EXECUTION COPY
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AMENDED AND RESTATED SECURITY AGREEMENT
By
QUEST CHEROKEE, LLC and QUEST RESOURCE CORPORATION,
as Borrowers
and
THE GUARANTORS PARTY HERETO
and
GUGGENHEIM CORPORATE FUNDING, LLC,
as Administrative Agent
----------------------
Dated as of December 22, 2006
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TABLE OF CONTENTS
Page
PREAMBLE.....................................................................1
RECITALS.....................................................................1
AGREEMENT....................................................................2
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1. DEFINITIONS..................................................2
SECTION 1.2. INTERPRETATION..............................................11
SECTION 1.3. RESOLUTION OF DRAFTING AMBIGUITIES..........................11
SECTION 1.4. PERFECTION CERTIFICATE......................................11
ARTICLE II
GRANT OF SECURITY AND SECURED OBLIGATIONS
SECTION 2.1. GRANT OF SECURITY INTEREST..................................11
SECTION 2.2. FILINGS.....................................................13
ARTICLE III
PERFECTION; SUPPLEMENTS; FURTHER ASSURANCES;
USE OF PLEDGED COLLATERAL
SECTION 3.1. DELIVERY OF CERTIFICATED SECURITIES COLLATERAL..............13
SECTION 3.2. PERFECTION OF UNCERTIFICATED SECURITIES COLLATERAL..........14
SECTION 3.3. FINANCING STATEMENTS AND OTHER FILINGS; MAINTENANCE
OF PERFECTED SECURITY INTEREST............................14
SECTION 3.4. OTHER ACTIONS...............................................15
SECTION 3.5. JOINDER OF ADDITIONAL GUARANTORS............................19
SECTION 3.6. SUPPLEMENTS; FURTHER ASSURANCES.............................20
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS
SECTION 4.1. TITLE.......................................................20
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SECTION 4.2. VALIDITY OF SECURITY INTEREST...............................21
SECTION 4.3. DEFENSE OF CLAIMS; TRANSFERABILITY OF PLEDGED
COLLATERAL................................................21
SECTION 4.4. OTHER FINANCING STATEMENTS..................................21
SECTION 4.5. CHIEF EXECUTIVE OFFICE; CHANGE OF NAME; JURISDICTION
OF ORGANIZATION...........................................22
SECTION 4.6. LOCATION OF INVENTORY AND EQUIPMENT.........................22
SECTION 4.7. DUE AUTHORIZATION AND ISSUANCE..............................22
SECTION 4.8. CONSENTS, ETC...............................................23
SECTION 4.9. PLEDGED COLLATERAL..........................................23
SECTION 4.10. INSURANCE...................................................23
SECTION 4.11. PAYMENT OF TAXES; COMPLIANCE WITH LAWS; CONTESTING
LIENS; CLAIMS.............................................23
SECTION 4.12. ACCESS TO PLEDGED COLLATERAL, BOOKS AND RECORDS;
OTHER INFORMATION.........................................23
ARTICLE V
CERTAIN PROVISIONS CONCERNING SECURITIES COLLATERAL
SECTION 5.1. PLEDGE OF ADDITIONAL SECURITIES COLLATERAL..................24
SECTION 5.2. VOTING RIGHTS; DISTRIBUTIONS; ETC...........................24
SECTION 5.3. DEFAULTS, ETC...............................................25
SECTION 5.4. CERTAIN AGREEMENTS OF PLEDGORS AS ISSUERS AND
HOLDERS OF EQUITY INTERESTS...............................26
ARTICLE VI
CERTAIN PROVISIONS CONCERNING INTELLECTUAL
PROPERTY COLLATERAL
SECTION 6.1. GRANT OF LICENSE............................................26
SECTION 6.2. PROTECTION OF ADMINISTRATIVE AGENT'S SECURITY...............26
SECTION 6.3. AFTER-ACQUIRED PROPERTY.....................................27
SECTION 6.4. LITIGATION..................................................28
ARTICLE VII
CERTAIN PROVISIONS CONCERNING ACCOUNTS
SECTION 7.1. MAINTENANCE OF RECORDS......................................28
SECTION 7.2. [RESERVED]..................................................29
SECTION 7.3. MODIFICATION OF TERMS, ETC..................................29
SECTION 7.4. COLLECTION..................................................29
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ARTICLE VIII
TRANSFERS
SECTION 8.1. TRANSFERS OF PLEDGED COLLATERAL.............................29
ARTICLE IX
REMEDIES
SECTION 9.1. REMEDIES....................................................30
SECTION 9.2. NOTICE OF SALE..............................................31
SECTION 9.3. WAIVER OF NOTICE AND CLAIMS.................................32
SECTION 9.4. CERTAIN SALES OF PLEDGED COLLATERAL.........................32
SECTION 9.5. NO WAIVER; CUMULATIVE REMEDIES..............................34
SECTION 9.6. CERTAIN ADDITIONAL ACTIONS REGARDING INTELLECTUAL
PROPERTY..................................................34
ARTICLE X
PROCEEDS OF CASUALTY EVENTS AND COLLATERAL DISPOSITIONS; APPLICATION OF
PROCEEDS
SECTION 10.1. PROCEEDS OF CASUALTY EVENTS AND COLLATERAL
DISPOSITIONS..............................................34
SECTION 10.2. APPLICATION OF PROCEEDS.....................................35
ARTICLE XI
MISCELLANEOUS
SECTION 11.1. CONCERNING ADMINISTRATIVE AGENT.............................35
SECTION 11.2. ADMINISTRATIVE AGENT MAY PERFORM; ADMINISTRATIVE
AGENT APPOINTED ATTORNEY-IN-FACT..........................36
SECTION 11.3. CONTINUING SECURITY INTEREST; ASSIGNMENT....................36
SECTION 11.4. TERMINATION; RELEASE........................................37
SECTION 11.5. MODIFICATION IN WRITING.....................................37
SECTION 11.6. NOTICES.....................................................37
SECTION 11.7. GOVERNING LAW, CONSENT TO JURISDICTION AND SERVICE
OF PROCESS; WAIVER OF JURY TRIAL..........................37
SECTION 11.8. SEVERABILITY OF PROVISIONS..................................37
SECTION 11.9. EXECUTION IN COUNTERPARTS...................................38
SECTION 11.10. BUSINESS DAYS...............................................38
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SECTION 11.11. WAIVER OF STAY..............................................38
SECTION 11.12. NO CREDIT FOR PAYMENT OF TAXES OR IMPOSITION................38
SECTION 11.13. NO CLAIMS AGAINST ADMINISTRATIVE AGENT......................38
SECTION 11.14. NO RELEASE..................................................39
SECTION 11.15. INDEBTEDNESS ABSOLUTE.......................................39
SIGNATURES.................................................................S-1
EXHIBIT 1 Form of Issuer's Acknowledgment
EXHIBIT 2 Form of Securities Pledge Amendment
EXHIBIT 3 Form of Joinder Agreement
EXHIBIT 4 Form of Control Agreement Concerning Securities Accounts
EXHIBIT 5 Form of Control Agreement Concerning Deposit Accounts
EXHIBIT 6 Form of Copyright Security Agreement
EXHIBIT 7 Form of Patent Security Agreement
EXHIBIT 8 Form of Trademark Security Agreement
EXHIBIT 9 Form of Bailee's Letter
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AMENDED AND RESTATED SECURITY AGREEMENT
AMENDED AND RESTATED SECURITY AGREEMENT dated as of December 22, 2006
(as amended, amended and restated, supplemented or otherwise modified from time
to time in accordance with the provisions hereof, the "Agreement") made by QUEST
CHEROKEE, LLC ("Quest Cherokee"), a Delaware limited liability company and QUEST
RESOURCE CORPORATION ("QRC"), a Nevada corporation (the "Borrowers") and THE
GUARANTORS LISTED ON THE SIGNATURE PAGES HERETO (the "Original Guarantors") OR
FROM TIME TO TIME PARTY HERETO BY EXECUTION OF A JOINDER AGREEMENT (the
"Additional Guarantors," and together with the Original Guarantors, the
"Guarantors"), as pledgors, assignors and debtors (the Borrowers, together with
the Guarantors, in such capacities and together with any successors in such
capacities, the "Pledgors," and each, a "Pledgor"), in favor of GUGGENHEIM
CORPORATE FUNDING, LLC, in its capacity as administrative agent pursuant to the
Third Lien Term Loan Agreement (as hereinafter defined), as pledgee, assignee
and secured party (in such capacities and together with any successors in such
capacities, the "Administrative Agent") for the benefit of the Secured Parties,
as defined below.
R E C I T A L S :
- - - - - - - -
A. The Borrowers, the Administrative Agent and the lending
institutions listed therein (the "Lenders") have, in connection with the
execution and delivery of this Agreement, entered into that certain Third Lien
Term Loan Agreement, dated as of June 9, 2006 (as amended, amended and restated,
supplemented or otherwise modified from time to time, the "Third Lien Term Loan
Agreement").
B. The Borrowers and certain of their subsidiaries, the Lenders
and the Administrative Agent entered into a Security Agreement dated as of June
9, 2006 (the "Original Security Agreement"), pursuant to which the Borrowers and
certain of their subsidiaries granted security interests in certain of their
assets to secure payment and performance of all of the Indebtedness (as
hereinafter defined) in connection with the Third Lien Term Loan Agreement and
the parties thereto have agreed to amend and restate the Original Security
Agreement in its entirety.
C. Quest Cherokee and QRC, as borrowers and the Administrative
Agent have entered into the Amended and Restated Senior Credit Agreement (as
amended, restated, supplemented or otherwise modified from time to time, the
"Existing Senior Secured Credit Agreement") dated as of February 7, 2006, which
amended and restated that certain original Senior Secured Credit Agreement (the
"Original Senior Secured Credit Agreement") dated as of November 14, 2005.
D. Pursuant to the Existing Senior Secured Credit Agreement, the
Borrowers and certain of their subsidiaries and the Administrative Agent have
executed the Second Amended and Restated Security Agreement (as amended,
restated, supplemented or otherwise
modified from time to time, the "Existing Senior Security Agreement)," of even
date herewith, which amended and restated that certain Amended and Restated
Security Agreement dated as of June 9, 2006.
E. The Borrowers and the Administrative Agent have further
entered into the Amended and Restated Second Lien Term Loan Agreement, dated as
of June 9, 2006, pursuant to which the Borrowers and certain of their
subsidiaries have executed the Second Amended and Restated Security Agreement
(as amended, restated, supplemented or otherwise modified from time to time, the
"Existing Second Lien Security Agreement,") of even date herewith, which amended
and restated that certain Amended and Restated Security Agreement dated as of
June 9, 2006.
A G R E E M E N T :
- - - - - - - - -
NOW THEREFORE, in consideration of the foregoing premises and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, each Pledgor and the Administrative Agent hereby agree that the
Original Security Agreement is hereby amended and restated in its entirety as of
the date hereof as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1. Definitions.
(a) Unless otherwise defined herein or in the Third Lien Term Loan
Agreement, capitalized terms used herein that are defined in the UCC shall have
the meanings assigned to them in the UCC.
(b) Terms used but not otherwise defined herein that are defined in
the Third Lien Term Loan Agreement shall have the meanings given to them in the
Third Lien Term Loan Agreement. Sections 1.04 and 1.05 of the Third Lien Term
Loan Agreement shall apply herein mutatis mutandis.
(c) The following terms shall have the following meanings:
"Additional Guarantors" shall have the meaning assigned to such term
in the Preamble hereof.
"Additional Pledged Interests" shall mean, collectively, with respect
to each Pledgor, (i) all options, warrants, rights, agreements, additional
membership, partnership or other equity interests of whatever class of any
issuer of Initial Pledged Interests or any interest in any
such issuer, together with all rights, privileges, authority and powers of such
Pledgor relating to such interests in each such issuer or under any
Organizational Document of any such issuer, and the certificates, instruments
and agreements representing such membership, partnership or other interests and
any and all interest of such Pledgor in the entries on the books of any
financial intermediary pertaining to such membership, partnership or other
equity interests from time to time acquired by such Pledgor in any manner and
(ii) all membership, partnership or other equity interests, as applicable, of
each limited liability company, partnership or other entity (other than a
corporation) hereafter acquired or formed by such Pledgor and all options,
warrants, rights, agreements, additional membership, partnership or other equity
interests of whatever class of such limited liability company, partnership or
other entity, together with all rights, privileges, authority and powers of such
Pledgor relating to such interests or under any Organizational Document of any
such issuer, and the certificates, instruments and agreements representing such
membership, partnership or other equity interests and any and all interest of
such Pledgor in the entries on the books of any financial intermediary
pertaining to such membership, partnership or other interests, from time to time
acquired by such Pledgor in any manner.
"Additional Pledged Shares" shall mean, collectively, with respect to
each Pledgor, (i) all options, warrants, rights, agreements, additional shares
of capital stock of whatever class of any issuer of the Initial Pledged Shares
or any other equity interest in any such issuer, together with all rights,
privileges, authority and powers of such Pledgor relating to such interests
issued by any such issuer under any Organizational Document of any such issuer,
and the certificates, instruments and agreements representing such interests and
any and all interest of such Pledgor in the entries on the books of any
financial intermediary pertaining to such interests, from time to time acquired
by such Pledgor in any manner and (ii) all the issued and outstanding shares of
capital stock of each corporation hereafter acquired or formed by such Pledgor
and all options, warrants, rights, agreements or additional shares of capital
stock of whatever class of such corporation, together with all rights,
privileges, authority and powers of such Pledgor relating to such shares or
under any Organizational Document of such corporation, and the certificates,
instruments and agreements representing such shares and any and all interest of
such Pledgor in the entries on the books of any financial intermediary
pertaining to such shares, from time to time acquired by such Pledgor in any
manner.
"Administrative Agent" shall have the meaning assigned to such term in
the Preamble above.
"Agreement" shall have the meaning assigned to such term in the
Preamble hereof.
"As-extracted collateral" shall mean (a) oil, gas, or other minerals
that are subject to a security interest that: (i) is created by a debtor having
an interest in the minerals before extraction; and (ii) attaches to the minerals
as extracted; or (b) accounts arising out of the sale at the wellhead or
minehead of oil, gas, or other minerals in which the debtor had an interest
before extraction.
"Bailee Letter" shall be an agreement in form substantially similar to
Exhibit 9 annexed hereto.
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"Bankruptcy Code" means Title 11 of the United States Code, as amended
and any successor statute thereto.
"Borrowers" shall have the meaning assigned to such term in the
Preamble hereof.
"Claims" shall mean any and all property and other taxes, assessments
and special assessments, levies, fees and all governmental charges imposed upon
or assessed against, and landlords', carriers', mechanics', workmen's,
repairmen's, laborers', materialmen's, suppliers' and warehousemen's Liens and
other claims arising by operation of law against, all or any portion of the
Pledged Collateral.
"Collateral Account" shall mean a collateral account or sub-account
established and maintained by the Administrative Agent to collect proceeds of
collateral and all property from time to time on deposit in the Collateral
Account.
"Commodity Account Control Agreement" shall mean a commodity account
control agreement in a form that is reasonably satisfactory to the
Administrative Agent and Pledgor.
"Contested Liens" shall mean, collectively, any Liens incurred in
respect of any Claims to the extent that the amounts owing in respect thereof
are not yet delinquent or are being contested and otherwise comply with the
provisions of Section 4.11 hereof; provided, however, that such Liens shall in
all respects be subject and subordinate in priority to the Lien and security
interest created by this Agreement, except if and to the extent that the law or
regulation creating, permitting or authorizing such Lien provides that such Lien
must be superior to the Lien and security interest created and evidenced hereby.
"Contracts" shall mean, collectively, with respect to each Pledgor,
all sale, service, performance, equipment or property lease contracts,
agreements and grants and all other contracts, agreements or grants (in each
case, whether written or oral, or third party or intercompany), between such
Pledgor and third parties, and all assignments, amendments, restatements,
supplements, extensions, renewals, replacements or modifications thereof.
"Control" shall mean (i) in the case of each Deposit Account,
"control," as such term is defined in Section 9-104 of the UCC, and (ii) in the
case of any Security Entitlement, "control," as such term is defined in Section
8-106 of the UCC and (iii) in the case of any Commodity Contract, "control," as
such term is defined in Section 9-106 of the UCC.
"Control Agreements" shall mean, collectively, the Deposit Account
Control Agreement, the Securities Account Control Agreement and the Commodity
Account Control Agreement.
"Copyrights" shall mean, collectively, with respect to each Pledgor,
all copyrights (whether statutory or common law, whether established or
registered in the United States or any other country or any political
subdivision thereof, whether registered or unregistered and whether published or
unpublished) and all copyright registrations and applications made by such
Pledgor,
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in each case, whether now owned or hereafter created or acquired by or assigned
to such Pledgor, together with any and all (i) rights and privileges arising
under applicable law with respect to such Pledgor's use of such copyrights, (ii)
reissues, renewals, continuations and extensions thereof, (iii) income, fees,
royalties, damages, claims and payments now or hereafter due and/or payable with
respect thereto, including damages and payments for past, present or future
infringements thereof, (iv) rights corresponding thereto throughout the world
and (v) rights to xxx for past, present or future infringements thereof.
"Copyright Security Agreement" shall mean an agreement substantially
in the form annexed hereto as Exhibit 6.
"Deposit Account Control Agreement" shall mean an agreement
substantially in the form annexed hereto as Exhibit 5 or such other form that is
reasonably satisfactory to the Administrative Agent and Pledgor.
"Deposit Accounts" shall mean, collectively, with respect to each
Pledgor, (i) all "deposit accounts" as such term is defined in the UCC and in
any event shall include the Collateral Account and all accounts and sub-accounts
relating to any of the foregoing accounts and (ii) all cash, funds, checks,
notes and instruments from time to time on deposit in any of the accounts or
sub-accounts described in clause (i) of this definition.
"Distributions" shall mean, collectively, with respect to each
Pledgor, all dividends, cash, options, warrants, rights, instruments,
distributions, returns of capital or principal, income, interest, profits and
other property, interests (debt or equity) or proceeds, including as a result of
a split, revision, reclassification or other like change of the Pledged
Securities, from time to time received, receivable or otherwise distributed to
such Pledgor in respect of or in exchange for any or all of the Pledged
Securities or Intercompany Notes.
