are made voluntarily and unconditionally after consultation with
outside legal counsel and with full knowledge of their significance and consequences, with the understanding that events giving rise to any defense or right waived may diminish, destroy or otherwise
adversely affect rights which such Grantor otherwise may have against the Borrower, any other Grantor, the Secured Parties or any other Person or against any collateral. If, notwithstanding the intent
of the parties that the terms of this Agreement shall control in any and all circumstances, any such waivers or consents are determined to be unenforceable under applicable law, such waivers and
consents shall be effective to the maximum extent permitted by law. 




        Section 10.13    Additional Grantors.    Each Subsidiary of the Borrower that is required to become a party to
this Agreement pursuant to Section 8.11 of the Term Loan Agreement and is not a signatory hereto shall become a Grantor for all purposes of this Agreement upon execution and delivery by such
Subsidiary of an Assumption Agreement in the form of Annex I hereto. 



        Section 10.14    Set-Off.    Each Grantor agrees that, in addition to (and without limitation of)
any right of set-off, bankers' lien or counterclaim a Secured Party may otherwise have, each Secured Party shall have the right and be entitled (after consultation with the Administrative
Agent), at its option, to offset balances held by it or by any of its Affiliates for account of any Grantor or any Subsidiary at any of its offices, in Dollars or in any other currency (regardless of
whether such balances are then due to such Person), in which case it shall promptly notify the Borrower and the Administrative Agent thereof, provided that such Secured Party's failure to give such
notice shall not affect the validity thereof. 


        Section 10.15    Releases.    



        (a)    Release Upon Payment in Full.    The grant of a security interest hereunder and all of rights, powers and
remedies in connection herewith shall remain in full force and effect until the Administrative Agent has (i) retransferred and delivered all Collateral in its possession to the Grantors, and
(ii) executed a written release or termination statement and reassigned to the Grantors without recourse or warranty any remaining Collateral and all rights conveyed hereby. Upon the complete
payment of the Obligations and the compliance by the Grantors with all covenants and agreements hereof, the Administrative Agent, at the written request and expense of the Borrower, will promptly
release, reassign and transfer the Collateral to the Grantors and declare this Agreement to be of no further force or effect. 


        (b)    Further Assurances.    If any of the Collateral shall be sold, transferred or otherwise disposed of by any
Grantor in a transaction permitted by the Term Loan Agreement, then the Administrative Agent, at the request and sole expense of such Grantor, shall promptly execute and deliver to such Grantor all
releases or other documents reasonably necessary or desirable for the release of the Liens created hereby on such Collateral and the capital stock of such Grantor. At the request and sole expense of
the Borrower, a Grantor shall be released from its obligations hereunder in the event that all the capital stock of such Grantor shall be sold, transferred or 



23







 




otherwise
disposed of in a transaction permitted by the Term Loan Agreement; provided that the Borrower shall have delivered to the Administrative Agent, at least ten Business Days prior to the date
of the proposed release, a written request for release identifying the relevant Grantor and the terms of the sale or other disposition in reasonable detail, including the price thereof and any
expenses in connection therewith, together with a certification by the Borrower stating that such transaction is in compliance with the Term Loan Agreement and the other Loan Documents. 


        (c)    Retention in Satisfaction.    Except as may be expressly applicable pursuant to Section 9.620 of the
Texas UCC, no action taken or omission to act by the Administrative Agent or the other Secured Parties hereunder, including, without limitation, any exercise of voting or consensual rights or any
other action taken or inaction, shall be deemed to constitute a retention of the Collateral in satisfaction of the Obligations or otherwise to be in full satisfaction of the Obligations, and the
Obligations shall remain in full force and effect, until the Administrative Agent and the other Secured Parties shall have applied payments (including, without limitation, collections from Collateral)
towards the Obligations in the full amount then outstanding or until such subsequent time as is provided in Section 10.15(a). 




