INTERCREDITOR AGREEMENT
EXHIBIT
10.5
This
INTERCREDITOR AGREEMENT is dated as of January 3, 2008, and entered into by
and
among FIRST SECURITY BANK, as trustee and collateral agent under the Senior
Note
Indenture (as hereinafter defined) the
(“Senior
Note Trustee”),BANK
OF
THE OZARKS in its capacity as trustee and collateral agent under the
Subordinated Note Indenture (as hereinafter defined) (the “Subordinated
Note Trustee”),
XXXXXXX DRILLING CORPORATION, a Nevada corporation, (the “Borrower”)
and
Xxxxxxx
Drilling, Inc., a Texas corporation, Xxxxxxx Tool & Supply, Inc., a Nevada
corporation, and Xxxxxxx Exploration & Production, Inc., a Nevada
corporation (individually,
as “Subsidiary”
and,
collectively, the “Subsidiaries”).
Capitalized terms used herein but not otherwise defined herein have the meanings
set forth in Section 1 below.
RECITALS
WHEREAS,
the Borrower and the Senior Notes Trustee have entered into an Indenture of
even
date herewith (the “Senior
Note Indenture”)
relating to the Borrower’s Senior Secured Notes Due January 15, 2013 (the
“Senior
Notes”);
WHEREAS,
Borrower’s obligations under the Senior Note Indenture are secured by a first
priority Lien in the Common Collateral, which Lien is memorialized in the Senior
Note Collateral Documents;
WHEREAS,
the Borrower and the Subordinated Note Trustee, have entered into an Indenture
of even date herewith (the “Subordinated
Note Indenture”)
relating to the Borrowers Subordinated Secured Notes due January 15, 2013 (the
“Subordinated
Notes”);
WHEREAS,
Borrower’s obligations in respect of the Subordinated Note Indenture and
Subordinated Notes are secured by, among other things, a second priority Lien
in
the Common Collateral, which Lien is memorialized in the Subordinated Note
Collateral Documents; and
WHEREAS,
the parties hereto have agreed to execute and deliver this Agreement for the
purpose of setting forth the relative priority of the Liens created or to be
created pursuant to or in connection with the Collateral Documents in respect
of
the exercise of the rights and remedies regarding the Common Collateral and
the
application of the proceeds thereof;
NOW,
THEREFORE, in consideration of the foregoing, the mutual covenants and
obligations herein set forth and for other good and valuable consideration,
the
adequacy and receipt of which are hereby acknowledged, and in reliance upon
the
representations, warranties and covenants herein contained, the parties hereto,
intending to be legally bound, hereby agree as follows:
SECTION
1. Definitions.
As used
in this Agreement, the following terms shall have the following meanings (such
meanings to be equally applicable to both the singular and the plural form
of
the terms indicated):
“Action
Period”
shall
have the meaning set forth in Section 3.1(b)(ii).
“Agreement”
means
this Intercreditor Agreement, as amended, supplemented, amended and restated
or
otherwise modified from time to time in accordance with the terms
hereof.
“Bank
Accounts” have the meaning ascribed to it in the Senior Note Security Agreement
and the Subordinated Note Security Agreement.
“Bankruptcy
Code”
means
the Bankruptcy Reform Act of 1978, as codified at title 11 of the United States
Code and as amended from time to time.
“Borrower”
shall
have the meaning set forth in the Preamble of this Agreement.
“Collateral
Documents”
means
the Senior Note Collateral Documents and the Subordinated Note Collateral
Documents.
“Common
Collateral”
means
the Common Real Estate Collateral and the Common Personal Property
Collateral.
“Common
Personal Property Collateral”
means
the collateral described in the Senior Note Security Agreement, the Senior
Note
Pledge Agreement, Subordinated Note Security Agreement and the Subordinated
Note
Pledge Agreement.
“Common
Real Estate Collateral”
means
the real property described in the
Senior Note Deed of Trust and the Subordinated Note Deed of
Trust.
“Discharge
of Senior Note Claims”
means,
except to the extent otherwise provided in Section 6.5, the indefeasible payment
in full in cash of all Senior Note Claims.
“Enforcement
Demand”
shall
have the meaning set forth in Section 3.1(b)(ii).
“Insolvency
or Liquidation Proceeding”
means
any voluntary or involuntary case or proceeding under the Bankruptcy Code or
the
laws of any other applicable jurisdiction.
“Lien”
means,
with respect to any asset, any mortgage, lien, pledge, charge, security
interest, embargo or encumbrance of any kind in respect of such asset, whether
or not filed, recorded or otherwise perfected under applicable law, including
any conditional sale or other title retention agreement, any lease in the nature
thereof, any option or other agreement to sell or give a security interest
in
and any filing of or agreement to give any financing statement under the UCC
(or
equivalent statutes) of any jurisdiction, including, without limitation, the
State of Texas.
“Person”
means
an individual, corporation, partnership (general or limited), limited liability
company, joint venture, trust, estate, unincorporated association,
unincorporated organization, governmental entity or political subdivision
thereof, or any other entity.
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“Pledged
Securities”
has
the
definition ascribed to it in the Senior Note Pledge Agreement and the
Subordinated Note Pledge Agreement.
“Recovery”
shall
have the meaning set forth in Section 6.5.
“Senior
Note Claims”
means
all of Borrower’s obligations outstanding at any time under or in connection
with the Senior Note Documents. Senior Note Claims shall include all interest
accrued or accruing (or which would, absent the commencement of an Insolvency
or
Liquidation Proceeding, accrue) after the commencement of an Insolvency or
Liquidation Proceeding in accordance with and at the rate specified in the
Senior Note Indenture whether or not the claim for such interest is allowed
as a
claim in such Insolvency or Liquidation Proceeding. To the extent any payment
with respect to Senior Note Claims is declared to be fraudulent or preferential
in any respect, set aside or required to be paid to a debtor in possession,
trustee, receiver or similar Person, then the obligations or part thereof
originally intended to be satisfied shall be deemed to be reinstated and
outstanding as if such payment had not occurred.
