Exhibit 4.7
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COLLATERAL AGENCY AND INTERCREDITOR AGREEMENT
AMONG
QUEST CHEROKEE, LLC,
AS BORROWER,
BLUESTEM PIPELINE, LLC,
AS GUARANTOR,
THE QUEST PLEDGORS, DEFINED HEREIN,
AND Cherokee ENERGY Partners LLC,
AS PLEDGORS,
BANK ONE, NA,
AS ADMINISTRATIVE AGENT FOR THE REVOLVER LENDERS
UNDER THE REVOLVING CREDIT AGREEMENT,
THE REVOLVER LENDERS
FROM TIME TO TIME PARTY TO THE REVOLVING CREDIT AGREEMENT,
BANK ONE, NA,
AS AGENT FOR THE TERM LENDERS
UNDER THE TERM LOAN AGREEMENT,
THE TERM LENDERS
FROM TIME TO TIME PARTY TO THE TERM LOAN AGREEMENT,
AND
BANK ONE, NA,
AS COLLATERAL AGENT
Dated: December 22, 2003
COLLATERAL AGENCY AND INTERCREDITOR AGREEMENT
THIS COLLATERAL AGENCY AND INTERCREDITOR AGREEMENT, dated as of December
22, 2003 (this "Agreement"), is made and entered into by and among QUEST
CHEROKEE, LLC, a Delaware limited liability company (the "Borrower"), BLUESTEM
PIPELINE, LLC, a Delaware limited liability company ("Bluestem"), Quest Oil &
Gas Corporation, a Kansas corporation, QUEST ENERGY SERVICE, INC., a Kansas
corporation, STP CHEROKEE, INC., an Oklahoma corporation, PONDEROSA GAS PIPELINE
COMPANY, INC., a Kansas corporation, PRODUCERS SERVICE INCORPORATED, a Kansas
corporation, and X-X GAS GATHERING, L.L.C., a Kansas limited liability company
(the "Quest Pledgors"), Cherokee ENERGY Partners LLC, a Delaware limited
liability company ("Cherokee Partners"), Bank One, NA, a national banking
association with its main office in Chicago, Illinois ("Bank One"), in its
capacity as agent for the Revolver Lenders (as defined below) under the
Revolving Credit Agreement (as defined below) (in such capacity, the "Revolver
Agent"), the REVOLVER LENDERS, being the financial institutions parties as
"Banks" to the Revolving Credit Agreement (as defined below) from time to time
(the "Revolver Lenders"), Bank One, in its capacity as agent for the Term
Lenders (as defined below) under the Term Loan Agreement (as defined below) (in
such capacity, the "Term Agent"), the TERM LENDERS, being the financial
institutions parties as "Lenders" to the Term Loan Agreement (as defined below)
from time to time (the "Term Lenders"), and Bank One, as Collateral Agent under
this Agreement (in such capacity, the "Collateral Agent") .
WITNESSETH:
WHEREAS, the Borrower, the Revolver Agent and the Revolver Lenders are
parties to that certain Credit Agreement, dated as of even date herewith,
pursuant to which the Revolver Lenders have agreed to make various credit
facilities available to the Borrower in an aggregate maximum principal amount of
up to $200,000,000 at any time outstanding (as amended, modified, supplemented
or restated from time to time in accordance with this Agreement, the "Revolving
Credit Agreement");
WHEREAS, the Borrower, the Term Agent and the Term Lenders are parties to
that certain Senior Term Second Lien Secured Credit Agreement, dated as of even
date herewith, pursuant to which the Term Lenders have agreed to make a term
loan to the Borrower in the aggregate principal amount of up to $35,000,000 (as
amended, modified supplemented or restated from time to time in accordance with
this Agreement, the "Term Loan Agreement");
WHEREAS, in order to secure the payment and performance of the Revolver
Debt (as defined below) and the payment and performance of the Term Debt (as
defined below), the Borrower has granted to the Collateral Agent, as Collateral
Agent for the benefit of both the Revolver Lenders and the Term Lenders, liens
on and security interests in substantially all of the Borrower's assets pursuant
to various Security Documents (as defined below); and
WHEREAS, in order to secure the payment and performance of the Revolver
Debt (as defined below) and the payment and performance of the Term Debt (as
defined below),
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Bluestem has executed and delivered the Bluestem Guaranty (as defined
below) to and for the benefit of the Lenders (as defined below); and
WHEREAS, in order to secure the payment and performance of the Revolver
Debt (as defined below) and the payment and performance of the Term Debt (as
defined below), the Quest Pledgors have executed and delivered the Equityholders
Pledge Agreement (as defined below) to and for the benefit of the Lenders (as
defined below); and
WHEREAS, in order to secure the payment and performance of the Revolver
Debt (as defined below) and the payment and performance of the Term Debt (as
defined below), Cherokee Partners has executed and delivered the Cherokee
Partners Pledge Agreement (as defined below) to and for the benefit of the
Lenders (as defined below); and
WHEREAS, the parties hereto now wish to set forth various agreements
regarding, among other things, their relative rights in and obligations with
respect to (a) the Security Documents (as defined below), (b) the Collateral (as
defined below), and (c) the Bluestem Guaranty (as defined below).
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and incorporating the foregoing
recitals herein, the parties hereto agree as follows.
ARTICLE 1. DEFINITIONS
1.1 Certain Defined Terms. When used herein, the following terms shall have
the following meanings (such definitions to be equally applicable to the
singular and plural forms thereof) :
Affiliate: shall mean, as to any Person, any Subsidiary of such Person, or
any other Person which, directly or indirectly, controls, is controlled by, or
is under common control with, such Person and, with respect to any Company,
shall mean, any director, executive officer, general partner or manager of such
Company and any Person who holds ten percent (10%) or more of the voting stock,
partnership interests, membership interests or other ownership interests of such
Company. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlled by" and "under common control
with"), as used with respect to any Person, shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of such Person, whether through the ownership of voting securities,
membership interests or partnership interests, or by contract or otherwise.
Agreement: shall mean this Collateral Agency and Intercreditor Agreement,
as amended, modified, supplemented and/or restated from time to time in
accordance with this Agreement.
Agreement Obligors: shall mean the Borrower, the Companies and Cherokee
Partners, and Agreement Obligor shall mean any one of the Agreement Obligors,
individually and severally.
Asset Sale: shall have the meaning specified in Section 2.4.
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Bank One: shall have the meaning assigned to such term in the first
paragraph of this Agreement.
Bankruptcy Code: shall mean Title 11 of the United States Code, as amended
from time to time.
Bluestem: shall have the meaning assigned to such term in the first
paragraph of this Agreement, and shall include the successors and permitted
assigns of the entity identified as such in the first paragraph of this
Agreement.
Bluestem Guaranty: shall mean that certain Guaranty of even date herewith,
executed by Bluestem for the benefit of the Lenders, pursuant to which Bluestem
absolutely and unconditionally guaranteed the prompt, complete and full payment
of the Master Debt and further guaranteed the proper and timely performance by
the Borrower of (i) the Revolver Debt and (ii) the Term Debt, as such Guaranty
may be amended, modified, supplemented and/or restated from time to time in
accordance with this Agreement.
Borrower: shall have the meaning assigned to such term in the first
paragraph of this Agreement, and shall include the successors and permitted
assigns of the entity identified as such in the first paragraph of this
Agreement.
Business Day: shall mean a day (other than a Saturday or a Sunday) on which
national banking associations are legally open for business in Dallas, Texas and
Chicago, Illinois.
Cherokee Partners: shall have the meaning assigned to such term in the
first paragraph of this Agreement, and shall include the successors and
permitted assigns of the entity identified as such in the first paragraph of
this Agreement.
Cherokee Partners Pledge Agreement: shall mean that certain Pledge
Agreement of even date herewith from Cherokee Partners to the Collateral Agent
for the benefit of the Revolver Lenders and the Term Lenders, securing, inter
alia, the Master Debt.
Class of Master Debt: shall mean the aggregate of the debt and other
obligations under or issued in connection with a Master Debt Agreement. All
loans and other obligations outstanding under the Revolving Credit Agreement
shall constitute one Class of Master Debt, and all loans and other obligations
outstanding under the Term Loan Agreement shall constitute one Class of Master
Debt.
Collateral: shall mean all property of any kind or description in which the
Collateral Agent for the benefit of the Revolver Lenders and the Term Lenders
has, or purports to have, a Lien or other interest under any Security Document,
including the Collateral Account Collateral and all amounts at any time on
deposit therein, and all Proceeds of Collateral.
Collateral Account: shall have the meaning specified in Section 4.4(a).
Collateral Account Collateral: shall have the meaning specified in Section
4.4(a).
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Collateral Estate: shall mean all right, title, and interest of each
Company in the Collateral granted to the Collateral Agent by the Security
Documents and all rights of the Collateral Agent thereunder.
Collateral Standstill Period: shall have the meaning set forth in Section
6.2(a).
Collateral Agent: shall mean Bank One in its capacity as Collateral Agent
and any successor appointed pursuant to Section 5.5 or Section 8.9 of this
Agreement.
Collateral Distribution: shall mean, (a) with respect to any Collateral,
(i) any payment or distribution of such Collateral, and (ii) any payment or
distribution of Proceeds of such Collateral, and (b) with respect to the
Bluestem Guaranty, any payment or distribution by Bluestem of cash, securities
or other property, whether direct, effected by set-off or otherwise, on account
of the Bluestem Guaranty.
Companies: shall mean (a) the Borrower, (b) Bluestem, (c) all present and
future Subsidiaries of the Borrower and (d) the Quest Pledgors; and Company
shall mean any one of the Companies.
Distribution Date: shall mean each date for the distribution of amounts on
deposit in the Collateral Account.
Dollars and the symbol "$": shall mean the lawful money of the United
States of America.
Effective Date: shall mean the date of this Agreement.
Enforcement Action: shall mean any action by the Term Lenders to: (i)
foreclose or otherwise enforce any Lien now or hereafter existing in favor of
the Collateral Agent for the benefit of the Term Lenders in any of the
Collateral pursuant to any of the Security Documents, (ii) exercise as against
any of the Collateral any other rights or remedies the Term Lenders may have
under the Term Documents, the UCC or any other applicable law with respect to
the Collateral pursuant to any of the Security Documents, or (iii) issue any
written instruction, direction, request or objection pursuant to Article 4,
provided however, that, notwithstanding anything to the contrary herein, the
issuance of an Enforcement Notice by or on behalf of the Term Lenders shall not
constitute an Enforcement Action.
Enforcement Notice: shall mean a written notice which states that a
Significant Term Default has occurred and that the Term Lenders desire to
commence an Enforcement Action as a consequence thereof.
Equityholders Pledge Agreement: shall mean that certain Pledge Agreement of
even date herewith from the Quest Pledgors to the Collateral Agent for the
benefit of the Revolver Lenders and the Term Lenders, securing, inter alia, the
Revolver Debt and the Term Debt.
Event of Default: shall mean any "Event of Default," as defined in the
Revolving Credit Agreement, and/or any "Default," as defined in the Term Loan
Agreement.
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Hedging Obligations: shall mean, with respect to any Person, the
obligations of such Person with respect to Hedging Transactions.
Hedging Transaction: shall mean any transaction (including an agreement
with respect thereto) now existing or hereafter entered into by any one or more
of the Companies which is a rate swap, basis swap, forward rate transaction,
commodity swap, commodity option, equity or equity index swap, equity or equity
index option, bond option, interest rate option, forward exchange transaction,
cap transaction, floor transaction, collar transaction, forward transaction,
currency swap transaction, cross-currency rate swap transaction, currency option
or any other similar transaction (including any option with respect to any of
these transactions) or any combination thereof, whether linked to one or more
interest rates, foreign currencies, commodity prices, equity prices or other
financial measures.
