SUBORDINATION AGREEMENT (KY USA ENERGY, INC.)
Exhibit
4.6
(KY
USA ENERGY, INC.)
This
Subordination Agreement (this “Subordination
Agreement”)
is
dated ____________, 2008, by and among KENTUCKY USA ENERGY, INC., a Delaware
corporation, having an address of 000 Xxxxxxxx Xxxx, Xxxxxx, Xxxxxxxx 00000
(“Subordinated
Creditor”),
KY
USA ENERGY, INC., a Kentucky corporation (“Borrower”),
having an address of 000 Xxxxxxxx Xxxx, Xxxxxx, Xxxxxxxx 00000, and NSES 12,
LLC, a Delaware limited liability company (“Lender”),
having an address of 00 Xxxxx Xxxxxx, Xxxxxxxx X, Xxxxxxxxxx, Xxxxxxxxxxx
00000.
Background
1. Borrower
and Lender are parties to the Senior Secured Credit Agreement dated
__________________, 2008 (as amended, supplemented, modified or restated from
time to time, the “Credit
Agreement”).
Borrower’s obligations to Lender under the Credit Agreement are secured by a
senior mortgage lien and first-priority security interest conveying all of
the
real and personal property of Borrower.
2. Each
of
Lender’s obligations under the Credit Agreement is conditioned upon, among other
things, the subordination of all obligations owed by Borrower to the
Subordinated Creditor to the obligations owed by Borrower to Lender under the
Credit Agreement and the other Loan Documents (as defined in the Credit
Agreement).
3. Capitalized
terms not defined in this Subordination Agreement shall have the meanings set
forth in the Credit Agreement.
Agreements
To
comply
with the terms and conditions of the Credit Agreement and for other good and
valuable consideration, the receipt and sufficiency of which are acknowledged
by
the parties, the Subordinated Creditor, Borrower and Lenders agree as
follows:
Section
1. Subordination
of Obligations and Priority.
(a) The
payment of and any liens or security interests securing payment of any and
all
Subordinated Debt (defined below) are expressly subordinated to the extent
and
in the manner set forth in this Subordination Agreement to the Senior
Indebtedness (defined below) and the liens and security interests securing
the
Senior Indebtedness. The term “Subordinated
Debt”
as
used
in this Subordination Agreement means any and all indebtedness, liabilities
and
obligations of Borrower to the Subordinated Creditor, absolute or contingent,
direct or indirect, joint, several or independent, now outstanding or owing
or
which may hereafter be existing or incurred, arising by operation of law or
otherwise, due or to become due, or held or to be held by the Subordinated
Creditor, whether created directly or acquired by assignment, as a
participation, conditionally, as collateral security from another or otherwise,
including indebtedness, obligations and liabilities of such Borrower to
Subordinated Creditor as a member of any partnership, syndicate, association
or
other group, and whether incurred by Borrower as principal, surety, endorser,
guarantor, accommodation party or otherwise, including, without limiting the
generality of the foregoing, all indebtedness, liabilities and obligations
of
Borrower to Subordinated Creditor arising out of any operating agreement or
similar agreement between Subordinated Creditor and Borrower.
(b) Priority.
The
agreements of Borrower, Senior Creditor and Subordinated Creditor herein are
applicable without regard to the date a loan or extension of credit is made
to
Borrower.
The
term
“Senior
Creditor”
as
used
in this Subordination Agreement means Lender.
The
term
“Senior
Indebtedness”
as
used
in this Subordination Agreement means any and all indebtedness, liabilities
and
obligations of Borrower to Senior Creditor absolute or contingent, direct or
indirect, joint, several or independent, now outstanding or owing or which
may
hereafter be existing or incurred, arising by operation of law or otherwise,
due
or to become due, or held or to be held by Senior Creditor whether created
directly or acquired by assignment, as a participation, conditionally, as
collateral security from another or otherwise, including indebtedness,
obligations and liabilities of Borrower to Senior Creditor as a member of any
partnership, syndicate, association or other group, and whether incurred by
Borrower as principal, surety, endorser, guarantor, accommodation party or
otherwise and including, without limitation, all Obligations (as defined in
the
Credit Agreement) owed by Borrower to Senior Creditor under the Credit Agreement
and the other Loan Documents.