“Senior
Note Enforcement Action”
shall
have the meaning set forth in Section 3.1(a).
“Senior
Note Indenture”
shall
have the meaning set forth in the Recitals of this Agreement.
“Senior
Note Collateral Documents”
means,
collectively, the Senior Note Indenture, the Senior Note Deed of Trust, the
Senior Note Pledge Agreement, the Senior Note Security Agreement and any other
document or instrument executed and delivered pursuant to any Senior Note
Document at any time or otherwise pursuant to which a Lien is granted by the
Borrower or any other obligor under the Senior Note Documents to secure the
Senior Note Claims or under which rights or remedies with respect to any such
Lien are governed, as the same may be amended, supplemented, amended and
restated or otherwise modified from time to time.
“Senior
Note Documents”
means,
collectively, the Senior Note Indenture, the Senior Notes, the other Senior
Note
Collateral Documents and any other document or instrument executed and delivered
pursuant to or in connection therewith at any time or otherwise evidencing
any
Senior Note Claims, as the same may be amended, supplemented, amended and
restated or otherwise modified from time to time.
“Senior
Note Guaranties”
means,
collectively, the guaranties provided by the “Guarantors” (as defined in the
Indenture) in Article 11 of the Senior Note Indenture to secure the Senior
Note
Claims.
“Senior
Note Deed of Trust”
means
that certain Deed of Trust dated of even date herewith encumbering real property
located in Odessa, Texas.
“Senior
Note Pledge Agreement”
means
any “Senior Note Pledge Agreement” (as defined in the Senior Note
Indenture).
3
“Senior
Note Security Agreement”
means
any “Senior Note Security Agreement” (as defined in the Senior Note
Indenture).
“Senior
Note Liens”
means
the first priority Liens on the Common Collateral created or to be created
as
collateral security for the Senior Note Claims pursuant to the Senior Note
Collateral Documents.
“Standstill
Period”
shall
have the meaning set forth in Section 3.1(b)(ii).
“Subordinated
Note Claims”
means
all indebtedness, obligations and other liabilities (contingent or otherwise)
arising under or with respect to the Subordinated Note Documents or any of
them.
Subordinated Note Claims shall include all interest accrued or accruing (or
which would, absent the commencement of an Insolvency or Liquidation Proceeding,
accrue) after the commencement of an Insolvency or Liquidation Proceeding in
accordance with and at the rate specified in the Subordinated Note Indenture
and/or the Subordinated Note whether or not the claim for such interest is
allowed as a claim in such Insolvency or Liquidation Proceeding. To the extent
any payment with respect to Subordinated Note Claims is declared to be
fraudulent or preferential in any respect, set aside or required to be paid
to a
debtor in possession, trustee, receiver or similar Person, then the obligations
or part thereof originally intended to be satisfied shall be deemed to be
reinstated and outstanding as if such payment had not occurred.
“Subordinated
Note Indenture”
shall
have the meaning set forth in the Recitals of this Agreement.
“Subordinated
Note Collateral Documents”
means,
collectively, the Subordinated Note Indenture, the Subordinated Note Deed of
Trust, the Subordinated Note Pledge Agreement, the Subordinated Note Security
Agreement and any other document or instrument executed and delivered pursuant
to any Subordinated Note Document at any time or otherwise pursuant to which
a
Lien is granted by the Borrower or any other obligor under the Subordinated
Note
Documents to secure the Subordinated Note Claims or under which rights or
remedies with respect to any such Lien are governed, as the same may be amended,
supplemented, amended and restated or otherwise modified from time to
time.
“Subordinated
Note Documents”
means,
collectively, the Subordinated Note Indenture, the Subordinated Notes, the
Subordinated Note Collateral Documents and any other document or instrument
executed and delivered pursuant to or in connection therewith at any time or
otherwise evidencing any Subordinated Note Claims, as the same may be amended,
supplemented, amended and restated or otherwise modified from time to time.
“Subordinated
Note Guaranties”
means,
collectively, (i) the guaranties provided by the “Guarantors” (as defined in the
Subordinate Note Indenture) in Article 11 of the Subordinated Note Indenture
to
secured the Subordinated Note Claims.
“Subordinated
Note Deed of Trust”
means
that certain Deed of Trust dated of even date herewith encumbering the real
property located in Odessa, Texas.
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“Subordinated
Note Pledge Agreement”
means
any “Subordinated Note Pledge Agreement” (as defined in the Subordinated Note
Indenture).
“Subordinated
Note Liens”
means
the second priority Liens on the Common Collateral created or to be created
as
collateral security for the Subordinated Note Claims pursuant to the
Subordinated Note Collateral Documents.
“Subordinated
Note Security Agreement”
means
any “Subordinated Note Security Agreement” (as defined in the Subordinated Note
Indenture).
“UCC”
means
the Uniform Commercial Code in effect in the State of Texas, as it may be
amended from time to time.
SECTION
2. Lien
Priorities.
2.1
Priority.
Notwithstanding the date, manner or order of grant, attachment or perfection
of
any Senior Note Liens or Subordinated Note Liens and notwithstanding any
provision of the UCC, or any other applicable law, the avoidance or setting
aside of any Senior Note Liens or Subordinated Note Liens or any other
circumstance whatsoever, the Subordinated Note Trustee, on behalf of itself
and
the Subordinated Note holders, hereby agrees that: (a) any Senior Note Liens
now
or hereafter held by the Senior Note Trustee shall be first in priority and
superior to any Subordinated Note Liens now or hereafter held by the
Subordinated Note holders or the Subordinated Note Trustee for itself and on
behalf of the Subordinated Note holders and (b) any Subordinated Note Liens
now
or hereafter held by the Subordinated Note holders or the Subordinated Note
Trustee for itself and on behalf of the Subordinated Note holders, regardless
of
how acquired, whether by grant, statute, operation of law, subrogation or
otherwise, shall be second in priority and inferior in all respects to any
Senior Note Liens. All Senior Note Liens shall be and remain first in priority
and superior to any and all Subordinated Note Liens for all purposes
whatsoever.