Lenders: shall mean the Revolver Lenders and the Term Lenders, and their
respective successors and assignees.
Letters of Credit: shall mean letters of credit (as defined in the UCC)
issued under the Revolving Credit Agreement.
Lien: shall mean any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), or preference, priority or
other security agreement or preferential arrangement of any kind or nature
whatsoever (including any conditional sale or other title retention agreement,
any capital lease having substantially the same economic effect as any of the
foregoing, and the filing of any financing statement under the UCC or comparable
law of any jurisdiction in respect of any of the foregoing) .
Master Debt: shall mean, collectively, the Revolver Debt and the Term Debt.
Master Debt Agreements: shall mean the Revolving Credit Agreement and the
Term Loan Agreement.
Master Debt Documents: shall mean the Revolver Documents and the Term
Documents.
Master Debt Outstanding: shall mean, at any date of determination, the
total outstanding amount of all Master Debt; provided, however, that, for
purposes of determining the amount of all Revolver Hedging Obligations as of
such date, Master Debt Outstanding shall only include the Revolver Hedging
Liabilities.
Master Debt Guaranty: shall mean, individually and collectively, (a) the
Bluestem Guaranty, and (b) each other and additional guarantee at any time
executed by any Person for the benefit of the Lenders (or any of them) for the
purpose of guaranteeing the payment of the Master Debt and the performance by
the Borrower of (i) the "Obligations," as defined in the Revolving Credit
Agreement, and (ii) the "Obligations," as defined in the Term Loan Agreement.
Moody's: shall mean Xxxxx'x Investors Services, Inc.
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Notice of Event of Default: shall mean a written certification delivered in
accordance with Section 4.2(b) hereof certifying that an Event of Default has
occurred and is continuing.
Paid in Full: shall mean, with respect to the Revolver Debt, payment in
full in cash of such Revolver Debt and the termination of all commitments of the
Revolver Lenders to lend or otherwise extend credit pursuant to the Revolver
Documents.
Permitted Investment: shall mean investments in (a) direct obligations of
the United States, or any Person for which investments are guaranteed by the
full faith and credit of the United States, maturing in twelve months or less
from the date of acquisition thereof, including repurchase agreements entered
into with banks or trust companies described in clause (c) below having a term
of less than one year and fully collateralized by such obligations; (b)
commercial paper and bankers' acceptances maturing in twelve months or less from
the date of issuance and which, at the time of acquisition, are rated A-2 or
better by S&P and P-2 or better by Moody's; (c) time deposits or certificates of
deposit maturing within one year from the date such investment is made and
issued by a bank or trust company or any branch of any Lender, which bank, trust
company or branch is organized under the laws of the United States or any state
thereof, having capital, surplus, and undivided profits aggregating at least
$250,000,000 and whose long-term certificates of deposit are, at the time of
acquisition thereof, rated A-2 by S&P or P2 by Moody's; and (d) investments in
money market funds which invest solely in the types of investments described in
paragraphs (a) through (c) above.
Person: shall mean a corporation, business trust, joint stock company,
trust, joint venture, association, partnership, limited liability company,
organization, business, individual, government or political subdivision thereof,
governmental agency, or other entity of whatever nature.
Potential Default: shall mean any event which with notice or lapse of time,
or both, would become an Event of Default.
Proceeding: shall mean any voluntary or involuntary (a) insolvency,
bankruptcy, receivership, custodianship, liquidation, reorganization,
readjustment, composition or any other similar proceeding relating to the
Borrower or any of its properties, whether under any bankruptcy, reorganization
or insolvency law or laws, federal or state, or any law, federal or state,
relating to relief of debtors, readjustment of indebtedness, reorganization,
composition or extension, (b) proceeding for any liquidation, liquidating
distribution, dissolution or other winding up of the Borrower or appointment of
a custodian, receiver, trustee or other officer with similar powers, whether or
not involving insolvency or bankruptcy proceedings, (c) general assignment for
the benefit of creditors of the Borrower or (d) other marshaling of the assets
of the Borrower.
Proceeds: shall mean all "proceeds" as such term is defined in Section
9-102 of the UCC and all present and future proceeds of any Collateral, whether
arising from the collection, sale, lease, exchange, assignment, licensing, or
other disposition of or other realization upon any Collateral, the proceeds of
any casualty or condemnation of any Collateral (including proceeds of property
insurance and condemnation awards), all claims of the Borrower or any of its
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Subsidiaries against third parties for impairment, loss, damage, or impairment
of the value of any Collateral, and all rights of the Borrower or any of its
Subsidiaries under any insurance, indemnity, warranty, or guaranty of or for any
of the foregoing, whether such proceeds are represented as money, deposit
accounts, accounts, general intangibles, securities, instruments, documents,
chattel paper, inventory, equipment, fixtures, goods, or otherwise, and all
proceeds of such proceeds.
Quest Pledgors: shall have the meaning assigned to such term in the first
paragraph of this Agreement, and shall include the respective successors and
permitted assigns of each of the entities identified as such in the first
paragraph of this Agreement; Quest Pledgor shall mean any one of the Quest
Pledgors.
Refinancing: shall mean any renewal or extension of any Class of Master
Debt and any refinancing, replacement or substitution in whole or in part of the
Master Debt of any Class of Master Debt, including any number of subsequent
refinancings, replacements or substitutions of any prior Refinancings.
Refinancing Lender: shall mean any Person which provides a Refinancing to
the Borrower.
Reimbursement Obligations: shall mean, at any time, that portion of the
Revolver Debt attributable to the obligations of the Borrower under the
Revolving Credit Agreement in respect of the Letters of Credit then outstanding
under the Revolving Credit Agreement to reimburse amounts paid by any Revolver
Lender (whether in such capacity or in its capacity as "Letter of Credit Issuer"
under the Revolving Credit Agreement) in respect of any drawing or drawings
under a Letter of Credit.
Release Consent: shall mean, in connection with any Release Notice, a
written consent or consents, executed by the Revolver Agent and by the Term
Agent, expressly consenting to the release of the specific items of Collateral
specified in such Release Notice from the Liens held by the Collateral Agent
pursuant to the Security Documents, in form and substance satisfactory to the
Collateral Agent in its sole discretion.
Release Notice: shall mean a written notice, signed by a Responsible
Officer of the Borrower, which requests the release of the specific items of
Collateral specified in such notice from the Liens held by the Collateral Agent
pursuant to the Security Documents, and which certifies to the Collateral Agent
that such Collateral is properly permitted to be disposed of by a Company in a
transaction contemplated and permitted under each Master Debt Agreement and that
the Borrower and/or such Company, as the case may be, is entitled under the
terms of the Master Debt Agreements to have such specific items of Collateral
released from such Liens in connection with consummation of such transaction.
Required Majority: shall mean the Required Percentage of each (or, if the
context requires, any) Class of Master Debt then outstanding.
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Required Percentage: shall mean, with respect to any Class of Master Debt
and with respect to any determination in question, the percentage or number of
the holder or holders of such Class of Master Debt required to make such
determination under the terms of the Master Debt Agreement under which such
Class of Master Debt was issued; provided, however, that (a) if no such
percentage or number is specified under the terms of such Master Debt Agreement,
then, (i) if there be more than two such holders, the holder or holders of at
least sixty-six and two-thirds percent (66 2/3%) of the Master Debt Outstanding
with respect to such Class of Master Debt, or (ii) if there be less than three
such holders, all such holders of the Master Debt Outstanding with respect to
such Class of Master Debt, and (b) Hedging Obligations shall not be included in
the determination of such percentage for any purpose.
Responsible Officer: shall mean the chief executive officer, president,
executive vice president, chief financial officer, treasurer, or secretary of
the Borrower.
Restricted Subsidiary: shall have the meaning assigned to such term in the
Revolving Credit Agreement.
Revolver Agent: shall mean the Person at the time in question serving in
the capacity of "Administrative Agent" under the Revolving Credit Agreement,
and, from and after any Refinancing of the Revolver Debt, any agent, trustee or
other representative of the Refinancing Lenders effecting such Refinancing, or,
in the event there is no Person serving in any such capacity, such Refinancing
Lenders.
Revolver Debt: shall mean the "Obligations," as defined in the Revolving
Credit Agreement, and all principal indebtedness for loans now or hereafter made
under any credit agreement for a Refinancing of such Revolver Debt (provided,
however, that, although there can be Refinancings of Revolver Debt and successor
credit agreements for such Refinancings, there must be only one credit
agreement, loan agreement or indenture in effect at any one time for the
principal indebtedness included within the Revolver Debt) .
Revolver Documents: shall mean the Revolving Credit Agreement, the Revolver
Notes, the Security Documents, the Master Debt Guaranty, and all other
agreements, documents and instruments executed from time to time in connection
therewith, as the same may be amended, supplemented or otherwise modified from
time to time.
Revolver Hedging Liabilities: shall mean, as of any date of determination,
the sum of, if greater than zero, (i) with respect to each Revolver Hedging
Obligation that is terminated and unsatisfied as of such date, (A) zero or (B)
the actual liability of Borrower and its Subsidiaries as of such date as a
result of the early termination of such Revolver Hedging Obligation whichever is
greater, minus (ii) the actual liability, if any, of any Revolver Lender
Counterparty to the Borrower and its Subsidiaries with respect to any Revolver
Hedging Obligations that are terminated and unsatisfied as of such date.
Revolver Hedging Obligation: shall mean any Hedging Obligation owed by any
Company to any Revolver ----------------------------- Lender Counterparty.
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Revolver Lender Counterparty: shall mean each Revolver Lender or any
Affiliate of a Revolver Lender counterparty to a Hedging Transaction.
Revolver Lenders: shall have the meaning assigned to such term in the first
paragraph of this Agreement, and shall include (a) each Person at the time in
question party as a "Bank" under the Revolving Credit Agreement, and (b) each
Refinancing Lender with respect to a Refinancing of the Revolver Debt.
Revolver Notes: shall mean those certain promissory notes issued pursuant
to the Revolving Credit Agreement, as amended, modified, supplemented or
restated from time to time in accordance with this Agreement.
Revolving Credit Agreement: shall have the meaning assigned to such term in
the first recital of this Agreement, and shall include any credit agreement,
loan agreement or indenture setting forth the terms of any Refinancing of the
Revolver Debt (provided, however, that, although there can be Refinancings of
Revolver Debt and successor credit agreements for such Refinancings, there must
be only one credit agreement, loan agreement or indenture in effect at any one
time for the principal indebtedness included within the Revolver Debt) .
Secured Obligations: shall mean (a) all Master Debt, and (b) all amounts
payable by any Company to the Collateral Agent under the Security Documents.
Security Documents: shall mean this Agreement and all deeds of trust,
mortgages, security agreements, pledge agreements, financing statements,
pledges, documents, and other instruments listed on Schedule 1 attached hereto,
and all future deeds of trust, mortgages, security agreements, pledge
agreements, financing statements, pledges, documents, and other instruments made
by any Company in favor of the Collateral Agent for the purposes of granting
Liens on property included or to be included in the Collateral Estate to secure
the payment and performance of the Master Debt, in each case as amended,
modified, supplemented or restated from time to time.
Significant Term Default: shall mean any Term Default (a) arising under
Section 8.2 of the Term Loan Agreement or (b) arising under Section 8.3 of the
Term Loan Agreement by reason of the Borrower's failure to comply with Section
7.22 of the Term Loan Agreement, in each case as Sections 7.22, 8.2 and 8.3 of
the Term Loan Agreement are in effect on the Effective Date,
Stated Maturity Date: shall mean December ___, 2008.