Restrictions
on Subordinated Creditor. During such time as any Senior Indebtedness remains
unpaid, Subordinated Creditor will not ask for, demand, xxx for, take, receive
or accept from Borrower, by set off or in any other manner, any payment or
distribution on account of the Subordinated Debt, nor present any instrument
evidencing the Subordinated Debt for payment (other than such presentment as
may
be necessary to prevent discharge of other liable parties on such instrument);
provided,
however,
nothing
contained herein shall prevent Subordinated Creditor from receiving any payment
from Borrower expressly permitted to be made by the Credit
Agreement.
Prohibition
of All Payments Following Default. If for any reason any of the Senior
Indebtedness is not paid when due or is not paid on or before the maturity
thereof, or if there shall occur and be continuing any event which with the
giving of notice or lapse of time or both would constitute a default or Event
of
Default under any instrument or agreement now or hereafter executed evidencing,
in connection with, as security for or providing for the issuance of any of
the
Senior Indebtedness, then, unless and until such Event of Default or default
shall have been cured, or unless and until the Senior Indebtedness shall be
paid
in full, the Subordinated Creditor will not ask for, xxx for, take, demand,
receive or accept from Borrower, by set off or in any other manner, any payment
or distribution on account of the Subordinated Debt nor present any instrument
evidencing the Subordinated Debt for payment (other than such presentment as
may
be necessary to prevent discharge of other liable parties on such
instrument).
2
Payments
Cannot Create a Default. Subordinated Creditor will not ask for, demand, xxx
for, take, receive or accept from Borrower, by set off or in any other manner,
any payment or distribution on account of the Subordinated Debt, if the making
of such payment would constitute, or would result in the occurrence of, a
violation of the provisions of any instrument or agreement evidencing, in
connection with, as security for or providing for the issuance of any Senior
Indebtedness or would result in the occurrence of any event which with the
giving of notice or lapse of time or both would constitute a default or an
Event
of Default under the Credit Agreement or any other Loan Document.
Unauthorized
Receipt of Payment by Subordinated Creditor. In the event Subordinated Creditor
shall receive any payment or distribution on account of the Subordinated Debt
which Subordinated Creditor is not entitled to receive under this Subordination
Agreement, Subordinated Creditor will hold any amount so received in trust
for
Senior Creditor and will promptly turn over such payment to Senior Creditor
in
the form received by Subordinated Creditor (together with any necessary
endorsement) to be applied against the Senior Indebtedness.
Restrictions
on Actions to Recover Subordinated Debt. Subordinated Creditor will not commence
any action or proceeding against Borrower to recover all or any part of the
Subordinated Debt or join with any other creditor, unless Senior Creditor shall
also join, in bringing any proceedings against Borrower under any bankruptcy,
reorganization, readjustment of debt, arrangement of debt, receivership,
liquidation or insolvency law or statute of the federal or any state government
unless and until all Senior Indebtedness shall have been paid in
full.