"Excluded Property" shall mean Special Property other than the
following:
(a) the right to receive any payment of money (including
Accounts, General Intangibles and Payment Intangibles) or any other
rights referred to in Sections 9-406(f), 9-407(a) or 9-408(a) of the
UCC to the extent that such sections of the UCC are effective to limit
the prohibitions which make such property "Special Property"; and
(b) any Proceeds, substitutions or replacements of any
Special Property (unless such Proceeds, substitutions or replacements
would constitute Special Property).
"Existing Senior Security Agreement" shall have the meaning set forth
in Recital D.
"Existing Second Lien Security Agreement" shall have the meaning set
forth in Recital E.
"General Intangibles" shall mean, collectively, with respect to each
Pledgor, all "general intangibles," as such term is defined in the UCC, of such
Pledgor and, in any event, shall include (i) all of such Pledgor's rights, title
and interest in, to and under all insurance
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policies and Contracts, (ii) all know-how and warranties relating to any of the
Pledged Collateral or the Mortgaged Property, (iii) any and all other rights,
claims, choses-in-action and causes of action of such Pledgor against any other
person and the benefits of any and all collateral or other security given by any
other person in connection therewith, (iv) all guarantees, endorsements and
indemnifications on, or of, any of the Pledged Collateral or any of the
Mortgaged Property, (v) all lists, books, records, correspondence, ledgers,
printouts, files (whether in printed form or stored electronically), tapes and
other papers or materials containing information relating to any of the Pledged
Collateral or any of the Mortgaged Property, including all customer or tenant
lists, identification of suppliers, data, plans, blueprints, specifications,
designs, drawings, appraisals, recorded knowledge, surveys, studies, engineering
reports, test reports, manuals, standards, processing standards, performance
standards, catalogs, research data, computer and automatic machinery software
and programs and the like, field repair data, accounting information pertaining
to such Pledgor's operations or any of the Pledged Collateral or any of the
Mortgaged Property and all media in which or on which any of the information or
knowledge or data or records may be recorded or stored and all computer programs
used for the compilation or printout of such information, knowledge, records or
data, (vi) all licenses, consents, permits, variances, certifications,
authorizations and approvals, however characterized, of any Governmental
Authority (or any person acting on behalf of a Governmental Authority) now or
hereafter acquired or held by such Pledgor pertaining to operations now or
hereafter conducted by such Pledgor or any of the Pledged Collateral or any of
the Mortgaged Property including building permits, certificates of occupancy,
environmental certificates, industrial permits or licenses and certificates of
operation and (vii) all rights to reserves, deferred payments, deposits,
refunds, indemnification of claims to the extent the foregoing relate to any
Pledged Collateral or Mortgaged Property and claims for tax or other refunds
against any Governmental Authority relating to any Pledged Collateral or any of
the Mortgaged Property.
"Goodwill" shall mean, collectively, with respect to each Pledgor, the
goodwill connected with such Pledgor's business including (i) all goodwill
connected with the use of and symbolized by any Trademark or Trademark License
in which such Pledgor has any interest, (ii) all know-how, trade secrets,
customer and supplier lists, proprietary information, inventions, methods,
procedures, formulae, descriptions, compositions, technical data, drawings,
specifications, name plates, catalogs, confidential information and the right to
limit the use or disclosure thereof by any person, pricing and cost information,
business and marketing plans and proposals, consulting agreements, engineering
contracts and such other assets which relate to such goodwill and (iii) all
product lines of such Pledgor's business.
"Guarantors" shall have the meaning assigned to such term in the
Preamble hereof.
"Initial Pledged Interests" shall mean, with respect to each Pledgor,
all membership, partnership or other equity interests (other than in a
corporation), as applicable, of each issuer described in Schedule 11 annexed to
the Perfection Certificate, together with all rights, privileges, authority and
powers of such Pledgor in and to each such issuer or under any Organizational
Document of each such issuer, and the certificates, instruments and agreements
representing such membership, partnership or other interests and any and all
interest of such
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Pledgor in the entries on the books of any financial intermediary pertaining to
such membership, partnership or other interests.
"Initial Pledged Shares" shall mean, collectively, with respect to
each Pledgor, the issued and outstanding shares of capital stock of each issuer
described in Schedule 11 annexed to the Perfection Certificate together with all
rights, privileges, authority and powers of such Pledgor relating to such
interests in each such issuer or under any Organizational Document of each such
issuer, and the certificates, instruments and agreements representing such
shares of capital stock and any and all interest of such Pledgor in the entries
on the books of any financial intermediary pertaining to the Initial Pledged
Shares.
"Instruments" shall mean, collectively, with respect to each Pledgor,
all "instruments," as such term is defined in Article 9, rather than Article 3,
of the UCC, and shall include all promissory notes, drafts, bills of exchange or
acceptances.
"Intellectual Property Collateral" shall mean, collectively, the
Patents, Trademarks, Copyrights, Licenses and Goodwill.
"Intercompany Notes" shall mean, with respect to each Pledgor, all
intercompany notes described in Schedule 12 annexed to the Perfection
Certificate and intercompany notes hereafter acquired by such Pledgor and all
certificates, instruments or agreements evidencing such intercompany notes, and
all assignments, amendments, restatements, supplements, extensions, renewals,
replacements or modifications thereof to the extent permitted pursuant to the
terms hereof.
"Investment Property" shall mean a security, whether certificated or
uncertificated, Security Entitlement, Securities Account, Commodity Contract or
Commodity Account, excluding, however, the Securities Collateral.
"Joinder Agreement" shall mean an agreement substantially in the form
annexed hereto as Exhibit 3.
"Lenders" shall have the meaning assigned to such term in Recital A
hereof.
"Licenses" shall mean, collectively, with respect to each Pledgor, all
license and distribution agreements with, and covenants not to xxx, any other
party with respect to any Patent, Trademark or Copyright or any other patent,
trademark or copyright, whether such Pledgor is a licensor or licensee,
distributor or distributee under any such license or distribution agreement,
together with any and all (i) renewals, extensions, supplements and
continuations thereof, (ii) income, fees, royalties, damages, claims and
payments now and hereafter due and/or payable thereunder and with respect
thereto including damages and payments for past, present or future infringements
or violations thereof, (iii) rights to xxx for past, present and future
infringements or violations thereof and (iv) other rights to use, exploit or
practice any or all of the Patents, Trademarks or Copyrights or any other
patent, trademark or copyright.
"Mortgaged Property" shall have the meaning assigned to such term in
the Mortgages.
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"Organizational Documents" shall mean, with respect to any person, (i)
in the case of any corporation, the certificate of incorporation and by-laws (or
similar documents) of such person, (ii) in the case of any limited liability
company, the certificate of formation and operating agreement (or similar
documents) of such person, (iii) in the case of any limited partnership, the
certificate of formation and limited partnership agreement (or similar
documents) of such person, (iv) in the case of any general partnership, the
partnership agreement (or similar document) of such person and (v) in any other
case, the functional equivalent of the foregoing.
"Original Guarantors" shall have the meaning assigned to such term in
the Preamble hereof.
"Original Senior Secured Credit Agreement" shall have the meaning
assigned to such term in Recital C hereof.
"Patents" shall mean, collectively, with respect to each Pledgor, all
patents issued or assigned to and all patent applications and registrations made
by such Pledgor (whether established or registered or recorded in the United
States or any other country or any political subdivision thereof), together with
any and all (i) rights and privileges arising under applicable law with respect
to such Pledgor's use of any patents, (ii) inventions and improvements described
and claimed therein, (iii) reissues, divisions, continuations, renewals,
extensions and continuations-in-part thereof, (iv) income, fees, royalties,
damages, claims and payments now or hereafter due and/or payable thereunder and
with respect thereto including damages and payments for past, present or future
infringements thereof, (v) rights corresponding thereto throughout the world and
(vi) rights to xxx for past, present or future infringements thereof.
"Patent Security Agreement" shall mean an agreement substantially in
the form annexed hereto as Exhibit 7.
"Perfection Certificate" shall mean that certain perfection
certificate dated December 22, 2006, executed and delivered by each Pledgor in
favor of the Administrative Agent for the benefit of the Secured Parties, and
each other Perfection Certificate (which shall be in form and substance
reasonably acceptable to the Administrative Agent) executed and delivered by the
applicable Guarantor in favor of the Administrative Agent for the benefit of the
Secured Parties contemporaneously with the execution and delivery of each
Joinder Agreement executed in accordance with Section 3.5 hereof, in each case,
as the same may be amended, amended and restated, supplemented or otherwise
modified from time to time in accordance with the Third Lien Term Loan Agreement
or upon the reasonable request of the Administrative Agent.
"Pledge Amendment" shall have the meaning assigned to such term in
Section 5.1 hereof.
"Pledged Collateral" shall have the meaning assigned to such term in
Section 2.1 hereof.
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"Pledged Interests" shall mean, collectively, the Initial Pledged
Interests and the Additional Pledged Interests; provided, however, that to the
extent applicable, Pledged Interests shall not include any interest which is not
required to be pledged pursuant to the Third Lien Term Loan Agreement.
"Pledged Securities" shall mean, collectively, the Pledged Interests,
the Pledged Shares and the Successor Interests.
"Pledged Shares" shall mean, collectively, the Initial Pledged Shares
and the Additional Pledged Shares.
"Pledgor" shall have the meaning assigned to such term in the Preamble
hereof.
"Secured Parties" shall mean, collectively, the Administrative Agent,
each other Agent, the Lenders, their Affiliates and each party to a Swap
Agreement that is included within the definition of Indebtedness.
"Securities Account Control Agreement" shall mean an agreement
substantially in the form annexed hereto as Exhibit 4 or such other form that is
reasonably satisfactory to the Administrative Agent and Pledgor.
"Securities Collateral" shall mean, collectively, the Pledged
Securities, the Intercompany Notes and the Distributions.
"Special Property" shall mean:
(a) any permit, lease or license held by any Pledgor that
validly prohibits the creation by such Pledgor of a security interest
therein;
(b) any permit, lease or license held by any Pledgor to the
extent that any Governmental Requirement applicable thereto prohibits
the creation of a security interest therein;
(c) Equipment owned by any Pledgor on the date hereof or
hereafter acquired that is subject to a Lien securing a Capital Lease
or purchase money obligation permitted to be incurred pursuant to the
provisions of the Third Lien Term Loan Agreement if the contract or
other agreement in which such Lien is granted (or the documentation
providing for such Capital Lease or purchase money obligation) validly
prohibits the creation of any other Lien on such Equipment; and
(d) cash and cash equivalents which secure obligations under
any Swap Agreement as permitted by Section 9.03(d) of the Third Lien
Term Loan Agreement and reimbursement obligations in connection with
letters of credit as permitted by Section 9.03(f);
8
assets to the extent such assets were encumbered by Liens in
existence on November 14, 2005 and shown on Schedule 7.14 to the Original
Senior Secured Credit Agreement;
(f) assets to the extent such assets are encumbered by Liens
securing Permitted Refinancing Debt provided such assets constituted
Special Property prior to the applicable refinancing; and
(g) assets to the extent such assets are encumbered by Liens
permitted by Section 9.03(i) provided such assets are not Oil and Gas
Properties and further provided that the aggregate fair market value
of such assets does not exceed $4,000,000.
provided, however, that in each case described in clauses (a), (b) and (c) of
this definition, such property shall constitute "Special Property" only to the
extent and for so long as such permit, lease, license, contract or other
agreement or Governmental Requirement applicable thereto validly prohibits the
creation of a Lien on such property in favor of the Administrative Agent and,
upon the termination of such prohibition (howsoever occurring), such property
shall cease to constitute "Special Property."
"Successor Interests" shall mean, collectively, with respect to each
Pledgor, all shares of each class of the capital stock of the successor
corporation or interests or certificates of the successor limited liability
company, partnership or other entity owned by such Pledgor (unless such
successor is such Pledgor itself) formed by or resulting from any consolidation
or merger in which any person listed in Schedule 1(a) annexed to the Perfection
Certificate is not the surviving entity, provided, however, that to the extent
applicable, Successor Interest shall not include any shares or interests which
are not required to be pledged pursuant to the Third Lien Term Loan Agreement.
"Third Lien Term Loan Agreement" shall have the meaning assigned to
such term in Recital A hereof.
"Trademarks" shall mean, collectively, with respect to each Pledgor,
all trademarks (including service marks), slogans, logos, certification marks,
trade dress, uniform resource locations (URL's), domain names, corporate names
and trade names, whether registered or unregistered, owned by or assigned to
such Pledgor and all registrations and applications for the foregoing (whether
statutory or common law and whether established or registered in the United
States or any other country or any political subdivision thereof), together with
any and all (i) rights and privileges arising under applicable law with respect
to such Pledgor's use of any trademarks, (ii) reissues, continuations,
extensions and renewals thereof, (iii) income, fees, royalties, damages and
payments now and hereafter due and/or payable thereunder and with respect
thereto, including damages, claims and payments for past, present or future
infringements thereof, (iv) rights corresponding thereto throughout the world
and (v) rights to xxx for past, present and future infringements thereof.
"Trademark Security Agreement" shall mean an agreement substantially
in the form annexed hereto as Exhibit 8.
9
"UCC" shall mean the Uniform Commercial Code as in effect on the date
hereof in the State of New York; provided, however, that if by reason of
mandatory provisions of law, any or all of the attachment, perfection or
priority of the Administrative Agent's and the Secured Parties' security
interest in any item or portion of the Pledged Collateral is governed by the
Uniform Commercial Code as in effect in a jurisdiction other than the State of
New York, the term "UCC" shall mean the Uniform Commercial Code as in effect on
the date hereof in such other jurisdiction for purposes of the provisions hereof
relating to such attachment, perfection or priority and for purposes of
definitions relating to such provisions.
SECTION 1.2. Interpretation. The rules of interpretation specified in
the Third Lien Term Loan Agreement (including Section 1.03 thereof) shall be
applicable to this Agreement.
SECTION 1.3. Resolution of Drafting Ambiguities. Each Pledgor
acknowledges and agrees that it was represented by counsel in connection with
the execution and delivery hereof, that it and its counsel reviewed and
participated in the preparation and negotiation hereof and that any rule of
construction to the effect that ambiguities are to be resolved against the
drafting party (i.e., the Administrative Agent) shall not be employed in the
interpretation hereof.
SECTION 1.4. Perfection Certificate. The Administrative Agent and each
Secured Party agree that the Perfection Certificate and all descriptions of
Pledged Collateral, schedules, amendments and supplements thereto are and shall
at all times remain a part of this Agreement.
ARTICLE II
GRANT OF SECURITY AND SECURED OBLIGATIONS
SECTION 2.1. Grant of Security Interest. As collateral security for
the payment and performance in full of all the Indebtedness, each Pledgor hereby
pledges and grants to the Administrative Agent for the benefit of the Secured
Parties, a lien on and security interest in and to all of the right, title and
interest of such Pledgor in, to and under the following property, wherever
located, whether now existing or hereafter arising or acquired from time to time
(collectively, the "Pledged Collateral"):
(i) all Accounts;
(ii) all Equipment, Goods, Inventory and Fixtures;
(iii) all Documents, Instruments and Chattel Paper;
(iv) all Letters of Credit and Letter-of-Credit Rights;
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(v) all Securities Collateral;
(vi) all Collateral Accounts;
(vii) all Investment Property;
(viii)all Intellectual Property Collateral;
(ix) the Commercial Tort Claims described on Schedule 15 to the
Perfection Certificate;
(x) all General Intangibles;
(xi) all Deposit Accounts;
(xii) all As-extracted collateral;
(xiii)all Supporting Indebtedness;
(xiv) all books and records relating to the Pledged Collateral; and
(xv) to the extent not covered by clauses (i) through (xiv) of this
sentence, all other personal property of such Pledgor, whether
tangible or intangible, and all Proceeds and products of each of
the foregoing and all accessions to, substitutions and
replacements for, and rents, profits and products of, each of
the foregoing, and any and all Proceeds of any insurance,
indemnity, warranty or guaranty payable to such Pledgor from
time to time with respect to any of the foregoing.
Notwithstanding anything to the contrary contained in clauses (i)
through (xv) above, the security interest created by this Agreement shall not
extend to, and the term "Pledged Collateral" shall not include, any Excluded
Property, and (i) the Pledgors shall from time to time (but no more frequently
than quarterly) at the request of the Administrative Agent give written notice
to the Administrative Agent identifying in reasonable detail the Special
Property (and stating in such notice that such Special Property constitutes
"Excluded Property") and shall provide to the Administrative Agent such other
information regarding the Special Property as the Administrative Agent may
reasonably request and (ii) from and after the Effective Date, no Pledgor shall
permit to become effective in any document creating, governing or providing for
any permit, lease or license, a provision that would prohibit the creation of a
Lien on such permit, lease or license in favor of the Administrative Agent
unless such Pledgor believes, in its reasonable judgment, that such prohibition
is usual and customary in transactions of such type.
The security interest granted under this Section 2 is third in
priority to the security interest in the Pledged Collateral granted to
Administrative Agent pursuant to the Existing Senior Security Agreement and the
Existing Second Lien Security Agreement. However, each Pledgor and
Administrative Agent agree that, as of the date on which the first and second
priority security interests in the Pledged Collateral (and any subsequent first
or second priority security
11
interest in the Pledged Collateral granted by Pledgors and to which
Administrative Agent has given its prior written consent, which consent shall be
at the sole discretion of Administrative Agent), terminate and are no longer in
effect, then, as of such date, the security interest granted by Pledgors under
this Agreement shall be a first priority security interest in the Pledged
Collateral.
SECTION 2.2. Filings. (a) Each Pledgor hereby irrevocably authorizes
the Administrative Agent at any time and from time to time to file in any
relevant jurisdiction any initial financing statements (including fixture
filings) and amendments thereto that contain the information required by Article
9 of the Uniform Commercial Code of each applicable jurisdiction for the filing
of any financing statement or amendment relating to the Pledged Collateral,
including (i) whether such Pledgor is an organization, the type of organization
and any organizational identification number issued to such Pledgor, (ii) any
financing or continuation statements or other documents without the signature of
such Pledgor where permitted by law, including the filing of a financing
statement describing the Pledged Collateral as "all assets in which the Pledgor
now owns or hereafter acquires rights" and (iii) in the case of a financing
statement filed as a fixture filing or covering Pledged Collateral constituting
oil, gas, minerals to be extracted, other As-extracted collateral or timber to
be cut, a sufficient description of the real property to which such Pledged
Collateral relates. Each Pledgor agrees to provide all information described in
the immediately preceding sentence to the Administrative Agent promptly upon
request.