2.2
Prohibition
on Contesting Liens.
The
Subordinated Note Trustee, for itself and on behalf of each Subordinated Note
holder, agrees that it shall not (and hereby waives any right to) contest or
support any other Person in contesting, in any proceeding (including any
Insolvency or Liquidation Proceeding), the first priority, validity and/or
enforceability of any Senior Note Liens. The Senior Note Trustee agrees that
it
shall not (and hereby waives any right to) contest or support any other Person
in contesting, in any proceeding (including any Insolvency or Liquidation
Proceeding), the second priority, validity and/or enforceability of any
Subordinated Note Liens.
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SECTION
3. Enforcement.
3.1
Exercise
of Remedies.
(a)
Except as provided in paragraph (b) below, so long as the Discharge of Senior
Note Claims has not occurred, whether or not any Insolvency or Liquidation
Proceeding has been commenced by or against the Borrower (i) the Subordinated
Note Trustee and the Subordinate Note holders will not exercise or seek to
exercise any rights or remedies (including by way of setoff) with respect to
any
Common Collateral, institute any action or proceeding with respect to such
rights or remedies, including any action of foreclosure, or contest, protest
or
object to any foreclosure proceeding or action brought by the Senior Note
Trustee or any other exercise by the Senior Note Trustee of any rights and
remedies relating to the Common Collateral under the Senior Note Documents
or
otherwise, or object to the forbearance by the Senior Note Trustee from bringing
or pursuing any foreclosure proceeding or action or any other exercise of any
rights or remedies relating to the Common Collateral (“Subordinated
Note Enforcement
Action”)
and
(ii) the Senior Note Trustee shall have the exclusive right to enforce rights,
exercise remedies (including by way of setoff and the right to credit bid their
debt), refrain from enforcing or exercising remedies, and make determinations
regarding release, disposition, or restrictions with respect to the Common
Collateral without any consultation with or the consent of the Subordinated
Note
Trustee or any Subordinated Note holder, all as if the Subordinated Note Liens
did not exist (“Senior
Note Enforcement Action”);
provided that (A) in any Insolvency or Liquidation Proceeding commenced by
or
against the Borrower, the Subordinated Note Trustee or any Subordinated Note
holder may file a claim or statement of interest with respect to the
Subordinated Note Claims, (B) the Subordinated Note Trustee or any Subordinated
Note holder may take any action not adverse to the Senior Note Liens in order
to
establish, preserve, perfect or protect its rights in the Common Collateral,
(C)
the Subordinated Note Trustee or any Subordinated Note holder shall be entitled
to file any pleadings, objections, motions or agreements which assert rights
or
interests available to it under either the Bankruptcy Code, similar law of
any
other applicable jurisdiction or applicable non-bankruptcy law, in each case
not
otherwise in contravention of the terms of this Agreement and (D) the
Subordinated Note Trustee or any Subordinated Note holder shall be entitled
to
file any proof of claim and other filings and make any arguments and motions
in
order to preserve or protect the Subordinated Note Liens and the Subordinated
Note Claim that are, in each case, not otherwise in contravention of the terms
of this Agreement, with respect to the Subordinated Note Indenture, the
Subordinated Note Claims, and the Common Collateral. In exercising any Senior
Note Enforcement Action, the Senior Note Trustee may enforce the provisions
of
the Senior Note Documents and exercise remedies thereunder, all in such order
and in such manner as it may determine in the exercise of its sole discretion.
Such exercise and enforcement shall include the rights of an agent appointed
by
the Senior Note Trustee to sell or otherwise dispose of Common Collateral upon
foreclosure, to incur expenses in connection with such sale or disposition,
and
to exercise all the rights and remedies of a secured party under the UCC or
the
laws of any other applicable jurisdiction and of a secured creditor under the
Bankruptcy Code or any similar laws of any applicable jurisdiction.
(b)
Notwithstanding the provisions of paragraph (a) above,
(i)
the
Subordinated Note Trustee and any Subordinated Note holder shall have the right
to take a Senior Note Enforcement Action at any time after the Senior Note
Trustee shall have accelerated the maturity of the Senior Note Claims and thirty
(30) days shall have elapsed after such acceleration during which period the
acceleration and the default or event of default on which it was based were
not
waived and the acceleration was not rescinded by the Senior Note Trustee;
or
6
(ii)
in
the event that (A) an Event of Default under the Subordinated Note Indenture
shall have occurred, (B) the Subordinated Note Trustee or the Subordinated
Note
holders shall have given the Senior Note Trustee written notice of such event
of
default, (C) one hundred twenty (120) days have elapsed from such notice (the
“Standstill
Period”)
and
the Borrower has not cured such default or caused it to be cured within the
Standstill Period, (D) the Senior Note Trustee shall not have accelerated the
maturity of the Senior Note Claims within the Standstill Period, (E) the
Subordinated Note Trustee or the Subordinated Note holders shall not have waived
in writing such default, and (F) such default shall be continuing on the last
day of the Standstill Period, then the Subordinated Note Trustee or the
Subordinated Note holders shall have the right to demand by written notice
delivered to the Senior Note Trustee and in accordance with the Subordinated
Note Indenture (such notice, an “Enforcement
Demand”)
that
the Senior Note Trustee initiate a Senior Note Enforcement Action toward
collection of the Senior Note Claims and/or enforcement of the Senior Note
holders’ rights, powers or remedies under the Senior Note Indenture or
applicable law as it relates thereto. Upon receipt of an Enforcement Demand,
the
Senior Note Trustee shall have a period of thirty (30) days (the “Action
Period”)
within
which to initiate a Senior Note Enforcement Action. If the Senior Note Trustee
initiates a Senior Note Enforcement Action during the Action Period, the Senior
Note Trustee shall promptly give written notice of such action to the
Subordinated Note Trustee and thereafter the Subordinated Note Trustee and
the
Subordinated Note holders shall refrain from taking any Senior Note Trustee
Enforcement Action based on such default. If the Senior Note Trustee fails
to
initiate a Senior Note Enforcement Action during the Action Period, the
Subordinated Note Trustee or the Subordinated Note holders may, in its or their
sole discretion at any time and from time to time thereafter take one or more
Subordinated Note Enforcement Actions if, but only if, the Borrower shall have
not cured such Event of Default or caused it to be cured and such Event of
Default shall continue to exist until immediately prior to the taking of the
Subordinated Note Enforcement Action. In the event the Senior Note Trustee shall
accelerate the maturity of the Senior Note Claims at any time prior to the
taking of the Subordinated Note Enforcement Action, clause (b)(i) above shall
be
applicable.