Subsidiary: shall mean, with respect to any specified Person, any other
Person of which, at the time of determination, such specified Person, directly
and/or indirectly through one or more other Persons, owns more than 50% of the
voting interests. Unless otherwise qualified, all references to a "Subsidiary"
or to "Subsidiaries" in this Agreement shall refer to a Subsidiary or
Subsidiaries of the Borrower.
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S&P: shall mean Standard & Poor's Ratings Services, a division of the
McGraw Hill Companies, Inc.
Term Agent: shall mean the Person at the time in question serving in the
capacity of "Agent" under the Term Loan Agreement, and, from and after any
Refinancing of the Term Debt, any agent, trustee or other representative of the
Refinancing Lenders effecting such Refinancing, or, in the event there is no
Person serving in any such capacity, such Refinancing Lenders.
Term Debt: shall mean the "Obligations," as defined in the Term Loan
Agreement, and all principal indebtedness for loans now or hereafter made under
any credit agreement for a Refinancing of such Term Debt (provided, however,
that, although there can be Refinancings of Term Debt and successor credit
agreements for such Refinancings, there must be only one credit agreement, loan
agreement or indenture in effect at any one time for the principal indebtedness
included within the Term Debt) .
Term Default: shall mean a "Default," as defined in the Term Loan
Agreement.
Term Documents: shall mean, collectively, the Term Loan Agreement, the Term
Notes, if any, the Security Documents, the Master Debt Guaranty, and all
instruments, documents, certificates contemplated by or executed in connection
with any of them.
Term Lenders: shall have the meaning assigned to such term in the first
paragraph of this Agreement, and shall include (a) each Person at the time in
question party as a "Lender" under the Term Loan Agreement, and (b) each
Refinancing Lender with respect to a Refinancing of the Term Debt.
Term Loan Agreement: shall have the meaning assigned to such term in the
second recital of this Agreement, and shall include any credit agreement, loan
agreement or indenture setting forth the terms of any Refinancing of the Term
Debt (provided, however, that, although there can be Refinancings of Term Debt
and successor credit agreements for such Refinancings, there must be only one
credit agreement, loan agreement or indenture in effect at any one time for the
principal indebtedness included within the Term Debt) .
Term Notes: shall mean those certain promissory notes, if any, issued
pursuant to the Term Loan Agreement, as amended, modified, supplemented or
restated from time to time in accordance with this Agreement.
UCC: shall mean the Uniform Commercial Code as in effect from time to time
in the State of Texas; provided, however, that if, by reason of mandatory
provisions of law, the perfection or the effect of perfection or non-perfection
of any Lien in any Collateral is governed by the Uniform Commercial Code as in
effect in a jurisdiction other than the State of Texas, "UCC" shall mean the
Uniform Commercial Code as in effect in such other jurisdiction for purposes of
the provisions hereof relating to such perfection or the effect of perfection or
non-perfection.
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Withdrawal Notice: shall have the meaning specified in Section 4.2(c)
hereof.
ARTICLE 2. COLLATERAL AGENCY
2.1 Creation of Collateral Agency. In order to provide for the creation,
perfection and maintenance of all Liens granted under Security Documents and for
the enforcement of the various rights and remedies set forth in the Security
Documents, and to set forth the relative rights of the Lenders with regard to
the Collateral and the Bluestem Guaranty as set forth herein, the Lenders hereby
appoint Bank One as the Collateral Agent under this Agreement and the other
Security Documents, and the Collateral Agent hereby accepts its appointment
subject to the terms and conditions of this Agreement and the Security
Documents. Each Company hereby reaffirms and confirms the grant of the
Collateral Estate in favor of the Collateral Agent in accordance with the terms
of the Security Documents and for the benefit of the Lenders as set forth
therein and herein.
2.2 Possession and Use of Collateral. So long as no Event of Default
exists, each Company shall have the right to remain in possession and retain
control of the Collateral (other than any Collateral for which applicable law
requires that Liens on such Collateral be perfected by control or possession) in
accordance with, and to the extent permitted by, the terms of the Master Debt
Agreements and the terms of the Security Documents.
2.3 Addition of Collateral to the Collateral Estate. At any time, any
Company and the Collateral Agent may, without necessity of consent from the
Revolver Agent, the Term Agent or any of the Lenders, enter into one or more
Security Documents, in form reasonably satisfactory to the Collateral Agent: (a)
to supplement or add to the covenants of such Company for the benefit of all
Lenders or to surrender any right or power conferred upon any one or more of the
Companies; (b) to mortgage or pledge to the Collateral Agent, or grant a
security interest in favor of the Collateral Agent in, any property or assets as
additional security for the Secured Obligations; or (c) to cure any ambiguity,
to correct or supplement any provision herein or in any Security Document which
may be defective or inconsistent with any other provision herein or therein, or
to make any other provision with respect to matters or questions arising
hereunder which shall not be inconsistent with any provision hereof. The
Collateral Agent, the Revolver Agent, the Term Agent and the Lenders agree that
the forms of Security Documents being executed and delivered concurrently with
(and dated of even date with) this Agreement are satisfactory to such parties.
The Borrower will deliver or cause to be delivered to the Collateral Agent,
promptly upon the execution and delivery thereof, executed counterparts of all
Security Documents and all amendments and supplements thereto. The Collateral
Agent shall keep all Security Documents held by it at the principal office
maintained by it in Dallas, Texas, or, if none is there maintained, at its
primary address for notice under this Agreement, shall provide copies of such
Security Documents to the Lenders within a reasonable time after its receipt of
a written request therefor, and permit any Lender or the representative thereof
to inspect the same at such office during normal business hours upon reasonable
prior notice.
2.4 Releases of Collateral. In connection with the proposed sale,
assignment, transfer, or other disposition of any Collateral by any Company (an
"Asset Sale"), the Borrower, on behalf of such selling Company, shall deliver a
Release Notice to the Collateral Agent, the Revolver Agent and the Term Agent.
If (a) the Collateral Agent receives a Release Consent relative to such Release
12
Notice within fifteen (15) Business Days after, the delivery of such Release
Notice, or (b) within fifteen (15) Business Days after the delivery of such
Release Notice, the Collateral Agent shall not have received a written objection
from either the Revolver Agent or the Term Agent stating that the selling
Borrower is not entitled under the terms of the Revolving Credit Agreement or
the Term Loan Agreement, as the case may be, to obtain the release of the
Collateral specified in the Release Notice, then, in either event, the
Collateral Agent shall provide for the release of the Liens with respect to such
Collateral to the extent requested by the Borrower in the Release Notice,
provided, however, that the effective delivery of any releases provided under
this Section 2.4 shall be expressly conditioned upon the consummation of the
Asset Sale to which the Release Notice relates. If, however, the Collateral
Agent receives a timely written objection from the Revolver Agent or the Term
Agent, the Collateral Agent may not release the Liens with respect to such
Collateral, and the Collateral Agent may not take any actions requested of it by
the Borrower until such objection shall be withdrawn in writing by the Revolver
Agent or the Term Agent, as the case may be, or until five (5) Business Days
after the Collateral Agent shall have received an order of a court of competent
jurisdiction, which shall be final and no longer subject to appeal, directing it
to release the Liens of the Collateral Agent with respect to such Collateral;
provided, however, that, notwithstanding the foregoing, such selling Company
shall not be entitled to such release, and the Collateral Agent shall not effect
such release, without the prior written consent of the Revolver Agent, the Term
Agent and the Required Percentage of each Class of Master Debt then outstanding
if, at the time such release would otherwise be effected by the Collateral
Agent, the Collateral Agent is in receipt of a Notice of Event of Default
(whether given prior to or after the delivery by the Borrower or such selling
Company of the Release Notice to which such release is related) for which no
Withdrawal Notice withdrawing the same has been received by the Collateral
Agent. Upon consummation of the Asset Sale for which a release of Liens is
granted hereunder, (i) all cash Proceeds received by or owing to any Company
from the sale of such released Collateral shall be immediately turned over to
the Collateral Agent, together with any necessary endorsements or instruments of
assignment or transfer, for deposit in the Collateral Account and distribution
in accordance with the provisions of Section 4.4 hereof, and (ii) all non-cash
Proceeds received by or owing to any Company from the sale of such released
Collateral shall be immediately pledged to the Collateral Agent for the benefit
of the Lenders pursuant to an appropriate Security Document (and, to the extent
constituting instruments, securities or other property as to which perfection of
the Collateral Agent's Lien thereon is established by possession pursuant to the
UCC, turned over to the Collateral Agent, together with any necessary
endorsements or instruments of assignment or transfer) to be held as part of the
Collateral Estate hereunder as additional Collateral hereunder. Notwithstanding
anything to the contrary contained herein, during the existence of any Event of
Default or Borrowing Base Deficiency (in each case as defined in the Revolving
Credit Agreement), the Collateral Agent will (and the Term Agent and each Term
Lender hereby irrevocably authorizes the Collateral Agent to), to the extent
requested by the Revolver Agent, release or otherwise terminate (pursuant to an
instrument or instruments in form and substance acceptable to the Revolver
Agent) the Liens securing the Term Debt with respect to any Collateral
encumbered by such Liens to the extent such Collateral is the subject of an
Asset Sale (to an unaffiliated third party in good faith in an arms length
transaction for cash proceeds in an amount proposed by Revolver Agent and
consented to by the Required Percentage of the Term Lenders, such consent not to
be unreasonably withheld or delayed) and the proceeds thereof applied to the
repayment of the Revolver Debt. Any covenant or other restriction in the Term
Loan Agreement that is inconsistent with the provisions of the
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preceding sentence is hereby waived to the extent of such inconsistency such
that the provisions of the preceding sentence shall prevail in the event of any
conflict with the provisions of the Term Loan Agreement. Subject to the receipt
of reasonable prior notice by the Collateral Agent, such releases, terminations
and other instruments and agreements shall be delivered substantially
contemporaneous with such sale or disposition.
2.5 Obligations Absolute.
(a) No Security Document, and no Master Debt Guaranty, may in any
event be revoked by any Company. Each Company agrees that such Company's
obligations and the obligations of such Company's Subsidiaries under the
Security Documents and each Master Debt Guaranty shall not be released,
diminished, or impaired by, and waives, to the fullest extent permitted by
applicable law, any rights which such Company might otherwise have which relate
to:
(i) Any lack of validity or enforceability of any of the Secured
Obligations, any Security Document, any Master Debt Guaranty, or any other
agreement or instrument relating thereto; any increase, reduction,
extension, or rearrangement of any of the Secured Obligations; any
amendment, supplement, or other modification of any of the Security
Documents or any Master Debt Guaranty; any release, waiver or consent
granted under any of the Security Documents or any Master Debt Guaranty; or
any sale, assignment, delegation, or other transfer of any of the Secured
Obligations and/or any of the Security Documents or any Master Debt
Guaranty;
(ii) Any grant of any security or support for any of the Secured
Obligations or any impairment of any security or support for any of the
Secured Obligations, including any full or partial release, exchange,
subordination, or waste of any collateral for any of the Secured
Obligations or any full or partial release of any Company or any other
Person liable for the payment or performance of any of the Secured
Obligations; any change in the organization or structure of any Company or
any other Person liable for the payment or performance of any of the
Secured Obligations; or the insolvency, bankruptcy, liquidation, or
dissolution of any Company or any other Person liable for the payment or
performance of any of the Secured Obligations;
(iii) The manner of applying payments on any of the Secured
Obligations or the proceeds of any security or support for any of the
Secured Obligations against any of the Secured Obligations;
(iv) The failure to give notice of the occurrence of any of
the events or actions referred to in this Section 2.5, notice of any
Potential Default or Event of Default, notice of intent to demand, notice
of demand, notice of presentment for payment, notice of nonpayment, notice
of intent to protest, notice of protest, notice of grace, notice of
dishonor, notice of intent to accelerate, notice of acceleration, notice of
bringing of action to enforce the payment or performance of any of the
Secured Obligations, notice of any sale or foreclosure of any collateral
for any of the Secured Obligations, notice of any transfer of any of the
Secured Obligations, notice of the financial condition of or other
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circumstances regarding the Borrower, any other Company, or any other
Person liable for any of the Secured Obligations, or any other notice of
any kind relating to any of the Secured Obligations; or
(v) Any other action taken or omitted which affects any of
the Secured Obligations or any of the Collateral, whether or not such
action or omission prejudices any Company or increases the likelihood that
any Company will be required to pay or support payment of the Secured
Obligations pursuant to the terms hereof, of any of the Master Debt
Guaranty, or of any of the Security Documents.