(b) Each Pledgor hereby ratifies its authorization for the
Administrative Agent to file in any relevant jurisdiction any initial financing
statements or amendments thereto relating to the Pledged Collateral if filed
prior to the date hereof.
(c) Each Pledgor hereby further authorizes the Administrative Agent to
file filings with the United States Patent and Trademark Office or United States
Copyright Office (or any successor office or any similar office in any other
country), including this Agreement, the Copyright Security Agreement, the Patent
Security Agreement and the Trademark Security Agreement, or other documents for
the purpose of perfecting, confirming, continuing, enforcing or protecting the
security interest granted by such Pledgor hereunder, without the signature of
such Pledgor, and naming such Pledgor, as debtor, and the Administrative Agent,
as secured party.
ARTICLE III
PERFECTION; SUPPLEMENTS; FURTHER ASSURANCES;
USE OF PLEDGED COLLATERAL
SECTION 3.1. Delivery of Certificated Securities Collateral. Each
Pledgor represents and warrants that all certificates, agreements or instruments
representing or evidencing the Securities Collateral in existence on the date
hereof have been delivered to the Administrative Agent pursuant to the terms of
the Existing Senior Security Agreement in
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suitable form for transfer by delivery or accompanied by duly executed
instruments of transfer or assignment in blank and that the Administrative Agent
has a third priority security interest therein. Each Pledgor hereby agrees that
all certificates, agreements or instruments representing or evidencing
Securities Collateral acquired by such Pledgor after the date hereof shall
promptly upon receipt thereof by such Pledgor be delivered to and held by or on
behalf of the Administrative Agent pursuant hereto, subject to the terms of the
Intercreditor Agreement. All certificated Securities Collateral shall be in
suitable form for transfer by delivery or shall be accompanied by duly executed
instruments of transfer or assignment in blank, all in form and substance
reasonably satisfactory to the Administrative Agent. The Administrative Agent
shall have the right, subject to the terms of the Intercreditor Agreement, at
any time upon the occurrence and during the continuance of any Event of Default,
to endorse, assign or otherwise transfer to or to register in the name of the
Administrative Agent or any of its nominees or endorse for negotiation any or
all of the Securities Collateral, without any indication that such Securities
Collateral is subject to the security interest hereunder. In addition, upon the
occurrence and during the continuance of an Event of Default, the Administrative
Agent shall have the right, subject to the terms of the Intercreditor Agreement,
at any time to exchange certificates representing or evidencing Securities
Collateral for certificates of smaller or larger denominations.
SECTION 3.2. Perfection of Uncertificated Securities Collateral. Each
Pledgor represents and warrants that the Administrative Agent has a perfected
third priority security interest in all uncertificated Pledged Securities
pledged by it hereunder that are in existence on the date hereof. Each Pledgor
hereby agrees that if any of the Pledged Securities are at any time not
evidenced by certificates of ownership, then each applicable Pledgor shall, to
the extent permitted by applicable law and the terms of the Intercreditor
Agreement (i) if necessary or desirable to perfect a security interest in such
Pledged Securities, cause such pledge to be recorded on the equityholder
register or the books of the issuer, cause the issuer to execute and deliver to
the Administrative Agent an acknowledgment of the pledge of such Pledged
Securities substantially in the form of Exhibit 1 annexed hereto, execute any
customary pledge forms or other documents necessary or appropriate to complete
the pledge and give the Administrative Agent the right to transfer such Pledged
Securities under the terms hereof and, upon request, provide to the
Administrative Agent an opinion of counsel, in form and substance reasonably
satisfactory to the Administrative Agent, confirming such pledge and perfection
thereof and (ii) use its commercially reasonable efforts to cause such Pledged
Securities to become certificated and delivered to the Administrative Agent in
accordance with the provisions of Section 3.1.
SECTION 3.3. Financing Statements and Other Filings; Maintenance of
Perfected Security Interest. Each Pledgor represents and warrants that all
filings necessary to perfect the security interest granted by it to the
Administrative Agent in respect of the Pledged Collateral have been delivered to
the Administrative Agent in completed and, to the extent necessary or
appropriate, duly executed form for filing in each governmental, municipal or
other office specified in Schedule 7 annexed to the Perfection Certificate (to
the extent required to be listed on the schedules to the Perfection Certificate
as of the date this representation is made or deemed made). Each Pledgor agrees
that at the sole cost and expense of the Pledgors, (i) such Pledgor will
maintain the security interest created by this Agreement in the Pledged
Collateral as
13
a perfected third priority security interest and shall defend such security
interest against the claims and demands of all persons except Liens permitted
under the Third Lien Term Loan Agreement, (ii) such Pledgor shall furnish to the
Administrative Agent from time to time (but no more frequently than quarterly)
statements and schedules further identifying and describing the Pledged
Collateral and such other reports in connection with the Pledged Collateral as
the Administrative Agent may reasonably request, all in reasonable detail and
(iii) at any time and from time to time, upon the written request of the
Administrative Agent, such Pledgor shall promptly and duly execute and deliver,
and file and have recorded, such further instruments and documents and take such
further action as the Administrative Agent may reasonably request for the
purpose of obtaining or preserving the full benefits of this Agreement and the
rights and powers herein granted, including the filing of any financing
statements, continuation statements and other documents (including this
Agreement) under the Uniform Commercial Code (or other similar laws) in effect
in any jurisdiction with respect to the security interest created hereby and the
execution and delivery of Control Agreements, all in form reasonably
satisfactory to the Administrative Agent and in such offices (including the
United States Patent and Trademark Office and the United States Copyright
Office) wherever required by law to perfect, continue and maintain a valid,
enforceable, third priority security interest in the Pledged Collateral as
provided herein and to preserve the other rights and interests granted to the
Administrative Agent hereunder, as against third parties, with respect to the
Pledged Collateral.
SECTION 3.4. Other Actions. In order to further insure the attachment,
perfection and priority of, and the ability of the Administrative Agent to
enforce, the Administrative Agent's security interest in the Pledged Collateral,
each Pledgor represents and warrants (as to itself) as follows and agrees, in
each case at such Pledgor's own expense and in accordance with the terms of the
Intercreditor Agreement, to take the following actions with respect to the
following Pledged Collateral:
(a) Instruments and Tangible Chattel Paper. (i) No amounts payable
under or in connection with any of the Pledged Collateral are evidenced by any
Instrument or Tangible Chattel Paper other than such Instruments and Tangible
Chattel Paper listed in Schedule 12 annexed to the Perfection Certificate (to
the extent required to be listed on the schedules to the Perfection Certificate
as of the date this representation is made or deemed made) and (ii) each
Instrument and each item of Tangible Chattel Paper listed in Schedule 12 annexed
to the Perfection Certificate has been properly endorsed, assigned and delivered
to the Administrative Agent, accompanied by instruments of transfer or
assignment duly executed in blank. If any amount then payable under or in
connection with any of the Pledged Collateral shall be evidenced by any
Instrument or Tangible Chattel Paper, and such amount, together with all amounts
payable evidenced by any Instrument or Tangible Chattel Paper not previously
delivered to the Administrative Agent exceeds $500,000 in the aggregate for all
Pledgors, the Pledgor acquiring such Instrument or Tangible Chattel Paper shall
forthwith endorse, assign and deliver the same to the Administrative Agent,
accompanied by such instruments of transfer or assignment duly executed in blank
as the Administrative Agent may from time to time specify.
(b) Deposit Accounts. (i) Each Pledgor has neither opened nor
maintains any Deposit Accounts other than the accounts listed in Schedule 16
annexed to the Perfection
14
Certificate (to the extent required to be listed on the schedules to the
Perfection Certificate as of the date this representation is made or
deemed made) and (ii) the Administrative Agent has a perfected third
priority security interest in each Deposit Account listed in Schedule 16
annexed to the Perfection Certificate by Control to the extent a fully
executed Deposit Account Control Agreement is in effect covering such
Deposit Account. No Pledgor shall hereafter establish and maintain any
Deposit Account unless (1) the applicable Pledgor shall have given the
Administrative Agent 30 days' prior written notice of its intention to
establish such new Deposit Account with a Bank, (2) such Bank shall be
reasonably acceptable to the Administrative Agent and (3) if requested by
the Administrative Agent, such Bank and such Pledgor shall have duly
executed and delivered to the Administrative Agent a Deposit Account
Control Agreement with respect to such Deposit Account. Each Pledgor
agrees that, with respect to each Deposit Account in existence on the date
hereof and at the time it establishes any additional Deposit Accounts it
shall (to the extent requested by the Administrative Agent) enter into a
duly authorized, executed and delivered Deposit Account Control Agreement
with respect to such Deposit Account. The Administrative Agent agrees with
each Pledgor that the Administrative Agent shall not give any instructions
directing the disposition of funds from time to time credited to any
Deposit Account or withhold any withdrawal rights from such Pledgor with
respect to funds from time to time credited to any Deposit Account unless
an Event of Default has occurred and is continuing. The provisions of this
Section 3.4(b) shall not apply to the Collateral Account, or any other
Deposit Account for which the Administrative Agent is the Bank. No Pledgor
shall grant Control of any Deposit Account to any person other than the
Administrative Agent.
(c) Investment Property. (i) Each Pledgor (1) has no Securities
Accounts or Commodity Accounts other than those listed in Schedule 16 annexed to
the Perfection Certificate (to the extent required to be listed on the schedules
to the Perfection Certificate as of the date this representation is made or
deemed made) and the Administrative Agent has a perfected third priority
security interest in such Securities Accounts and Commodity Accounts by Control,
(2) does not hold, own or have any interest in any certificated securities or
uncertificated securities other than those constituting Pledged Securities and
those maintained in Securities Accounts or Commodity Accounts listed in Schedule
16 annexed to the Perfection Certificate (to the extent required to be listed on
the schedules to the Perfection Certificate as of the date this representation
is made or deemed made) and (3) as of the date hereof, has entered into a duly
authorized, executed and delivered Securities Account Control Agreement or a
Commodity Account Control Agreement with respect to each Securities Account or
Commodity Account listed in Schedule 16 annexed to the Perfection Certificate,
as applicable.
(ii) If any Pledgor shall at any time hold or acquire any certificated
securities constituting Investment Property, such Pledgor shall promptly (a)
endorse, assign and deliver the same to the Administrative Agent, accompanied by
such instruments of transfer or assignment duly executed in blank, all in form
and substance reasonably satisfactory to the Administrative Agent or (b) deliver
such securities into a Securities Account with respect to which a Control
Agreement is in effect in favor of the
15
Administrative Agent. If any securities now or hereafter acquired by any
Pledgor constituting Investment Property are uncertificated and are issued
to such Pledgor or its nominee directly by the issuer thereof, such
Pledgor shall promptly notify the Administrative Agent thereof and
pursuant to an agreement in form and substance reasonably satisfactory to
the Administrative Agent, either (a) cause the issuer to agree to comply
with instructions from the Administrative Agent as to such securities,
without further consent of any Pledgor or such nominee, (b) cause a
Security Entitlement with respect to such uncertificated security to be
held in a Securities Account with respect to which the Administrative
Agent has Control or (c) arrange for the Administrative Agent to become
the registered owner of the securities. Pledgor shall not hereafter
establish and maintain any Securities Account or Commodity Account with
any Securities Intermediary or Commodity Intermediary unless (1) the
applicable Pledgor shall have given the Administrative Agent 30 days'
prior written notice of its intention to establish such new Securities
Account or Commodity Account with such Securities Intermediary or
Commodity Intermediary, (2) such Securities Intermediary or Commodity
Intermediary shall be reasonably acceptable to the Administrative Agent
and (3) such Securities Intermediary or Commodity Intermediary, as the
case may be, and such Pledgor shall have duly executed and delivered a
Control Agreement with respect to such Securities Account or Commodity
Account, as the case may be. Each Pledgor shall accept any cash and
Investment Property in trust for the benefit of the Administrative Agent
and within one (1) Business Day of actual receipt thereof, deposit any
cash or Investment Property and any new securities, instruments, documents
or other property by reason of ownership of the Investment Property (other
than payments of a kind described in Section 7.4 hereof) received by it
into a Deposit Account or Securities Account subject to Administrative
Agent's Control. The Administrative Agent agrees with each Pledgor that
the Administrative Agent shall not give any Entitlement Orders or
instructions or directions to any issuer of uncertificated securities,
Securities Intermediary or Commodity Intermediary, and shall not withhold
its consent to the exercise of any withdrawal or dealing rights by such
Pledgor, unless an Event of Default has occurred and is continuing, or,
after giving effect to any such investment and withdrawal rights would
occur. The provisions of this Section 3.4(c) shall not apply to any
Financial Assets credited to a Securities Account for which the
Administrative Agent is the Securities Intermediary. No Pledgor shall
grant control over any Investment Property to any person other than the
Administrative Agent.
(iii) As between the Administrative Agent and the Pledgors, the
Pledgors shall bear the investment risk with respect to the Investment Property
and Pledged Securities, and the risk of loss of, damage to, or the destruction
of the Investment Property and Pledged Securities, whether in the possession of,
or maintained as a security entitlement or deposit by, or subject to the control
of, the Administrative Agent, a Securities Intermediary, Commodity Intermediary,
any Pledgor or any other person; provided, however, that nothing contained in
this Section 3.4(c) shall release or relieve any Securities Intermediary or
Commodity Intermediary of its duties and obligations to the Pledgors or any
other person under any Control Agreement or under applicable law. Each Pledgor
shall promptly pay all Claims and fees of whatever kind or nature with respect
to the Investment Property and Pledged Securities pledged by it under this
16
Agreement. In the event any Pledgor shall fail to make such payment
contemplated in the immediately preceding sentence, the Administrative
Agent may do so for the account of such Pledgor and the Pledgors shall
promptly reimburse and indemnify the Administrative Agent from all costs
and expenses incurred by the Administrative Agent under this Section
3.4(c) in accordance with Section 12.03 of the Third Lien Term Loan
Agreement.
(d) Electronic Chattel Paper and Transferable Records. No amount under
or in connection with any of the Pledged Collateral is evidenced by any
Electronic Chattel Paper or any "transferable record" (as that term is defined
in Section 201 of the Federal Electronic Signatures in Global and National
Commerce Act, or in Section 16 of the Uniform Electronic Transactions Act as in
effect in any relevant jurisdiction) other than such Electronic Chattel Paper
and transferable records listed in Schedule 12 annexed to the Perfection
Certificate (to the extent required to be listed on the schedules to the
Perfection Certificate as of the date this representation is made or deemed
made). If any amount payable under or in connection with any of the Pledged
Collateral shall be evidenced by any Electronic Chattel Paper or any
transferable record, the Pledgor acquiring such Electronic Chattel Paper or
transferable record shall promptly notify the Administrative Agent thereof and
shall take such action as the Administrative Agent may reasonably request to
vest in the Administrative Agent control under UCC Section 9-105 of such
Electronic Chattel Paper or control under Section 201 of the Federal Electronic
Signatures in Global and National Commerce Act or, as the case may be, Section
16 of the Uniform Electronic Transactions Act, as so in effect in such
jurisdiction, of such transferable record. The requirement in the preceding
sentence shall apply to the extent that such amount, together with all amounts
payable evidenced by Electronic Chattel Paper or any transferable record in
which the Administrative Agent has not been vested control within the meaning of
the statutes described in this sentence exceeds $500,000 in the aggregate for
all Pledgors. The Administrative Agent agrees with such Pledgor that the
Administrative Agent will arrange, pursuant to procedures satisfactory to the
Administrative Agent and so long as such procedures will not result in the
Administrative Agent's loss of control, for the Pledgor to make alterations to
the Electronic Chattel Paper or transferable record permitted under UCC Section
9-105 or, as the case may be, Section 201 of the Federal Electronic Signatures
in Global and National Commerce Act or Section 16 of the Uniform Electronic
Transactions Act for a party in control to allow without loss of control, unless
an Event of Default has occurred and is continuing or would occur after taking
into account any action by such Pledgor with respect to such Electronic Chattel
Paper or transferable record.
(e) Letter-of-Credit Rights. If any Pledgor is at any time a
beneficiary under a Letter of Credit now or hereafter issued in favor of such
Pledgor, such Pledgor shall promptly notify the Administrative Agent thereof and
such Pledgor shall, at the request of the Administrative Agent, pursuant to an
agreement in form and substance reasonably satisfactory to the Administrative
Agent, either (i) arrange for the issuer and any confirmer of such Letter of
Credit to consent to an assignment to the Administrative Agent of the proceeds
of any drawing under the Letter of Credit or (ii) arrange for the Administrative
Agent to become the transferee beneficiary of such Letter of Credit, with
17
the Administrative Agent agreeing, in each case, that the proceeds of any
drawing under the Letter of Credit are to be applied in accordance with
the terms of the Intercreditor Agreement. The actions in the preceding
sentence shall be taken to the extent that the amount under such Letter of
Credit, together with all amounts under Letters of Credit for which the
actions described above in clause (i) and (ii) have not been taken,
exceeds $500,000 in the aggregate for all Pledgors.
(f) Commercial Tort Claims. As of the date hereof each Pledgor hereby
represents and warrants that it holds no Commercial Tort Claims other than those
listed in Schedule 15 annexed to the Perfection Certificate (to the extent
required to be listed on the schedules to the Perfection Certificate as of the
date this representation is made or deemed made). If any Pledgor shall at any
time hold or acquire a Commercial Tort Claim having a value together with all
other Commercial Tort Claims of all Pledgors in which the Administrative Agent
does not have a security interest in excess of $500,000 in the aggregate, such
Pledgor shall immediately notify the Administrative Agent in writing signed by
such Pledgor of the brief details thereof and grant to the Administrative Agent
in such writing a security interest therein and in the Proceeds thereof, all
upon the terms of this Agreement, with such writing to be in form and substance
reasonably satisfactory to the Administrative Agent.