(c)
The
Subordinated Note Trustee, for itself and on behalf of the Subordinated Note
holders, agrees that, subject to the provisions of paragraph (b)(ii) above,
it
and the Subordinated Note holders will not take any action that would hinder
or
cause to delay any Senior Note Enforcement Action, including, without
limitation, any sale, lease, exchange, transfer or other disposition of
the
Common Collateral, whether by foreclosure or otherwise, and the Subordinated
Note Trustee, for itself and on behalf of the Subordinated Note holders, hereby
waives any and all rights it or the Subordinated Note holders may have as a
junior lienholder or otherwise as to the Common Collateral (whether arising
under the UCC or the laws of any other applicable jurisdiction) to object to
any
lawful manner in which the Senior Note Trustee seek to enforce the Senior Note
Liens.
(d)
The
Subordinated Note Trustee acknowledges and agrees that no covenant, agreement
or
restriction contained in the Subordinated Note Documents shall be deemed to
restrict in any way the rights and remedies of the Senior Note Trustee with
respect to the Common Collateral as set forth in this Agreement and the Senior
Note Documents.
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SECTION
4. Payments.
4.1
Application
of Proceeds.
So long
as the Discharge of Senior Note Claims has not occurred, the cash proceeds
of
Common Collateral received in connection with the sale, transfer or other
disposition of such Common Collateral upon the exercise of remedies shall be
applied by the Senior Note Trustee to the Senior Note Claims (for application
in
such order as specified in the Senior Note Documents) until the Discharge of
Senior Note Claims has occurred. Upon the Discharge of Senior Note Claims,
the
Senior Note Trustee shall deliver to the Subordinated Note Trustee (for
application in such order as specified in the Subordinated Note Documents)
any
proceeds of Common Collateral held by it in the same form as received, with
any
necessary endorsements or as a court of competent jurisdiction may otherwise
direct.
4.2
The
Subordinated Note Trustee, on behalf of itself and the Subordinated Note
holders, agrees that it will not, in connection with the exercise of any right
or remedy (including by way of setoff) with respect to any Common Collateral,
take or receive any Common Collateral or any proceeds of Common Collateral
unless and until the Discharge of Senior Note Claims has occurred. In the event
any Common Collateral or proceeds thereof are received by the Subordinated
Note
Trustee in violation of this Agreement, such Common Collateral and/or proceeds
shall be segregated and held in trust for the benefit of the Senior Note Trustee
in the same form as received, and shall not be applied to the satisfaction
of
any Subordinated Note Claims. Without limiting the generality of the foregoing,
unless and until the Discharge of Senior Note Claims has occurred,
except
as expressly provided in Section 3.1(b),
the sole
right of the Subordinated Note Trustee and the Subordinated Note holders as
secured parties with respect to the Common Collateral is to hold a perfected
Lien on the Common Collateral pursuant to the Subordinated Note Collateral
Documents for the period and to the extent granted therein and to receive a
share of the proceeds thereof, if any, after the Discharge of Senior Note Claims
has occurred.
SECTION
5. Other
Agreements.
5.1
Insurance.
Unless
and until the Discharge of Senior Note Claims has occurred, the Senior Note
Trustee shall have the sole and exclusive right, subject to the rights of the
Borrower under
the
Senior Note Documents, to adjust settlement for any insurance policy covering
the Common Collateral in the event of any loss thereunder. Unless
and until
the
Discharge of Senior Note Claims has occurred, all proceeds of any such policy
and any such award if in respect of the Common Collateral shall be paid to
the
Senior Note Trustee to the extent required under the Senior Note Documents
and
thereafter to the Subordinated Note Trustee for the benefit of the Subordinated
Note holders to the extent required under the Subordinated Note Documents and
then to the Borrower or as a court of competent jurisdiction may otherwise
direct.
5.2
Amendments
to Collateral Documents.
Unless
and until the Discharge of Senior Note Claims has occurred, without the prior
written consent of the Senior Note Trustee, no Subordinated Note Collateral
Document may be amended, supplemented or otherwise modified or entered into
to
the extent such amendment, supplement or modification, or the terms of any
new
Subordinated Note Collateral Document, would be inconsistent with any of the
terms of this Agreement as to the Common Collateral. The Subordinated Note
Trustee agrees that each Subordinated Note Collateral Document that deals with
Common Collateral shall include by incorporation through this reference the
following language:
8
“Notwithstanding
anything herein to the contrary, the second priority lien and security interest
granted to the Subordinated Note Trustee pursuant to this agreement on the
Common Collateral described in the Intercreditor Agreement (as defined below)
and the exercise of any right or remedy by the Subordinated Note Trustee
hereunder with respect to the Common Collateral subject to such second priority
lien are subject to the provisions of that certain Intercreditor Agreement,
dated as of November __, 2007 (as amended, supplemented, amended and restated
or
otherwise modified from time to time, the "Intercreditor
Agreement"),
among
First Security Bank, Xxxxxxx Drilling Corporation, Xxxxxxx
Drilling, Inc., Xxxxxxx Tool & Supply, Inc. and Xxxxxxx Exploration &
Production, Inc.