(b) The Master Debt Guaranty and each of the Security Documents shall
continue to be effective or be reinstated if any payment on the Secured
Obligations must be refunded for any reason, including as a result of or by
reason of any Proceeding. In the event that the Collateral Agent or any of
the Lenders must refund any payment received against the Secured
Obligations, any prior release from the terms of this Agreement or the
other Security Documents given to any Company by the Collateral Agent in
connection with such payment shall be without effect, and all such Security
Documents shall be reinstated in full force and effect as to the Collateral
subject to such release.
ARTICLE 3. MASTER DEBT
3.1 Modification of Master Debt.
(a) The Borrower, the Revolver Agent, and the Revolver Lenders
agree that without the prior written consent of the Term Agent and the Required
Percentage of the Term Lenders they will not renew, extend, modify or amend the
Revolving Credit Agreement or any of the instruments or documents relating to
the Revolver Debt to (i) increase the maximum principal amount of the
commitments under the Revolving Credit Agreement to an amount in excess of
$200,000,000, or (ii) increase the applicable margin with respect to the
interest rate on any of the Revolver Debt by more than 2.00% per annum
(excluding any increase resulting from the imposition of any default rate of
interest in accordance with the terms of the Revolver Documents) .
(b) The Borrower, the Term Agent, and the Term Lenders agree that
without the prior written consent of the Revolver Agent and the Required
Percentage of the Revolver Lenders they will not renew, extend, modify or amend
the Term Loan Agreement or any of the instruments or documents relating to the
Term Debt to (i) increase the maximum principal amount of the Term Debt to an
amount in excess of $35,000,000 or the rate of interest on any of the Term Debt
(other than as a result of the imposition of a default rate of interest in
accordance with the terms of the Term Documents), (ii) change or add any event
of default or any convenant with respect to the Term Debt if the effect of such
change or addition is to cause any one or more of the Term Documents to be more
restrictive on any Company than such Term Documents were prior to such change or
addition, (iii) change the dates upon which payments of principal or interest on
the Term Debt are due, or (iv) change any redemption or prepayment provisions of
the Term Debt. Furthermore, the Lien priorities provided herein shall not be
altered or otherwise affected by any amendment, modification, supplement,
extension,
15
renewal, restatement, or refinancing of the Master Debt or any portion thereof,
nor by any action or inaction which the Collateral Agent, the Revolver Agent,
the Term Agent or any Lender may take or fail to take in respect of the
Collateral, or otherwise, except for any release or termination executed by
Collateral Agent in accordance with the terms hereof.
ARTICLE 4. ACTIONS REGARDING COLLATERAL
4.1 Preservation and Maintenance of Collateral. The Collateral Agent may
from time to time take action for the protection and enforcement of its rights
under the Security Documents on behalf of the Lenders, but the Collateral Agent
shall not be obligated to take any action under the Security Documents except
that (a) the Collateral Agent shall perform such duties as are specifically set
forth herein including the taking of action during an Event of Default as set
forth in Section 4.2 below to the extent required thereby, and (b) the
Collateral Agent shall take such action as may be reasonably requested from time
to time in writing pursuant to this Agreement as long as the requested action is
not prohibited by this Agreement or by any of the Security Documents, does not
conflict with applicable law, and the Collateral Agent is indemnified, to its
satisfaction, by the Lenders.
4.2 Enforcement Action under the Security Documents.
(a) The Collateral Agent shall be deemed not to have knowledge of the
existence of any condition or event which constitutes an Event of Default unless
notified in writing by the Revolver Agent, the Term Agent, or a Lender. The
Collateral Agent shall not be under any obligation, as a result of knowledge of
an Event of Default, to take any action under the provisions of any Security
Document unless so directed by the Revolver Agent, the Term Agent or the Lenders
in accordance with this Agreement.
(b) Subject to Section 6.2 with respect to the Term Debt, if at any
time an Event of Default exists, the Revolver Agent, the Term Agent or the
Required Percentage of any Class of Master Debt shall be entitled to give the
Collateral Agent and the Borrower a Notice of Event of Default hereunder. The
failure to give any Notice of Event of Default hereunder shall in no way affect
the validity or effectiveness of any similar or subsequent notice of default or
Event of Default provided to the Borrower or to any Company under the applicable
Master Debt Agreement, nor shall the failure of the Borrower to receive any
Notice of Event of Default hereunder affect the validity of any request to the
Collateral Agent or the ability of the Collateral Agent to exercise the rights
and remedies provided in the Security Documents upon receipt of such Notice of
Event of Default. The Collateral Agent shall provide copies of any Notice of
Event of Default to the Revolver Agent, the Term Agent, Cherokee Partners and
the Borrower within five (5) Business Days from its receipt of any such notice,
but its failure to do so shall not affect the validity or effectiveness of any
such Notice of Event of Default.
(c) The Revolver Agent, the Term Agent or the Required Percentage of
any Class of Master Debt may withdraw any Notice of Event of Default previously
delivered by it pursuant to Section 4.2(b) above by delivering a written notice
of withdrawal (a "Withdrawal Notice") to the Collateral Agent, and such
Withdrawal Notice shall be effective (subject to the provisions of Section
4.2(e) ) if delivered (i) before the Collateral Agent takes any action to
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exercise any remedy with respect to the Collateral, or (ii) at any time after
the Collateral Agent takes any action to exercise any remedy with respect to the
Collateral, if (x) the Collateral Agent reasonably determines that the exercise
of any remedy or remedies with respect to the Collateral can be reversed,
terminated, or withdrawn without prejudice to the Collateral Agent or any
Lender, and (y) the Companies have reimbursed, or have made acceptable
arrangements to reimburse, the Collateral Agent, the Revolver Agent, the Term
Agent and the Lenders with respect to all costs and expenses incurred by the
Collateral Agent, the Revolver Agent, the Term Agent and the Lenders in
connection with the enforcement actions and the reversing or termination
thereof. The Revolver Agent, the Term Agent or the Required Percentage of any
Class of Master Debt shall deliver a Withdrawal Notice to the Collateral Agent
with respect to any Notice of Event of Default previously delivered by it to the
Collateral Agent promptly after, but only if, each Event of Default that is the
subject of in such Notice of Event of Default has been waived it by instrument
in writing delivered to the Borrower. The Collateral Agent shall provide copies
of any Withdrawal Notice to the Revolver Agent, the Term Agent, Cherokee
Partners and the Borrower within five (5) Business Days from its receipt of any
such notice, but its failure to do so shall not affect the validity or
effectiveness of any such Withdrawal Notice.
(d) If a Notice of Event of Default shall have been received by the
Collateral Agent from the Revolver Agent or the Required Percentage of the
Revolver Debt at any time or from the Term Agent or the Required Percentage of
the Term Debt after the expiration of the Collateral Standstill Period and such
Notice of Event of Default shall not have been withdrawn in accordance with the
provisions of Section 4.2(c) above, the Collateral Agent shall exercise such
rights and remedies of the Collateral Agent under the Security Documents,
institute and maintain such suits and proceedings, and take such other actions
in connection therewith as the Revolver Agent may direct from time to time in
writing if such Notice of Event of Default was delivered by the Revolver Agent
or the Required Percentage of Revolver Debt, or the Term Agent if such Notice of
Event of Default was delivered by the Term Agent or the Required Percentage of
Term Debt, unless the Revolver Agent or the Required Percentage of Revolver Debt
have on or prior to the end of any Collateral Standstill Period caused the
Collateral Agent to commence foreclosure or other remedies under the Security
Documents with respect to the Collateral and the Collateral Agent is diligently
pursuing the same, in each case as permitted under the Security Documents during
the existence of an Event of Default. Upon the effectiveness of any Withdrawal
Notice pursuant to the terms and provisions of Section 4.2(c) above, the
Collateral Agent shall discontinue and terminate, without prejudice, any
enforcement action taken by the Collateral Agent with respect to such Notice of
Event of Default; provided, however, that any such Withdrawal Notice shall not
become effective if, within fifteen (15) Business Days after receipt by the
Collateral Agent of the Withdrawal Notice, any party entitled to deliver a
separate Notice of Event of Default hereunder objects to the discontinuance or
termination of such enforcement action.
(e) In the event that the Collateral Agent shall receive conflicting
instructions from the Revolver Agent, the Term Agent, the Required Majority of
any Class of Master Debt, and/or from Required Majorities of different Classes
of Master Debt, regarding the specific action to be taken or not to be taken
under the Security Documents, or the manner or timing of the exercise of any
rights or remedies thereunder, the Collateral Agent shall follow the
17
instructions received in writing from the Revolver Agent, provided, however,
that after the expiration of the Collateral Standstill Period and provided the
Revolver Agent or the Required Percentage of Revolver Lenders have not on or
prior to the end of such period caused the Collateral Agent to commence
foreclosure or other remedies under the Security Documents with respect to the
Collateral and the Collateral Agent is diligently pursuing the same, the
Collateral Agent shall diligently pursue (in each case, to the extent reasonably
requested by the Term Agent or the Required Percentage of Term Lenders) the good
faith exercise of rights and remedies under the Security Documents or applicable
law with respect to the Collateral, including and if requested by the Term Agent
or the Required Percentage of Term Lenders, the commencement of actions to
foreclose the Collateral Agent's Liens on, or to take possession of, all or any
material portion of the Collateral, the commencement of any judicial proceedings
or actions against or with respect to all or any material portion of the
Collateral, or the taking of any action to vacate any stay on enforcement of the
Collateral Agent's Liens on any of the Collateral.
(f) Any sale or disposition of Collateral by the Collateral Agent
pursuant to any power or in accordance with any rights or remedies set forth in
the Security Documents shall be in accordance with the provisions of applicable
law and, with respect to any such sale or disposition effected on the provisions
of the UCC applicable thereto, shall be effected in a commercially reasonable
manner.
(g) The Collateral Agent shall not be obligated to follow any written
directions received pursuant to this Agreement if the Collateral Agent
determines in good faith that such written directions are in conflict with any
provisions of applicable law or any Security Document.
(h) In the event the occurrence of a fire or other casualty resulting
in damage to all or any portion of any Collateral (collectively, a "Casualty"),
(a) the Term Agent and the Term Lenders hereby waive any right to participate or
join in any adjustment, compromise, or settlement of any claims resulting from a
Casualty with respect to any Collateral; and (b) all proceeds received or to be
received on account of a Casualty shall be applied in the manner or manners
provided for in the Revolver Documents; and the Collateral Agent, the Term Agent
and the Term Lenders agree to execute and deliver any documents, instruments,
agreements or further assurances reasonably required to effectuate any of the
foregoing.