(g) Landlord's Access Agreements/Bailee Letters. Each Pledgor shall,
following the reasonable request of the Administrative Agent, use its
commercially reasonable efforts to obtain as soon as practicable after the date
of such request, with respect to each location required by the Administrative
Agent, where such Pledgor maintains Pledged Collateral, a Bailee Letter and/or
Landlord Access Agreement, as applicable, and use commercially reasonable
efforts to obtain a Bailee Letter, Landlord Access Agreement and/or landlord's
lien waiver, as applicable, from all such bailees and landlords, as applicable,
who from time to time have possession of Pledged Collateral in the ordinary
course of such Pledgor's business. A waiver of bailee's lien shall not be
required if the value of the Pledged Collateral held by such bailee is less than
$100,000, provided that the aggregate value of the Pledged Collateral held by
all bailees who have not delivered a Bailee Letter is less than $500,000 in the
aggregate.
(h) Motor Vehicles. Upon the request of the Administrative Agent, each
Pledgor shall deliver to the Administrative Agent originals of the certificates
of title or ownership for the motor vehicles (and any other Equipment covered by
Certificates of Title or ownership) owned by it with the Administrative Agent
listed as lienholder therein. Such requirement shall apply to the Pledgors if
any such motor vehicle (or any such other Equipment) is valued at over $50,000.
SECTION 3.5. Joinder of Additional Guarantors. The Pledgors shall
cause each Subsidiary of Quest Resource Corporation which, from time to time,
after the date hereof shall be required to pledge any assets to the
Administrative Agent for the benefit of the Secured Parties pursuant to the
provisions of the Third Lien Term Loan Agreement, (a) to execute and deliver to
the Administrative Agent (i) a Joinder Agreement substantially in the form of
Exhibit 3 annexed hereto within thirty (30) Business Days on which it was
acquired or created
18
and (ii) a Perfection Certificate, in each case, within thirty (30) Business
Days of the date on which it was acquired or created or (b) in the case of a
Subsidiary organized outside of the United States required to pledge any assets
to the Administrative Agent, execute and deliver such documentation as the
Administrative Agent shall reasonably request and, in each case, upon such
execution and delivery, such Subsidiary shall constitute a "Guarantor" and a
"Pledgor" for all purposes hereunder with the same force and effect as if
originally named as a Guarantor and Pledgor herein. The execution and delivery
of such Joinder Agreement shall not require the consent of any Pledgor
hereunder. The rights and obligations of each Pledgor hereunder shall remain in
full force and effect notwithstanding the addition of any new Guarantor and
Pledgor as a party to this Agreement.
SECTION 3.6. Supplements; Further Assurances. Each Pledgor shall take
such further actions, and execute and deliver to the Administrative Agent such
additional assignments, agreements, supplements, powers and instruments, as the
Administrative Agent may in its reasonable judgment deem necessary or
appropriate, wherever required by law, in order to perfect, preserve and protect
the security interest in the Pledged Collateral as provided herein and the
rights and interests granted to the Administrative Agent hereunder, to carry
into effect the purposes hereof or better to assure and confirm unto the
Administrative Agent the Pledged Collateral or permit the Administrative Agent
to exercise and enforce its rights, powers and remedies hereunder with respect
to any Pledged Collateral. Without limiting the generality of the foregoing,
each Pledgor shall make, execute, endorse, acknowledge, file or refile and/or
deliver to the Administrative Agent from time to time upon reasonable request
such lists, descriptions and designations of the Pledged Collateral, copies of
warehouse receipts, receipts in the nature of warehouse receipts, bills of
lading, documents of title, vouchers, invoices, schedules, confirmatory
assignments, supplements, additional security agreements, conveyances, financing
statements, transfer endorsements, powers of attorney, certificates, reports and
other assurances or instruments as the Administrative Agent shall reasonably
request. If an Event of Default has occurred and is continuing, the
Administrative Agent may institute and maintain, subject to the terms of the
Intercreditor Agreement, in its own name or in the name of any Pledgor, such
suits and proceedings as the Administrative Agent may be advised by counsel
shall be necessary or expedient to prevent any impairment of the security
interest in or the perfection thereof in the Pledged Collateral. All of the
foregoing shall be at the sole cost and expense of the Pledgors.
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS
Each Pledgor represents, warrants and covenants as follows:
SECTION 4.1. Title. Except for the security interest granted to the
Administrative Agent for the ratable benefit of the Secured Parties pursuant to
this Agreement and Liens permitted under the Third Lien Term Loan Agreement,
such Pledgor owns and, as to
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Pledged Collateral acquired by it from time to time after the date hereof, will
own the rights in each item of Pledged Collateral pledged by it hereunder free
and clear of any and all Liens or claims of others other than the Liens granted
pursuant to the Existing Senior Security Agreement and the Existing Second Lien
Security Agreement and Liens permitted under the Third Lien Term Loan Agreement
and Restrictions on Pledged Interests. In addition, no Liens or claims exist on
the Securities Collateral, other than as permitted by Section 9.03 of the Third
Lien Term Loan Agreement and Restrictions on Pledged Interests. Such Pledgor has
not filed, nor authorized any third party to file a financing statement or other
public notice with respect to all or any part of the Pledged Collateral on file
or of record in any public office, except such as have been filed in favor of
the Administrative Agent pursuant to Liens granted under the Existing Senior
Security Agreement, the Existing Second Lien Security Agreement, and this
Agreement or as are permitted by the Third Lien Term Loan Agreement or financing
statements or public notices relating to the termination statements listed on
Schedule 9 to the Perfection Certificate. No person other than the
Administrative Agent has control or possession of all or any part of the Pledged
Collateral, except as permitted by the Third Lien Term Loan Agreement and the
Intercreditor Agreement.
SECTION 4.2. Validity of Security Interest. The security interest in
and Lien on the Pledged Collateral granted to the Administrative Agent for the
benefit of the Secured Parties hereunder constitutes (a) a legal and valid
security interest in all the Pledged Collateral securing the payment and
performance of the Indebtedness, and (b) subject to the filings and other
actions described in Schedule 7 annexed to the Perfection Certificate (to the
extent required to be listed on the schedules to the Perfection Certificate as
of the date this representation is made or deemed made), a perfected security
interest in all the Pledged Collateral except for the Pledged Securities. The
security interest and Lien granted to the Administrative Agent for the benefit
of the Secured Parties pursuant to this Agreement in and on the Pledged
Collateral will at all times constitute a perfected, continuing security
interest therein, subject only to Liens granted under the Existing Senior
Security Agreement or the Existing Second Lien Security Agreement and to Liens
permitted under the Third Lien Term Loan Agreement.
SECTION 4.3. Defense of Claims; Transferability of Pledged Collateral.
Each Pledgor shall, at its own cost and expense, defend title to the Pledged
Collateral pledged by it hereunder and the security interest therein and Lien
thereon granted to the Administrative Agent and the priority thereof against all
claims and demands of all persons, at its own cost and expense, at any time
claiming any interest therein adverse to the Administrative Agent or any other
Secured Party other than Liens permitted under the Third Lien Term Loan
Agreement (other than Contested Liens). There is no agreement, and no Pledgor
shall enter into any agreement or take any other action, that would restrict the
transferability of any of the Pledged Collateral or otherwise impair or conflict
with such Pledgors' obligations or the rights of the Administrative Agent
hereunder, other than Restrictions on Pledged Interests.
SECTION 4.4. Other Financing Statements. It has not filed, nor
authorized any third party to file (nor will there be any) valid or effective
financing statement (or similar statement or instrument of registration under
the law of any jurisdiction) covering or purporting to cover any interest of any
kind in the Pledged Collateral other than financing statements and other
statements and instruments relating to the Liens granted under the Existing
Senior Security
20
Agreement or the Existing Second Lien Security Agreement and to Liens permitted
under the Third Lien Term Loan Agreement. So long as any of the Indebtedness
remains unpaid, no Pledgor shall execute, authorize or permit to be filed in any
public office any financing statement (or similar statement or instrument of
registration under the law of any jurisdiction) relating to any Pledged
Collateral, except financing statements and other statements and instruments
filed or to be filed in respect of and covering the security interests granted
by such Pledgor to the holder of the Liens permitted under the Third Lien Term
Loan Agreement.
SECTION 4.5. Chief Executive Office; Change of Name; Jurisdiction of
Organization. (a) It shall comply with the provisions of Section 7.16 of the
Third Lien Term Loan Agreement.
(b) The Administrative Agent may rely on opinions of counsel as to
whether any or all UCC financing statements of the Pledgors need to be amended
as a result of any of the changes to the information provided in Section 5.13(a)
of the Third Lien Term Loan Agreement. If any Pledgor fails to provide
information to the Administrative Agent about such changes on a timely basis,
the Administrative Agent shall not be liable or responsible to any party for any
failure to maintain a perfected security interest in such Pledgor's property
constituting Pledged Collateral, for which the Administrative Agent needed to
have information relating to such changes. The Administrative Agent shall have
no duty to inquire about such changes if any Pledgor does not inform the
Administrative Agent of such changes, the parties acknowledging and agreeing
that it would not be feasible or practical for the Administrative Agent to
search for information on such changes if such information is not provided by
any Pledgor.
SECTION 4.6. Location of Inventory and Equipment. It shall not move
any Equipment or Inventory to any location other than one within the continental
United States until (i) it shall have given the Administrative Agent not less
than 30 days' prior written notice (in the form of an Officers' Certificate) of
its intention so to do, clearly describing such new location and providing such
other information in connection therewith as the Administrative Agent may
request and (ii) with respect to such new location, such Pledgor shall have
taken all action reasonably satisfactory to the Administrative Agent to maintain
the perfection and priority of the security interest of the Administrative Agent
for the benefit of the Secured Parties in the Pledged Collateral intended to be
granted hereby, including using commercially reasonable efforts to obtain
waivers of landlord's or warehousemen's and/or bailee's liens with respect to
such new location, if applicable, and if reasonably requested by the
Administrative Agent. Such Pledgor agrees to provide the Administrative Agent
with prompt notice following the movement of any Equipment or Inventory to any
location other than one that is listed in the relevant Schedules to the
Perfection Certificate.
SECTION 4.7. Due Authorization and Issuance. All of the Initial
Pledged Shares have been, and to the extent any Pledged Shares are hereafter
issued, such Pledged Shares will be, upon such issuance, duly authorized,
validly issued and fully paid and non-assessable. All of the Initial Pledged
Interests have been fully paid for, and there is no amount or other obligation
owing by any Pledgor to any issuer of the Initial Pledged Interests in exchange
for or in connection with the issuance of the Initial Pledged Interests or any
Pledgor's status as a partner or a member of any issuer of the Initial Pledged
Interests.
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SECTION 4.8. Consents, etc. In the event that the Administrative Agent
desires to exercise any remedies, voting or consensual rights or
attorney-in-fact powers set forth in this Agreement and determines it necessary
to obtain any approvals or consents of any Governmental Authority or any other
person therefor, then, upon the reasonable request of the Administrative Agent,
such Pledgor agrees to use its best efforts to assist and aid the Administrative
Agent to obtain as soon as practicable any necessary approvals or consents for
the exercise of any such remedies, rights and powers.
SECTION 4.9. Pledged Collateral. All information set forth herein,
including the schedules annexed hereto, and all information contained in any
documents, schedules and lists heretofore delivered to any Secured Party,
including the Perfection Certificate and the schedules thereto, in connection
with this Agreement, in each case, relating to the Pledged Collateral, is
accurate and complete in all material respects. The Pledged Collateral described
on the schedules annexed to the Perfection Certificate constitutes all of the
property of such type of Pledged Collateral owned or held by the Pledgors.
SECTION 4.10. Insurance. In the event that the proceeds of any
insurance claim are paid after the Administrative Agent has exercised its right
to foreclose after an Event of Default, such Net Cash Proceeds shall be paid to
the Administrative Agent to satisfy any deficiency remaining after such
foreclosure.
SECTION 4.11. Payment of Taxes; Compliance with Laws; Contesting
Liens; Claims. Each Pledgor represents and warrants that all Claims imposed upon
or assessed against the Pledged Collateral have been paid and discharged except
to the extent such Claims constitute a Lien not yet due and payable which is a
Contested Lien or a Permitted Collateral Lien. Each Pledgor shall comply with
all laws applicable to the Pledged Collateral the failure to comply with which
would, individually or in the aggregate, have a Material Adverse Effect. Each
Pledgor may at its own expense contest the validity, amount or applicability of
any Claims so long as the contest thereof shall be conducted in accordance with,
and permitted pursuant to the provisions of, the Third Lien Term Loan Agreement.
Notwithstanding the foregoing provisions of this Section 4.11, (i) no contest of
any such obligation may be pursued by such Pledgor if such contest would expose
the Administrative Agent or any other Secured Party to (A) any possible criminal
liability or (B) any additional civil liability for failure to comply with such
obligations unless such Pledgor shall have furnished a bond or other security
therefor satisfactory to the Administrative Agent, or such Secured Party, as the
case may be and (ii) if at any time payment or performance of any obligation
contested by such Pledgor pursuant to this Section 4.11 shall become necessary
to prevent the imposition of remedies against the Pledged Collateral because of
non-payment, such Pledgor shall pay or perform the same in sufficient time to
prevent the imposition of remedies against the Pledged Collateral in respect of
such default or prospective default.
SECTION 4.12. Access to Pledged Collateral, Books and Records; Other
Information. Upon reasonable request to each Pledgor, the Administrative Agent,
its agents, accountants and attorneys shall have full and free access to visit
and inspect, as applicable, during normal business hours and such other
reasonable times as may be requested by the Administrative Agent all of the
Pledged Collateral and Mortgaged Property including all of the
22
books, correspondence and records of such Pledgor relating thereto. The
Administrative Agent and its representatives may examine the same, take extracts
therefrom and make photocopies thereof, and such Pledgor agrees to render to the
Administrative Agent, at such Pledgor's cost and expense, such clerical and
other assistance as may be reasonably requested by the Administrative Agent with
regard thereto. Such Pledgor shall, at any and all times, within a reasonable
time after written request by the Administrative Agent, furnish or cause to be
furnished to the Administrative Agent, in such manner and in such detail as may
be reasonably requested by the Administrative Agent, additional information with
respect to the Pledged Collateral.
ARTICLE V
CERTAIN PROVISIONS CONCERNING SECURITIES COLLATERAL
SECTION 5.1. Pledge of Additional Securities Collateral. Each Pledgor
shall, upon obtaining any Pledged Securities or Intercompany Notes of any
person, accept the same in trust for the benefit of the Administrative Agent and
forthwith deliver to the Administrative Agent a pledge amendment, duly executed
by such Pledgor, in substantially the form of Exhibit 2 annexed hereto (each, a
"Pledge Amendment"), and the certificates and other documents required under
Section 3.1 and Section 3.2 hereof in respect of the additional Pledged
Securities or Intercompany Notes which are to be pledged pursuant to this
Agreement, and confirming the attachment of the Lien hereby created on and in
respect of such additional Pledged Securities or Intercompany Notes. Each
Pledgor hereby authorizes the Administrative Agent to attach each Pledge
Amendment to this Agreement and agrees that all Pledged Securities or
Intercompany Notes listed on any Pledge Amendment delivered to the
Administrative Agent shall for all purposes hereunder be considered Pledged
Collateral.
SECTION 5.2. Voting Rights; Distributions; etc.
(a) So long as no Event of Default shall have occurred and be
continuing:
(i) Each Pledgor shall be entitled to exercise any and all
voting and other consensual rights pertaining to the Securities
Collateral or any part thereof for any purpose not inconsistent with
the terms or purposes hereof, the Third Lien Term Loan Agreement or
any other document evidencing the Indebtedness; provided, however,
that no Pledgor shall in any event exercise such rights in any manner
which could reasonably be expected to have a Material Adverse Effect.
(ii) Each Pledgor shall be entitled to receive and retain,
and to utilize free and clear of the Lien hereof, any and all
Distributions, but only if and to the extent made in accordance with
the provisions of the Third Lien Term Loan Agreement; provided,
however, that any and all such Distributions consisting of rights or
interests in the form of securities shall be forthwith delivered to
the Administrative Agent to hold as Pledged Collateral in accordance
with the terms of the Intercreditor Agreement, and shall, if
23
received by any Pledgor, be received in trust for the benefit of the
Administrative Agent, be segregated from the other property or funds of
such Pledgor and be forthwith delivered to the Administrative Agent as
Pledged Collateral in the same form as so received (with any necessary
endorsement).
(b) The Administrative Agent shall be deemed without further action or
formality to have granted to each Pledgor all necessary consents relating to
voting rights and shall, if necessary, upon written request of any Pledgor and
at the sole cost and expense of the Pledgors, from time to time execute and
deliver (or cause to be executed and delivered) to such Pledgor all such
instruments as such Pledgor may reasonably request in order to permit such
Pledgor to exercise the voting and other rights which it is entitled to exercise
pursuant to Section 5.2(a)(i) hereof and to receive the Distributions which it
is authorized to receive and retain pursuant to Section 5.2(a)(ii) hereof.
(c) Upon the occurrence and during the continuance of any Event of
Default and at all times in accordance with the terms of the Intercreditor
Agreement:
(i) All rights of each Pledgor to exercise the voting and
other consensual rights it would otherwise be entitled to exercise
pursuant to Section 5.2(a)(i) hereof shall cease, and all such rights
shall thereupon become vested in the Administrative Agent, which shall
thereupon have the sole right to exercise such voting and other
consensual rights.
(ii) All rights of each Pledgor to receive Distributions
which it would otherwise be authorized to receive and retain pursuant
to Section 5.2(a)(ii) hereof shall cease and all such rights shall
thereupon become vested in the Administrative Agent, which shall
thereupon have the sole right to receive and hold as Pledged
Collateral such Distributions.
(d) Each Pledgor shall, at its sole cost and expense, from time to
time execute and deliver to the Administrative Agent appropriate instruments as
the Administrative Agent may request in order to permit the Administrative Agent
to exercise the voting and other rights which it may be entitled to exercise
pursuant to Section 5.2(a)(i) hereof and to receive all Distributions which it
may be entitled to receive under Section 5.2(a)(ii) hereof.
(e) All Distributions which are received by any Pledgor contrary to
the provisions of Section 5.2(a)(ii) hereof shall be received in trust for the
benefit of the Administrative Agent, shall be segregated from other funds of
such Pledgor and shall immediately be paid over to the Administrative Agent as
Pledged Collateral in the same form as so received (with any necessary
endorsement).