Insolvency
or Bankruptcy by any Borrower. In the event of any receivership, insolvency,
bankruptcy, assignment for the benefit of creditors, reorganization or
arrangement with creditors, adjustment of debt, whether or not pursuant to
bankruptcy laws, the sale of all or substantially all of the assets,
dissolution, liquidation, or any other marshaling of the assets and liabilities
of Borrower, the Subordinated Creditor will at Senior Creditor’s request file
any claim, proof of claim, proof of interest or other instrument of similar
character necessary to enforce the obligations of such Borrower in respect
of
the Subordinated Debt and will hold in trust for Senior Creditor and pay over
to
Senior Creditor, in the form received (together with any necessary endorsement),
to be applied on the Senior Indebtedness, any and all monies, dividends or
other
assets received in any such proceedings on account of the Subordinated Debt
unless and until the Senior Indebtedness shall be paid in full. In the event
that the Subordinated Creditor shall fail to take any such action requested
by
Senior Creditor, Senior Creditor, may, as attorney in fact for the Subordinated
Creditor take such action on behalf of the Subordinated Creditor, and the
Subordinated Creditor hereby appoints Senior Creditor as attorney in fact for
the Subordinated Creditor to demand, xxx for, collect and receive any and all
such monies, dividends or other assets and give acquittance therefor and to
file
any claim, proof of claim, proof of interest or other instrument of similar
character and to take such other proceedings in Senior Creditor’s own name or in
the name of the Subordinated Creditor as Senior Creditor may deem necessary
or
advisable for the enforcement of this Subordination Agreement, and the
Subordinated Creditor will execute and deliver to Senior Creditor such other
and
further powers of attorney or other instruments as Senior Creditor may request
in order to accomplish the foregoing.
3
Senior
Creditor’s Rights. Senior Creditor may, at any time, and from time to time,
without the consent of or notice to the Subordinated Creditor, without incurring
responsibility to the Subordinated Creditor and without impairing or releasing
any of Senior Creditor’s rights or any of the obligations of the Subordinated
Creditor under this Subordination Agreement:
(c) Change
the amount, manner, place or terms of payment, or change or extend for any
period the time of payment of, or renew, rearrange or otherwise modify or alter,
the Senior Indebtedness or any instrument or agreement now or hereafter executed
evidencing, in connection with, as security for or providing for the issuance
of
any of the Senior Indebtedness in any manner, or enter into or amend in any
manner any other agreement relating to the Senior Indebtedness (including
provisions restricting or further restricting payments of the Subordinated
Debt);
(d) Sell,
exchange, release or otherwise deal with all or any part of any property by
whomsoever at any time pledged or mortgaged to secure, howsoever securing,
the
Senior Indebtedness;
(e) Release
anyone liable in any manner for payment or collection of the Senior
Indebtedness;
(f) Exercise
or refrain from exercising any rights against any Borrower or others (including
the Subordinated Creditor); and
(g) Apply
any
sums received by Senior Creditor, by whomsoever paid and however realized,
to
payment of the Senior Indebtedness in such a manner as Senior Creditor, in
its
sole discretion, may deem appropriate.
Documentation
of Subordinated Debt. The Subordinated Creditor will:
(h) cause
all
Subordinated Debt to be evidenced by a note, debenture or other instrument
evidencing the Subordinated Debt,
(i) at
Senior
Creditor’s request, promptly surrender or cause to be surrendered any such note,
debenture, or instrument evidencing the Subordinated Debt so that a statement
or
legend may be entered thereon to the effect that such note, debenture, or other
instrument is subordinated to the Senior Indebtedness in favor of Senior
Creditor in the manner and to the extent set forth in this Subordination
Agreement,
(j) xxxx
the
books of Subordinated Creditor to show that the Subordinated Debt is
subordinated to the Senior Indebtedness in the manner and to the extent set
forth in this Subordination Agreement, and
(k) cause
all
financial statements of the Subordinated Creditor hereafter prepared for
delivery to any person to make specific reference to the provisions of this
Subordination Agreement.
4
Execution
of Instruments. The Subordinated Creditor
agrees to execute any and all other instruments necessary as required by the
Senior Creditor to subordinate the Subordinated Debt to the Senior Indebtedness
as herein provided.
Assignment
by Subordinated Creditor. Subordinated Creditor will not assign or transfer
to
others any claim the Subordinated Creditor has or may have against Borrower
as
long as any of the Senior Indebtedness remains outstanding, unless such
assignment or transfer is expressly made subject to this Subordination
Agreement.
Warranties
and Representations. The Subordinated Creditor represents and warrants that
(a) neither the execution nor delivery of this Subordination Agreement nor
fulfillment of or compliance with the terms and provisions hereof will conflict
with, or result in a breach of the terms, conditions or provisions of, or
constitute a default under, any agreement or instrument (including, without
limitation, any formation documents) to which Subordinated Creditor is now
subject, and (b) none of the Subordinated Debt is or will be subordinated
to any other indebtedness of Borrower other than the Senior Indebtedness unless
otherwise agreed by Senior Creditor.