4.3 General Provisions Regarding Remedies.
(a) No remedy conferred upon or reserved to the Collateral Agent
herein or in the Security Documents is intended to be exclusive of any other
remedy or remedies, but every such remedy shall be cumulative and shall be in
addition to every other remedy conferred herein or in any of the Security
Documents or now or hereafter existing at law or in equity or by statute. All of
the powers, remedies, and rights of the Collateral Agent as set forth in this
Agreement may be exercised by the Collateral Agent in respect of any Security
Document as though set forth at length therein, and all the powers, remedies,
and rights of the Collateral Agent as set forth in any Security Document may be
exercised from time to time as herein and therein provided. No delay or omission
by the Collateral Agent in the exercise of any right, remedy, or power accruing
upon any Event of Default shall impair any such right, remedy or power or shall
18
be construed to be a waiver of any such Event of Default or an acquiescence
therein; and every right, power, and remedy given by any Security Document may
be exercised from time to time and as often as may be deemed expedient by the
Collateral Agent.
(b) In the event the Collateral Agent has proceeded to enforce any
right, remedy, or power under any Security Document and the proceeding for the
enforcement thereof has been discontinued or abandoned for any reason or is
determined adversely to the Collateral Agent, then and in every such case, each
Agreement Obligor, the Collateral Agent, the Revolver Agent, the Term Agent and
each Lender shall, subject to any effect of or determination in such proceeding,
severally and respectively be restored to their former positions and rights
under such Security Document with respect to the Collateral Estate and in all
other respects, and thereafter all rights, remedies, and power of the Collateral
Agent shall continue as though no such proceeding was taken.
(c) All rights of action and rights to assert claims upon or under the
Security Documents may be enforced by the Collateral Agent without the
possession of any Master Debt Agreement or other instruments which manifest the
Master Debt or the production thereof in any trial or other proceeding relative
thereto, and any such suit or proceedings instituted by the Collateral Agent
shall be brought in its name as Collateral Agent for the benefit of the Lenders
and any recovery of and from any judgment shall be held as part of the
Collateral Estate. Each Agreement Obligor hereby waives, to the fullest extent
permitted by applicable law, notice of intent to demand, demand, presentment for
payment, notice of nonpayment, protest, notice of protest, grace, notice of
dishonor, notice of intent to accelerate, notice of acceleration, and all other
notices in connection with the enforcement of the Master Debt, the Security
Documents, and the Collateral. To the full extent each Agreement Obligor may do
so, no Agreement Obligor shall insist upon, plead, claim, or take advantage of
any law providing for any appraisement, valuation, stay, extension, or
redemption, and each Agreement Obligor hereby waives and releases the same, and
all rights to a marshaling of the assets of such Agreement Obligor and the
Collateral or to a sale in inverse order of alienation in the event of
foreclosure of the Liens granted pursuant to the Security Documents. Each
Agreement Obligor agrees not to assert any right under any law pertaining to the
marshaling of assets, sale in inverse order of alienation, the administration of
estates of decedents, or other matters whatsoever to defeat, reduce, or affect
the right of the Collateral Agent or Lenders under the terms of the Security
Documents or applicable law.
(d) Each Agreement Obligor hereby irrevocably constitutes and appoints
the Collateral Agent and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full power and
authority to act on behalf of such Agreement Obligor, in the name of such
Agreement Obligor or in its own name, upon the occurrence and during the
continuance of any Event of Default, to take any and all appropriate action,
execute any and all documents and instruments, or institute any proceedings
which the Collateral Agent, the Revolver Agent, the Term Agent and/or the
Lenders deem reasonably necessary or desirable to carry out purposes and terms
of any of the Security Documents. This power of attorney is a power coupled with
an interest and shall be irrevocable. Each Agreement Obligor hereby ratifies all
acts of such attorney-in-fact consistent with the foregoing. Any such
attorney-in-fact shall not be liable for any acts or omissions, INCLUDING
NEGLIGENT ACTS AND
19
OMISSIONS OF SUCH ATTORNEY-IN-FACT, unless they constitute the gross negligence
or willful misconduct of such attorney-in-fact, but in no event shall the
attorney-in-fact be liable for special, indirect or consequential losses or
damages of any kind whatsoever (including but not limited to lost profits) .
(e) Notwithstanding any other provision of any Security Document, and
except as expressly set forth in this Agreement, neither the rights of the
Revolver Agent, the Term Agent or any of the Lenders to receive payment on the
Master Debt held by holders thereof, to institute suit for the enforcement of
such payment, to initiate or participate with others in any suit, action or
proceeding against any Company, including a Proceeding, to assert their
respective positions as a creditor or to receive any distribution in any
proceeding under or related to the Bankruptcy Code, or to otherwise exercise any
right they may have in connection with such Master Debt (other than the right to
enforce any Lien on the Collateral under the Security Documents, which shall in
all circumstances be exercisable only in accordance with this Agreement as long
as this Agreement remains in effect), nor the obligation of any Company to pay
the Master Debt owing by such Company, shall be impaired or affected without the
consent of the Revolver Agent, the Term Agent or such Lenders, as the case may
be.
4.4 Application of Monies by Collateral Agent.
(a) On the date hereof there shall be established and, at all times
thereafter until the Collateral Estate has been terminated, there shall be
maintained by the Collateral Agent a deposit account (the "Collateral Account")
which shall be maintained with the Collateral Agent at the principal office
maintained by it in Dallas, Texas, or, if none is there maintained, at its
primary address for notice under this Agreement. To secure the prompt and
complete payment, when due, and the observance and performance of all terms,
covenants, and agreements relating to all Secured Obligations, each Agreement
Obligor hereby assigns and pledges to the Collateral Agent for the benefit of
the Lenders, and grants to the Collateral Agent for the benefit of the Lenders a
security interest in, all of the right, title, and interest of such Agreement
Obligor in and to the following property, whether presently existing or
hereafter arising or acquired (the "Collateral Account Collateral") : the
Collateral Account, all cash deposited therein, all certificates and
instruments, if any, from time to time representing the Collateral Account; all
investments from time to time made pursuant to Section 4.4(b) below; all notes,
certificates of deposit, and other instruments from time to time hereafter
delivered to or otherwise possessed by the Collateral Agent in substitution for,
or in addition to, any or all of the then existing Collateral Account
Collateral; all interest, dividends, cash, instruments, and other property from
time to time received, receivable, or otherwise distributed in respect of or in
exchange for any or all of the then existing Collateral Account Collateral; and
to the extent not covered above, all Proceeds of the foregoing (whether the same
are acquired before or after the commencement of a case under the Bankruptcy
Code) . All right, title, and interest in and to the Collateral Account shall
vest in the Collateral Agent, and funds on deposit in the Collateral Account and
other Collateral Account Collateral shall constitute part of the Collateral
Estate. The Collateral Account Collateral and Collateral Account shall be
subject to the exclusive dominion and control of the Collateral Agent and shall
be held for the benefit of the Lenders as their respective interests appear.
20
(b) All money and other Proceeds received by the Collateral Agent in
respect of any Collateral, including (i) Proceeds derived from Asset Sales, (ii)
Proceeds derived from the exercise of any right or remedy with respect to any of
the Collateral conferred upon the Collateral Agent under the terms of any
Security Document or otherwise available to the Collateral Agent at law or in
equity, (iii) Proceeds derived from any assignment of production and from any
assignment of rents, (iv) insurance proceeds and condemnation proceeds, (v)
amounts received as a result of set off by the Collateral Agent, collections of
accounts, instruments, chattel paper and other receivables, (vi) Proceeds from
public or private sale or other disposition of any Collateral in accordance with
the terms of any applicable Security Document or otherwise permitted by
applicable law, (vii) Proceeds of any judicial or non-judicial foreclosure
proceedings (or conveyance in lieu thereof), and (viii) all amounts paid over to
the Collateral Agent pursuant to Section 6.1(b), shall be deposited in or
credited to the Collateral Account. Any Proceeds deemed not appropriate at the
time of receipt for deposit or credit to the Collateral Account shall be held by
the Collateral Agent for the benefit of the Lenders until such time as cash
proceeds are realized therefrom or the Collateral Agent deems such Proceeds
appropriate for deposit or credit to the Collateral Account. All funds in the
Collateral Account shall be invested, reinvested, and liquidated (at the risk
and expense of the Companies) in accordance with instructions given to the
Collateral Agent by (i) the Borrower, prior to a Notice of Event of Default
having been received by the Collateral Agent, or (ii) the Revolver Agent and the
Term Agent subsequent to a Notice of Event of Default having been received by
the Collateral Agent, provided, however, that if the Collateral Agent receives
conflicting instructions from the Revolver Agent and the Term Agent, the
Collateral Agent shall comply with the instructions of the Revolver Agent for so
long as any Revolver Debt remains outstanding, and provided further that, in all
circumstances, all investments shall be Permitted Investments. The Collateral
Agent shall not be liable for any loss resulting from any Permitted Investment
or the sale or redemption thereof in accordance with the preceding sentence. If
and when cash is required for disbursement in accordance with this Agreement,
the Collateral Agent is authorized, to the extent necessary, to cause Permitted
Investments to be sold or otherwise liquidated in such manner as the Collateral
Agent shall deem appropriate.
(c) Prior to any Notice of Event of Default having been received by
the Collateral Agent, all amounts in the Collateral Account shall be held by the
Collateral Agent for the benefit of the Lenders until the Borrower requests the
release thereof. Any such request by the Borrower shall be made in writing,
delivered to the Collateral Agent, the Revolver Agent and the Term Agent, and
shall be accompanied by a certificate of a Responsible Officer of the Borrower
specifying (i) the use for the funds released and stating that the funds shall
be used for the specified purpose, (ii) that the release is permitted under the
terms of all Master Debt Agreements, (iii) that no Potential Default or Event of
Default then exists, and (iv) that the release, if granted, would not reasonably
be expected to cause or result in the occurrence of an Event of Default. If the
Collateral Agent does not receive an objection from the Revolver Agent or the
Term Agent within fifteen (15) Business Days after such request is delivered
stating that the release would violate the terms of a Master Debt Agreement or
result in an Event of Default, then the Collateral Agent shall release the funds
or other items of Collateral as requested by the Borrower. If, however, an
objection is received by the Collateral Agent, then the Collateral Agent shall
retain the funds or other property in the Collateral Account until such time as
(i) the objection is withdrawn, (ii) distributions are made under paragraph (d)
below, or (iii) the
21
Collateral Agent shall have received a final order of a court of competent
jurisdiction, no longer subject to appeal, directing it to release the funds or
property.