SECTION 5.3. Defaults, etc. Such Pledgor is not in default in the
payment of any portion of any mandatory capital contribution, if any, required
to be made under any agreement to which such Pledgor is a party relating to the
Pledged Securities pledged by it, and such Pledgor is not in violation of any
other provisions of any such agreement to which such Pledgor is a party, or
otherwise in default or violation thereunder. No Securities Collateral
24
pledged by such Pledgor is subject to any defense, offset or counterclaim, nor
have any of the foregoing been asserted or alleged against such Pledgor by any
person with respect thereto, and as of the date hereof, there are no
certificates, instruments, documents or other writings (other than the
Organizational Documents and certificates, if any, delivered to the
Administrative Agent) which evidence any Pledged Securities of such Pledgor.
SECTION 5.4. Certain Agreements of Pledgors As Issuers and Holders of
Equity Interests.
(a) In the case of each Pledgor which is an issuer of Securities
Collateral, such Pledgor agrees to be bound by the terms of this Agreement
relating to the Securities Collateral issued by it and will comply with such
terms insofar as such terms are applicable to it.
(b) In the case of each Pledgor which is a partner in a partnership,
limited liability company or other entity, such Pledgor hereby consents to the
extent required by the applicable Organizational Document to the pledge by each
other Pledgor, pursuant to the terms hereof, of the Pledged Interests in such
partnership, limited liability company or other entity and, upon the occurrence
and during the continuance of an Event of Default, to the transfer of such
Pledged Interests to the Administrative Agent or its nominee and to the
substitution of the Administrative Agent or its nominee as a substituted partner
or member in such partnership, limited liability company or other entity with
all the rights, powers and duties of a general partner or a limited partner or
member, as the case may be.
ARTICLE VI
CERTAIN PROVISIONS CONCERNING INTELLECTUAL
PROPERTY COLLATERAL
SECTION 6.1. Grant of License. For the purpose of enabling the
Administrative Agent, during the continuance of an Event of Default, to exercise
rights and remedies under Article IX hereof at such time as the Administrative
Agent shall be lawfully entitled to exercise such rights and remedies, and for
no other purpose, each Pledgor hereby grants to the Administrative Agent, to the
extent assignable, an irrevocable, non-exclusive license to use, assign, license
or sublicense any of the Intellectual Property Collateral now owned or hereafter
acquired by such Pledgor, wherever the same may be located. Such license shall
include access to all media in which any of the licensed items may be recorded
or stored and to all computer programs used for the compilation or printout
hereof.
SECTION 6.2. Protection of Administrative Agent's Security. On a
continuing basis, each Pledgor shall, at its sole cost and expense, (i) promptly
following its becoming aware thereof, notify the Administrative Agent of (A) any
materially adverse determination in any proceeding in the United States Patent
and Trademark Office or the United States Copyright Office with respect to any
material Patent, Trademark or Copyright or (B) the institution of any proceeding
or any adverse determination in any federal, state or local court or
administrative
25
body regarding such Pledgor's claim of ownership in or right to use any of the
Intellectual Property Collateral material to the use and operation of the
Pledged Collateral or Mortgaged Property, its right to register such
Intellectual Property Collateral or its right to keep and maintain such
registration in full force and effect, (ii) maintain and protect the
Intellectual Property Collateral material to the use and operation of the
Pledged Collateral or Mortgaged Property as presently used and operated and as
contemplated by the Third Lien Term Loan Agreement, (iii) not permit to lapse or
become abandoned any Intellectual Property Collateral material to the use and
operation of the Pledged Collateral or Mortgaged Property as presently used and
operated and as contemplated by the Third Lien Term Loan Agreement, and not
settle or compromise any pending or future litigation or administrative
proceeding with respect to such Intellectual Property Collateral, in each case
except as shall be consistent with commercially reasonable business judgment,
(iv) upon such Pledgor obtaining knowledge thereof, promptly notify the
Administrative Agent in writing of any event which may be reasonably expected to
materially and adversely affect the value or utility of the Intellectual
Property Collateral or any portion thereof material to the use and operation of
the Pledged Collateral or Mortgaged Property, the ability of such Pledgor or the
Administrative Agent to dispose of the Intellectual Property Collateral or any
portion thereof or the rights and remedies of the Administrative Agent in
relation thereto including a levy or threat of levy or any legal process against
the Intellectual Property Collateral or any portion thereof, (v) not license the
Intellectual Property Collateral other than licenses entered into by such
Pledgor in, or incidental to, the ordinary course of business, or amend or
permit the amendment of any of the licenses in a manner that materially and
adversely affects the right to receive payments thereunder, or in any manner
that would materially impair the value of the Intellectual Property Collateral
or the Lien on and security interest in the Intellectual Property Collateral
intended to be granted to the Administrative Agent for the benefit of the
Secured Parties, without the consent of the Administrative Agent, (vi)
diligently keep adequate records respecting the Intellectual Property Collateral
and (vii) furnish to the Administrative Agent from time to time upon the
Administrative Agent's request therefor reasonably detailed statements and
amended schedules further identifying and describing the Intellectual Property
Collateral and such other materials evidencing or reports pertaining to the
Intellectual Property Collateral as the Administrative Agent may from time to
time request.
SECTION 6.3. After-Acquired Property. If any Pledgor shall, at any
time before the Indebtedness have been paid in full (other than contingent
indemnification obligations which, pursuant to the provisions of the Third Lien
Term Loan Agreement or the Security Instruments, survive the termination
thereof), (i) obtain any rights to any additional Intellectual Property
Collateral or (ii) become entitled to the benefit of any additional Intellectual
Property Collateral or any renewal or extension thereof, including any reissue,
division, continuation, or continuation-in-part of any Intellectual Property
Collateral, or any improvement on any Intellectual Property Collateral, the
provisions hereof shall automatically apply thereto and any such item enumerated
in clause (i) or (ii) of this Section 6.3 with respect to such Pledgor shall
automatically constitute Intellectual Property Collateral if such would have
constituted Intellectual Property Collateral at the time of execution hereof and
be subject to the Lien and security interest created by this Agreement without
further action by any party. Each Pledgor shall promptly (i) provide to the
Administrative Agent written notice of any of the foregoing and (ii) confirm the
attachment of the Lien and security interest created by this Agreement to any
26
rights described in clauses (i) and (ii) of the immediately preceding sentence
of this Section 6.3 by execution of an instrument in form reasonably acceptable
to the Administrative Agent and the filing of any instruments or statements as
shall be reasonably necessary to preserve, protect or perfect the Administrative
Agent's security interest in such Intellectual Property Collateral. Further,
each Pledgor authorizes the Administrative Agent to modify this Agreement by
amending Schedules 14(a) and 14(b) annexed to the Perfection Certificate to
include any Intellectual Property Collateral acquired or arising after the date
hereof of such Pledgor.
SECTION 6.4. Litigation. Unless there shall occur and be continuing
any Event of Default, each Pledgor shall have the right to commence and
prosecute in its own name, as the party in interest, for its own benefit and at
the sole cost and expense of the Pledgors, such applications for protection of
the Intellectual Property Collateral and suits, proceedings or other actions to
prevent the infringement, counterfeiting, unfair competition, dilution,
diminution in value or other damage as are necessary to protect the Intellectual
Property Collateral. Upon the occurrence and during the continuance of any Event
of Default, the Administrative Agent shall have the right but shall in no way be
obligated to file applications for protection of the Intellectual Property
Collateral and/or bring suit in the name of any Pledgor, the Administrative
Agent or the Secured Parties to enforce the Intellectual Property Collateral and
any license thereunder. In the event of such suit, each Pledgor shall, at the
reasonable request of the Administrative Agent, do any and all lawful acts and
execute any and all documents requested by the Administrative Agent in aid of
such enforcement and the Pledgors shall promptly reimburse and indemnify the
Administrative Agent for all costs and expenses incurred by the Administrative
Agent in the exercise of its rights under this Section 6.4 in accordance with
Section 12.03 of the Third Lien Term Loan Agreement. In the event that the
Administrative Agent shall elect not to bring suit to enforce the Intellectual
Property Collateral, each Pledgor agrees, at the reasonable request of the
Administrative Agent, to take all commercially reasonable actions necessary,
whether by suit, proceeding or other action, to prevent the infringement,
counterfeiting, unfair competition, dilution, diminution in value of or other
damage to any of the Intellectual Property Collateral by others and for that
purpose agrees to diligently maintain any suit, proceeding or other action
against any person so infringing necessary to prevent such infringement.
ARTICLE VII
CERTAIN PROVISIONS CONCERNING ACCOUNTS
SECTION 7.1. Maintenance of Records. Each Pledgor shall keep and
maintain at its own cost and expense complete records of each Account, in a
manner consistent with prudent business practice, including records of all
payments received, all credits granted thereon, all merchandise returned and all
other documentation relating thereto. Each Pledgor shall, at such Pledgor's sole
cost and expense, upon the Administrative Agent's demand made at any time after
the occurrence and during the continuance of any Event of Default, deliver all
tangible evidence of Accounts, including all documents evidencing Accounts and
any books and records
27
relating thereto to the Administrative Agent or to its representatives (copies
of which evidence and books and records may be retained by such Pledgor). Upon
the occurrence and during the continuance of any Event of Default, the
Administrative Agent may transfer a full and complete copy of any Pledgor's
books, records, credit information, reports, memoranda and all other writings
relating to the Accounts to and for the use by any person that has acquired or
is contemplating acquisition of an interest in the Accounts or the
Administrative Agent's security interest therein without the consent of any
Pledgor.
SECTION 7.2. [Reserved].
SECTION 7.3. Modification of Terms, etc. No Pledgor shall rescind or
cancel any obligations evidenced by any Account in excess of $250,000 or modify
any term thereof or make any adjustment with respect thereto except in the
ordinary course of business consistent with prudent business practice, or extend
or renew any such obligations except in the ordinary course of business
consistent with prudent business practice or compromise or settle any dispute,
claim, suit or legal proceeding relating thereto or sell any Account or interest
therein except in the ordinary course of business consistent with prudent
business practice without the prior written consent of the Administrative Agent.
Each Pledgor shall timely fulfill all obligations on its part to be fulfilled
under or in connection with the Accounts except where failure would not have a
Material Adverse Effect.
SECTION 7.4. Collection. Each Pledgor shall use commercially
reasonable efforts to collect from the Account Debtor of each of the Accounts,
as and when due in the ordinary course of business and consistent with prudent
business practice (including Accounts that are delinquent, such Accounts to be
collected in accordance with generally accepted commercial collection
procedures), any and all amounts owing under or on account of such Account, and
apply forthwith upon receipt thereof all such amounts as are so collected to the
outstanding balance of such Account, except that any Pledgor may, with respect
to an Account, allow in the ordinary course of business (i) a refund or credit
due as a result of returned or damaged or defective merchandise and (ii) such
extensions of time to pay amounts due in respect of Accounts and such other
modifications of payment terms or settlements in respect of Accounts as shall be
commercially reasonable in the circumstances, all in accordance with such
Pledgor's ordinary course of business consistent with its collection practices
as in effect from time to time. The costs and expenses (including attorneys'
fees) of collection, in any case, whether incurred by any Pledgor, the
Administrative Agent or any Secured Party, shall be paid by the Pledgors.
ARTICLE VIII
TRANSFERS
SECTION 8.1. Transfers of Pledged Collateral. No Pledgor shall sell,
convey, assign or otherwise dispose of, or grant any option with respect to, any
of the Pledged Collateral pledged by it hereunder except as permitted by the
Third Lien Term Loan Agreement.
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ARTICLE IX
REMEDIES
SECTION 9.1. Remedies. Upon the occurrence and during the continuance
of any Event of Default the Administrative Agent may from time to time exercise
in respect of the Pledged Collateral, in addition to the other rights and
remedies provided for herein or otherwise available to it and at all times in
accordance with the terms of the Intercreditor Agreement, the following
remedies:
(a) Personally, or by agents or attorneys, immediately take possession
of the Pledged Collateral or any part thereof, from any Pledgor or any other
person who then has possession of any part thereof with or without notice or
process of law, and for that purpose may enter upon any Pledgor's premises where
any of the Pledged Collateral is located, remove such Pledged Collateral, remain
present at such premises to receive copies of all communications and remittances
relating to the Pledged Collateral and use in connection with such removal and
possession any and all services, supplies, aids and other facilities of any
Pledgor;
(b) Demand, xxx for, collect or receive any money or property at any
time payable or receivable in respect of the Pledged Collateral including
instructing the obligor or obligors on any agreement, instrument or other
obligation constituting part of the Pledged Collateral to make any payment
required by the terms of such agreement, instrument or other obligation directly
to the Administrative Agent, and in connection with any of the foregoing,
compromise, settle, extend the time for payment and make other modifications
with respect thereto; provided, however, that in the event that any such
payments are made directly to any Pledgor, prior to receipt by any such obligor
of such instruction, such Pledgor shall segregate all amounts received pursuant
thereto in trust for the benefit of the Administrative Agent and shall promptly
(but in no event later than one (1) Business Day after receipt thereof) pay such
amounts to the Administrative Agent;
(c) Sell, assign, grant a license to use or otherwise liquidate, or
direct any Pledgor to sell, assign, grant a license to use or otherwise
liquidate, any and all investments made in whole or in part with the Pledged
Collateral or any part thereof, and take possession of the proceeds of any such
sale, assignment, license or liquidation;
(d) Take possession of the Pledged Collateral or any part thereof, by
directing any Pledgor in writing to deliver the same to the Administrative Agent
at any place or places so designated by the Administrative Agent, in which event
such Pledgor shall at its own expense: (A) forthwith cause the same to be moved
to the place or places designated by the Administrative Agent and therewith
delivered to the Administrative Agent, (B) store and keep any Pledged Collateral
so delivered to the Administrative Agent at such place or places pending further
action by the Administrative Agent and (C) while the Pledged Collateral shall be
so stored and kept, provide such security and maintenance services as shall be
necessary to protect the same and to preserve and maintain them in good
condition. Each Pledgor's obligation to deliver the Pledged
29
Collateral as contemplated in this Section 9.1(iv) is of the essence hereof.
Upon application to a court of equity having jurisdiction, the Administrative
Agent shall be entitled to a decree requiring specific performance by any
Pledgor of such obligation;
(e) Withdraw all moneys, instruments, securities and other property in
any bank, financial securities, deposit or other account of any Pledgor
constituting Pledged Collateral for application to the Indebtedness as provided
in Article X hereof;
(f) Retain and apply the Distributions to the Indebtedness as provided
in Article X hereof;
(g) Exercise any and all rights as beneficial and legal owner of the
Pledged Collateral, including perfecting assignment of and exercising any and
all voting, consensual and other rights and powers with respect to any Pledged
Collateral; and
(h) All the rights and remedies of a secured party on default under
the UCC, and the Administrative Agent may also in its sole discretion, without
notice except as specified in Section 9.2 hereof, sell, assign or grant a
license to use the Pledged Collateral or any part thereof in one or more parcels
at public or private sale, at any exchange, broker's board or at any of the
Administrative Agent's offices or elsewhere, for cash, on credit or for future
delivery, and at such price or prices and upon such other terms as the
Administrative Agent may deem commercially reasonable. The Administrative Agent
or any other Secured Party or any of their respective Affiliates may be the
purchaser, licensee, assignee or recipient of any or all of the Pledged
Collateral at any such sale (to the extent permitted by law) and shall be
entitled, for the purpose of bidding and making settlement or payment of the
purchase price for all or any portion of the Pledged Collateral sold, assigned
or licensed at such sale, to use and apply any of the Indebtedness owed to such
person as a credit on account of the purchase price of any Pledged Collateral
payable by such person at such sale. Each purchaser, assignee, licensee or
recipient at any such sale shall acquire the property sold, assigned or licensed
absolutely free from any claim or right on the part of any Pledgor, and each
Pledgor hereby waives, to the fullest extent permitted by law, all rights of
redemption, stay and/or appraisal which it now has or may at any time in the
future have under any rule of law or statute now existing or hereafter enacted.
The Administrative Agent shall not be obligated to make any sale of Pledged
Collateral regardless of notice of sale having been given. The Administrative
Agent may adjourn any public or private sale from time to time by announcement
at the time and place fixed therefor, and such sale may, without further notice,
be made at the time and place to which it was so adjourned. Each Pledgor hereby
waives, to the fullest extent permitted by law, any claims against the
Administrative Agent arising by reason of the fact that the price at which any
Pledged Collateral may have been sold, assigned or licensed at such a private
sale was less than the price which might have been obtained at a public sale,
even if the Administrative Agent accepts the first offer received and does not
offer such Pledged Collateral to more than one offeree.
SECTION 9.2. Notice of Sale. Each Pledgor acknowledges and agrees
that, to the extent notice of sale or other disposition of Pledged Collateral
shall be required by law, ten (10) days' prior notice to such Pledgor of the
time and place of any public sale or of the time after which any private sale or
other intended disposition is to take place shall be commercially
30
reasonable notification of such matters. No notification need be given to any
Pledgor if it has signed, after the occurrence of an Event of Default, a
statement renouncing or modifying any right to notification of sale or other
intended disposition.
SECTION 9.3. Waiver of Notice and Claims. Each Pledgor hereby waives,
to the fullest extent permitted by applicable law, notice or judicial hearing in
connection with the Administrative Agent's taking possession or the
Administrative Agent's disposition of any of the Pledged Collateral, including
any and all prior notice and hearing for any prejudgment remedy or remedies and
any such right which such Pledgor would otherwise have under law, and each
Pledgor hereby further waives, to the fullest extent permitted by applicable
law: (i) all damages occasioned by such taking of possession, (ii) all other
requirements as to the time, place and terms of sale or other requirements with
respect to the enforcement of the Administrative Agent's rights hereunder and
(iii) all rights of redemption, appraisal, valuation, stay, extension or
moratorium now or hereafter in force under any applicable law. The
Administrative Agent shall not be liable for any incorrect or improper payment
made pursuant to this Article IX in the absence of gross negligence or willful
misconduct. Any sale of, or the grant of options to purchase, or any other
realization upon, any Pledged Collateral shall operate to divest all right,
title, interest, claim and demand, either at law or in equity, of the applicable
Pledgor therein and thereto, and shall be a perpetual bar both at law and in
equity against such Pledgor and against any and all persons claiming or
attempting to claim the Pledged Collateral so sold, optioned or realized upon,
or any part thereof, from, through or under such Pledgor.
SECTION 9.4. Certain Sales of Pledged Collateral.
