EXECUTED VERSION
INTERCREDITOR AGREEMENT
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THIS INTERCREDITOR AGREEMENT (as amended, modified, supplemented, renewed,
restated or replaced in writing from time to time, the "Agreement") is made as
of November 14, 2005, by and among Quest Resource Corporation, a Nevada
corporation and Quest Cherokee, LLC, a Delaware limited liability company (the
"Borrowers"), STP Cherokee, Inc., Quest Oil & Gas Corporation, Quest Energy
Service, Inc., Ponderosa Gas Pipeline Company, Inc., Producers Service,
Incorporated, X-X Gas Gathering, LLC, Bluestem Pipeline, LLC and Quest Cherokee
Oilfield Service, LLC, (the "Guarantors"), Guggenheim Corporate Funding, LLC, a
Delaware limited liability company, in its capacity as administrative agent, (in
such capacity, the "Senior Administrative Agent") for itself and for each of the
lenders (the "Senior Secured Term Lenders") with respect to senior secured term
loans (the "Senior Secured Term Loans") and each of the lenders (the "Senior
Secured Revolving Lenders" and, with the Senior Secured Term Lenders, the
"Senior Secured Lenders") with respect to the senior secured revolving loans
(the "Senior Secured Revolving Loans") under the Senior Secured Credit
Agreement, as defined below (collectively, the "Senior Secured Creditor"),
Guggenheim Corporate Funding LLC, a Delaware limited liability company as
administrative agent (in such capacity, the "Second Lien Administrative Agent"),
for itself and for each of the lenders (the "Second Lien Lenders") that is or
becomes a party to the Second Lien Credit Agreement, as defined below
(collectively, the "Second Lien Creditor") and Guggenheim Corporate Funding,
LLC, a Delaware limited liability company, as collateral agent (in such
capacity, the "Collateral Agent" and collectively with the Senior Administrative
Agent and the Second Lien Administrative Agent, the "Agents") for the Senior
Secured Creditor, the Second Lien Creditor and the counterparties with respect
to Swap Agreements entered into by either Borrower or any of their Subsidiaries
("Swap Counterparties"). The Senior Secured Revolving Lenders, the Senior
Secured Term Lenders and the Second Lien Lenders are hereafter referred to as
the "Lenders." BP Corporation North America Inc. is also a party to this
Agreement, solely for purposes of Section 3 hereof. Capitalized terms not
defined in this Agreement have the meanings given them in the Senior Secured
Credit Agreement.
RECITALS
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WHEREAS, Senior Secured Creditor is making credit accommodations available
to Borrowers pursuant to the terms and provisions of a credit agreement, dated
as of the date hereof, by and between Senior Secured Creditor and Borrowers
(such agreement, as the same may be amended, supplemented, modified, extended,
renewed, restated and/or replaced as permitted hereunder, the "Senior Secured
Credit Agreement");
WHEREAS, Second Lien Creditor is making credit accommodations available to
Borrower pursuant to the terms and provisions of a Second Lien Term Loan
Agreement dated as of the date hereof (such agreement, as the same now exists
and may hereafter be amended, supplemented, modified, extended, renewed,
restated, and/or replaced as permitted hereunder, the "Second Lien Credit
Agreement") by and among the Second Lien Creditor and the Borrowers;
WHEREAS, as a condition for executing and entering into the Senior Secured
Credit Agreement, the Senior Secured Creditor has required that the Second Lien
Creditor's liens
against the Borrowers and the Guarantors be subordinated in favor of Senior
Secured Creditor's liens under the Senior Secured Credit Agreement and that the
Second Lien Creditor makes the arrangements set forth herein with respect to
right to payment and claims against the Borrowers and the Guarantors;
WHEREAS, the Senior Secured Revolving Lenders, the Senior Secured Term
Lenders, the Swap Counterparties and the Second Lien Lenders desire to set forth
certain provisions regarding their respective rights and the rights of the Swap
Counterparties in the Collateral and the application of proceeds thereof;
WHEREAS, the parties hereto are entering into this Agreement in order to
accommodate the Senior Secured Creditor's conditions and obtain the direct and
indirect benefits to the Borrowers and the Second Lien Creditor resulting from
the Borrowers' and Senior Secured Creditor's execution of the Senior Secured
Credit Agreement and other Senior Secured Loan Documents; and
WHEREAS, in order to facilitate and administer the respective rights of
the Lenders with respect to the Collateral, Senior Administrative Agent, on
behalf of the Senior Lenders, and Second Lien Administrative Agent on behalf of
the Second Lien Lenders, enter into this Agreement to appoint Guggenheim
Corporate Funding, LLC, as Collateral Agent under the Security Documents to hold
the Liens in trust for the benefit of the Senior Secured Creditor, the Second
Lien Creditor and the Swap Counterparties, subject to the terms and conditions
hereof.
AGREEMENT
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NOW, THEREFORE, in consideration of the above recitals and the provisions
set forth herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, agree as follows:
Section 1. Definitions. For purposes of this Agreement, (a) terms defined
in the introductory paragraphs and recitals to this Agreement have the meanings
set forth therein, (b) the following terms used herein shall have the following
meanings, (c) terms defined both in the introductory paragraphs and recitals and
in this Section 1 shall have the meanings set forth in this Section 1:
"Blockage Period" means a Non-Payment Blockage Period or a Payment
Blockage Period.