Waiver
of
Notice of Acceptance. Notice of acceptance of this Subordination Agreement
is
waived, acceptance on the part of Senior Creditor being conclusively presumed
by
its request for this Subordination Agreement and delivery of the same to
it.
Assignment
by Senior Creditor. This Subordination Agreement may be assigned by Senior
Creditor in connection with any assignment or transfer of the Senior
Indebtedness.
Notices.
All notices and other communications provided for hereunder shall be in writing
(including by facsimile transmission). All such written notices shall be mailed,
faxed or delivered, to the applicable address, or facsimile number set out
below
or to such other address, or facsimile number, as shall be designated by such
party in a notice to the other parties. All such notices and other
communications shall be deemed to be given or made upon the earlier to occur
of
(i) actual receipt by the relevant party hereto and (ii) (A) if
delivered by hand or by courier, upon delivery; (B) if delivered by mail,
four (4) Business Days after deposit in the mails, postage prepaid; and
(C) if delivered by facsimile, when sent and the sender has received
electronic confirmation of error free receipt. In no event shall a voicemail
message be effective as a notice, communication or confirmation
hereunder.
If
to Senior Creditor:
|
|||
NSES
12, LLC
|
|||
00
Xxxxx Xxxxxx, Xxxxxxxx X
|
|||
Xxxxxxxxxx,
Xxxxxxxxxxx 00000
|
|||
Attention:
|
Xxxxx
Xxxxxxxx
|
||
Telephone:
|
(000)
000-0000 x000
|
||
Facsimile:
|
|||
E-Mail:
|
xxxxxxxxx@xxxxxxxxxxxxxxxx.xxx
|
5
If
to Borrower, to:
|
|||
KY
USA Energy, Inc.
|
|||
000
Xxxxxxxx Xxxx
|
|||
Xxxxxx,
Xxxxxxxx 00000
|
|||
Attention:
|
|||
Telephone:
|
|||
Facsimile:
|
|||
E-Mail:
|
|||
If
to Subordinated Creditor:
|
|||
000
Xxxxxxxx Xxxx
|
|||
Xxxxxx,
XX 00000
|
|||
Attention:
|
Xxxxxx
X. Xxxxxxxx
|
||
Telephone:
|
(000)
000-0000
|
||
Facsimile:
|
(606)
878-[____]
|
||
E-Mail:
|
Governing
Law..
This
Subordination Agreement shall be construed under and governed by the laws of
the
State of New York and applicable federal law.
Severability.
If any provision (or portion of any provision) of this Subordination Agreement
is rendered or declared invalid, illegal or unenforceable by reason of any
existing or subsequently enacted legislation or by a final decision of any
court
of competent jurisdiction, the parties shall promptly meet and negotiate
substitute provisions for those rendered invalid, illegal or unenforceable,
but
all of the remaining provisions will remain in full force and
effect.
Counterparts.
This Subordination Agreement may be executed in two or more counterparts, and
it
shall not be necessary that the signatures of all parties be contained together
on any one counterpart of this Subordination Agreement. Each counterpart will
be
deemed an original, but all counterparts taken together will constitute one
and
the same agreement.
Section
2. SUBMISSION
TO JURISDICTION; WAIVER OF JURY TRIAL.