        Section 10.16    Reinstatement.    The obligations of each Grantor under this Agreement (including, without
limitation, with respect to the guarantee contained in Article II and the provision of collateral herein) shall continue to be effective, or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any of the Obligations is rescinded or must otherwise be restored or returned by the Administrative Agent or any other Secured Party upon the insolvency, bankruptcy,
dissolution,
liquidation or reorganization of the Borrower or any Grantor, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, the Borrower or
any Guarantor or any substantial part of its property, or otherwise, all as though such payments had not been made. 


        Section 10.17    Acceptance.    Each Grantor hereby expressly waives notice of acceptance of this Agreement,
acceptance on the part of the Administrative Agent and the other Secured Parties being conclusively presumed by their request for this Agreement and delivery of the same to the Administrative Agent. 


24










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



	BORROWER:	 	PETROHAWK ENERGY CORPORATION
	

 	
 	

By:	

 	

 
	 	 	 	/s/  FLOYD C. WILSON      
 Floyd C. Wilson

President and Chief Executive Officer
	
GUARANTORS:	
 	

WYNN-CROSBY ENERGY, INC.
	 	 	 	By:	P-H Energy, L.L.C.

Its General Partner
	

 	
 	

 	
By:	

/s/  FLOYD C. WILSON      
 President and Chief Executive Officer
	

 	
 	
P-H ENERGY, LLC
	 	 	 	By:	/s/  FLOYD C. WILSON      
 President and Chief Executive Officer
	

 	
 	
WYNN-CROSBY 1994, LTD.
	 	 	 	By:	P-H Energy, L.L.C.

Its General Partner
	

 	
 	

 	
By:	

/s/  FLOYD C. WILSON      
 President and Chief Executive Officer
	

 	
 	
WYNN-CROSBY 1995, LTD.
	 	 	 	By:	P-H Energy, L.L.C.

Its General Partner
	

 	
 	

 	
By:	

/s/  FLOYD C. WILSON      
 President and Chief Executive Officer
	

 	
 	
WYNN-CROSBY 1996, LTD.
	 	 	 	By:	P-H Energy, L.L.C.

Its General Partner
	

 	
 	

 	
By:	

/s/  FLOYD C. WILSON      
 President and Chief Executive Officer
	

 	
 	
WYNN-CROSBY 1997, LTD.
	 	 	 	By:	P-H Energy, L.L.C.

Its General Partner
	

 	
 	

 	
By:	

/s/  FLOYD C. WILSON      
 President and Chief Executive Officer
	

 	
 	
WYNN-CROSBY 1998, LTD.
	 	 	 	By:	P-H Energy, L.L.C.

Its General Partner
	

 	
 	

 	
By:	

/s/  FLOYD C. WILSON      
 President and Chief Executive Officer
	 	 	 	 	 










	

 	
 	
WYNN-CROSBY 1999, LTD.
	 	 	 	By:	P-H Energy, L.L.C.

Its General Partner
	

 	
 	

 	
By:	

/s/  FLOYD C. WILSON      
 President and Chief Executive Officer
	

 	
 	
WYNN-CROSBY 2000, LTD.
	 	 	 	By:	P-H Energy, L.L.C.

Its General Partner
	

 	
 	

 	
By:	

/s/  FLOYD C. WILSON      
 President and Chief Executive Officer
	

 	
 	
WYNN-CROSBY 2002, LTD.
	 	 	 	By:	P-H Energy, L.L.C.

Its General Partner
	

 	
 	

 	
By:	

/s/  FLOYD C. WILSON      
 President and Chief Executive Officer
	

 	
 	
BETA OPERATING COMPANY, L.L.C.
	 	 	 	By:	PETROHAWK ENERGY CORPORATION

Its Sole Member
	

 	
 	

 	
By:	

/s/  FLOYD C. WILSON      
 President and Chief Executive Officer
	

 	
 	
TCM, L.L.C.
	 	 	 	By:	BETA OPERATING COMPANY, L.L.C.