(d) After any Notice of Event of Default having been received by the
Collateral Agent and such notice not having been withdrawn, all moneys and
property held or received by the Collateral Agent in the Collateral Account
shall be held in the Collateral Account for the benefit of the Lenders and, upon
request of the Revolver Agent prior to the Stated Maturity Date, and thereafter
upon the request of the Revolver Agent, the Term Agent or any Required Majority
of the Term Debt and to the extent available for distribution, shall be
distributed from time to time by the Collateral Agent in the following order of
priority:
First: to the Collateral Agent in an amount equal to all amounts due and
unpaid to it as of such Distribution Date pursuant to Section 5.3 and
Section 5.4 and all other amounts due and unpaid it under the terms of the
Security Documents as of such Distribution Date, including all reasonable
costs and expenses (including reasonable attorneys fees) incurred in
connection with any sale, disposition, or other attempt to realize upon all
or any part of the Collateral (and to the extent any such amounts have been
previously paid on behalf of the Companies under Section 5.3, Section 5.4
or otherwise by other Persons to reimburse such Persons) ;
Second: to the Revolver Agent for the benefit of the Revolver Lenders in an
amount equal to the full amount of the Revolver Debt then outstanding,
whether or not due and payable; provided, however, that with respect to all
cash collateralization obligations covering contingent obligations under
Letters of Credit that are included in the Revolver Debt then outstanding,
(1) rather than distributing the amounts allocable to such obligations to
the holders thereof, such amounts shall be reserved in the Collateral
Account (such reserve being an "L/C Reserve") and set aside for the purpose
of covering Reimbursement Obligations for such Letters of Credit as they
arise in connection with draws under such Letters of Credit, (2) upon any
draws under such Letters of Credit that are not reimbursed when due, and at
the request of the issuers of such Letters of Credit, the Collateral Agent
shall distribute the ratable share of the L/C Reserve allocable to such
Reimbursement Obligations to the holders of Revolver Debt, and (3) as such
contingent obligations expire, the Collateral Agent shall release and
deposit the portion of the L/C Reserve allocable to such obligations which
have expired into the Collateral Account for general distribution in
accordance with this Agreement;
Third: to the Term Agent for the benefit of Term Lenders in an amount equal
to the full amount of the Term Debt then outstanding, whether or not due
and payable; and
Fourth: any surplus then remaining shall be paid to the Borrower or its
successors or assigns.
The term "unpaid" as used in this Section 4.4(d) refers: (1) in the absence of a
Proceeding with respect to any Agreement Obligor, to all amounts of Secured
Obligations outstanding as of Distribution Date, whether or not then due and
payable, and (2) during the pendency of a Proceeding with respect to any
Agreement Obligor, to all amounts with respect to such
22
Agreement Obligor allowed by the bankruptcy court in respect of Secured
Obligations as a basis for distribution (including estimated amounts, if any,
allowed in respect of contingent claims), in each case, to the extent that prior
distributions have not been made in respect thereof.
(e) Notwithstanding anything herein to the contrary, the Collateral
Agent shall, at all times, have the right to apply funds and property held in
the Collateral Account to the payment of amounts due and unpaid to it pursuant
to Section 5.3 below. Unless otherwise waived by the Revolver Agent and the Term
Agent, the Collateral Agent shall provide the Borrower, the Revolver Agent and
the Term Agent with fifteen (15) Business Days prior written notice of any such
application of moneys or property. Further, notwithstanding anything to the
contrary contained herein, the Collateral Agent, shall, at all times following
the occurrence and during the continuance of any Event of Default, have the
right to distribute Proceeds from an Asset Sale, net of the reasonable costs and
expenses incurred by the Collateral Agent in connection with such disposition
(including reasonable attorneys' fees), and all amounts paid over to the
Collateral Agent pursuant to Section 6.1(b) below, to the Lenders in the same
manner and to the same extent as provided in Section 4.4(d) above.
(f) In making amounts available for distribution hereunder, the
Collateral Agent may liquidate investments prior to maturity in order to make a
distribution, and any resultant loss shall be for the sole account and risk of
the Companies. All such distributions shall be made in cash in Dollars.
(g) Each Agreement Obligor hereby authorizes and directs the
Collateral Agent to comply, and the Collateral Agent agrees to comply, with the
terms of this Agreement regarding, and with instructions originated by the
Lenders (or by the Revolver Agent and/or the Term Agent) in accordance with this
Agreement directing, the disposition of funds from time to time in the
Collateral Account or as to any other matters relating to the Collateral Account
or any of the Collateral Account Collateral without further consent by any
Agreement Obligor, but subject to the terms of this Agreement
ARTICLE 5. THE COLLATERAL AGENT
5.1 Acceptance of Collateral Estate; Duties and Limitations. The Collateral
Agent hereby accepts the trusts of this Agreement on behalf of and for the
benefit of all Lenders, but only upon the terms set forth herein, including the
following:
(a) Except as otherwise expressly provided herein or in the Security
Documents, the Collateral Agent makes no representation and has no
responsibility as to the validity of the Security Documents, the sufficiency or
value of the Collateral, the title to the Collateral, or verification of the
sufficiency or continuation of any insurance in respect thereof;
(b) the Collateral Agent may rely and shall be protected in acting
upon any resolution, certificate, opinion, consent, or other document reasonably
believed by it to be genuine and to have been executed or presented by the
proper party or parties and, without limiting the foregoing, (i) in making any
payment or in taking any other action hereunder in respect of any Master Debt,
the Collateral Agent may rely upon a certificate signed by the Term
23
Agent or the Revolver Agent, as appropriate, with respect to the ownership of
each such Class of Master Debt and the amounts due thereunder, and (ii) whenever
in the administration of its duties hereunder, the Collateral Agent deems it
reasonably necessary for a matter to be proved or established prior to taking
any action hereunder, the Collateral Agent may request a certification from such
party or parties regarding such matter as it deems appropriate in its reasonable
discretion and upon which the Collateral Agent shall be protected in relying;
and
(c) the Collateral Agent shall be under no liability with respect to
any action or omission taken in accordance with this Agreement or for any other
action or omission of the Collateral Agent, INCLUDING NEGLIGENT ACTIONS OR
OMISSIONS OF THE COLLATERAL AGENT (except that nothing contained herein shall
relieve the Collateral Agent from liability for its own gross negligence or
willful misconduct), and in no event shall the Collateral Agent be liable for
special, indirect, or consequential losses or damages of any kind whatsoever
(including but not limited to lost profits) .
5.2 Limitation of Scope of Duties. Beyond its duties set forth in this
Agreement and the other Security Documents as to the perfection of Liens
against, and the custody and preservation of Collateral, which are for the
benefit of the Lenders, and the accounting to the Borrower, the Revolver Agent,
the Term Agent and the Lenders for moneys received and moneys distributed by it
hereunder and thereunder, the Collateral Agent shall not have any duty to any
Agreement Obligor, the Revolver Agent, the Term Agent or the Lenders with
respect to any Collateral in its possession or control or in the possession or
control of its agent or nominee, any income thereon, or the preservation of
rights against prior parties or any other rights pertaining thereto, other than
the duty to manage such funds and such Collateral in the same manner it would
manage its own assets.
5.3 Expenses. Each Company and each Lender agrees to pay on demand of the
Collateral Agent (a) all reasonable out-of-pocket costs and expenses of the
Collateral Agent in connection with the preparation, execution, delivery,
administration, modification, and amendment of this Agreement and the Security
Documents, including the reasonable fees and expenses of outside counsel for the
Collateral Agent, (b) all reasonable out-of-pocket costs and expenses of the
Collateral Agent in connection with any Release Notice, whether or not any
release of Collateral is effected in connection therewith, including the
reasonable fees and expenses of outside counsel for the Collateral Agent, and
(c) all out-of-pocket costs and expenses of the Collateral Agent in connection
with the preservation or enforcement of rights under the Security Documents,
whether through negotiations, legal proceedings, or otherwise, including fees
and expenses of counsel for the Collateral Agent. Each Lender shall be liable
for the foregoing only to the extent (i) that such expenses are not paid by the
Companies, (ii) that such expenses are not paid or recoverable out of the
Collateral, (iii) that such expenses relate to actions of the Collateral Agent
acting as Collateral Agent, and (iv) of such Lender's ratable share of such
expenses based upon the Master Debt Outstanding. The provisions of this Section
5.3 shall survive the repayment of the Secured Obligations and any purported
termination of the Security Documents which does not expressly refer to this
paragraph.
5.4 Indemnification.
24
(a) Each Company and each Lender, on behalf of themselves and all
Persons claiming by, through, or under any of them, agrees to protect, defend,
indemnify, and hold harmless the Collateral Agent, and its shareholders,
directors, officers, employees, agents, representatives and affiliates and the
shareholders, directors, officers, employees, agents, and representatives of
those affiliates (collectively, the "Indemnified Parties"), from and against all
demands, claims, actions, suits, damages, judgments, fines, penalties,
liabilities, and out-of-pocket costs and expenses, including reasonable costs of
attorneys and related costs of experts such as accountants (collectively, the
"Indemnified Liabilities"), actually incurred by any Indemnified Party which are
related to any litigation or proceeding relating to the Security Documents or
the transactions contemplated thereunder or hereunder in connection with the
Collateral Agent acting in its capacity as Collateral Agent, INCLUDING ANY
INDEMNIFIED LIABILITIES CAUSED BY ANY INDEMNIFIED PARTY'S OWN NEGLIGENCE AND ANY
INDEMNIFIED LIABILITIES IMPOSED UPON THE INDEMNIFIED PARTY, OR ANY OF THEM,
UNDER ANY THEORY OF STRICT LIABILITY, but not Indemnified Liabilities which are
a result of any Indemnified Party's gross negligence or willful misconduct. Each
Lender shall be liable for the foregoing only to the extent (i) that any such
Indemnified Liability is not paid by the Companies, (ii) that such expenses are
not paid or recoverable out of the Collateral, (iii) that such Indemnified
Liability relates to the actions of the Collateral Agent acting as Collateral
Agent, and (iv) of such Lender's ratable share of such Indemnified Liability
based upon the Master Debt Outstanding. The provisions of this paragraph shall
survive the repayment of the Secured Obligations, the resignation or removal of
the Collateral Agent and any purported termination of the Security Documents. In
no event, however, shall Indemnified Liabilities include special or
consequential losses or damages of any kind whatsoever (including but not
limited to, lost profits) .
5.5 Resignation, Removal, and Replacement of Collateral Agent.
(a) The Collateral Agent or any successor Collateral Agent may resign
at any time by giving at least thirty (30) days' prior written notice of
resignation to the Borrower, the Revolver Agent, the Term Agent and each Lender,
such resignation to be effective on the later of (a) the date specified in such
notice or (b) the date on which a successor agrees to act as Collateral Agent
hereunder and under the Security Documents. If appropriate instruments of
assignment to and acceptance by a successor Collateral Agent shall not have been
executed and delivered within thirty (30) days after the giving of such notice
of resignation, the resigning Collateral Agent may petition any court of
competent jurisdiction for the appointment of a successor Collateral Agent.
(b) The Required Majority may at any time remove the Collateral Agent,
for or without cause, by an instrument or instruments in writing delivered to
the Collateral Agent and the Borrower, and in the event the office of Collateral
Agent shall become vacant for any reason, the Required Majority may appoint a
successor Collateral Agent to fill such vacancy if a successor Collateral Agent
has agreed to accept such position. Upon removal of any Person from the position
of "Collateral Agent", such removal shall become effective on the date on which
a successor agrees to act as Collateral Agent hereunder and under the Security
Documents.
25
(c) Upon the appointment of any successor Collateral Agent, such
successor Collateral Agent shall execute, acknowledge, and deliver to the
Borrower and to the retiring or removed Collateral Agent an instrument accepting
such appointment, and the retiring Collateral Agent, at the expense of the
Borrower, shall duly assign, transfer, and deliver to such successor Collateral
Agent all rights, instruments and moneys or other Collateral (including any
funds or Collateral Account Collateral then held in the Collateral Account) then
held by the retiring Collateral Agent as Collateral Agent hereunder and under
the Security Documents, and shall execute and deliver such other proper
instruments in such form as may be reasonably requested by such successor
Collateral Agent to evidence such assignment, transfer, and delivery. Upon the
execution, acknowledgment and delivery of all such instruments, the successor
Collateral Agent shall immediately, and without the need for any further action,
succeed to all of the rights and obligations of the retiring Collateral Agent
under this Agreement and the Security Documents as if originally named therein.