(a) SUBORDINATED
CREDITOR AND BORROWER EACH, TO THE FULL EXTENT PERMITTED BY LAW, HEREBY
KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT
COUNSEL, (i)
SUBMITS
TO PERSONAL JURISDICTION IN THE STATE OF NEW YORK FOR ANY SUIT, ACTION OR
PROCEEDING BY ANY PERSON ARISING FROM OR RELATING TO THIS AGREEMENT,
(ii)
AGREES
THAT ANY SUCH ACTION, SUIT OR PROCEEDING MAY BE BROUGHT IN ANY STATE OR FEDERAL
COURT OF COMPETENT JURISDICTION SITTING IN THE STATE OF NEW YORK, (iii)
SUBMITS
TO THE JURISDICTION OF SUCH COURTS, AND (iv)
TO THE
FULLEST EXTENT PERMITTED BY LAW, AGREES THAT THEY WILL NOT BRING ANY ACTION,
SUIT OR PROCEEDING IN ANY OTHER FORUM (BUT NOTHING HEREIN SHALL AFFECT THE
RIGHT
OF LENDER TO BRING ANY ACTION, SUIT OR PROCEEDING IN ANY OTHER
FORUM).
6
(b) SUBORDINATED
CREDITOR, BORROWER AND LENDER EACH, BY ACCEPTING THIS AGREEMENT, TO THE FULL
EXTENT PERMITTED BY LAW, HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH
AND UPON THE ADVICE OF COMPETENT COUNSEL, WAIVES, RELINQUISHES AND FOREVER
FORGOES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON,
ARISING OUT OF, OR IN ANY WAY RELATING TO THIS AGREEMENT OR ANY CONDUCT, ACT
OR
OMISSION OF LENDER, SUBORDINATED CREDITOR OR PARTNERS, MEMBERS, MANAGERS,
EMPLOYEES, AGENTS OR ATTORNEYS, OR ANY OTHER PERSON AFFILIATED WITH LENDER,
SUBORDINATED CREDITOR OR BORROWER, IN EACH OF THE FOREGOING CASES, WHETHER
SOUNDING IN CONTRACT, TORT OR OTHERWISE, SUBORDINATED CREDITOR AND BORROWER
EACH
HEREBY CONSENTS AND AGREES TO SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER LEGAL
PROCESS, IN CONNECTION WITH ANY SUIT, ACTION OR PROCEEDING ARISING FROM OR
RELATING TO THIS AGREEMENT BY REGISTERED OR CERTIFIED U.S. MAIL, POSTAGE
PREPAID, RETURN RECEIPT REQUESTED TO SUBORDINATED CREDITOR OR BORROWER, AS
APPLICABLE, AT THE ADDRESS SET FORTH HEREINABOVE.
ENTIRE
AGREEMENT; AMENDMENT. THIS SUBORDINATION AGREEMENT REFLECTS THE ENTIRE AGREEMENT
OF THE PARTIES WITH RESPECT TO THE MATTERS COVERED BY THIS SUBORDINATION
AGREEMENT AND CANNOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS
OR
SUBSEQUENT ORAL AGREEMENTS AMONG ANY OF THE PARTIES. THERE ARE NO UNWRITTEN
ORAL
AGREEMENTS AMONG THE PARTIES. THIS SUBORDINATION AGREEMENT MAY BE AMENDED AND
THE RIGHTS OF ANY PARTY UNDER THIS SUBORDINATION AGREEMENT MAY BE WAIVED ONLY
PURSUANT TO A WRITTEN AGREEMENT SIGNED BY EACH OF THE PARTIES TO THIS
SUBORDINATION AGREEMENT.
[Signatures
Begin on the Following Page.]
7
IN
WITNESS WHEREOF, the undersigned have caused this instrument to be executed
by
their duly authorized undersigned officers effective as of the date first set
forth above.
SUBORDINATED
CREDITOR:
|
||
a
Delaware corporation
|
||
By:
|
||
Xxxxxx
X. Xxxxxxxx
|
||
President
and Chief Executive Officer
|
Signature
Page to the Subordination Agreement
BORROWER:
|
||
KY
USA Energy, Inc.,
|
||
a
Kentucky corporation
|
||
By:
|
||
Name:
|
||
Title:
|
Signature
Page to the Subordination Agreement
LENDER:
|
||
NSES
12, LLC,
|
||
a
Delaware limited liability company
|
||
By:
|
||
Name:
|
||
Title:
|
Signature
Page to the Subordination Agreement