Its Sole Member
	

 	
 	

 	
By:	

PETROHAWK ENERGY CORPORATION

Its Sole Member
	 	 	 	By:	/s/  FLOYD C. WILSON      
 President and Chief Executive Officer
	

 	
 	
RED RIVER FIELD SERVICES, L.L.C.
	 	 	 	By:	BETA OPERATING COMPANY, L.L.C.

Its Sole Member
	

 	
 	

 	
By:	

PETROHAWK ENERGY CORPORATION

Its Sole Member
	

 	
 	

By:	

/s/  FLOYD C. WILSON      
 Floyd C. Wilson

President and Chief Executive Officer
	

 	
 	

Acknowledged and Agreed to as

of the date hereof by:
	
ADMINISTRATIVE AGENT:	
 	

BNP PARIBAS
	

 	
 	

By:	

/s/  BRIAN M. MALONE      
	 	 	 	

	 	 	Title:	Authorized Signatory
	 	 	 	

	

 	
 	

By:	

/s/  GABE ELLISOR      
	 	 	 	

	 	 	Title:	Authorized Signatory
	 	 	 	










SIGNATURE
PAGE

SECOND LIEN—GUARANTEE AND COLLATERAL AGREEMENT 








  



 
 

Schedule 1    
    
    NOTICE ADDRESSES OF GRANTORS    
    


	1.
	Wynn
Crosby 1994, Ltd.

Texas limited partnership

Notice Address:

Attn: Floyd C. Wilson

1100 Louisiana, Suite 4400

Houston, Texas 77002

Telephone: (832) 204-2700

Facsimile: (832) 204-2800




	2.
	Wynn-Crosby
1995, Ltd.

Texas limited partnership

Notice Address:

Attn: Floyd C. Wilson

1100 Louisiana, Suite 4400

Houston, Texas 77002

Telephone: (832) 204-2700

Facsimile: (832) 204-2800



	3.
	Wynn-Crosby
1996, Ltd.

Texas limited partnership

Notice Address:

Attn: Floyd C. Wilson

1100 Louisiana, Suite 4400

Houston, Texas 77002

Telephone: (832) 204-2700

Facsimile: (832) 204-2800



	4.
	Wynn-Crosby
1997, Ltd.

Texas limited partnership

Notice Address:

Attn: Floyd C. Wilson

1100 Louisiana, Suite 4400

Houston, Texas 77002

Telephone: (832) 204-2700

Facsimile: (832) 204-2800



	5.
	Wynn-Crosby
1998, Ltd.

Texas limited partnership

Notice Address:

Attn: Floyd C. Wilson

1100 Louisiana, Suite 4400

Houston, Texas 77002

Telephone: (832) 204-2700

Facsimile: (832) 204-2800



	6.
	Wynn-Crosby
1999, Ltd.

Texas limited partnership

Notice Address:

Attn: Floyd C. Wilson

1100 Louisiana, Suite 4400



Schedule 1 - 1








 

Houston,
Texas 77002

Telephone: (832) 204-2700

Facsimile: (832) 204-2800 



	7.
	Wynn-Crosby
2000, Ltd.

Texas limited partnership

Notice Address:

Attn: Floyd C. Wilson

1100 Louisiana, Suite 4400

Houston, Texas 77002

Telephone: (832) 204-2700

Facsimile: (832) 204-2800



	8.
	Wynn-Crosby
2002, Ltd.

Texas limited partnership

Notice Address:

Attn: Floyd C. Wilson

1100 Louisiana, Suite 4400

Houston, Texas 77002

Telephone: (832) 204-2700

Facsimile: (832) 204-2800




	9.
	Wynn-Crosby
Energy, Inc.

Texas corporation

Notice Address:

Attn: Floyd C. Wilson

1100 Louisiana, Suite 4400

Houston, Texas 77002

Telephone: (832) 204-2700

Facsimile: (832) 204-2800



	10.
	P-H
Energy, LLC

Texas limited liability company

Notice Address:

Attn: Floyd C. Wilson

1100 Louisiana, Suite 4400

Houston, Texas 77002

Telephone: (832) 204-2700

Facsimile: (832) 204-2800



	11.
	Beta
Operating Company, L.L.C.

Oklahoma limited liability company

Notice Address:

Attn: Floyd C. Wilson

1100 Louisiana, Suite 4400

Houston, Texas 77002

Telephone: (832) 204-2700 


Schedule 1 - 2







 
	12.
	TCM,
L.L.C.

Oklahoma limited liability company

Notice Address:

Attn: Floyd C. Wilson

1100 Louisiana, Suite 4400

Houston, Texas 77002

Telephone: (832) 204-2700




	13.
	Red
River Field Services, L.L.C.

Oklahoma limited liability company

Notice Address:

Attn: Floyd C. Wilson

1100 Louisiana, Suite 4400

Houston, Texas 77002

Telephone: (832) 204-2700 


Schedule 1 - 3








  



 
 

Schedule 2    
    
    DESCRIPTION OF PLEDGED SECURITIES    
    


        Pledged Securities: 



	Owner
 
	 	Issuer
	 	Class of Stock or

other Equity Interest
	 	No. of

Shares
	 	Certificated or

Uncertificated

	P-H Energy, LLC	 	Wynn-Crosby 1994, Ltd.	 	1% General Partnership Interest	 	N/A	 	Uncertificated
	

Petrohawk Energy Corporation	
 	

Wynn-Crosby 1994, Ltd.	
 	

99% Limited Partnership Interest	
 	

N/A	
 	

Uncertificated
	

P-H Energy, LLC	
 	

Wynn-Crosby 1995, Ltd.	
 	

1% General Partnership Interest	
 	

N/A	
 	

Uncertificated
	

Petrohawk Energy Corporation	
 	

Wynn-Crosby 1995, Ltd.	
 	

99% Limited Partnership Interest	
 	

N/A	
 	

Uncertificated
	

P-H Energy, LLC	
 	

Wynn-Crosby 1996, Ltd.	
 	

1% General Partnership Interest	
 	

N/A	
 	

Uncertificated
	

Petrohawk Energy Corporation	
 	

Wynn-Crosby 1996, Ltd.	
 	

99% Limited Partnership Interest	
 	

N/A	
 	

Uncertificated
	

P-H Energy, LLC	
 	

Wynn-Crosby 1997, Ltd.	
 	

1% General Partnership Interest	
 	

N/A	
 	

Uncertificated
	

Petrohawk Energy Corporation	
 	

Wynn-Crosby 1997, Ltd.	
 	

99% Limited Partnership Interest	
 	

N/A	
 	

Uncertificated
	

P-H Energy, LLC	
 	

Wynn-Crosby 1998, Ltd.	
 	

1% General Partnership Interest	
 	

N/A	
 	

Uncertificated
	

Petrohawk Energy Corporation	
 	

Wynn-Crosby 1998, Ltd.	
 	

99% Limited Partnership Interest	
 	

N/A	
 	

Uncertificated
	

P-H Energy, LLC	
 	

Wynn-Crosby 1999, Ltd.	
 	

1% General Partnership Interest	
 	

N/A	
 	

Uncertificated
	

Petrohawk Energy Corporation	
 	

Wynn-Crosby 1999, Ltd.	
 	

99% Limited Partnership Interest	
 	

N/A	
 	

Uncertificated
	

P-H Energy, LLC	
 	

Wynn-Crosby 2000, Ltd.	
 	

1% General Partnership Interest	
 	

N/A	
 	

Uncertificated
	

Petrohawk Energy Corporation	
 	

Wynn-Crosby 2000, Ltd.	
 	