In the
event of any conflict between the terms of the Intercreditor Agreement and
this
agreement, the terms of the Intercreditor Agreement shall govern.”
5.3
Bailee
for Perfection and control of Common Personal Property
Collateral.
(a)
Solely for the purpose of perfecting the security interest in the Pledged
Securities, and Bank Account (if requested), and subject to the terms and
conditions of this Section 5.3, the Senior Note Trustee agrees to hold the
certificates evidencing the Pledged Securities and the Bank Account (if
requested and subject to a bank account agreement) in its possession or control
(or in the possession or control of its agents or bailees) as bailee for the
Subordinated Note Trustee and the Subordinated Note holders and any assignee
thereof.
(b)
The
rights of the Subordinated Note Trustee and Subordinated Note holders with
respect to the Common Personal Property Collateral shall at all times be subject
to the terms of this Agreement and to the Senior Note Trustee’s rights under the
Senior Note Documents.
(c)
The
Senior Note Trustee shall have no obligation whatsoever to the Subordinated
Note
Trustee or any Subordinated Note holders to assure that the Common Personal
Property Collateral is genuine or owned by the Borrower or to preserve rights
or
benefits of any Person except as expressly set forth in this Section 5.3. The
duties or responsibilities of the Senior Note Trustee under this Section 5.3
shall be limited solely to holding the Securities and Bank Account (if
requested) as bailee for the Subordinated Note Trustee for purposes of
perfecting the Lien held by the Subordinated Note Trustee on the Securities
and
Bank Account (if requested).
(d)
The
Senior Note Trustee shall not have by reason of the Subordinated Note Collateral
Documents or this Agreement or any other document a fiduciary relationship
in
respect of the Subordinated Note Trustee or any Subordinated Note
holder.
(e)
Upon
the Discharge of Senior Note Claims, the Senior Note Trustee shall deliver
to
the Subordinated Note Trustee, at the sole cost and expense of the Borrower,
the
Common Personal Property Collateral in its possession together with any
necessary endorsements (or otherwise allow the Subordinated Note Trustee to
obtain control of such Common Personal Property Collateral) to the extent
required by the Subordinated Note Documents or as a court of competent
jurisdiction may otherwise direct.
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SECTION
6. Insolvency
or Liquidation Proceedings.
6.1
Financing
Issues.
If
Borrower shall be subject to any Insolvency or Liquidation Proceeding and the
Senior Note Trustee shall desire to permit the use of cash collateral or to
permit the Borrower to obtain financing under Section 363 or Section 364 of
the
Bankruptcy Code (“DIP
Financing”),
then
the Subordinated Note Trustee, on behalf of itself and the Subordinated Note
holders, agrees that it will raise no objection to such use or DIP Financing
and
will not request adequate protection or any other relief in connection therewith
(except to the extent permitted by Section 6.3) and, to the extent the Senior
Note Liens are junior in priority or pari
passu
with
such DIP Financing, will maintain the priority of its Liens in the Common
Collateral as junior in priority to such Senior Note Liens on the same basis
as
the other Subordinated Note Liens are second in priority to the Senior Note
Liens under this Agreement.
6.2
Relief
from the Automatic Stay.
While
any Senior Note Claims is outstanding or any commitment under any DIP Financing
provided by the Senior Note Trustee is in effect, the Subordinated Note Trustee,
on behalf of itself and the Subordinated Note holders, agrees that none of
them
shall seek relief from the automatic stay or any other stay in any Insolvency
or
Liquidation Proceeding in respect of the Common Collateral, without the prior
written consent of the Senior Note Trustee.
6.3
Adequate
Protection.
The
Subordinated Note Trustee, on behalf of itself and the Subordinated Note
holders, agrees that none of them shall contest (or support any other Person
contesting) (a) any request by the Senior Note Trustee for adequate protection
or (b) any objection by the Senior Note Trustee to any motion, relief, action
or
proceeding which objection is based on the Senior Note Trustee claiming a lack
of adequate protection. Notwithstanding the foregoing contained in this Section
6.3, in any Insolvency or Liquidation Proceeding, in the event the Subordinated
Note Trustee, on behalf of itself and the Subordinated Note holders, seeks
or
requests adequate protection and such adequate protection is granted in the
form
of collateral that would constitute Common Collateral, then the Subordinated
Note Trustee, on behalf of itself or any of the Subordinated Note holders,
agrees that the Senior Note Trustee shall also be granted a Lien on such Common
Collateral as security for the Senior Note Claims and any such DIP Financing
and
that any Lien on such Common Collateral securing the Subordinated Note Claims
shall be junior in priority to the Liens on such Common Collateral securing
the
Senior Note Claims and any such DIP Financing.
6.4
No
Waiver; Voting Rights.
Nothing
contained herein shall prohibit or in any way limit Senior Note Trustee from
objecting in any Insolvency or Liquidation Proceeding or otherwise to
any
action taken by the Subordinated Note Trustee or any of the Subordinated
Note holders, including the seeking by the Subordinated Note holders or
any Subordinated
Note Trustee of adequate protection or the asserting by the Subordinated Note
holders or the Subordinated Note Trustee of any of its rights and remedies
under
the Subordinated Note Documents or otherwise.
10
6.5
Preference
Issues.
If the
Senior Note Trustee is required in any Insolvency or Liquidation Proceeding
or
otherwise to turn over or otherwise pay to the estate of Borrower any amount
as
a preference (a “Recovery”),
then
the Senior Note Trustee shall be entitled to a reinstatement of the Senior
Note
Claims with respect to all such recovered amounts. If this Agreement shall
have
been terminated prior to such Recovery, this Agreement shall be reinstated
in
full force and effect, and such prior termination shall not diminish, release,
discharge, impair or otherwise affect the obligations of the parties hereto
from
such date of reinstatement.
6.6
Reorganization
Securities.