"Collateral" shall mean any and all property which now constitutes or
hereafter will constitute collateral or other security for payment of the
Senior Secured Indebtedness pursuant to the Senior Secured Loan Documents,
all amounts payable under the Swap Agreements and Second Lien Indebtedness
pursuant to the Second Lien Loan Documents.
"Collateral Agent - Related Persons" means Collateral Agent, together
with its Affiliates, and the officers, directors, employees, agents and
attorneys-in-fact of such Persons and Affiliates.
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"Enforcement Action" means, with respect to any Subordinated
Obligations: any enforcement of any right or remedy including any
enforcement or foreclosure of Liens granted by the Borrowers or any of
their Subsidiaries to secure any or all of such Subordinated Obligations,
any enforcement or foreclosure of Liens on any capital stock or other
equity interests in either of the Borrowers or any of their Subsidiaries
which may be granted by either of the Borrowers or its Subsidiaries or any
holder of equity in either of the Borrowers to secure any or all of such
Subordinated Obligations, or any other efforts to collect proceeds from
either of the Borrowers' or any of their Subsidiaries' assets or
properties (including proceeds of production) to satisfy the Subordinated
Obligations, including, without limitation, the commencement, or the
joining with any other creditor of either of the Borrowers or any
Subsidiary in the commencement of any Insolvency Proceeding against either
of the Borrowers or any of their Subsidiaries; provided, that none of the
following shall constitute an Enforcement Action: (a) acceleration of any
of the Subordinated Obligations following acceleration of any of the
Senior Indebtedness (provided that such acceleration of Senior
Indebtedness has not previously been rescinded), (b) acceleration of any
of the Senior Indebtedness following acceleration of any of the
Subordinated Obligations (provided that such acceleration of the
Subordinated Obligations has not previously been rescinded), (c) actions
by the Second Lien Creditor to obtain possession of or receive
Reorganization Securities, or (d) taking any action described above in
this proviso during the existence of any Insolvency Proceeding subject to
the jurisdiction of a court of competent authority.
"Enforcement Notice" means a written notice which states that a
default or an event of default under any provision of the Second Lien
Indebtedness has occurred and that Second Lien Creditor desires to take
enforcement action as a consequence thereof.
"Guarantors" shall mean each of the current subsidiaries and any
future Subsidiary of the Borrowers and any other Person which at any time
guarantees the Senior Secured Indebtedness and the Second Lien
Indebtedness whether now or in the future.
"Indemnified Liabilities" means any and all liabilities, obligations,
losses, damages, penalties, claims, demands, actions, judgments, suits,
costs, expenses and disbursements (including reasonable attorney's costs
and expenses) of any kind or nature whatsoever which may at any time be
imposed on, incurred by or asserted against any Collateral Agent-Related
Person in any way relating to or arising out of or in connection with (a)
the execution, delivery, enforcement, performance or administration of
this Agreement or the Security Documents, (b) the use or proposed use of
the proceeds of any Collateral, or (c) any actual or prospective claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory (including any
investigation of, preparation for, or defense of any pending or threatened
claim, investigation, litigation or proceeding).
"Insolvency Proceeding" shall mean (a) any voluntary or involuntary
case, action, or proceeding before any Governmental Authority having
jurisdiction over the applicable Person or its assets relating to
bankruptcy, reorganization, insolvency, liquidation, receivership,
dissolution, winding-up, or relief of debtors, or (b) any general
assignment
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for the benefit of creditors, composition, marshaling of assets for
creditors, or other similar arrangement in respect of its creditors
generally or any substantial portion of its creditors; in each case whether
undertaken under U.S. Federal, state, or foreign law.
"Lien" shall mean any interest in Property securing an obligation
owed to, or a claim by, a Person other than the owner of the Property,
whether such interest is based on the common law, statute or contract, and
whether such obligation or claim is fixed or contingent, and including but
not limited to (i) the lien or security interest arising from a mortgage,
encumbrance, pledge, security agreement, conditional sale or trust receipt
or a lease, consignment or bailment for security purposes or (ii)
production payments and the like payable out of Oil and Gas Properties.
The term "Lien" shall include reservations, exceptions, encroachments,
easements, rights of way, covenants, conditions, restrictions, leases and
other title exceptions and encumbrances affecting Property. For the
purposes of this Agreement, the Borrowers or any Subsidiary shall be
deemed to be the owner of any Property which it has acquired or holds
subject to a conditional sale agreement, or leases under a financing lease
or other arrangement pursuant to which title to the Property has been
retained by or vested in some other Person in a transaction intended to
create a financing.
"Lien Enforcement Action" shall mean any action, whether legal,
equitable, judicial, non-judicial, or otherwise, to enforce any
assignment, lien, security interest, or other encumbrance now or in the
future securing all or any indebtedness or other obligations, including,
without limitation, exercise of any assignments of production or the right
to receive proceeds thereof, division orders or letters in lieu of
division orders, any offset, repossession, foreclosure, public sale,
private sale, or retention of all or any part of an asset for any
indebtedness or other obligations.