99% Limited Partnership Interest	
 	

N/A	
 	

Uncertificated
	

P-H Energy, LLC	
 	

Wynn-Crosby 2002, Ltd.	
 	

1% General Partnership Interest	
 	

N/A	
 	

Uncertificated
	

Petrohawk Energy Corporation	
 	

Wynn-Crosby 2002, Ltd.	
 	

99% Limited Partnership Interest	
 	

N/A	
 	

Uncertificated
	

Petrohawk Energy Corporation	
 	

P-H Energy, LLC	
 	

100% Membership Interest	
 	

N/A	
 	

Uncertificated
	

Petrohawk Energy Corporation	
 	

Wynn-Crosby Energy, Inc.	
 	

Common Stock	
 	

1,000	
 	

Certificated
	

Petrohawk Energy Corporation	
 	

Beta Operating Company, L.L.C.	
 	

100% Membership Interest	
 	

N/A	
 	

Uncertificated
	

Beta Operating Company, L.L.C.	
 	

Red River Field Services, L.L.C.	
 	

100% Membership Interest	
 	

N/A	
 	

Uncertificated
	

Beta Operating Company, L.L.C.	
 	

TCM, L.L.C.	
 	

100% Membership Interest	
 	

N/A	
 	

Uncertificated




Schedule 2 - 1








  



 
 

Schedule 3    
    
    FILINGS AND OTHER ACTIONS
  REQUIRED TO PERFECT SECURITY INTERESTS    
    


Uniform Commercial Code Filings  


[INFORMATION TO COME]


Delivery to Administrative Agent of Pledged Securities  


	1.
	Petrohawk
Energy Corporation

Stock Certificate No. 3 for 1,000 shares of Common Stock

of Wynn-Crosby Energy, Inc. 


Schedule 3 - 1








  



 
 

Schedule 4    
    
    CORRECT LEGAL NAME, LOCATION OF JURISDICTION OF ORGANIZATION,
  ORGANIZATIONAL IDENTIFICATION NUMBER, TAXPAYOR IDENTIFICATION
  NUMBER AND CHIEF EXECUTIVE OFFICE    





	1.	 	Wynn-Crosby 1994, Ltd.

a Texas limited partnership	 	 
	 	 	Organizational Identification Number:	 	00076385-10
	 	 	Taxpayor Identification Number:	 	75-2575733
	 	 	Chief Executive Office:	 	1100 Louisiana, Suite 4400

Houston, Texas 77002
	

2.	
 	

Wynn-Crosby 1995, Ltd.

a Texas limited partnership	
 	

 
	 	 	Organizational Identification Number:	 	00085893-10
	 	 	Taxpayor Identification Number:	 	75-2627325
	 	 	Chief Executive Office:	 	1100 Louisiana, Suite 4400

Houston, Texas 77002
	

3.	
 	

Wynn-Crosby 1996, Ltd.

a Texas limited partnership	
 	

 
	 	 	Organizational Identification Number:	 	00095234-10
	 	 	Taxpayor Identification Number:	 	75-2684881
	 	 	Chief Executive Office:	 	1100 Louisiana, Suite 4400

Houston, Texas 77002
	

4.	
 	

Wynn-Crosby 1997, Ltd.

a Texas limited partnership	
 	

 
	 	 	Organizational Identification Number:	 	00097592-10
	 	 	Taxpayor Identification Number:	 	75-2702317
	 	 	Chief Executive Office:	 	1100 Louisiana, Suite 4400

Houston, Texas 77002
	

5.	
 	

Wynn-Crosby 1998, Ltd.

a Texas limited Partnership	
 	

 
	 	 	Organizational Identification Number:	 	00111816-10
	 	 	Taxpayor Identification Number:	 	75-2779453
	 	 	Chief Executive Office:	 	1100 Louisiana, Suite 4400

Houston, Texas 77002
	

6.	
 	