If, in
any Liquidation or Insolvency Proceeding, debt obligations of the reorganized
debtor secured by Liens upon any property of the reorganized debtor are
distributed, pursuant to a plan of reorganization or similar dispositive
restructuring plan, both on account of the Senior Note Claims and on account
of
the Subordinated Note Claims, then, to the extent the debt obligations
distributed on account of the Senior Note Claims and on account of the
Subordinated Note Claims are secured by Liens upon the Common Collateral, the
provisions of this Agreement will survive the distribution of such debt
obligations pursuant to such plan and will apply with like effect to the Liens
on the Common Collateral securing such debt obligations.
6.7
Expense
Claims.
Neither
the Subordinated Note Trustee nor any Subordinated Note holder will assert
or
enforce, at any time prior to the Discharge of Senior Note Claims, any claim
under Section 506(c) of the Bankruptcy Code senior to or on a parity with the
Senior Note Liens for costs or expenses of preserving or disposing of any Common
Collateral.
6.8
Post-Petition
Claims.
(a)
Neither the Subordinated Note Trustee nor any Subordinated Note holder shall
oppose or seek to challenge any claim by the Senior Note Trustee for allowance
in any Insolvency or Liquidation Proceeding of Senior Note Claims consisting
of
post-petition interest, fees or expenses to the extent of the value of the
Subordinated Note Liens, without regard to the existence of the Subordinated
Note Liens.
(b)
The
Senior Note Trustee shall not oppose or seek to challenge any claim by the
Subordinated Note Trustee or any Subordinate Note holder for allowance in any
Insolvency or Liquidation Proceeding of Subordinated Note Trustee Claims
consisting of post-petition interest, fees or expenses to the extent of the
value of the Subordinated Note Liens (after taking into account the Senior
Note
Liens).
6.9
Proofs
of Claim.
Subject
to the limitations set forth in this Agreement, the Senior Note Trustee may
file
proofs of claim and other pleadings and motions with respect to any Senior
Note
Claims or the Common Collateral in any Insolvency or Liquidation Proceeding.
If
a proper proof of claim has not been filed in the form required in such
Insolvency or Liquidation Proceeding at least ten (10) days prior to the
expiration of the time for filing thereof, the Senior Note Trustee shall have
the right (but not the duty) to file an appropriate claim for and on behalf
of
the Subordinated Note Trustee for the benefit of the Subordinated Note holders
with respect to its rights on the Common Collateral; provided that the Senior
Note Trustee shall have provided written notice of its intent to file a proof
of
claim on behalf of the Subordinated Note holders to the Subordinated Note
Trustee at least the lesser of (x) five (5) days and (y) the number of days
remaining in the ten (10) day period described in this sentence, in each case
before so filing. In furtherance of the foregoing, the Subordinated Note Trustee
hereby appoints the Senior Note Trustee as its attorney-in-fact, with full
authority in the place and stead of the Subordinated Note Trustee and full
power
of substitution and in the name of the Subordinated Note holders or otherwise,
to execute and deliver any document or instrument that the Collateral Agent
is
required or permitted to deliver pursuant to this Section 6.9, such appointment
being coupled with an interest and irrevocable.
11
SECTION
7. Reliance;
Waivers; etc.
7.1
Reliance.
The
consent by the Senior Note Trustee to the execution and delivery of the
Subordinated Note Documents as to the Common Collateral and the grant to the
Subordinated Note Trustee, on behalf of the Subordinated Note holders, of the
Subordinated Note Liens and all loans and other extensions of credit made or
deemed made on the date hereof by the Senior Note holders to the Borrower under
the Senior Note Documents shall be deemed to have been given and made in
reliance upon this Agreement. The Subordinated Note Trustee, on behalf of itself
and the Subordinated Note holders, acknowledges that it and the Subordinated
Note holders have, independently and without reliance on the Senior Note
Trustee, and based on documents and information deemed by them appropriate,
made
their own analysis and credit decision to enter into the Subordinated Note
Indenture, this Agreement and the transactions contemplated hereby and thereby
and they will continue to make their own credit decision in taking or not taking
any action under the Subordinated Note Indenture or this Agreement.
7.2
No
Warranties or Liability.
The
Subordinated Note Trustee, on behalf of itself and the Subordinated Note
holders, acknowledges and agrees that the Senior Note Trustee has made no
express or implied representation or warranty, including with respect to the
execution, validity, legality, completeness, collectibility or enforceability
of
any of the Senior Note Documents. The Senior Note Trustee will be entitled
to
manage and supervise the loans and extensions of credit to the Borrower under
the Senior Note Indenture in accordance with applicable law and as it may
otherwise, in its sole discretion, deem appropriate, and the Senior Note Trustee
may manage such loans and extensions of credit without regard to any rights
or
interests that the Subordinated Note Trustee or any of the Subordinated Note
holders have in the Common Collateral or otherwise, except as otherwise provided
in this Agreement. The Senior Note Trustee shall not have any duty to the
Subordinated Note Trustee or any of the Subordinated Note holders to act or
refrain from acting in a manner which allows, or results in, the occurrence
or
continuance of an event of default or default under any agreements with the
Borrower (including the Subordinated Note Documents), regardless of any
knowledge thereof
which the Senior Note Trustee may have or be charged with.
7.3
Obligations
Unconditional.
All
rights, interests, agreements and obligations of the Senior Note Trustee, the
Subordinated Note Trustee and the Subordinated Note holders, respectively,
hereunder shall remain in full force and effect irrespective of:
(a)
any
lack
of validity or enforceability of any Senior Note Documents or any Subordinated
Note Documents or any setting aside or avoidance of any Senior Note Liens or
Subordinated Note Liens;
12
(b)
any
change in the time, manner or place of payment of, or in any other terms of,
all
or any of the Senior Note Claims or Subordinated Note Claims, or any amendment
or waiver or other modification, whether by course of conduct or otherwise,
of
the terms of the Senior Note Indenture or any other Senior Note Document or
of
the terms of the Subordinated Note Indenture or any other Subordinated Note
Document, in each case only to the extent permitted by this
Agreement;
(c)
any
exchange of any security interest in any Common Collateral or any other
collateral, or any amendment, waiver or other modification, whether in writing
or by course of conduct or otherwise, of all or any of the Senior Note Claims
or
Subordinated Note Claims or any guarantee thereof, in each case only to the
extent permitted by this Agreement;
(d)
the
commencement of any Insolvency or Liquidation Proceeding in respect of the
Borrower; or
(e)
any
other circumstances which otherwise might constitute a defense available to,
or
a discharge of, Borrower in respect of the Senior Note Claims or the
Subordinated Note Claims, or of the Subordinated Note Trustee, any Subordinated
Note holder or the Senior Note Trustee in respect of this
Agreement.