"Loan Parties" shall mean, individually and collectively, Borrowers,
Guarantors and any other Person (other than the Senior Secured Creditor,
Swap Counterparties and the Second Lien Creditor) which is at any time a
party to any Senior Secured Loan Documents or Second Lien Loan Documents
or individually, a "Loan Party".
"Non-Payment Blockage Period" means, with respect to any Non-Payment
Default, the period from and including the date of receipt by the Second
Lien Lenders or the Second Lien Administrative Agent or other
representative designated pursuant to Section 16 hereof of a Non-Payment
Default Notice relating thereto until the first to occur of (a) the date
upon which the Senior Secured Indebtedness has been paid in full in cash,
all commitments of any holder of Senior Secured Indebtedness to make loans
or extensions of credit have terminated, and all letters of credit issued
by Senior Secured Creditor or any Affiliate thereof have expired,
terminated or been fully collateralized in cash, (b) the 180th day after
receipt of such Non-Payment Default Notice, (c) the date on which the
Non-Payment Default which is the subject of such Non-Payment Default
Notice has been waived in writing by the applicable holder or holders of
the Senior Secured Indebtedness or an agent or representative on their
behalf, cured, or ceased to exist, or (d) the date upon which the
Person(s) giving such Non-Payment Default Notice notify the Second Lien
Lenders or the Second Lien Administrative Agent or other
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representative designated pursuant to Section 16 hereof in writing of the
termination of such Non-Payment Blockage Period.
"Non-Payment Default" means the occurrence of any event under any
Senior Secured Loan Document, not constituting a Payment Default, which
gives the holder(s) of such Senior Secured Indebtedness, or an agent or
representative acting on behalf of such holder(s), the right to cause the
maturity of such Senior Secured Indebtedness to be accelerated immediately
without any further notice (except such notice as may be required to
effect such acceleration) or the expiration of any applicable grace
period.
"Non-Payment Default Notice" means a written notice from or on behalf
of the Senior Secured Indebtedness Representative that a Non-Payment
Default has occurred and is continuing which identifies such Non-Payment
Default and specifically designates such notice as a "Non-Payment Default
Notice."
"Payment Blockage Period" means, with respect to any Payment Default
or Senior Secured Indebtedness Acceleration, the period from and including
the date of receipt by the Second Lien Lenders or the Second Lien
Administrative Agent or other representative designated pursuant to
Section 16 hereof of a Payment Default Notice relating thereto until the
first to occur of (a) the date upon which the Senior Secured Indebtedness
has been paid in full in cash, all commitments of any holder of Senior
Secured Indebtedness to make loans or extensions of credit have
terminated, and all letters of credit issued by any holder of Senior
Secured Indebtedness have expired, terminated or been fully collateralized
in cash, (b) if such Payment Default Notice relates to a Payment Default,
the date on which the Payment Default which is the subject of such Payment
Default Notice has been waived in writing by the applicable holder or
holders of the Senior Secured Indebtedness or an agent or representative
on their behalf, cured or ceased to exist, or if such Payment Default
Notice relates to a Senior Secured Indebtedness Acceleration, the date on
which such acceleration is rescinded, annulled or ceases to exist, or (c)
the day upon which the Person(s) giving such Payment Default Notice notify
the Second Lien Lenders or the Administrative Agent or other
representative in writing of the termination of such Payment Blockage
Period.
"Payment Default" means a default by the Borrowers or any Guarantor
in the payment of any amount owing with respect to the Senior Secured
Indebtedness, whether with respect to principal, interest, premium, letter
of credit reimbursement obligations, commitment fees or letter of credit
fees or otherwise when the same becomes due and payable, whether at
maturity or at a date fixed for payment of an installment or prepayment or
by declaration or acceleration or otherwise.
"Payment Default Notice" means a written notice from or on behalf of
the Senior Secured Indebtedness Representative that either (i) a Payment
Default with respect to Senior Secured Indebtedness has occurred and is
continuing, or (ii) a Senior Secured Indebtedness Acceleration with
respect to such Senior Secured Indebtedness has occurred and is continuing
and specifically designates such notice as a "Payment Default Notice".
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"Person" means any natural person, corporation, limited liability
company, trust, joint venture, association, company, partnership, or other
entity.
"Proportionate Share" means at any time with respect to any Lender,
the amount equal to (a) the amount of the following owed to such Lender
and/or such Lender's Affiliates, divided by (b) without duplication the
sum of: (i) the principal amount of Senior Secured Indebtedness then
outstanding, including the L/C Exposure, plus (ii) the unused portion of
the Commitments of the Senior Secured Lenders, plus (iii) the principal
amount of the Second Lien Indebtedness then outstanding.
"Proceeds" shall have the meaning assigned to it under the UCC, and,
in any event, shall include, but not be limited to (a) any and all
proceeds of any insurance, indemnity, warranty, letter of credit or
guaranty or collateral security payable to any grantor from time to time
with respect to any of the Collateral, (b) any and all payments (in any
form whatsoever) made or due and payable to the owner of the Collateral
from time to time in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of all or any part of the Collateral
by any governmental body, authority, bureau or agency (or any Person
acting under color of governmental authority) and (c) any and all other
amounts from time to time paid or payable under or in connection with any
of the Collateral.