Wynn-Crosby 1999, Ltd.

a Texas limited partnership	
 	

 
	 	 	Organizational Identification Number:	 	0013341610
	 	 	Taxpayor Identification Number:	 	75-2871588
	 	 	Chief Executive Office:	 	1100 Louisiana, Suite 4400

Houston, Texas 77002
	

7.	
 	

Wynn-Crosby 2000, Ltd.

a Texas limited partnership	
 	

 
	 	 	Organizational Identification Number:	 	0014728210
	 	 	Taxpayor Identification Number:	 	75-2925158
	 	 	Chief Executive Office:	 	1100 Louisiana, Suite 4400

Houston, Texas 77002
	 	 	 	 	 





Schedule 4 - 1







 

	

8.	
 	

Wynn-Crosby 2002, Ltd.

a Texas limited partnership	
 	

 
	 	 	Organizational Identification Number:	 	800131427
	 	 	Taxpayor Identification Number:	 	68-0525178
	 	 	Chief Executive Office:	 	1100 Louisiana, Suite 4400

Houston, Texas 77002
	

9.	
 	

Wynn-Crosby Energy, Inc.

a Texas corporation	
 	

 
	 	 	Organizational Identification Number:	 	01262202-00
	 	 	Taxpayor Identification Number:	 	75-2472880
	 	 	Chief Executive Office:	 	1100 Louisiana, Suite 4400

Houston, Texas 77002
	

10.	
 	

P-H Energy, LLC

a Texas limited liability company	
 	

 
	 	 	Organizational Identification Number:	 	800414887
	 	 	Taxpayor Identification Number:	 	None (disregarded entity)
	 	 	Chief Executive Office:	 	1100 Louisiana, Suite 4400

Houston, Texas 77002
	

11.	
 	

Beta Operating Company, L.L.C.

an Oklahoma limited liability company	
 	

 
	 	 	Organizational Identification Number:	 	3500593601
	 	 	Taxpayer Identification Number:	 	73-1535371
	 	 	Chief Executive Office:	 	1100 Louisiana, Suite 4400

Houston, Texas 77002
	

12.	
 	

TCM, L.L.C.

an Oklahoma limited liability company	
 	

 
	 	 	Organizational Identification Number:	 	3500593600
	 	 	Taxpayer Identification Number:	 	73-1535373
	 	 	Chief Executive Office:	 	1100 Louisiana, Suite 4400

Houston, Texas 77002
	

13.	
 	

Red River Field Services, L.L.C.

an Oklahoma limited liability company	
 	

 
	 	 	Organizational Identification Number:	 	3500620355
	 	 	Taxpayer Identification Number:	 	73-1560304
	 	 	Chief Executive Office:	 	1100 Louisiana, Suite 4400

Houston, Texas 77002




Schedule 4 - 2








  



 
 

Schedule 5    
    
    PRIOR NAMES AND PRIOR CHIEF EXECUTIVE OFFICE    
    



	1.	 	Wynn-Crosby 1994, Ltd.	 	 
	 	 	Prior Names:	 	None
	 	 	Prior Chief Executive Office:	 	5500 West Plano Parkway, Suite 200

Plano, Texas 75093
	

2.	
 	

Wynn-Crosby 1995, Ltd.	
 	

 
	 	 	Prior Names:	 	None
	 	 	Prior Chief Executive Office:	 	5500 West Plano Parkway, Suite 200

Plano, Texas 75093
	

3.	
 	

Wynn-Crosby 1996, Ltd.	
 	

 
	 	 	Prior Names:	 	None
	 	 	Prior Chief Executive Office:	 	5500 West Plano Parkway, Suite 200

Plano, Texas 75093
	

4.	
 	

Wynn-Crosby 1997, Ltd.	
 	

 
	 	 	Prior Names:	 	None
	 	 	Prior Chief Executive Office:	 	5500 West Plano Parkway, Suite 200

Plano, Texas 75093
	

5.	
 	