SECTION
8. Miscellaneous.
8.1
Conflicts.
In the
event of any conflict between the provisions of this Agreement and the
provisions of the Senior Note Documents or the Subordinated Note Documents,
the
provisions of this Agreement shall govern.
8.2
Continuing
Nature of This Agreement.
This
Agreement shall continue to be effective until the Discharge of Senior Note
Claims shall has occurred. This is a continuing agreement of lien priority.
The
Subordinated Note Trustee, on behalf of itself and the Subordinated Note
holders, hereby waives any right it may have under applicable law to revoke
this
Agreement or any of the provisions of this Agreement. The terms of this
Agreement shall survive, and shall continue in full force and effect, in any
Insolvency or Liquidation Proceeding.
8.3
Amendments;
Waivers.
No
amendment, modification or waiver of any of the provisions of this Agreement
shall be deemed to be made unless the same shall be in writing signed by the
parties hereto and each waiver, if any, shall be a waiver only with respect
to
the specific instance involved and shall in no way impair the rights of the
parties making such waiver or the obligations of the other parties to such
party
in any other respect or at any other time.
8.4
Information
Concerning Financial Condition of Borrower and Its Subsidiaries.
The
Senior Note Trustee, on the one hand, and the Subordinated Note Trustee and
the
Subordinated Note holders, on the other hand, shall each be responsible for
keeping themselves informed of (a) the financial condition of the Borrower
and
its subsidiaries and all endorsers and/or guarantors of the Senior Note Claims
or the Subordinated Note Claims and (b) all other circumstances bearing upon
the
risk of nonpayment of the Subordinated Note Claims or the Senior Note Claims.
Except as otherwise provided herein, neither the Senior
Note
Trustee nor the Subordinated Note Trustee shall have any duty to advise the
other of information known to it or them regarding such condition or any such
circumstances or otherwise. In the event the Senior Note Trustee or the
Subordinated Note Trustee undertakes at any time or from time to time to provide
any such information to the other it shall be under no obligation (x) to provide
any additional information or to provide any such information on any subsequent
occasion, (y) to undertake any investigation or (z) to disclose any information
which, pursuant to accepted or reasonable commercial finance practices, such
party wishes to maintain confidential.
13
8.5
Successor
Trustee.
Any
successor of the Subordinated Note Trustee under the Subordinated Note Indenture
shall execute and deliver a counterpart of and become a party to this Agreement,
and no replacement or resignation of the Subordinated Note Trustee shall be
effective until its successor shall have executed and delivered a counterpart
of
this Agreement.
8.6
Application
of Payments.
All
payments received by the Senior Note Trustee may be applied, reversed and
reapplied, in whole or in part, to such part of the Senior Note Claims in its
sole discretion, deems appropriate.
8.7
Governing
Law; Submission to Jurisdiction; Venue.
(a)
THIS
AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE
CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF TEXAS.
ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT SHALL BE BROUGHT
IN THE COURTS OF THE XXXXX XX XXXXX XX XX XXX XXXXXX XXXXXX FOR THE SOUTHERN
DISTRICT OF TEXAS BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE SENIOR NOTE
TRUSTEE AND THE SUBORDINATED NOTE TRUSTEE, ON BEHALF OF ITSELF AND THE
SUBORDINATED NOTE HOLDERS, HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT
OF ITS PROPERTY OR INTERESTS IN PROPERTY, GENERALLY AND UNCONDITIONALLY, THE
JURISDICTION OF THE AFORESAID COURTS. EACH OF THE SENIOR NOTE TRUSTEE AND THE
SUBORDINATED NOTE TRUSTEE, ON BEHALF OF ITSELF AND THE SUBORDINATED NOTE
HOLDERS, FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT 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 ANY PARTY
TO
THIS AGREEMENT AT ITS ADDRESS SET FORTH BENEATH ITS SIGNATURE BELOW, SUCH
SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL
AFFECT THE RIGHT OF THE PARTIES HERETO TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY APPLICABLE LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE
PROCEED AGAINST ANY PARTY IN ANY OTHER JURISDICTION.
(b)
THE
SENIOR NOTE TRUSTEE AND THE SUBORDINATED NOTE TRUSTEE, ON BEHALF OF ITSELF
AND
THE SUBORDINATED NOTE HOLDERS, HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH
IT
MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS
OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT BROUGHT
IN
THE COURTS REFERRED TO IN CLAUSE (A) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES
AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM.
14
8.8
Waiver
of Jury Trial.
THE
PARTIES HERETO HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS
THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON,
OR
ARISING OUT OF, UNDER OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT OR INDENTURE DOCUMENTS, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF SUCH PARTIES RELATING
THERETO. EACH OF THE PARTIES HERETO ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED
FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION AND THAT THIS PROVISION
IS
A MATERIAL INDUCEMENT FOR THE PARTIES ENTERING INTO THIS AGREEMENT, THE LOAN
DOCUMENTS AND THE INDENTURE DOCUMENTS, AS APPLICABLE.
8.9
Notices.