"Required Lenders" means (i) Lenders holding, in the aggregate,
Proportionate Shares exceeding 66?% and (ii) the Senior Administrative
Agent.
"Required Second Lien Lenders" means (i) Lenders holding, in the
aggregate, outstanding Second Lien Indebtedness representing more than
66?% of all outstanding Second Lien Indebtedness and (ii) the Second Lien
Administrative Agent.
"Required Senior Secured Revolving Lenders" means (i) Lenders holding
outstanding Senior Secured Revolving Loans plus unused Commitments to make
Senior Secured Revolving Loans that, in the aggregate, exceed 66?% of the
sum of all Commitments to make Senior Secured Revolving Loans and (ii) the
Senior Administrative Agent.
"Required Senior Secured Term Loan Lenders" means Lenders holding
outstanding Senior Secured Term Loans plus unused Commitments to make
Senior Secured Term Loans that, in the aggregate, exceed 66?% of the sum
of all Commitments to make Senior Secured Term Loans and (ii) the Senior
Administrative Agent.
"Reorganization Securities" means (a) debt securities that are issued
pursuant to an Insolvency Proceeding the payment of which is subordinate
and junior at least to the extent provided in this Agreement to the
payment of the Senior Secured Indebtedness outstanding at the time of the
issuance thereof (including any refinancing of Senior Secured Indebtedness
pursuant to an Insolvency Proceeding) and to the payment of all debt
securities issued in exchange for such Senior Secured Indebtedness in such
Insolvency Proceeding (whether such subordination is effected by the terms
of such securities, an order or decree issued in such Insolvency
Proceeding, by agreement of the
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Second Lien Lenders or otherwise), or (b) equity securities that are
issued pursuant to an Insolvency Proceeding; provided, in either case,
that such securities are authorized by an order or decree made by a court
of competent jurisdiction in such Insolvency Proceeding.
"Second Lien Credit Agreement" means that certain Second Lien Term
Loan Agreement dated as of November 14, 2005 among the Borrowers,
Guggenheim Corporate Funding, LLC, as administrative agent and the
financial institutions listed therein from time to time as Second Lien
Lenders, as from time to time renewed, extended, amended, supplemented, or
restated, and any agreements representing the refinancing, replacement, or
substitution in whole or in part of the loans made or incurred under such
Second Lien Credit Agreement.
"Second Lien Creditor" means, individually and collectively, Second
Lien Creditor and all other present or future holders of all or part of
the Second Lien Indebtedness, and their respective successors and assigns.
"Second Lien Indebtedness" shall mean and include all indebtedness,
obligations and liabilities of any Loan Party under the Second Lien Loan
Documents, including, without limitation, all principal and interest
(including post-petition interest accrued subsequent to, and interest that
would have accrued but for, the filing of any petition under any
bankruptcy, insolvency or similar law), and other amounts payable under
the Second Lien Loan Documents.
"Second Lien Lenders" means all Persons which now or hereafter
constitute a "Lender" under the Second Lien Credit Agreement and their
respective successors and assigns, and all Person refinancing any Senior
Indebtedness and their respective successors and assigns.
"Second Lien Loan Documents" means, collectively, (a) the Second Lien
Credit Agreement, (b) the Second Lien Notes, if requested, and any other
note, bond or other instrument evidencing Second Lien Indebtedness, (c)
all mortgages, security agreements, pledge agreements or financing
statements evidencing, creating or perfecting any Lien to secure the
Second Lien Credit Agreement and the Second Lien Notes, if requested, in
any way, (d) all guarantees thereof, (d) all other documents, instruments
or agreements relating to the Second Lien Credit Agreement or the Second
Lien Note, if requested, now or hereafter executed or delivered by and
among the Borrowers, any of their Subsidiaries, the Administrative Agent
or any Second Lien Lender, including without limitation each of the other
the "Second Lien Loan Documents", and (e) all renewals, extensions,
amendments, modifications or restatements of the foregoing.
"Second Lien Notes" means each promissory note requested by a Second
Lien Lender and issued under the Second Lien Credit Agreement evidencing
the term loans made pursuant to the term thereof, as from time to time
renewed, extended, amended, supplemented, or restated, and any agreements
representing the refinancing, replacement, or substitution in whole or in
part thereof.
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"Secured Parties" means the Senior Administrative Agent, the Second
Lien Administrative Agent, each Swap Counterparty, each of the Senior
Secured Lenders and each of the Second Lien Lenders.
"Security Documents" means all security agreements, pledge
agreements, deeds of trust, mortgages, financing statements, continuation
statements, extension agreements and other agreements or instruments now,
heretofore, or hereafter delivered by any Loan Party, Senior
Administrative Agent or the Second Lien Administrative Agent to secure the
Senior Secured Indebtedness, amounts payable under the Swap Agreements and
the Second Lien Indebtedness.
"Senior Secured Credit Agreement" means that certain Senior Credit
Agreement dated as of November 14, 2005 among the Borrowers, Guggenheim
Corporate Funding, LLC, as administrative agent and the financial
institutions listed therein from time to time as Senior Secured Lenders,
as from time to time renewed, extended, amended, supplemented, or
restated, and any agreements representing the refinancing, replacement, or
substitution in whole or in part of the loans and letter of credit
liabilities made or incurred under such Senior Secured Credit Agreement.