Wynn-Crosby 1998, Ltd.	
 	

 
	 	 	Prior Names:	 	None
	 	 	Prior Chief Executive Office:	 	5500 West Plano Parkway, Suite 200

Plano, Texas 75093
	

6.	
 	

Wynn-Crosby 1999, Ltd.	
 	

 
	 	 	Prior Names:	 	None
	 	 	Prior Chief Executive Office:	 	5500 West Plano Parkway, Suite 200

Plano, Texas 75093
	

7.	
 	

Wynn-Crosby 2000, Ltd.	
 	

 
	 	 	Prior Names:	 	None
	 	 	Prior Chief Executive Office:	 	5500 West Plano Parkway, Suite 200

Plano, Texas 75093
	

8.	
 	

Wynn-Crosby 2002, Ltd.	
 	

 
	 	 	Prior Names:	 	None
	 	 	Prior Chief Executive Office:	 	5500 West Plano Parkway, Suite 200

Plano, Texas 75093
	

9.	
 	

Wynn-Crosby Energy, Inc.	
 	

 
	 	 	Prior Names:	 	None
	 	 	Prior Chief Executive Office:	 	5500 West Plano Parkway, Suite 200

Plano, Texas 75093
	

10.	
 	

P-H Energy, LLC	
 	

 
	 	 	Prior Names:	 	None
	 	 	Prior Chief Executive Office:	 	None
	 	 	 	 	 





Schedule 5 - 1







 

	

11.	
 	

Beta Operating Company, L.L.C.	
 	

 
	 	 	Prior Names:	 	Red River Energy, L.L.C.
	 	 	Prior Chief Executive Office:	 	6120 South Yale Avenue, Suite 813

Tulsa, Oklahoma 74136
	

12.	
 	

TCM, L.L.C.	
 	

 
	 	 	Prior Names:	 	None
	 	 	Prior Chief Executive Office:	 	6120 South Yale Avenue, Suite 813

Tulsa, Oklahoma 74136
	

13.	
 	

Red River Field Services, L.L.C.	
 	

 
	 	 	Prior Names:	 	None
	 	 	Prior Chief Executive Office:	 	6120 South Yale Avenue, Suite 813

Tulsa, Oklahoma 74136




Schedule 5 - 2









 
 

ACKNOWLEDGMENT AND CONSENT    
    


        The undersigned hereby acknowledges receipt of a copy of the Guarantee and Collateral Agreement dated as of November 23, 2004 (the "Agreement"), made by
the Grantors parties thereto for the benefit of BNP Paribas, as Administrative Agent. The undersigned agrees for the benefit of the Administrative Agent and the Lenders as follows: 


	1.
	The
undersigned will be bound by the terms of the Agreement and will comply with such terms insofar as such terms are applicable to the undersigned.



	2.
	The
terms of Sections 6.01(c) and 6.03 of the Agreement shall apply to it, mutatis mutandis, with respect to all actions that may be
required of it pursuant to Sections 6.01(c) or 6.03 of the Agreement. 






	 	 	[NAME OF ISSUER]
	

 	
 	

By:	

 
	 	 	 	

	 	 	Title:	 
	 	 	 	

	

 	
 	

Address for Notices:
	



	
 	

 	

 
	 	 	

	



	
 	

 	

 
	 	 	

	



	
 	

 	

 
	 	 	

	

 	
 	

Fax:	

 
	 	 	 	







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


Acknowledgment
and Consent 








  



 
 

Annex I    
    
    Assumption Agreement    
    


        ASSUMPTION AGREEMENT, dated as of November    , 2004, made
by                        , a corporation duly formed and existing under the laws of the state of
[            ] (the "Additional Grantor"), in favor of BNP Paribas, as administrative agent (in such capacity, the "Administrative Agent") for the banks and other financial
institutions (the "Lenders") parties to the Term Loan Agreement referred to below. All capitalized terms not defined herein shall have the meaning ascribed to them in such Term Loan Agreement. 