(a) Each Pledgor recognizes that, by reason of certain prohibitions
contained in law, rules, regulations or orders of any Governmental Authority,
the Administrative Agent may be compelled, with respect to any sale of all or
any part of the Pledged Collateral, to limit purchasers to those who meet the
requirements of such Governmental Authority. Each Pledgor acknowledges that any
such sales may be at prices and on terms less favorable to the Administrative
Agent than those obtainable through a public sale without such restrictions,
and, notwithstanding such circumstances, agrees that any such restricted sale
shall be deemed to have been made in a commercially reasonable manner and that,
except as may be required by applicable law, the Administrative Agent shall have
no obligation to engage in public sales.
(b) Each Pledgor recognizes that, by reason of certain prohibitions
contained in the Securities Act, and applicable state securities laws, the
Administrative Agent may be compelled, with respect to any sale of all or any
part of the Securities Collateral and Investment Property, to limit purchasers
to persons who will agree, among other things, to acquire such Securities
Collateral or Investment Property for their own account, for investment and not
with a view to the distribution or resale thereof. Each Pledgor acknowledges
that any such private sales may be at prices and on terms less favorable to the
Administrative Agent than those obtainable through a public sale without such
restrictions (including a public offering made pursuant to a registration
statement under the Securities Act), and, notwithstanding such circumstances,
agrees that any such private sale shall be deemed to have been made in a
commercially reasonable manner and that the Administrative Agent shall have no
obligation to engage in public sales and no obligation to delay the sale of any
Securities Collateral or Investment Property for the period
31
of time necessary to permit the issuer thereof to register it for a form of
public sale requiring registration under the Securities Act or under applicable
state securities laws, even if such issuer would agree to do so.
(c) Notwithstanding the foregoing, each Pledgor shall, upon the
occurrence and during the continuance of any Event of Default, at the reasonable
request of the Administrative Agent, for the benefit of the Administrative
Agent, cause any registration, qualification under or compliance with any
Federal or state securities law or laws to be effected with respect to all or
any part of the Securities Collateral as soon as practicable and at the sole
cost and expense of the Pledgors. Each Pledgor will use its commercially
reasonable efforts to cause such registration to be effected (and be kept
effective) and will use its commercially reasonable efforts to cause such
qualification and compliance to be effected (and be kept effective) as may be so
requested and as would permit or facilitate the sale and distribution of such
Securities Collateral including registration under the Securities Act (or any
similar statute then in effect), appropriate qualifications under applicable
blue sky or other state securities laws and appropriate compliance with all
other requirements of any Governmental Authority. Each Pledgor shall use its
commercially reasonable efforts to cause the Administrative Agent to be kept
advised in writing as to the progress of each such registration, qualification
or compliance and as to the completion thereof, shall furnish to the
Administrative Agent such number of prospectuses, offering circulars or other
documents incident thereto as the Administrative Agent from time to time may
request, and shall indemnify and shall cause the issuer of the Securities
Collateral to indemnify the Administrative Agent and all others participating in
the distribution of such Securities Collateral against all claims, losses,
damages and liabilities caused by any untrue statement (or alleged untrue
statement) of a material fact contained therein (or in any related registration
statement, notification or the like) or by any omission (or alleged omission) to
state therein (or in any related registration statement, notification or the
like) a material fact required to be stated therein or necessary to make the
statements therein not misleading.
(d) If the Administrative Agent determines to exercise its right to
sell any or all of the Securities Collateral or Investment Property, upon
written request, the applicable Pledgor shall from time to time furnish to the
Administrative Agent all such information as the Administrative Agent may
request in order to determine the number of securities included in the
Securities Collateral or Investment Property which may be sold by the
Administrative Agent as exempt transactions under the Securities Act and the
rules of the Securities and Exchange Commission thereunder, as the same are from
time to time in effect.
(e) Each Pledgor further agrees that a breach of any of the covenants
contained in this Section 9.4 will cause irreparable injury to the
Administrative Agent and other Secured Parties, that the Administrative Agent
and the other Secured Parties have no adequate remedy at law in respect of such
breach and, as a consequence, that each and every covenant contained in this
Section 9.4 shall be specifically enforceable against such Pledgor, and such
Pledgor hereby waives and agrees not to assert any defenses against an action
for specific performance of such covenants except for a defense that no Event of
Default has occurred and is continuing.
32
SECTION 9.5. No Waiver; Cumulative Remedies.
(a) No failure on the part of the Administrative Agent to exercise, no
course of dealing with respect to, and no delay on the part of the
Administrative Agent in exercising, any right, power or remedy hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
such right, power or remedy hereunder preclude any other or further exercise
thereof or the exercise of any other right, power or remedy; nor shall the
Administrative Agent be required to look first to, enforce or exhaust any other
security, collateral or guaranties. The remedies herein provided are cumulative
and are not exclusive of any remedies provided by law.
(b) In the event that the Administrative Agent shall have instituted
any proceeding to enforce any right, power or remedy under this Agreement by
foreclosure, sale, entry or otherwise, and such proceeding shall have been
discontinued or abandoned for any reason or shall have been determined adversely
to the Administrative Agent, then and in every such case, the Pledgors, the
Administrative Agent and each other Secured Party shall be restored to their
respective former positions and rights hereunder with respect to the Pledged
Collateral, and all rights, remedies and powers of the Administrative Agent and
the other Secured Parties shall continue as if no such proceeding had been
instituted.
SECTION 9.6. Certain Additional Actions Regarding Intellectual
Property. If any Event of Default shall have occurred and be continuing, upon
the written demand of the Administrative Agent, each Pledgor shall execute and
deliver to the Administrative Agent an assignment or assignments of the
registered Patents, Trademarks and/or Copyrights and Goodwill and such other
documents as are necessary or appropriate to carry out the intent and purposes
hereof. Within five (5) Business Days of written notice thereafter from the
Administrative Agent, each Pledgor shall make available to the Administrative
Agent, to the extent within such Pledgor's power and authority, such personnel
in such Pledgor's employ on the date of the Event of Default as the
Administrative Agent may reasonably designate to permit such Pledgor to
continue, directly or indirectly, to produce, advertise and sell the products
and services sold by such Pledgor under the registered Patents, Trademarks
and/or Copyrights, and such persons shall be available to perform their prior
functions on the Administrative Agent's behalf.
ARTICLE X
PROCEEDS OF CASUALTY EVENTS AND COLLATERAL DISPOSITIONS; APPLICATION OF
PROCEEDS
SECTION 10.1. Proceeds of Casualty Events and Collateral Dispositions.
The Pledgors shall take all actions required by the Third Lien Term Loan
Agreement and the Intercreditor Agreement with respect to any Net Cash Proceeds
of any Casualty Event or from the sale or disposition of any Pledged Collateral.
33
SECTION 10.2. Application of Proceeds. The proceeds received by the
Administrative Agent in respect of any sale of, collection from or other
realization upon all or any part of the Collateral pursuant to the exercise by
the Administrative Agent of its remedies shall be applied, together with any
other sums then held by the Administrative Agent pursuant to this Agreement, in
accordance with the Third Lien Term Loan Agreement and the Intercreditor
Agreement.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1. Concerning Administrative Agent.
(a) The actions of the Administrative Agent hereunder are subject to
the provisions of the Third Lien Term Loan Agreement. The Administrative Agent
shall have the right hereunder to make demands, to give notices, to exercise or
refrain from exercising any rights, and to take or refrain from taking action
(including the release or substitution of the Pledged Collateral), in accordance
with this Agreement, Third Lien Term Loan Agreement and the Intercreditor
Agreement. The Administrative Agent may employ agents and attorneys-in-fact in
connection herewith and shall not be liable for the negligence or misconduct of
any such agents or attorneys-in-fact selected by it in good faith. The
Administrative Agent may resign and a successor Administrative Agent may be
appointed in the manner provided in the Third Lien Term Loan Agreement. Upon the
acceptance of any appointment as the Administrative Agent by a successor
Administrative Agent, that successor Administrative Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Administrative Agent under this Agreement, and the retiring
Administrative Agent shall thereupon be discharged from its duties and
obligations under this Agreement. After any retiring Administrative Agent's
resignation, the provisions hereof shall inure to its benefit as to any actions
taken or omitted to be taken by it under this Agreement while it was the
Administrative Agent.
(b) The Administrative Agent shall be deemed to have exercised
reasonable care in the custody and preservation of the Pledged Collateral in its
possession if such Pledged Collateral is accorded treatment substantially
equivalent to that which the Administrative Agent, in its individual capacity,
accords its own property consisting of similar instruments or interests, it
being understood that neither the Administrative Agent nor any of the Secured
Parties shall have responsibility for (i) ascertaining or taking action with
respect to calls, conversions, exchanges, maturities, tenders or other matters
relating to any Securities Collateral, whether or not the Administrative Agent
or any other Secured Party has or is deemed to have knowledge of such matters or
(ii) taking any necessary steps to preserve rights against any person with
respect to any Pledged Collateral.
(c) The Administrative Agent shall be entitled to rely upon any
written notice, statement, certificate, order or other document or any telephone
message believed by it to be
34
genuine and correct and to have been signed, sent or made by the proper person,
and, with respect to all matters pertaining to this Agreement and its duties
hereunder, upon advice of counsel selected by it.
(d) If any item of Pledged Collateral also constitutes collateral
granted to the Administrative Agent under any other deed of trust, mortgage,
security agreement, pledge or instrument of any type, in the event of any
conflict between the provisions hereof and the provisions of such other deed of
trust, mortgage, security agreement, pledge or instrument of any type in respect
of such collateral, the Administrative Agent, in its sole discretion, shall
select which provision or provisions shall control.
SECTION 11.2. Administrative Agent May Perform; Administrative Agent
Appointed Attorney-in-Fact. If any Pledgor shall fail to perform any covenants
contained in this Agreement (including such Pledgor's covenants to (i) pay the
premiums in respect of all required insurance policies hereunder, (ii) pay
Claims, (iii) make repairs, (iv) discharge Liens or (v) pay or perform any
obligations of such Pledgor under any Pledged Collateral) or if any
representation or warranty on the part of any Pledgor contained herein shall be
breached, the Administrative Agent may (but shall not be obligated to) do the
same or cause it to be done or remedy any such breach, and may expend funds for
such purpose; provided, however, that the Administrative Agent shall in no event
be bound to inquire into the validity of any tax, lien, imposition or other
obligation which such Pledgor fails to pay or perform as and when required
hereby and which such Pledgor does not contest in accordance in accordance with
the provisions of Section 4.11 hereof. Any and all amounts so expended by the
Administrative Agent shall be paid by the Pledgors in accordance with the
provisions of Section 12.03 of the Third Lien Term Loan Agreement. Neither the
provisions of this Section 11.2 nor any action taken by the Administrative Agent
pursuant to the provisions of this Section 11.2 shall prevent any such failure
to observe any covenant contained in this Agreement nor any breach of
representation or warranty from constituting an Event of Default. Each Pledgor
hereby appoints the Administrative Agent its attorney-in-fact, with full
authority in the place and stead of such Pledgor and in the name of such
Pledgor, or otherwise, from time to time in the Administrative Agent's
discretion to take any action and to execute any instrument consistent with the
terms of the Third Lien Term Loan Agreement, this Agreement and the other
Security Instruments which the Administrative Agent may deem necessary or
advisable to accomplish the purposes hereof if any Pledgor shall fail to perform
any covenants or agreements contained in this Agreement. The foregoing grant of
authority is a power of attorney coupled with an interest and such appointment
shall be irrevocable for the term hereof. Each Pledgor hereby ratifies all that
such attorney shall lawfully do or cause to be done by virtue hereof.
SECTION 11.3. Continuing Security Interest; Assignment. This Agreement
shall create a continuing security interest in the Pledged Collateral and shall
(i) be binding upon the Pledgors, their respective successors and assigns and
(ii) inure, together with the rights and remedies of the Administrative Agent
hereunder, to the benefit of the Administrative Agent and the other Secured
Parties and each of their respective successors, transferees and assigns. No
other persons (including any other creditor of any Pledgor) shall have any
interest herein or any right or benefit with respect hereto. Without limiting
the generality of the foregoing clause (ii), any Secured Party may assign or
otherwise transfer any indebtedness held by it secured by this
35
Agreement to any other person, and such other person shall thereupon become
vested with all the benefits in respect thereof granted to such Secured Party,
herein or otherwise, subject however, to the provisions of the Third Lien Term
Loan Agreement and any Swap Agreement.
SECTION 11.4. Termination; Release. The Pledged Collateral shall be
released from the Lien of this Agreement in accordance with the provisions of
the Third Lien Term Loan Agreement. Upon termination hereof or any release of
Pledged Collateral in accordance with the provisions of the Third Lien Term Loan
Agreement, the Administrative Agent shall, upon the request and at the sole cost
and expense of the Pledgors, assign, transfer and deliver to Pledgor, against
receipt and without recourse to or warranty by the Administrative Agent except
as to the fact that the Administrative Agent has not encumbered the released
assets, such of the Pledged Collateral to be released (in the case of a release)
as may be in possession of the Administrative Agent and as shall not have been
sold or otherwise applied pursuant to the terms hereof, and, with respect to any
other Pledged Collateral, proper documents and instruments (including UCC-3
termination statements or releases) acknowledging the termination hereof or the
release of such Pledged Collateral, as the case may be.
SECTION 11.5. Modification in Writing. No amendment, modification,
supplement, termination or waiver of or to any provision hereof, nor consent to
any departure by any Pledgor therefrom, shall be effective unless the same shall
be made in accordance with the terms of the Third Lien Term Loan Agreement and
unless in writing and signed by the Administrative Agent. Any amendment,
modification or supplement of or to any provision hereof, any waiver of any
provision hereof and any consent to any departure by any Pledgor from the terms
of any provision hereof shall be effective only in the specific instance and for
the specific purpose for which made or given. Except where notice is
specifically required by this Agreement or any other document evidencing the
Indebtedness, no notice to or demand on any Pledgor in any case shall entitle
any Pledgor to any other or further notice or demand in similar or other
circumstances.
SECTION 11.6. Notices. Unless otherwise provided herein or in the
Third Lien Term Loan Agreement, any notice or other communication herein
required or permitted to be given shall be given in the manner and become
effective as set forth in the Third Lien Term Loan Agreement, as to any Pledgor,
addressed to it at the address of the Borrowers set forth in the Third Lien Term
Loan Agreement and as to the Administrative Agent, addressed to it at the
address set forth in the Third Lien Term Loan Agreement, or in each case at such
other address as shall be designated by such party in a written notice to the
other party complying as to delivery with the terms of this Section 11.6.
SECTION 11.7. Governing Law, Consent to Jurisdiction and Service of
Process; Waiver of Jury Trial. Section 12.09 of the Third Lien Term Loan
Agreement is incorporated herein, mutatis mutandis, as if a part hereof.
SECTION 11.8. Severability of Provisions. Any provision hereof which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
36
SECTION 11.9. Execution in Counterparts. This Agreement and any
amendments, waivers, consents or supplements hereto may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed to be an original,
but all such counterparts together shall constitute one and the same agreement.
SECTION 11.10. Business Days. In the event any time period or any date
provided in this Agreement ends or falls on a day other than a Business Day,
then such time period shall be deemed to end and such date shall be deemed to
fall on the next succeeding Business Day, and performance herein may be made on
such Business Day, with the same force and effect as if made on such other day.
SECTION 11.11. Waiver of Stay. Each Pledgor covenants (to the extent
it may lawfully do so) that in the event that such Pledgor or any property or
assets of such Pledgor shall hereafter become the subject of a voluntary or
involuntary proceeding under the Bankruptcy Code or such Pledgor shall otherwise
be a party to any federal or state bankruptcy, insolvency, moratorium or similar
proceeding to which the provisions relating to the automatic stay under Section
362 of the Bankruptcy Code or any similar provision in any such law is
applicable, then, in any such case, whether or not the Administrative Agent has
commenced foreclosure proceedings under this Agreement, such Pledgor shall not,
and each Pledgor hereby expressly waives their right to (to the extent it may
lawfully do so) at any time insist upon, plead or in any whatsoever, claim or
take the benefit or advantage of any such automatic stay or such similar
provision as it relates to the exercise of any of the rights and remedies
(including any foreclosure proceedings) available to the Administrative Agent as
provided in this Agreement, in any other Security Instrument or any other
document evidencing the Indebtedness. Each Pledgor further covenants (to the
extent it may lawfully do so) that it will not hinder, delay or impede the
execution of any power granted herein to the Administrative Agent, but will
suffer and permit the execution of every such power as though no law relating to
any stay or similar provision had been enacted.
SECTION 11.12. No Credit for Payment of Taxes or Imposition. Such
Pledgor shall not be entitled to any credit against the principal, premium, if
any, or interest payable under the Third Lien Term Loan Agreement, and such
Pledgor shall not be entitled to any credit against any other sums which may
become payable under the terms thereof or hereof, by reason of the payment of
any Tax on the Pledged Collateral or any part thereof.
SECTION 11.13. No Claims Against Administrative Agent. Nothing
contained in this Agreement shall constitute any consent or request by the
Administrative Agent, express or implied, for the performance of any labor or
services or the furnishing of any materials or other property in respect of the
Pledged Collateral or any part thereof, nor as giving any Pledgor any right,
power or authority to contract for or permit the performance of any labor or
services or the furnishing of any materials or other property in such fashion as
would permit the making of any claim against the Administrative Agent in respect
thereof or any claim that any Lien based on the performance of such labor or
services or the furnishing of any such materials or other property is prior to
the Lien hereof.
37
SECTION 11.14. No Release. Nothing set forth in this Agreement shall
relieve any Pledgor from the performance of any term, covenant, condition or
agreement on such Pledgor's part to be performed or observed under or in respect
of any of the Pledged Collateral or from any liability to any person under or in
respect of any of the Pledged Collateral or shall impose any obligation on the
Administrative Agent or any other Secured Party to perform or observe any such
term, covenant, condition or agreement on such Pledgor's part to be so performed
or observed or shall impose any liability on the Administrative Agent or any
other Secured Party for any act or omission on the part of such Pledgor relating
thereto or for any breach of any representation or warranty on the part of such
Pledgor contained in this Agreement, the Third Lien Term Loan Agreement or the
other Loan Documents, or under or in respect of the Pledged Collateral or made
in connection herewith or therewith. The obligations of each Pledgor contained
in this Section 11.14 shall survive the termination hereof and the discharge of
such Pledgor's other obligations under this Agreement, the Third Lien Term Loan
Agreement and the other Loan Documents.