"Senior Secured Creditor" means, individually and collectively,
Senior Secured Creditor and all other present or future holders of all or
part of the Senior Secured Indebtedness, and their respective successors
and assigns.
"Senior Secured Indebtedness" means and includes (a) all principal
indebtedness for loans now outstanding or hereafter incurred, the undrawn
portion of all Commitments (as defined in the Senior Secured Credit
Agreement) and all letter of credit reimbursement obligations now existing
or hereafter arising, under the Senior Secured Credit Agreement, provided
that the aggregate outstanding principal amount of Senior Secured
Indebtedness under this clause (a) shall not exceed $100,000,000 at any
time, and provided further, that if the aggregate principal amount of
Senior Secured Indebtedness (constituting principal and letter of credit
reimbursement obligations) shall exceed $100,000,000, then the
subordination of the Second Lien Notes, if any, as contemplated by this
Agreement to the Senior Secured Indebtedness of $100,000,000 or less shall
not be impaired, (b) all amounts now or hereafter owing to any Swap
Counterparty, (c) all interest accruing on the Senior Secured Indebtedness
described in the preceding clauses (a) and (b), and (d) all other monetary
obligations (whether now outstanding or hereafter incurred) for which
either of the Borrowers or any of their Subsidiaries is responsible or
liable as obligor, guarantor or otherwise under or pursuant to any of the
Senior Secured Loan Documents including, without limitation, all fees,
penalties, yield protections, breakage costs, damages, indemnification
obligations, reimbursement obligations, and expenses (including, without
limitation, fees and expenses of counsel to the Senior Indebtedness
Representative and the Senior Secured Lenders) together with interest on
the foregoing to the extent provided for in the Senior Secured Loan
Documents. The interest described in the preceding clause (c) and the
premiums and penalties described in the preceding clause (d) include,
without limitation, all interest accruing after the commencement of any
Insolvency Proceeding under the
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terms of the Senior Secured Loan Documents whether or not such interest
constitutes an allowed claim in any such Insolvency Proceeding.
"Senior Secured Indebtedness Acceleration" means with respect to the
Senior Secured Indebtedness that the holder or holders of such Senior
Secured Indebtedness, or an agent or representative on behalf of such
holder or holders, have caused the maturity of such Senior Secured
Indebtedness to be accelerated.
"Senior Secured Indebtedness Default" means a Payment Default or a
Non-Payment Default.
"Senior Secured Indebtedness Representative" means (a) initially, the
Senior Administrative Agent or (b) such other Person selected by the
Majority Lenders (as such term is defined in the Senior Secured Credit
Agreement) to replace the Senior Administrative Agent or the then Senior
Indebtedness Representative.
"Senior Secured Lenders" means all Persons which now or hereafter
constitute "Lenders" under the Senior Secured Credit Agreement and their
respective successors and assigns, and all Persons refinancing any Senior
Secured Indebtedness and their respective successors and assigns.
"Senior Secured Loan Documents" means, collectively, (a) the Senior
Secured Credit Agreement and the Swap Agreements, (b) any note, bond or
other instrument evidencing Senior Secured Indebtedness, (c) all
mortgages, security agreements, pledge agreements or financing statements
evidencing, creating or perfecting any Lien to secure the Senior Secured
Indebtedness in any way, (d) all guarantees of the Senior Secured
Indebtedness, (d) all other documents, instruments or agreements relating
to the Senior Secured Indebtedness now or hereafter executed or delivered
by and among the Borrowers, any Subsidiary, the Senior Indebtedness
Representative or any Senior Secured Lender, including without limitation
each of the other the "Loan Documents" as such term is defined in the
Senior Secured Credit Agreement, and (e) all renewals, extensions,
amendments, modifications or restatements of the foregoing.
"Standstill Period" means the period beginning with the commencement
of a Blockage Period and ending on the earliest of (a) the date when the
Senior Secured Indebtedness Default giving rise to such Blockage Period
has been cured or waived in writing, (b) the date of the repayment in full
in cash of the Senior Secured Indebtedness, (c) the date that is 90 days
after the commencement of a Blockage Period, (d) the end of the
Non-Payment Blockage Period applicable to such Senior Secured Indebtedness
Default, (e) the date on which the Senior Secured Indebtedness shall have
been declared due and payable prior to its stated maturity or any holder
of Senior Secured Indebtedness commences proceedings to collect any Senior
Secured Indebtedness or realize upon any material part of the Collateral
for any Senior Secured Indebtedness and (f) the date upon which any
Insolvency Proceeding is commenced.
"Subordinated Obligations" means any and all indebtedness (whether
for principal, interest, fees, indemnifications or otherwise, but not
expenses) now or hereafter
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owing by the Borrowers or any of their Subsidiaries under or in connection
with the Second Lien Credit Agreement, the Second Lien Notes, if
requested, any mortgage, guaranty or other security instrument given in
connection therewith, and any letter agreement or other agreement
providing for payment of fees in connection therewith.