5.6 Eligibility of Collateral Agent. The Collateral Agent may be either the
Revolver Agent, the Term Agent or a Lender, provided, however, that such Person
is willing and able to accept such appointment upon terms substantially in
accord with those of this Agreement. In all other cases the Collateral Agent
shall be a financial institution with assets in excess of $250,000,000. If, at
any time, the Collateral Agent shall cease to be eligible in accordance with the
provisions of this Section 5.6, the Collateral Agent shall promptly resign in
the manner and with the effect specified in Section 5.5.
5.7 Appointment of Separate or Co-Collateral Agent. The Collateral Agent
may, and, upon the request of any Required Majority, shall, by an instrument in
writing delivered to the Borrower and to each Lender, appoint a bank or trust
company or an individual to act as separate collateral agent or co-collateral
agent with respect to all or any portion of the Collateral (or all or any
portion of the Master Debt) in a jurisdiction where the Collateral Agent is
disqualified from acting. Such separate collateral agent or co-collateral agent
shall exercise only such rights and shall have only such duties as shall be
specified in the instrument of appointment. The Companies will pay the
reasonable compensation and expenses of any such separate collateral agent or
co-collateral agent and indemnify such person as if such Person was the
Collateral Agent hereunder.
5.8 Non-Reliance on Collateral Agent, Revolver Agent, Term Agent or Other
Lenders. Each Lender agrees that it has, independently and without reliance on
the Collateral Agent, the Revolver Agent, the Term Agent or any other Lender,
and based upon such documents and information as it has deemed appropriate, made
its own credit analysis of the Companies and the Collateral, including the
status of the title of such Collateral, and its own independent decision to
enter into this Agreement and the Master Debt Agreement to which it is a party
or under which it is legally bound. Each Lender agrees that it will
independently and without reliance upon the Collateral Agent, the Revolver
Agent, the Term Agent or any other Lender, and based upon such documents and
information as it shall deem appropriate at the time, continue to make its own
analysis and decisions in taking or not taking any action under this Agreement
and/or the Security Documents. Except as expressly set forth herein or in the
Security Documents, the Collateral Agent acting solely as Collateral Agent shall
not be required to keep itself, the Revolver Agent, the Term Agent or the
Lenders informed as to the performance of the Companies under this Agreement,
any Master Debt Agreement or any other document, instrument or agreement,
referred to or provided for
26
herein or therein, or to inspect the properties or books of the Companies.
Except as expressly provided for herein, the Collateral Agent in its capacity as
Collateral Agent shall not have any duty, responsibility or liability to provide
any Lender with any credit or other information concerning the affairs,
financial condition or business of the Companies which may come into the
possession of the Collateral Agent, provided, however, that the Collateral Agent
shall send to each Lender, promptly upon receipt thereof, duplicates or copies
of all notices, requests, and other instruments received by the Collateral Agent
under or pursuant to this Agreement.
ARTICLE 6. SUBORDINATION
6.1 Limited Subordination. As between the Revolver Lenders and the Term
Lenders, the Term Lenders hereby acknowledge and agree, solely for the benefit
of the Revolver Lenders, that:
(a) The Liens of the Security Documents, insofar as the same secure
the payment and performance of the Term Debt, are subject and subordinate to the
Liens of the Security Documents, insofar as the same secure the Revolver Debt,
to the extent and in the manner set forth in this Agreement; and
(b) The rights of the Term Lenders to receive Collateral Distributions
under the Bluestem Guaranty in payment of the Term Debt are subject and
subordinate to the rights of the Revolver Lenders to receive Collateral
Distributions under the Bluestem Guaranty in payment of the Revolver Debt, to
the extent and in the manner set forth in this Agreement.
(c) Until the Revolver Debt is Paid in Full, if the Term Agent or any
Term Lender receives a Collateral Distribution under the Bluestem Guaranty on
account of the Term Debt the full amount of such Collateral Distribution shall
be promptly paid or delivered to the Collateral Agent to be held and distributed
by the Collateral Agent as, and in the same manner as, Proceeds of Collateral in
accordance with this Agreement.
6.2 Term Debt Standstill Provisions.
(a) Until the Revolver Debt is Paid in Full, neither the Term Agent
nor any Term Lender shall, without the prior written consent of the Revolver
Agent, take any Enforcement Action with respect to any of the Collateral,
including issuing any notice, instruction, direction, request or objection
pursuant to Article 4 (but excluding the issuance of any Enforcement Notice),
until the earliest to occur of the following:
(i) acceleration of the Revolver Debt; or
(ii) the passage of 180 days from the delivery of an Enforcement
Notice to the Revolver Agent (the "Collateral Standstill Period"), but
only if any Significant Term Default described therein shall not have
been cured or waived within such period.
Notwithstanding the foregoing, Term Lenders may file proofs of claim against any
Agreement Obligor in any Proceeding involving such Agreement Obligor and take
any of the other actions,
27
and enforce any of the other rights and remedies, described or to which
reference is made in Section 4.3(e) hereof. Any Collateral Distributions or
other proceeds of any Enforcement Action obtained by Term Agent or any Term
Lender prior to the time at which the Revolver Debt is Paid in Full shall be
promptly paid or delivered to the Collateral Agent to be held and distributed by
the Collateral Agent in accordance with this Agreement.
(b) Notwithstanding anything contained herein to the contrary, if
following the acceleration of the Revolver Debt by Revolver Lenders such
acceleration is rescinded (whether or not any existing Revolver Default has been
cured or waived), then all Enforcement Actions taken by the Term Agent or any
Term Lender shall likewise be rescinded if such Enforcement Action is based
solely on clause (i) of paragraph (a) of this Section 6.2; provided, however,
that such rescission shall not affect the determination of whether the
Collateral Standstill Period has expired if an Enforcement Notice was delivered
after such acceleration and a Significant Term Default exists at the time of
such rescission.
6.3 Insolvency Proceedings.
(a) Each of the Revolver Agent and the Term Agent agrees to file, in
accordance with applicable law, all filings and claims required to preserve the
Master Debt under the Term Loan Agreement and the Revolving Credit Agreement in
any formal insolvency Proceeding, whether under the Bankruptcy Code or state
law, within the time periods required by such applicable law to preserve those
debts, claims and rights, and each of the Revolver Agent (and each of the
Revolver Lenders) and the Term Agent (and each of the Term Lenders) hereby
irrevocably authorizes, empowers and appoints the other to execute, verify,
deliver and file proofs of claim upon the failure of such other party to do so
with respect to the relevant Class of Master Debt within three (3) Business Days
prior to the expiration of the time to file such proof of claim; provided,
however, that neither the Revolver Agent nor the Term Agent shall have the
obligation to execute, verify, deliver, and/or file any such proof of claim on
behalf of the other Class of Master Debt.
(b) In the event any Proceeding is commenced by or against any
Agreement Obligor, the Term Agent and the Term Lenders agree that, unless and
until the Revolver Debt shall have been Paid in Full, the Term Agent and the
Term Lenders, as the case may be, shall promptly pay over to the Collateral
Agent any Collateral Distribution attributable to any such Proceeding in the
form received for application pursuant to this Agreement, except that the Term
Lenders may receive and retain (i) debt securities issued in exchange for the
Term Debt and (ii) equity interests in the Borrower.
6.4 Rights of Term Lenders. Except as expressly provided herein, nothing
contained in this Agreement is intended to, nor shall it, impair or reduce the
obligation of the Companies, which are absolute and unconditional, to pay the
Term Debt as and when the same shall become due and payable or to comply with
all of the terms and conditions of the Term Loan Agreement. No Person, including
the Companies, any third party, a trustee in bankruptcy or representative of
creditors, other than the Revolver Lenders shall be entitled to any benefit
under this Agreement so as to claim any priority over the Term Lenders.
28
ARTICLE 7. LENDER AGREEMENTS
7.1 Miscellaneous Security Interests. Each of the Term Agent, the Revolver
Agent and each Lender agrees that it is, and shall act as, the agent and bailee
for the other Lenders (without effect on the priorities established hereunder
and without any liability or responsibility) to the extent reasonably necessary
to perfect any security interest in Collateral required to be perfected by
possession or control and which is at any time in the possession or under the
control of any such Person.
7.2 Coordination of Enforcement Efforts. Without providing any rights or
benefits to any Agreement Obligor, the Revolver Agent, the Term Agent and each
Lender agree that, in the event enforcement proceedings are necessary at any
time after the expiration of the Collateral Standstill Period, such parties
shall reasonably discuss the possibility of undertaking a coordinated
enforcement process, including an effort, if advisable, to attempt to sell the
Collateral assets of the Companies for fair market value as a going concern and
to reasonably enter into arrangements between themselves so as to permit the
ongoing operation of the business of the Companies. Failure to enter into such
discussions shall in no way affect the rights and/or obligations of any party as
set forth in this Agreement nor shall it entitle any party to specific
performance pursuant to Section 7.4 hereof.
7.3 Information. The Term Agent and the Revolver Agent agree to furnish to
each other and to all Lenders, from time to time upon request, information and
particulars as to the amounts owing by the Companies under the Master Debt
Agreements, and the Companies hereby consent to all such disclosures. The
Revolver Agent and the Term Agent shall provide to each other copies of any
written waivers of any Events of Default granted by it to any Agreement Obligor
and copies of all amendments to their respective Master Debt Agreements.
7.4 Specific Performance. Each of the parties to this Agreement
acknowledges that the Revolver Lenders and the Term Lenders would be damaged
irreparably in the event any of the provisions of this Agreement are not
performed in accordance with their specific terms or are otherwise breached.
Accordingly, each of the parties to this Agreement agrees that the Revolver
Lenders and the Term Lenders, and the Revolver Agent and Term Agent shall be
entitled to an injunction or injunctions to prevent breaches of the provisions
of this Agreement and to enforce specifically this Agreement and the terms and
provisions of this Agreement in any action instituted in any court of competent
jurisdiction, in addition to any other remedy to which they may be entitled at
law or in equity, without the need to demonstrate any actual damage to be
suffered by the party seeking such relief and without posting any bond or other
security.
ARTICLE 8. MISCELLANEOUS
8.1 Interpretation and Survival of Provisions. Article, Section, Schedule,
and Exhibit references are to this Agreement, unless otherwise specified. All
references to instruments, documents, contracts, and agreements are references
to such instruments, documents, contracts, and agreements as the same may be
amended, supplemented, and otherwise modified from time to time, unless
otherwise specified. The word "including" shall mean "including but not limited
to." Whenever any Agreement Obligor has an obligation under this Agreement, the
expense of
29
complying with that obligation shall be an expense of the Companies unless
otherwise specified. Whenever any determination, consent, or approval is to be
made or given by the Collateral Agent, such action shall be in the Collateral
Agent's reasonable discretion unless otherwise specified in this Agreement. If
any provision in this Agreement is held to be illegal, invalid, not binding, or
unenforceable, such provision shall be fully severable and this Agreement shall
be construed and enforced as if such illegal, invalid, not binding, or
unenforceable provision had never comprised a part of this Agreement, and the
remaining provisions shall remain in full force and effect. This Agreement has
been reviewed and negotiated by sophisticated parties with access to legal
counsel and shall not be construed against the drafter. The representations,
warranties, and covenants made in this Agreement shall remain operative and in
full force and effect regardless of (a) any investigation made by or on behalf
of any Person, or (b) the issuance and acceptance of any Master Debt and payment
therefor. Provisions which expressly state so shall remain operative and in full
force and effect unless such provisions are expressly terminated in a writing
referencing those individual provisions, regardless of any purported general
termination of this Agreement.