SECTION 11.15. Indebtedness Absolute. All obligations of each Pledgor
hereunder shall be absolute and unconditional irrespective of:
(a) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of any Pledgor;
(b) any lack of validity or enforceability of the Third Lien Term Loan
Agreement, any Swap Agreement or any other Loan Document, or any other agreement
or instrument relating thereto;
(c) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Indebtedness, or any other amendment or waiver
of or any consent to any departure from the Third Lien Term Loan Agreement, any
Swap Agreement or any other Loan Document or any other agreement or instrument
relating thereto;
(d) any pledge, exchange, release or non-perfection of any other
collateral, or any release or amendment or waiver of or consent to any departure
from any guarantee, for all or any of the Indebtedness;
(e) any exercise, non-exercise or waiver of any right, remedy, power
or privilege under or in respect hereof, the Third Lien Term Loan Agreement, any
Swap Agreement or any other Loan Document except as specifically set forth in a
waiver granted pursuant to the provisions of Section 11.5 hereof; or
(f) any other circumstances which might otherwise constitute a defense
available to, or a discharge of, any Pledgor.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]
38
IN WITNESS WHEREOF, the Pledgors and the Administrative Agent have
caused this Agreement to be duly executed and delivered by their duly authorized
officers as of the date first above written.
QUEST CHEROKEE OILFIELD SERVICE, LLC, X-X GAS GATHERING, L.L.C., as a Pledgor
as a Pledgor
By: /s/ Xxxxx X. Xxxx
---------------------------------
By: Quest Cherokee, LLC, its sole member Name: Xxxxx X. Xxxx
Title: Chief Executive Officer
By: /s/ Xxxxx X. Xxxx
-----------------------------
Name: Xxxxx X. Xxxx
Title: Chief Executive Officer
QUEST ENERGY SERVICE, LLC, as a Pledgor PONDEROSA GAS PIPELINE COMPANY, LLC,
as a Pledgor
By: /s/ Xxxxx X. Xxxx By: /s/ Xxxxx X. Xxxx
----------------------------- ---------------------------------
Name: Xxxxx X. Xxxx Name: Xxxxx X. Xxxx
Title: Chief Executive Officer Title: Chief Executive Officer
QUEST OIL & GAS, LLC, as a Pledgor PRODUCERS SERVICE, LLC, as a Pledgor
By: /s/ Xxxxx X. Xxxx By: /s/ Xxxxx X. Xxxx
----------------------------- ---------------------------------
Name: Xxxxx X. Xxxx Name: Xxxxx X. Xxxx
Title: Chief Executive Officer Title: Chief Executive Officer
STP CHEROKEE, LLC, as a Pledgor QUEST CHEROKEE, LLC, as a Pledgor
By: /s/ Xxxxx X. Xxxx By: /s/ Xxxxx X. Xxxx
----------------------------- ---------------------------------
Name: Xxxxx X. Xxxx Name: Xxxxx X. Xxxx
Title: Chief Executive Officer Title: President and Chief
Executive Officer
QUEST RESOURCE CORPORATION, as a Pledgor
By: /s/ Xxxxx X. Xxxx
-----------------------------
Name: Xxxxx X. Xxxx
Title: President and Chief
Executive Officer
S-1
GUGGENHEIM CORPORATE FUNDING, LLC,
as Administrative Agent
By: /s/ Xxxx Xxxxxx
-------------------------------------
Name: Xxxx Xxxxxx
Title: Managing Partner
S-2
EXHIBIT 1
[Form of]
ISSUER'S ACKNOWLEDGMENT
The undersigned hereby (i) acknowledges receipt of a copy of that
certain Amended and Restated Security Agreement (as amended, amended and
restated, supplemented or otherwise modified from time to time, the "Security
Agreement;" capitalized terms used but not otherwise defined herein shall have
the meanings assigned to such terms in the Security Agreement), dated as of
December [__], 2006, made by QUEST CHEROKEE, LLC, a Delaware limited liability
company and QUEST RESOURCE CORPORATION, a Nevada corporation (collectively, the
"Borrowers"), the Guarantors party thereto and GUGGENHEIM CORPORATE FUNDING,
LLC, as Administrative Agent (in such capacity and together with any successors
in such capacity, the "Administrative Agent"), (ii) agrees promptly to note on
its books the security interests granted to the Administrative Agent and
confirmed under the Security Agreement, (iii) agrees that it will comply with
instructions of the Administrative Agent with respect to the applicable
Securities Collateral without further consent by the applicable Pledgor, (iv)
agrees to notify the Administrative Agent upon obtaining knowledge of any
interest in favor of any person in the applicable Securities Collateral that is
adverse to the interest of the Administrative Agent therein and (v) waives any
right or requirement at any time hereafter to receive a copy of the Security
Agreement in connection with the registration of any Securities Collateral
thereunder in the name of the Administrative Agent or its nominee or the
exercise of voting rights by the Administrative Agent or its nominee.
[ ]
By:
-------------------------------------
Name:
Title:
EXHIBIT 2
[Form of]
SECURITIES PLEDGE AMENDMENT
This Security Pledge Amendment, dated as of December [__], 2006, is
delivered pursuant to Section 5.1 of that certain Amended and Restated Security
Agreement (as amended, amended and restated, supplemented or otherwise modified
from time to time, the "Security Agreement;" capitalized terms used but not
otherwise defined herein shall have the meanings assigned to such terms in the
Security Agreement), dated as of December [__], 2006, made by QUEST CHEROKEE,
LLC, a Delaware limited liability company and QUEST RESOURCE CORPORATION, a
Nevada corporation (collectively, the "Borrowers"), the Guarantors party thereto
and GUGGENHEIM CORPORATE FUNDING, LLC, as Administrative Agent (in such capacity
and together with any successors in such capacity, the "Administrative Agent").
The undersigned hereby agrees that this Pledge Amendment may be attached to the
Security Agreement and that the Pledged Securities and/or Intercompany Notes
listed on this Pledge Amendment shall be deemed to be and shall become part of
the Pledged Collateral and shall secure all Indebtedness.
PLEDGED SECURITIES
CLASS NUMBER OF PERCENTAGE OF
OF STOCK SHARES ALL ISSUED CAPITAL
OR PAR CERTIFICATE OR OR OTHER EQUITY
ISSUER INTERESTS VALUE NO(S). INTERESTS INTERESTS OF ISSUER
------ -------- ----- ----------- --------- -------------------
INTERCOMPANY NOTES
PRINCIPAL DATE OF INTEREST MATURITY
ISSUER AMOUNT ISSUANCE RATE DATE
------ --------- -------- -------- ---------
[ ],
as Pledgor
By:
-------------------------------------
Name:
Title:
AGREED TO AND ACCEPTED:
GUGGENHEIM CORPORATE FUNDING, LLC,
as Administrative Agent
By:
-------------------------------
Name:
Title:
2
EXHIBIT 3
[Form of]
JOINDER AGREEMENT
[Name of New Pledgor]
[Address of New Pledgor]
[Date]
---------------------
---------------------
---------------------
---------------------
Ladies and Gentlemen:
Reference is made to that certain Amended and Restated Security
Agreement (as amended, amended and restated, supplemented or otherwise modified
from time to time, the "Security Agreement;" capitalized terms used but not
otherwise defined herein shall have the meanings assigned to such terms in the
Security Agreement), dated as of December [__], 2006, made by QUEST CHEROKEE,
LLC, a Delaware limited liability company and QUEST RESOURCE CORPORATION, a
Nevada corporation (collectively, the "Borrowers"), the Guarantors party thereto
and GUGGENHEIM CORPORATE FUNDING, LLC, as Administrative Agent (in such capacity
and together with any successors in such capacity, the "Administrative Agent").
This letter supplements the Security Agreement and is delivered by
the undersigned, [ ] (the "New Pledgor"), pursuant to Section 3.5 of the
Security Agreement. The New Pledgor hereby agrees to be bound as a Guarantor and
as a Pledgor by all of the terms, covenants and conditions set forth in the
Security Agreement to the same extent that it would have been bound if it had
been a signatory to the Security Agreement on the execution date of the Security
Agreement. The New Pledgor also hereby agrees to be bound as a party by all of
the terms, covenants and conditions applicable to it set forth in the Guaranty
and in Articles VII, VIII and IX of the Third Lien Term Loan Agreement to the
same extent that it would have been bound if it had been a signatory to the
Third Lien Term Loan Agreement on the execution date of the Third Lien Term Loan
Agreement. Without limiting the generality of the foregoing, the New Pledgor
hereby grants and pledges to the Administrative Agent, as collateral security
for the full, prompt and complete payment and performance when due (whether at
stated maturity, by acceleration or otherwise) of the Indebtedness, a Lien on
and security interest in, all of its right, title and interest in, to and under
the Pledged Collateral and expressly assumes all obligations and liabilities of
a Guarantor and Pledgor thereunder. The New Pledgor hereby makes each of the
representations and warranties and agrees to each of the covenants applicable to
the Pledgors contained in the Security Agreement and Article VII of the Third
Lien Term Loan Agreement.
Annexed hereto are supplements to each of the schedules to the
Security Agreement and the Third Lien Term Loan Agreement, as applicable, with
respect to the New Pledgor. Such supplements shall be deemed to be part of the
Security Agreement or the Third Lien Term Loan Agreement, as applicable.
This agreement and any amendments, waivers, consents or supplements
hereto may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed and delivered
shall be deemed to be an original, but all such counterparts together shall
constitute one and the same agreement.
THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
2
IN WITNESS WHEREOF, the New Pledgor has caused this letter agreement
to be executed and delivered by its duly authorized officer as of the date first
above written.
[NEW PLEDGOR]
By:
-------------------------------------
Name:
Title:
AGREED TO AND ACCEPTED:
GUGGENHEIM CORPORATE FUNDING, LLC,
as Administrative Agent
By:
-------------------------------
Name:
Title:
[Schedules to be attached]
3
EXHIBIT 4
[Form of]
CONTROL AGREEMENT CONCERNING SECURITIES ACCOUNTS
This Control Agreement Concerning Securities Accounts (this "Control
Agreement"), dated as of [ ], by and among [QUEST CHEROKEE, LLC][___________]
(the "Pledgor"), Guggenheim Corporate Funding, LLC (the "Administrative Agent")
and [ ] (the "Securities Intermediary"), is delivered pursuant to Section 3.4(c)
of that certain Amended and Restated Security Agreement (as amended, amended and
restated, supplemented or otherwise modified from time to time, the "Security
Agreement"), dated as of December [__], 2006, made by the Pledgor and each of
the Guarantors listed on the signature pages thereto in favor of GUGGENHEIM
CORPORATE FUNDING, LLC, as Administrative Agent, as pledgee, assignee and
secured party (the "Administrative Agent"). This Control Agreement is for the
purpose of perfecting the security interests of the Secured Parties granted by
the Pledgor in the Designated Accounts described below. All references herein to
the "UCC" shall mean the Uniform Commercial Code as in effect from time to time
in the State of New York. Capitalized terms used but not defined herein shall
have the meanings assigned to such terms in the Security Agreement.
Section 1. Confirmation of Establishment and Maintenance of
Designated Accounts. The Securities Intermediary hereby confirms and agrees that
(i) the Securities Intermediary has established for the Pledgor and maintains
the account(s) listed in Schedule I annexed hereto (such account(s), together
with each such other securities account maintained by the Pledgor with the
Securities Intermediary collectively, the "Designated Accounts" and each a
"Designated Account"), (ii) each Designated Account will be maintained in the
manner set forth herein until termination of this Control Agreement, (iii) this
Control Agreement is the valid and legally binding obligation of the Securities
Intermediary, (iv) the Securities Intermediary is a "securities intermediary" as
defined in Article 8-102(a)(14) of the UCC, (v) each of the Designated Accounts
is a "securities account" as such term is defined in Section 8-501(a) of the UCC
and (vi) all securities or other property underlying any financial assets which
are credited to any Designated Account shall be registered in the name of the
Securities Intermediary, endorsed to the Securities Intermediary or in blank or
credited to another securities account maintained in the name of the Securities
Intermediary and in no case will any financial asset credited to any Designated
Account be registered in the name of the Pledgor, payable to the order of the
Pledgor or specially endorsed to the Pledgor, except to the extent the foregoing
have been specially endorsed to the Securities Intermediary or in blank.
Section 2. "Financial Assets" Election. The Securities Intermediary
hereby agrees that each item of Investment Property credited to any Designated
Account shall be treated as a "financial asset" within the meaning of Section
8-102(a)(9) of the UCC.
Section 3. Entitlement Order. If at any time the Securities
Intermediary shall receive an "entitlement order" (within the meaning of Section
8-102(a)(8) of the UCC) issued by the Administrative Agent and relating to any
financial asset maintained in one or more of the Designated Accounts, the
Securities Intermediary shall comply with such entitlement order without further
consent by the Pledgor or any other person. The Securities Intermediary shall
also comply with instructions directing the Securities Intermediary with respect
to the sale, exchange or transfer of financial assets held in each Designated
Account originated by a Pledgor, or any representative of, or investment manager
appointed by, a Pledgor until such time as the Administrative Agent delivers a
Notice of Sole Control pursuant to Section 9(i) to the Securities Intermediary.
Section 4. Subordination of Lien; Waiver of Set-Off. The Securities
Intermediary hereby agrees that any security interest in any Designated Account
it now has or subsequently obtains shall be subordinate to the security interest
of the Administrative Agent. The financial assets and other items deposited to
any Designated Account will not be subject to deduction, set-off, banker's lien,
or any other right in favor of any person other than the Secured Parties (except
that the Securities Intermediary may set off all amounts due to the Securities
Intermediary in respect of its customary fees and expenses for the routine
maintenance and operation of the Designated Accounts, including overdraft fees
and amounts advanced to settle authorized transactions).
Section 5. Choice of Law. Both this Control Agreement and the
Designated Accounts shall be governed by the laws of the State of New York.
Regardless of any provision in any other agreement, for purposes of the UCC, New
York shall be deemed to be the Securities Intermediary's jurisdiction and the
Designated Accounts (as well as the security entitlements related thereto) shall
be governed by the laws of the State of New York.
Section 6. Conflict with Other Agreements; Amendments. As of the
date hereof, there are no other agreements entered into between the Securities
Intermediary and the Pledgor with respect to any Designated Account or any
security entitlements or other financial assets credited thereto (other than
standard and customary documentation with respect to the establishment and
maintenance of such Designated Accounts). The Securities Intermediary and the
Pledgor will not enter into any other agreement with respect to any Designated
Account unless the Administrative Agent shall have received prior written notice
thereof. The Securities Intermediary and the Pledgor have not and will not enter
into any other agreement with respect to (i) creation or perfection of any
security interest in or (ii) control of security entitlements maintained in any
of the Designated Accounts or purporting to limit or condition the obligation of
2
the Securities Intermediary to comply with entitlement orders with respect to
financial assets credited to any Designated Account as set forth in Section 3
hereof without the prior written consent of the Administrative Agent acting in
its sole discretion. In the event of any conflict with respect to control over
any Designated Account between this Control Agreement (or any portion hereof)
and any other agreement now existing or hereafter entered into, the terms of
this Control Agreement shall prevail. No amendment or modification of this
Control Agreement or waiver of any rights hereunder shall be binding on any
party hereto unless it is in writing and is signed by all the parties hereto.
Section 7. Certain Agreements.
(i) The Securities Intermediary has furnished to the Administrative
Agent the most recent account statement issued by the Securities Intermediary
with respect to each of the Designated Accounts and the financial assets and
cash balances held therein, identifying the financial assets held therein in a
manner acceptable to the Administrative Agent. Each such statement accurately
reflects the assets held in such Designated Account as of the date thereof.
(ii) The Securities Intermediary will, upon its receipt of each
supplement to the Security Agreement signed by the Pledgor and identifying one
or more financial assets as "Pledged Collateral," enter into its records,
including computer records, with respect to each Designated Account a notation
with respect to any such financial asset so that such records and reports
generated with respect thereto identify such financial asset as "Pledged."
(iii) The Administrative Agent has delivered to the Securities
Intermediary a list, signed by an authorized representative of the officers of
the Administrative Agent authorized to give approvals or instructions under this
Control Agreement (the "Authorized Representatives") and the Securities
Intermediary shall be entitled to rely on communications from any such
Authorized Representatives until the earlier of the termination of this Control
Agreement in accordance with the terms hereof and notification by an Authorized
Representative of a change in such list at any time.
Section 8. Notice of Adverse Claims. Except for the claims and
interest of the Securities Intermediary under Section 4, the Administrative
Agent and of the Pledgor in the financial assets maintained in the Designated
Account(s), the Securities Intermediary on the date hereof does not know of any
claim to, or security interest in, any Designated Account or in any financial
asset credited thereto and does not know of any claim that any person other than
the Administrative Agent has been given "control" (within the meaning of Section
8-106 of the UCC) of any Designated Account or any such financial asset. If the
Securities Intermediary becomes aware that any person is asserting any lien,
encumbrance or adverse claim (including any writ, garnishment, judgment, warrant
of attachment, execution or similar process or any claim of control) against any
of the financial assets maintained in any Designated Account, the Securities
Intermediary promptly notify the Administrative Agent and the Pledgor thereof.
3
Section 9. Maintenance of Designated Accounts. In addition to the
obligations of the Securities Intermediary in Section 3 hereof, the Securities
Intermediary agrees to maintain the Designated Accounts as follows:
(i) Notice of Sole Control. If at any time the Administrative Agent
delivers to the Securities Intermediary a notice of sole control in
substantially the form set forth in Exhibit A attached hereto (the "Notice
of Sole Control") with respect to any Designated Account, the Securities
Intermediary agrees that, after receipt of such notice, it will take all
instructions with respect to such Designated Account solely from the
Administrative Agent and cease taking instructions from Pledgor,
including, without limitation, instructions for investment, distribution
or transfer of any financial asset maintained in any Designated Account.
Permitting settlement of trades pending at the time of receipt of such
notice shall not constitute a violation of the immediately preceding
sentence.
(ii) Voting Rights. Until such time as the Securities Intermediary
receives a Notice of Sole Control, the Pledgor, or an investment manager
on behalf of the Pledgor, shall direct the Securities Intermediary with
respect to the voting of any financial assets credited to any Designated
Account.