"Swap Agreement" means, at any date of determination, any agreement
entered into by either Borrower or any of their Subsidiaries that is in
full force and effect with respect to any swap, forward, future or
derivative transaction, collar or option or similar agreement, whether
exchange traded, "over-the-counter" or otherwise, involving, or settled by
reference to, one or more rates, currencies, commodities, equity or debt
instruments or securities, or economic, financial or pricing indices or
measures of economic, financial or pricing risk or value or any similar
transaction or any combination of these transactions; provided that no
phantom stock or similar plan providing for payments only on account of
services provided by current or former directors, officers, employees or
consultants of the Borrowers or their Subsidiaries shall be a Swap
Agreement.
"Swap Counterparty" means any party to a Swap Agreement other than
Borrower or any Subsidiary of Borrower and, initially shall be BP
Corporation North America Inc.
"UCC" shall mean the Uniform Commercial Code as in effect from time
to time in the State of New York.
Section 2. General. (a) Notwithstanding any provision of the Second Lien
Loan Documents, the liens and security interests securing the Second Lien
Indebtedness shall be subordinate and junior in all respects to all liens and
security interests securing all or any part of any of the Senior Secured
Indebtedness, to the extent and in the manner provided in this Agreement, and
each Second Lien Lender, by acceptance thereof whether upon original issuance,
transfer, assignment or exchange, agrees to be bound by the provisions of this
Agreement.
(b) Notwithstanding any provision of the Senior Secured Loan
Documents, the liens and security interests securing the Senior Secured Term
Loans shall be subordinate and junior to the liens and security interests
securing the Senior Secured Revolving Loans.
Section 3. Collateral Agent Appointment, Powers, Duties and Immunities.
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(a) Each of the Lenders and the Swap Counterparty that is a
signatory hereto hereby irrevocably appoints and authorizes Guggenheim Corporate
Funding, LLC, to act as Collateral Agent under the Security Documents on the
terms and conditions set forth in this Agreement and authorizes the Collateral
Agent to execute and/or accept from the Loan Parties the Security Documents, in
the name of and for the benefit of the Lenders, and Guggenheim Corporate
Funding, LLC, hereby accepts such appointment and shall have all of the rights
and obligations of the Collateral Agent hereunder and under the Security
Documents.
(b) Each Lender hereby authorizes Collateral Agent to do the
following in accordance with the terms of this Agreement and the Security
Documents:
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(i) to receive all documents and items to be furnished from time to
time to Collateral Agent, Senior Administrative Agent, Second Lien
Administrative Agent or any Lender under the Security Documents;
(ii) to distribute to Senior Administrative Agent and Second Lien
Administrative Agent information, requests, documents, and other items
received from the Loan Parties and other Persons under the Security
Documents;
(iii) to execute and deliver to Borrowers and other Persons
requests, demands, notices, approvals, consents, waivers, and other
communications received from Senior Administrative Agent and Second Lien
Administrative Agent in connection with the Security Documents and
herewith subject to the terms and conditions set forth therein and herein;
(iv) to receive on behalf of Senior Administrative Agent and Second
Lien Administrative Agent any payment of monies paid to Collateral Agent
in accordance with this Agreement and the Security Documents, and to
distribute to Senior Administrative Agent and/or Second Lien
Administrative Agent for the account of the applicable Lenders in
accordance with the terms of this Agreement such monies so received by
such Senior Administrative Agent and/or Second Lien Administrative Agent;
(v) to act on behalf of Lenders and the Swap Counterparties at the
direction of Senior Administrative Agent and/or Second Lien Administrative
Agent to maintain the perfection and priority of the Liens created under
the Security Documents;
(vi) subject to the terms and conditions of the Security Documents
and this Agreement, to exercise on behalf of Senior Administrative Agent
all Lien Enforcement Actions and, subject to the terms and conditions of
this Agreement to exercise on behalf of Second Lien Administrative Agent
all Lien Enforcement Actions permitted hereunder; and
(vii) subject to the terms and conditions of the Security Documents
and this Agreement, to take such other actions as may be directed by
Senior Administrative Agent and/or Second Lien Administrative Agent as are
reasonably incident to any powers granted to Collateral Agent hereunder.
(c) Notwithstanding any provision to the contrary contained
elsewhere herein or in any Senior Secured Loan Document, Swap Agreement or
Second Lien Loan Document, the Collateral Agent shall not have any duties or
responsibilities, except those expressly set forth herein, nor shall the
Collateral Agent have or be deemed to have any fiduciary relationship with any
Lender, Swap Counterparty or participant, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any Senior Secured Loan Document, Swap Agreement or Second Lien
Loan Document or otherwise exist against the Collateral Agent. Without limiting
the generality of the foregoing sentence, the use of the term "agent" herein
with reference to the Collateral Agent is not intended to connote any fiduciary
or other implied (or express) obligations arising under agency doctrine of any
applicable law. Instead, such term is used merely as a matter of market custom,
and is intended
11
to create or reflect only an administrative relationship between independent
contracting parties. The Lenders and the Swap Counterparties irrevocably
authorize the Collateral Agent, at its option and in its discretion, to release
any lien on or security interest in any Collateral (i) if the property subject
to such lien or security interest is permitted to be sold or otherwise
transferred pursuant to the Senior Secured Credit Agreement or such lien is
otherwise permitted to be released pursuant to the Senior Secured Loan Documents
and (ii) upon termination of and payment in full of all Senior Secured
Indebtedness and Second Lien Indebtedness (other than contingent indemnification
obligations).