W I T N E S S E T H:  


        WHEREAS, Petrohawk Energy Corporation (the "Borrower"), the Lenders, the Administrative Agent and the other Agents, have entered into a Term Loan Agreement, dated
as of November 23, 2004 (as amended, supplemented or otherwise modified from time to time, the "Term Loan Agreement"); 



        WHEREAS,
in connection with the Term Loan Agreement, the Borrower and certain of its Subsidiaries have entered into the Guarantee and Collateral Agreement, dated as of
November 23, 2004 (as amended, supplemented or otherwise modified from time to time, the "Guarantee and Collateral Agreement") in favor of the Administrative Agent for the benefit of the
Lenders and Affiliates of the Lenders; 


        WHEREAS,
the Term Loan Agreement requires the Additional Grantor to become a party to the Guarantee and Collateral Agreement; and 


        WHEREAS,
the Additional Grantor has agreed to execute and deliver this Assumption Agreement in order to become a party to the Guarantee and Collateral Agreement; 


        NOW,
THEREFORE, IT IS AGREED: 


        1.    Guarantee and Collateral Agreement.    By executing and delivering this Assumption Agreement, the Additional
Grantor, as provided in Section 9.15 of the Guarantee and Collateral Agreement, hereby becomes a party to the Guarantee and Collateral Agreement as a Grantor thereunder with the same force and
effect as if originally named therein as a Grantor and, without limiting the generality of the foregoing, hereby expressly assumes all obligations and liabilities of a Grantor thereunder and expressly
grants to the Administrative Agent, for the benefit of the Secured Parties (as defined in the Guarantee and Collateral Agreement), a security interest in all Collateral owned by such Additional
Grantor to secure all of such Additional Grantor's obligations and liabilities thereunder. The information set forth in Annex 1-A hereto is hereby added to the information set forth in
Schedules 1 through 5 to the Guarantee and Collateral Agreement. The Additional Grantor hereby represents and warrants that each of the representations and warranties contained in Article IV of
the Guarantee and Collateral Agreement is true and correct on and as the date hereof (after giving effect to this Assumption Agreement) as if made on and as of such date. 



        2.    Governing Law.    THIS ASSUMPTION AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF TEXAS. 


Annex I - 1







 



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



	 	 	[ADDITIONAL GRANTOR]
	

 	
 	

By:	

 
	 	 	 	

	 	 	Name:	 
	 	 	 	

	 	 	Title:	 
	 	 	 	





Annex I - 2











QuickLinks



Exhibit 10.3


SECOND LIEN TERM LOAN AGREEMENT GUARANTEE AND COLLATERAL AGREEMENT

TABLE OF CONTENTS


ARTICLE I Definitions

ARTICLE II Guarantee

ARTICLE III Grant of Security Interest

ARTICLE IV Acknowledgments, Waivers and Consents

ARTICLE V Representations and Warranties

ARTICLE VI Covenants



ARTICLE VII Remedial Provisions

ARTICLE VIII The Administrative Agent

ARTICLE IX Subordination of Indebtedness

ARTICLE X Miscellaneous


Schedule 1 NOTICE ADDRESSES OF GRANTORS


Schedule 2 DESCRIPTION OF PLEDGED SECURITIES


Schedule 3 FILINGS AND OTHER ACTIONS REQUIRED TO PERFECT SECURITY INTERESTS


Schedule 4 CORRECT LEGAL NAME, LOCATION OF JURISDICTION OF ORGANIZATION, ORGANIZATIONAL IDENTIFICATION NUMBER, TAXPAYOR IDENTIFICATION NUMBER AND CHIEF EXECUTIVE OFFICE


Schedule 5 PRIOR NAMES AND PRIOR CHIEF EXECUTIVE OFFICE



ACKNOWLEDGMENT AND CONSENT


Annex I Assumption Agreement