8.2 Binding Effect; Assignment. This Agreement and the Security Documents
shall be binding upon all parties hereto and thereto and their respective
successors and permitted assigns. Except as expressly provided herein and in the
Security Documents, such agreements shall not be construed so as to confer any
right or benefit upon any Person, including a trustee in bankruptcy or any other
representatives of creditors generally, other than the parties to this
Agreement, the Lenders, and their respective successors and permitted assigns.
The Companies may not assign their rights or delegate their duties under the
Security Documents. The Collateral Agent may assign its rights and delegate its
duties under the Security Documents in accordance with the terms of this
Agreement.
8.3 Modifications, Waivers and Consents. This Agreement may be amended
without the consent of any Agreement Obligor if the effect of such amendment
does not cause this Agreement, as so amended, to be more restrictive on any
Agreement Obligor not party to such amendment than this Agreement was prior to
such amendment. Unless otherwise set forth herein, all amendments,
modifications, waivers, and consents under all other Security Documents shall be
in writing and signed by the Companies party thereto and the Collateral Agent,
acting upon the written direction of the Required Percentage of each Class of
Master Debt, but if such modification, waiver, or consent adversely affects the
rights, duties, or immunities of the Collateral Agent, then the Collateral Agent
shall take such action only in its own discretion. Nothing herein is intended to
impair the obligations of the Companies to execute documents and agreements in
accordance with the respective Master Debt Agreements.
8.4 Notices.
(a) The Collateral Agent shall, promptly after receipt thereof;
deliver to the Borrower, the Revolver Agent and the Term Agent copies of all
other notices, requests, correspondence or instruments received by the
Collateral Agent from any Person under or pursuant to this Agreement.
(b) All notices, requests, correspondence, and other instruments
delivered to any party hereunder shall be in writing, and shall be delivered by
registered or certified mail,
30
return receipt requested, telex, telegram, telecopy, air courier guaranteeing
overnight delivery, or personal delivery, to such parties at the following
addresses:
If to the Collateral Agent:
Bank One, NA, as Collateral Agent
Mail Code IL 1-0634
1 Bank Xxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxx Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to:
Bank One, NA, as Collateral Agent
0000 Xxxx Xxxxxx
Xxxxxx Xxxxx
Xxxxxx, Xxxxx 00000
Attention: J. Xxxxx Xxxxxx, Director, Capital Markets
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Revolver Agent or the Revolver Lenders:
Bank One, NA
0000 Xxxx Xxxxxx
4th Floor
Mail Code TX1-2448
Xxxxxx, Xxxxx 00000
Attention: J. Xxxxx Xxxxxx
If to the Term Agent or the Term Lenders:
Bank One, NA
Mail Code IL 1-0634
1 Bank Xxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxx Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to:
Bank One, NA
0000 Xxxx Xxxxxx
00
Xxxxxx Xxxxx
Xxxxxx, Xxxxx 00000
Attention: J. Xxxxx Xxxxxx, Director, Capital Markets
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Borrower or any other Company:
c/o Quest Resources Corporation
0000 X. Xxxxxxx, Xxxxx 000
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxx, Chairman and Co-Chief Executive Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Cherokee Partners:
_______________________________
_______________________________
_______________________________
_______________________________
Attention: ___________________________
Telephone: ___________________________
Facsimile: ___________________________
or to such other addresses as such parties may designate to the others in
writing. All such notices requests, correspondence, and other instruments shall
be deemed to have been duly given: at the time delivered by hand, if personally
delivered; four (4) days after being sent by certified mail, return receipt
requested, if mailed; when answered back, if telexed; when receipt acknowledged,
if telecopied; and on the next Business Day if timely delivered to an air
courier guaranteeing overnight delivery. Any notice required under this
Agreement to be delivered to the Companies shall be deemed duly delivered if
delivered to the Borrower or another of such Companies.
8.5 Further Assurances. Each party to this Agreement shall execute,
acknowledge, and deliver all such agreements, documents and instruments and take
all such further action as may be reasonably necessary in order to further
effectuate the purposes and to carry out the terms of this Agreement and the
Security Documents.
8.6 Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Texas, without regard to principles of
conflicts of laws.
8.7 Execution in Counterparts. This Agreement may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which counterparts,
32
when so executed and delivered, shall be deemed to be an original and all of
which counterparts, taken together, shall constitute but one and the same
Agreement.
8.8 Conflict. In the event any term or provision hereof is inconsistent
with or conflicts with any provision of the Security Documents, the terms and
provisions contained in this Agreement shall be controlling.
8.9 Termination.
(a) This Agreement and the obligations of the parties hereunder shall
terminate, and be of no further force and effect, when all amounts owed under
the Master Debt Agreements have been fully and finally paid.
(b) Except as otherwise set forth in this paragraph (b), the rights
and obligations of the Revolver Lenders and the Revolver Agent under this
Agreement shall terminate and be of no further force and effect when all of the
Revolver Debt has been fully and finally paid. If, upon the repayment in full of
the Revolver Debt, the Revolver Agent or any Revolver Lender shall then be
acting as the Collateral Agent under this Agreement and not be Term Lender or be
acting as Term Agent, then the Revolver Agent or such Revolver Lender, as the
case may be, shall duly assign, transfer, and deliver unto the Term Agent all of
the rights, instruments and moneys or other Collateral (including any funds or
Collateral Account Collateral then held in the Collateral Account) then held by
the Revolver Agent or such Revolver Lender as Collateral Agent hereunder and
under the Security Documents, and shall execute and deliver such proper
instruments in such form as may reasonably be requested by the Term Agent to
evidence such assignment, transfer, and delivery. Upon the Term Agent's
acceptance of the assignment, transfer, and delivery as aforesaid (i) the Term
Agent shall immediately and without the need for any further action succeed to
all of the rights and obligations of the Collateral Agent under the Security
Documents as if originally named as such therein, (ii) the Revolver Agent and
all Revolver Lenders shall be fully and finally released in writing from any and
all obligations under this Agreement, and (iii) and the rights of the Revolver
Agent and the Revolver Lender (each in such capacity, but not in any other
capacity) hereunder shall terminate, and be of no further force and effect.
(c) Except as otherwise set forth in this paragraph (c), the rights
and obligations of the Term Lenders and the Term Agent under this Agreement
shall terminate and be of no further force and effect when all of the Term Debt
has been fully and finally paid. If, upon the repayment in full of the Term
Debt, the Term Agent or any Term Lender shall then be acting as the Collateral
Agent under this Agreement and not be Revolver Lender or be acting as Revolver
Agent, then the Term Agent or such Term Lender, as the case may be, shall duly
assign, transfer, and deliver unto the Revolver Agent all of the rights,
instruments and moneys or other Collateral (including any funds or Collateral
Account Collateral then held in the Collateral Account) then held by the Term
Agent or such Term Lender as Collateral Agent hereunder and under the Security
Documents, and shall execute and deliver such proper instruments in such form as
may reasonably be requested by the Revolver Agent to evidence such assignment,
transfer, and delivery. Upon the Revolver Agent's acceptance of the assignment,
transfer, and delivery as aforesaid (i) the Revolver Agent shall immediately and
without the need for any
33
further action succeed to all of the rights and obligations of the Collateral
Agent under the Security Documents as if originally named as such therein, (ii)
the Term Agent and all Term Lenders shall be fully and finally released in
writing from any and all obligations under this Agreement, and (iii) and the
rights of the Term Agent and the Term Lender (each in such capacity, but not in
any other capacity) hereunder shall terminate, and be of no further force and
effect.
(d) Notwithstanding anything to the contrary contained in this Section
8.9, upon the termination of this Agreement (i) the indemnification provisions
of Section 5.4 hereof shall survive the termination of this Agreement, (ii)
unless and until all obligations owed under all Master Debt Agreements have been
fully and finally paid, the Security Documents (other than this Agreement) and
all of the obligations of the Companies thereunder shall remain in full force
and effect, (iii) the payment or distribution priorities of Section 4.4(d) shall
remain in full force and effect, and (iv) the power and authority of the
Collateral Agent to effect releases of Collateral in accordance with this
Agreement shall survive the termination of this Agreement.
8.10 Subsidiaries. Each Company hereby covenants and agrees that it will
not, and will not permit any of its existing or future Subsidiaries to, take or
fail to take any action that any Company Borrower is either required or
prohibited, as the case may be, from taking under the provisions of this
Agreement.
8.11 JURY WAIVER. THE PARTIES HERETO HEREBY WAIVE, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDINGS ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
[Signatures on the Following Pages]
34
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers and
attorneys-in-fact as of the day and year first above written.
Bank One, NA,
as Revolver Agent and as a Revolver Lender
By: /s/ J. XXXXX XXXXXX
-------------------
Name: J. Xxxxx Xxxxxx
Title: Director, Capital Markets
Signature Page
Bank One, NA,
as Term Agent and as a Term Lender
By: /s/ J. XXXXX XXXXXX
-------------------
Name: J. Xxxxx Xxxxxx
Title: Director, Capital Markets
Signature Page
Bank One, NA,
as Collateral Agent
By: /s/ J. XXXXX XXXXXX
-------------------
Name: J. Xxxxx Xxxxxx
Title: Director, Capital Markets
Signature Page
Quest Cherokee, LLC
By: /s/ XXXXX XXXX
--------------
Name: Xxxxx X. Xxxx
Title: Manager
Bluestem Pipeline, LLC
By: /s/ XXXXX XXXX
---------------
Name: Xxxxx X. Xxxx
Title: Manager
Signature page
Quest Oil & Gas Corporation
By: /s/ XXXXX XXXX
---------------
Name: Xxxxx X. Xxxx
Title:Co-Chief Executive Officer and Secretary
Quest Energy Service, Inc.
By: /s/ XXXXX XXXX
---------------
Name: Xxxxx X. Xxxx
Title:Co-Chief Executive Officer and Secretary
STP Cherokee, Inc.
By: /s/ XXXXX XXXX
---------------
Name: Xxxxx X. Xxxx
Title:Co-Chief Executive Officer and Secretary
Ponderosa Gas Pipeline Company, Inc.
By: /s/ XXXXX XXXX
---------------
Name: Xxxxx X. Xxxx
Title:Co-Chief Executive Officer and Secretary
Producers Service Incorporated
By: /s/ XXXXX XXXX
---------------
Name: Xxxxx X. Xxxx
Title:Co-Chief Executive Officer and Secretary
X-X Gas Gathering, L.L.C.
By: /s/ XXXXX XXXX
---------------
Name: Xxxxx X. Xxxx
Title: Manager
Signature Page
Cherokee Energy Partners LLC,
By: /s/ XXXXXXXXXXX X. XXXXXXX
--------------------------
Name: Xxxxxxxxxxx X. Picottte
Title: Vice President
Signature Page
Schedule 1
to
Collateral Agency and Intercreditor Agreement
SECURITY DOCUMENTS
1. The Equityholders Pledge Agreement.
2. The Cherokee Partners Pledge Agreement.
3. Pledge Agreement dated December 22, 2003 from the Borrower to the
Collateral Agent for the benefit of the Revolver Lenders and the Term
Lenders, securing, inter alia, the Master Debt.
4. Each of the several Security Documents styled "Mortgage, Deed of Trust,
Security Agreement, Financing Statement and Assignment of Production,"
dated December 22, 2003, from Quest Cherokee, LLC, as Mortgagor, to Bank
One, NA, as Collateral Agent for Revolving Lenders and Term Lenders, as
Mortgagee, or, alternatively, to J. Xxxxx Xxxxxx, Trustee, for the benefit
of Bank One, NA, as Collateral Agent for Revolving Lenders and Term Lenders
Signature Page