(d) The Collateral Agent may execute any of its duties under this
Agreement or the Security Documents by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel and other
consultants or experts concerning all matters pertaining to such duties. The
Collateral Agent shall not be responsible for the negligence or misconduct of
any agent or attorney-in-fact that it selects in the absence of gross negligence
or willful misconduct.
(e) No Collateral Agent-Related Person shall (i) be liable for any
action taken or omitted to be taken by any of them under or in connection with
this Agreement or the Security Documents or the transactions contemplated hereby
and thereby including but not limited to those arising from its own negligence
(except for its own gross negligence or willful misconduct in connection with
its duties expressly set forth herein), or (ii) be responsible in any manner to
any Lender, Swap Counterparty or participant for any recital, statement,
representation or warranty made by the Loan Parties, or any officer thereof,
contained herein or in the Security Documents, or in any certificate, report,
statement or other document referred to or provided for in, or received by the
Collateral Agent under or in connection with, this Agreement or the Security
Documents, or the validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or the Security Documents, or for any failure of
the Loan Parties to perform their obligations hereunder or thereunder. No
Collateral Agent-Related Person shall be under any obligation to any Lender or
participant to ascertain or to inquire as to the observance or performance of
any of the agreements contained in, or conditions of, this Agreement, the Senior
Secured Loan Documents, the Second Lien Loan Documents, this Agreement, the
Security Documents, or to inspect the properties, books or records of the Loan
Parties.
(f) The Collateral Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing, communication, signature,
resolution, representation, notice, consent, certificate, affidavit, letter,
telegram, facsimile, telex or telephone message, electronic mail message,
statement or other document or conversation reasonably believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons, and upon advice and statements of legal counsel (including counsel
to the Loan Parties), independent accountants and other experts selected by the
Collateral Agent. The Collateral Agent shall be fully justified in failing or
refusing to take any action under the Security Documents unless it shall first
receive such advice or concurrence of Senior Administrative Agent as it deems
appropriate and, if it so requests, it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such action. The
Collateral Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement or the Security Documents in
accordance with a request or consent of Senior Administrative Agent and such
request and any
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action taken or failure to act pursuant thereto shall be binding upon all the
Lenders and Swap Counterparties.
(g) The Collateral Agent shall not be deemed to have knowledge or
notice of the occurrence of any "Default" or "Event of Default" under the Senior
Secured Credit Agreement, the Second Lien Credit Agreement, the Security
Documents or any Swap Agreement (as "Default" or "Event of Default" is defined
in any of such documents) or unless the Collateral Agent shall have received
written notice from the Senior Administrative Agent or Second Lien
Administrative Agent, as applicable, or a Borrower, describing such "Default" or
"Event of Default" and stating that such notice is a "notice of default." The
Collateral Agent will notify Senior Administrative Agent and the Second Lien
Administrative Agent of its receipt of any such notice. The Collateral Agent
shall take such action with respect to the Collateral after any such "Default"
or "Event of Default" as may be directed by Senior Administrative Agent in
accordance with the terms hereof until the Senior Secured Indebtedness has been
paid in full in cash and all Commitments under the Senior Secured Credit
Agreement have been terminated and thereafter as directed by the Second Lien
Administrative Agent in accordance with the terms of hereof. Unless and until
the Collateral Agent has received any such direction, the Collateral Agent shall
not be obligated to take such action with respect to such "Default" or "Event of
Default". Furthermore, the Collateral Agent may (but shall not be obligated to)
take action hereunder to the extent necessary to maintain insurance on the
Collateral or otherwise protect the Collateral from damage or destruction.
(h) Each Lender acknowledges that no Collateral Agent-Related Person
has made any representation or warranty to it, and that no act by the Collateral
Agent hereafter taken, including any consent to and acceptance of any assignment
or review of the affairs of the Loan Parties, shall be deemed to constitute any
representation or warranty by any Collateral Agent-Related Person to any Lender
as to any matter, including whether Collateral Agent-Related Persons have
disclosed material information in their possession. Each Lender and Swap
Counterparty represents to the Collateral Agent that it has, independently and
without reliance upon any Collateral Agent-Related Person and based on such
documents and information as it has deemed appropriate, made its own appraisal
of and investigation into the business, prospects, operations, property,
financial and other condition and creditworthiness of the Loan Parties, and all
applicable bank or other regulatory laws relating to the transactions
contemplated hereby, and made its own decision to enter into the Senior Secured
Loan Documents or Second Lien Loan Documents, as applicable, and this Agreement
and to extend credit to Borrowers under the applicable credit agreement. Each
Lender and each Swap Counterparty also represents that it will, independently
and without reliance upon any Collateral Agent-Related Person and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit analysis, appraisals and decisions in taking or not taking
action under this Agreement and the Senior Secured Loan Documents, Swap
Agreement or Second Lien Loan Documents, as applicable, and to make such
investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition and
creditworthiness of the Loan Parties. Except for notices, reports and other
documents expressly required to be furnished to Senior Administrative Agent or
Second Lien Administrative Agent by the Collateral Agent herein, the Collateral
Agent shall not have any duty or responsibility to provide any Lender or Swap
Counterparty with any credit or other information concerning the business,
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prospects, operations, property, financial and other condition or
creditworthiness of any of the Loan Parties which may come into the possession
of any Collateral Agent-Related Person.