(iii) Statements and Confirmations. The Securities Intermediary will
send copies of all statements and other correspondence (excluding routine
confirmations) concerning any Designated Account or any financial assets
credited thereto simultaneously to each of the Pledgor and the
Administrative Agent at the address set forth in Section 11 hereof. The
Securities Intermediary will provide to the Administrative Agent, upon the
Administrative Agent's request therefor from time to time and, in any
event, as of the last business day of each calendar month, a statement of
the market value of each financial asset maintained in each Designated
Account. The Securities Intermediary shall not change the name or account
number of any Designated Account without the prior written consent of the
Administrative Agent.
(iv) Bailee for Perfection. The Securities Intermediary acknowledges
that, in the event that it should come into possession of any certificate
representing any security or other assets held as financial assets in any
of the Designated Accounts, the Securities Intermediary shall retain
possession of the same for the benefit of the Administrative Agent and
such act shall cause the Securities Intermediary to be deemed a bailee for
the Administrative Agent, if necessary to perfect the Administrative
Agent's security interest in such securities or assets. The Securities
Intermediary hereby acknowledges its receipt of a copy of the Security
Agreement, which shall also serve as notice to the Securities Intermediary
of a security interest in collateral held by a bailee.
4
Section 10. Successors; Assignment. The terms of this Control
Agreement shall be binding upon, and shall inure to the benefit of, the parties
hereto and their respective corporate successors and permitted assignees.
Section 11. Notices. Any notice, request or other communication
required or permitted to be given under this Control Agreement shall be in
writing and deemed to have been properly given when delivered in person, or when
sent by telecopy or other electronic means and electronic confirmation of error
free receipt is received or two (2) days after being sent by certified or
registered United States mail, return receipt requested, postage prepaid,
addressed to the party at the address set forth below.
Pledgor: [ ]
[Address]
Attention:
Telecopy:
Telephone:
with copy to:
[ ]
[Address]
Attention:
Telecopy:
Telephone:
Securities
Intermediary:[ ]
[Address]
Attention:
Telecopy:
Telephone:
Administrative
Agent: Guggenheim Corporate Funding, LLC
[__________________________]
___________________________]
Attention:
Telecopy:
Telephone:
Any party may change its address for notices in the manner set forth
above.
5
Section 12. Termination. The rights and powers granted herein to the
Administrative Agent are powers coupled with an interest and will be affected
neither by the bankruptcy of the Pledgor nor by the lapse of time. The
obligations of the Securities Intermediary hereunder shall continue in effect
until (i) the security interests of the Secured Parties with respect to the
financial assets maintained in the Designated Account(s) have been terminated
and an Authorized Representative has notified the Securities Intermediary of
such termination in writing or (ii) thirty days following the Securities
Intermediary's delivery of written notice of such termination to the Pledgor and
the Administrative Agent.
Section 13. Severability. If any term or provision set forth in this
Agreement shall be invalid or unenforceable, the remainder of this Agreement,
other than those provisions held invalid or unenforceable, shall be construed in
all respects as if such invalid or unenforceable term or provision were omitted.
Section 14. Counterparts. This Control Agreement may be executed in
any number of counterparts, all of which shall constitute one and the same
instrument, and any party hereto may execute this Control Agreement by signing
and delivering one or more counterparts.
6
[ ],
as Pledgor
By:
-------------------------------------
Name:
Title:
GUGGENHEIM CORPORATE FUNDING, LLC,
as Administrative Agent
By:
-------------------------------------
Name:
Title:
[ ],
as Securities Intermediary
By:
-------------------------------------
Name:
Title:
S-1
SCHEDULE I
Designated Account(s)
EXHIBIT A
[Letterhead of Guggenheim Corporate Funding, LLC]
[Date]
[Securities Intermediary]
[Address]
Attention:
Re: Notice of Sole Control
Ladies and Gentlemen:
As referenced in Section 9(i) of the Control Agreement Concerning
Designated Accounts dated as of [ ], by and among [ ], us and you (the "Control
Agreement") (a copy of which is attached) we hereby give you notice of our sole
control over the financial assets maintained in the Designated Account(s)
referred to in the Control Agreement, account numbers: ________________ (the
"Specified Designated Accounts"). You are hereby instructed not to accept any
direction, instruction or entitlement order with respect to financial assets
maintained in the Specified Designated Accounts from any person other than the
undersigned.
You are instructed to deliver a copy of this notice by facsimile
transmission to [Pledgor].
Very truly yours,
GUGGENHEIM CORPORATE FUNDING, LLC,
as Administrative Agent
By:
-------------------------------------
Name:
Title:
cc: [Pledgor]
2
EXHIBIT 5
[Form of]
CONTROL AGREEMENT CONCERNING DEPOSIT ACCOUNTS
This CONTROL AGREEMENT CONCERNING DEPOSIT ACCOUNTS (this "Control
Agreement"), dated as of [ ], by and among [QUEST CHEROKEE, LLC][_____________]
(the "Pledgor"), GUGGENHEIM CORPORATE FUNDING, LLC (the "Administrative Agent")
and [ ] (the "Bank"), is delivered pursuant to Section 3.4(b) of that certain
Amended and Restated Security Agreement (as amended, amended and restated,
supplemented or otherwise modified from time to time, the "Security Agreement"),
dated as of December [__], 2006, made by the Pledgor and each of the Guarantors
listed on the signature pages thereto in favor of GUGGENHEIM CORPORATE FUNDING,
LLC, as Administrative Agent, as pledgee, assignee and secured party (the
"Administrative Agent"). This Control Agreement is for the purpose of perfecting
the security interests of the Secured Parties granted by the Pledgor in the
Designated Accounts described below. All references herein to the "UCC" shall
mean the Uniform Commercial Code as in effect from time to time in the State of
New York. Capitalized terms used but not defined herein shall have the meanings
assigned to such terms in the Security Agreement.
Section 1. Confirmation of Establishment and Maintenance of
Designated Accounts. The Bank hereby confirms and agrees that (i) the Bank has
established for the Pledgor and maintains the deposit account(s) listed in
Schedule 1 annexed hereto (such account(s), together with each such other
deposit account maintained by the Pledgor with the Bank collectively, the
"Designated Accounts" and each a "Designated Account"), (ii) each Designated
Account will be maintained in the manner set forth herein until termination of
this Control Agreement, (iii) the Bank is a "bank," as such term is defined in
the UCC, (iv) this Control Agreement is the valid and legally binding obligation
of the Bank and (v) each Designated Account is a "deposit account" as such term
is defined in Article 9 of the UCC.
Section 2. Control. The Bank shall comply with instructions
originated by the Administrative Agent without further consent of the Pledgor or
any person acting or purporting to act for the Pledgor being required,
including, without limitation, directing disposition of the funds in each
Designated Account. The Bank shall also comply with instructions directing the
disposition of funds in each Designated Account originated by the Pledgor or its
authorized representatives until such time as the Administrative Agent delivers
a Notice of Sole Control pursuant to Section 8(i) hereof to the Bank.
Section 3. Subordination of Lien; Waiver of Set-Off. The Bank hereby
agrees that any security interest in any Designated Account it now has or
subsequently obtains
shall be subordinate to the security interest of the Administrative Agent. The
funds deposited into any Designated Account will not be subject to deduction,
set-off, banker's lien, or any other right in favor of any person other than the
Secured Parties (except that the Bank may set off (i) all amounts due to the
Bank in respect of its customary fees and expenses for the routine maintenance
and operation of the Designated Accounts, including overdraft fees, and (ii) the
face amount of any checks or other items which have been credited to any
Designated Account but are subsequently returned unpaid because of uncollected
or insufficient funds).
Section 4. Choice of Law. Both this Control Agreement and the
Designated Account(s) shall be governed by the laws of the State of New York.
Regardless of any provision in any other agreement, for purposes of the UCC, New
York shall be deemed to be the Bank's jurisdiction and the Designated Account(s)
shall be governed by the law of the State of New York.
Section 5. Conflict with Other Agreements; Amendments. As of the
date hereof, there are no other agreements entered into between the Bank and the
Pledgor with respect to any Designated Account or any funds credited thereto
(other than standard and customary documentation with respect to the
establishment and maintenance of such Designated Accounts). The Bank and the
Pledgor will not enter into any other agreement with respect to any Designated
Account unless the Administrative Agent shall have received prior written notice
thereof. The Bank and the Pledgor have not and will not enter into any other
agreement with respect to control of the Designated Accounts or purporting to
limit or condition the obligation of the Bank to comply with any orders or
instructions with respect to any Designated Account as set forth in Section 2
hereof without the prior written consent of the Administrative Agent acting in
its sole discretion. In the event of any conflict with respect to control over
any Designated Account between this Control Agreement (or any portion hereof)
and any other agreement now existing or hereafter entered into, the terms of
this Control Agreement shall prevail. No amendment or modification of this
Control Agreement or waiver of any right hereunder shall be binding on any party
hereto unless it is in writing and is signed by all the parties hereto.
Section 6. Certain Agreements.
(i) The Bank has furnished to the Administrative Agent the most recent
account statement issued by the Bank with respect to each of the Designated
Accounts and the cash balances held therein. Each such statement accurately
reflects the assets held in such Designated Account as of the date thereof.
(ii) The Administrative Agent has delivered to the Bank a list, signed
by an authorized representative, of the officers of the Administrative Agent
authorized to give approvals or instructions under this Control Agreement (the
"Authorized Representatives") and the Bank shall be entitled to rely on
communications from any such Authorized Representatives until the earlier of the
termination of this Control
2
Agreement in accordance with the terms hereof and notification by an
Authorized Representative of a change in such list at any time.
Section 7. Notice of Adverse Claims. Except for the claims and
interest of the Bank under Section 3, the Secured Parties and of the Pledgor in
the Designated Account(s), the Bank on the date hereof does not know of any
claim to, or security interest in, any Designated Account or in any funds
credited thereto and does not know of any claim that any person other than the
Administrative Agent has been given control (within the meaning of Section 8-106
of the UCC) of any Designated Account or any such funds. If the Bank becomes
aware that any person is asserting any lien, encumbrance or adverse claim
(including any writ, garnishment, judgment, warrant of attachment, execution or
similar process or any claim of control) against any funds in any Designated
Account, the Bank will promptly notify the Administrative Agent and the Pledgor
thereof.
Section 8. Maintenance of Designated Accounts. In addition to the
obligations of the Bank in Section 2 hereof, the Bank agrees to maintain the
Designated Accounts as follows:
(i) Notice of Sole Control. If at any time the Administrative Agent
delivers to the Bank a notice of sole control in substantially the form
set forth in Exhibit A attached hereto (the "Notice of Sole Control") with
respect to any Designated Account, the Bank agrees that, after receipt of
such notice, it will take all instruction with respect to such Designated
Account solely from the Administrative Agent and cease taking instructions
from the Pledgor, including, without limitation, instructions for
distribution or transfer of any funds in any Designated Account.
(ii) Statements and Confirmations. The Bank will send copies of all
statements and other correspondence (excluding routine confirmations)
concerning any Designated Account simultaneously to the Pledgor and the
Administrative Agent at the address set forth in Section 10 hereof. The
Bank will promptly provide to the Administrative Agent, upon request
therefor from time to time and, in any event, as of the last business day
of each calendar month, a statement of the cash balance in each Designated
Account. The Bank shall not change the name or account number of any
Designated Account without the prior written consent of the Administrative
Agent.
Section 9. Successors; Assignment. The terms of this Control Agreement
shall be binding upon, and shall inure to the benefit of, the parties hereto and
their respective corporate successors and permitted assignees.
Section 10. Notices. Any notice, request or other communication
required or permitted to be given under this Control Agreement shall be in
writing and deemed to have been properly given when delivered in person, or when
sent by telecopy or other electronic means and electronic confirmation of error
free receipt is received or two (2) days after being sent by
3
certified or registered United States mail, return receipt requested, postage
prepaid, addressed to the party at the address set forth below.
Pledgor: [ ]
[Address]
Attention:
Telecopy:
Telephone:
with copy to:
[ ]
[Address]
Attention:
Telecopy:
Telephone:
Bank: [ ]
[ ]
[ ]
Attention:
Telecopy:
Telephone:
Administrative
Agent: Guggenheim Corporate Funding, LLC
[_____________________
______________________]
Attention:
Telecopy:
Telephone:
Any party may change its address for notices in the manner set forth
above.
Section 11. Termination. The rights and powers granted herein to the
Administrative Agent are powers coupled with an interest and will be affected
neither by the bankruptcy of the Pledgor nor by the lapse of time. The
obligations of the Bank hereunder shall continue in effect until (i) the
security interests of the Secured Parties with respect to the Designated
Account(s) have been terminated and an Authorized Representative has notified
the Bank of such termination in writing or (ii) thirty days following the Bank's
delivery of written notice of such termination to the Administrative Agent and
Pledgor.
4
Section 12. Severability. If any term or provision set forth in this
Agreement shall be invalid or unenforceable, the remainder of this Agreement,
other than those provisions held invalid or unenforceable, shall be construed in
all respects as if such invalid or unenforceable term or provision were omitted.
Section 13. Counterparts. This Control Agreement may be executed in
any number of counterparts, all of which shall constitute one and the same
instrument, and any party hereto may execute this Control Agreement by signing
and delivering one or more counterparts.
5
[ ]
By:
-------------------------------------
Name:
Title:
GUGGENHEIM CORPORATE FUNDING, LLC,
as Administrative Agent
By:
-------------------------------------
Name:
Title:
[ ],
as Bank
By:
-------------------------------------
Name:
Title:
S-1
SCHEDULE 1
Designated Account(s)
EXHIBIT A
[Letterhead of Guggenheim Corporate Funding, LLC]
[Date]
[Bank] [Address]
Attention: _______________
Re: Notice of Sole Control
Ladies and Gentlemen:
As referenced in Section 8(i) of the Control Agreement Concerning
Designated Accounts dated as of [ ], by and among [ ], us and you (the "Control
Agreement") (a copy of which is attached) we hereby give you notice of our sole
control over the Designated Account(s) referred to in the Control Agreement,
having account number(s): ___________________________________ (the "Specified
Designated Accounts"). You are hereby instructed not to accept any direction or
instructions with respect to the Specified Designated Accounts or any funds
credited thereto from any person other than the undersigned, unless otherwise
ordered by a court of competent jurisdiction.
You are instructed to deliver a copy of this notice by facsimile
transmission to [Pledgor]
Very truly yours,
Guggenheim Corporate Funding, LLC,
as Administrative Agent
By:
-------------------------------------
Name:
Title:
cc: [Pledgor]
2
EXHIBIT 6
[Form of]
COPYRIGHT SECURITY AGREEMENT
Copyright Security Agreement, dated as of [ ], by QUEST CHEROKEE,
LLC and QUEST RESOURCE CORPORATION, a Nevada corporation (collectively, the
"Borrowers") and each Guarantor listed on Schedule II hereto (collectively, the
"Original Guarantors," together with the Borrowers, the "Pledgors"), in favor of
GUGGENHEIM CORPORATE FUNDING, LLC, in its capacity as Administrative Agent
pursuant to the Third Lien Term Loan Agreement (in such capacity, the
"Administrative Agent").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Pledgors are party to that certain Amended and Restated
Security Agreement dated December [__], 2006 (the "Security Agreement") in favor
of the Administrative Agent pursuant to which the Pledgors are required to
execute and deliver this Copyright Security Agreement;
NOW, THEREFORE, in consideration of the premises and to induce the
Administrative Agent, for the benefit of the Secured Parties, to enter into the
Third Lien Term Loan Agreement, the Pledgors hereby agree with the
Administrative Agent as follows:
SECTION 1. Defined Terms. Unless otherwise defined herein, terms
defined in the Security Agreement and used herein have the meaning given to them
in the Security Agreement.
SECTION 2. Grant of Security Interest in Copyright Collateral. Each
Pledgor hereby pledges and grants to the Administrative Agent for the benefit of
the Secured Parties a lien on and security interest in and to all of its right,
title and interest in, to and under all the following Pledged Collateral of such
Pledgor:
(a) Copyrights of such Pledgor listed on Schedule I attached hereto;
and
(b) all Proceeds of any and all of the foregoing (other than
Excluded Property).
SECTION 3. Security Agreement. The security interest granted
pursuant to this Copyright Security Agreement is granted in conjunction with the
security interest granted to the Administrative Agent pursuant to the Security
Agreement and Pledgors hereby acknowledge and
affirm that the rights and remedies of the Administrative Agent with respect to
the security interest in the Copyrights made and granted hereby are more fully
set forth in the Security Agreement, the terms and provisions of which are
incorporated by reference herein as if fully set forth herein. In the event that
any provision of this Copyright Security Agreement is deemed to conflict with
the Security Agreement, the provisions of the Security Agreement shall control
unless the Administrative Agent shall otherwise determine.
SECTION 4. Termination. Upon the full performance of the
Indebtedness, the Administrative Agent shall execute, acknowledge, and deliver
to each Pledgor an instrument in writing in recordable form releasing the
collateral pledge, grant, assignment, lien and security interest in the
Copyrights under this Copyright Security Agreement.
[signature page follows]
2
IN WITNESS WHEREOF, each Pledgor has caused this Copyright Security
Agreement to be executed and delivered by its duly authorized officer as of the
date first set forth above.
Very truly yours,
QUEST CHEROKEE, LLC
By:
-------------------------------------
Name:
Title:
QUEST RESOURCE CORPORATION
By:
-------------------------------------
Name:
Title:
[ORIGINAL GUARANTORS](1)
By:
-------------------------------------
Name:
Title:
--------------------
(1) This document needs only to be executed by any Guarantor which owns a
pledged Copyright.
3
Accepted and Agreed:
GUGGENHEIM CORPORATE FUNDING, LLC,
as Administrative Agent
By:
-------------------------------
Name:
Title:
4
SCHEDULE I
to
COPYRIGHT SECURITY AGREEMENT
COPYRIGHT REGISTRATIONS AND COPYRIGHT APPLICATIONS
Copyright Registrations:
REGISTRATION
OWNER NUMBER TITLE
----- ------------ -----
Copyright Applications:
OWNER TITLE
----- -----
SCHEDULE II
to
COPYRIGHT SECURITY AGREEMENT
ORIGINAL GUARANTORS
NAME ADDRESS
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