All
notices to the parties hereto permitted or required under this Agreement shall
be sent to the address set forth below each party’s name on the signature pages
hereto or, as to each party, at such other address as may be designated by
such
party in a written notice to all of the other parties in accordance with this
Agreement. Notices to the Subordinated Note holders permitted or required under
this Agreement may be sent to the Subordinated Note Trustee. Unless otherwise
specifically provided herein, any notice or other communication herein required
or permitted to be given shall be in writing and may be personally served,
telecopied, electronically mailed or sent by courier service or U.S. mail and
shall be deemed to have been given (i) when delivered in person or by courier
service, (ii) upon receipt of a telecopy or electronic mail (provided that
if
the notice is delivered by telecopy or electronic mail after normal business
hours on a business day or on a day that is not a business day, such notice
shall be deemed to have occurred on the next succeeding business day) or (iii)
four (4) business days after deposit in the U.S. mail (registered or certified,
with postage prepaid and properly addressed).
8.10
Further
Assurances.
Each of
the parties hereto agrees that it shall take such further actions and shall
execute and deliver such additional documents and instruments (in recordable
form, if requested) as may be reasonably requested to effectuate the terms
of
and the Lien priorities contemplated by this Agreement.
8.11
Subrogation.
The
Subordinated Note Trustee, on behalf of itself and the Subordinated Note
holders, hereby waives any rights of subrogation it may acquire as to the Common
Collateral as a result of any payment hereunder until the Discharge of Senior
Note Claims has occurred.
15
8.12
Binding
on Successors and Assigns; No Third Party Beneficiaries.
This
Agreement shall be binding upon and inure to the benefit of the Senior Note
Trustee, the Subordinated Note Trustee, the Subordinate Note holders and their
respective successors and assigns. No other Person shall have or be entitled
to
assert rights or benefits hereunder.
8.13
Specific
Performance.
The
Senior Note Trustee and the Subordinated Note Trustee may demand specific
performance of this Agreement.
The
Subordinated Note Trustee, on behalf of itself and the Subordinate Note holders,
hereby irrevocably waives any defense based on the adequacy of a remedy at
law
and any other defense which might be asserted to bar the remedy of specific
performance in any action which may be brought by the Senior Note Trustee as
to
the Common Collateral.
8.14
Section
Titles; Time Periods.
The
section titles contained in this Agreement are and shall be without substantive
meaning or content of any kind whatsoever and are not a part of this
Agreement.
8.15
Counterparts.
This
Agreement may be executed in one or more counterparts, each of which shall
be an
original and all of which shall together constitute one and the same document.
Delivery of an executed counterpart of a signature page to this Agreement by
facsimile or electronic mail shall be effective as delivery of a manually
executed counterpart of this Agreement.
8.16
Authorization.
By its
signature, each Person executing this Agreement on behalf of a party hereto
represents and warrants to the other parties hereto that it is duly authorized
to execute this Agreement.
8.17
Effectiveness.
This
Agreement shall become effective when executed and delivered by all of the
parties hereto. This Agreement shall be effective both before and after the
commencement of any Insolvency or Liquidation Proceeding. All references to
Borrower or any of its subsidiaries shall include Borrower or any of its
subsidiaries as debtor and debtor-in-possession and any receiver or trustee
for
the Borrower or the relevant subsidiary in any Insolvency or Liquidation
Proceeding.
8.18
Provisions
Solely to Define Relative Rights.
The
provisions of this Agreement are and are intended solely for the purpose of
defining the relative rights of the Senior Note Trustee on the one hand and
the
Subordinated Note Trustee on behalf of the Subordinated Note holders on the
other hand. None of the Borrower or any of its subsidiaries or any other
creditor thereof shall have any rights hereunder. Nothing in this Agreement
is
intended to or shall impair the obligations of Borrower or any of its
subsidiaries, which are absolute and unconditional, to pay the Senior Note
Claims and the Subordinated Note Claims as and when the same shall become due
and payable in accordance with their terms.
8.19
No
Marshalling of Assets.
The
Subordinated Note Trustee hereby waives any and all rights to have the Common
Collateral, or any part thereof, marshaled upon any foreclosure or other
enforcement of the Senior Note Liens.
16
Certain
Acknowledgement, Acceptance and Agreement. Each of the Borrower and the
Subsidiaries, jointly and severally, acknowledges and accepts this Agreement
and
agrees to be bound hereby.
17
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date
first written above.
|
FIRST
SECURITY BANK
|
|
|
By:
|
/s/
Xxxxx Xxxxx
|
| Name: |
Xxxxx
Xxxxx
|
| Title: |
Senior
Vice President
|
| Address: |
000
X. Xxxxxx Xxxxxx
Xxxxxx,
XX 00000
|
|
BANK
OF THE OZARKS
|
|
|
By:
|
/s/
Xxxxxx Xxxxxx
|
| Name: |
Xxxxxx
Xxxxxx
|
| Title: |
Senior
Vice President
|
| Address: |
00000
Xxxxxx Xxxxxxx
Xxxxxx
Xxxx, XX 00000
|
|
XXXXXXX
DRILLING CORPORATION
|
|
|
By:
|
/s/
Xxxx Xxxxxxx III
|
| Name: |
Xxxx
Xxxxxxx III
|
| Title: |
Chairman,
President and CEO
|
| Address: |
0000
Xxxxxxxx Xxxx Xxxxx
Xxxxx
000
Xxxxxxx,
XX 00000
|
|
By:
|
/s/
W. Xxxxx Xxxxxxxx
|
|
Name:
W. Xxxxx Xxxxxxxx
Title:
Secretary
|
|
|
XXXXXXX
TOOL & SUPPLY, INC.
|
|
|
By:
|
/s/
W. Xxxxx Xxxxxxxx
|
|
Name:
W. Xxxxx Xxxxxxxx
Title:
Secretary
|
|
|
XXXXXXX
EXPLORATION & PRODUCTION, INC.
|
|
|
By:
|
/s/
W. Xxxxx Xxxxxxxx
|
|
Name:
W. Xxxxx Xxxxxxxx
Title:
Secretary
|
|
Signature
Page to Intercreditor Agreement