(i) The Lenders shall indemnify upon demand each Collateral
Agent-Related Person (to the extent not reimbursed by or on behalf of the Loan
Parties and without limiting the obligation of the Loan Parties to do so), to
the extent of each Lender's Proportionate Share, and hold harmless each
Collateral Agent-Related Person from and against any and all Indemnified
Liabilities incurred by it, including but not limited to those arising from its
own negligence; provided, however, that no Lender shall be liable for the
payment to any Collateral Agent-Related Person of any portion of such
Indemnified Liabilities to the extent determined in a final, nonappealable
judgment by a court of competent jurisdiction to have resulted from such
Collateral Agent-Related Person's own gross negligence or willful misconduct;
provided further, however, that no action taken in accordance with the
directions of Senior Administrative Agent or Second Lien Administrative Agent
shall be deemed to constitute gross negligence or willful misconduct for
purposes of this Section 3(i). Without limitation of the foregoing, each Lender
shall reimburse the Collateral Agent upon demand for its ratable share of any
costs or out-of-pocket expenses (including reasonable attorney's fees and
expenses) incurred by the Collateral Agent in connection with the preparation,
execution, delivery, administration, modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise) of, or legal
advice in respect of rights or responsibilities under, this Agreement or the
Security Documents to the extent that the Collateral Agent is not reimbursed for
such expenses by or on behalf of the Loan Parties. The undertaking in this
Section 3(i) shall survive termination of the Senior Secured Credit Agreement
and the Second Lien Credit Agreement.
(j) Guggenheim Corporate Funding, LLC, and its Affiliates may make
loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in, enter into hedging and derivative agreements, and
generally engage in any kind of banking, trust, financial advisory, underwriting
or other business with the Loan Parties as though Guggenheim Corporate Funding,
LLC were not the Collateral Agent hereunder and without notice to or consent of
the Lenders. The Lenders acknowledge that, pursuant to such activities,
Guggenheim Corporate Funding, LLC or its Affiliates may receive information
regarding the Loan Parties (including information that may be subject to
confidentiality obligations in favor of the Loan Parties) and acknowledge that
the Collateral Agent shall be under no obligation to provide such information to
them. With respect to the Collateral, Guggenheim Corporate Funding, LLC shall
have the same rights and powers under this Agreement and the Security Documents
as any other Lender and may exercise such rights and powers as though it were
not the Collateral Agent, and the terms "Lender" and "Lenders" include
Guggenheim Corporate Funding, LLC in its individual capacity.
(k) Successor Collateral Agent.
(i) The Collateral Agent may resign as Collateral Agent upon not
less than 20 days' notice to the Lenders, with such resignation to take
effect upon the acceptance by a successor Collateral Agent of its
appointment as the Collateral Agent hereunder. In addition in the event
the Collateral Agent is no longer a Lender or the Senior Administrative
Agent, the Required Lenders may remove the Collateral Agent by giving
written notice thereof to the Collateral Agent at least 20 days' prior to
the effective date of
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such removal. Upon any such resignation or removal,
the Required Lenders shall have the right to appoint a successor
Collateral Agent. If no successor Collateral Agent shall have been so
appointed and shall have accepted such appointment in writing within 20
days after the retiring Collateral Agent's giving of notice of resignation
or its removal, then the retiring Collateral Agent may, on behalf of the
Lenders, appoint a successor Collateral Agent which meets the eligibility
requirements of paragraph (k)(iii) below. Upon acceptance of appointment
as Collateral Agent, such successor shall thereupon and forthwith succeed
to and become vested with all the rights, powers and privileges,
immunities and duties of the retiring Collateral Agent, the term
"Collateral Agent" shall mean such successor Collateral Agent, and the
retiring Collateral Agent, upon the transferring and setting over to such
successor Collateral Agent all rights, moneys and other collateral held by
it in its capacity as Collateral Agent, shall be discharged from its
duties and obligations hereunder. After any retiring Collateral Agent's
resignation or removal hereunder as Collateral Agent, the provisions of
this paragraph (k)(i) shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Collateral Agent under this
Agreement.
(ii) Any successor Collateral Agent appointed hereunder shall
execute, acknowledge and deliver to Borrowers, the Senior Administrative
Agent, the Senior Secured Lenders, the Second Lien Administrative Agent,
the Second Lien Lenders and the predecessor Collateral Agent an instrument
accepting such appointment, and thereupon such successor Collateral Agent,
without any further act, deed, conveyance or transfer, shall become vested
with the title to the Collateral, and with all the rights, powers, duties
and obligations of the predecessor Collateral Agent in the trust
hereunder, with like effect as if originally named as Collateral Agent
herein. Upon the request of any such successor Collateral Agent, Borrowers
and the predecessor Collateral Agent shall promptly execute and deliver
such instruments of conveyance and further assurance reflecting terms
consistent with the terms of the Senior Secured Loan Documents and the
Second Lien Loan Documents then in effect and do such other things as may
reasonably be required for more fully and certainly vesting and confirming
in such successor Collateral Agent its interest in the Collateral and all
such rights, powers, duties and obligations of the predecessor Collateral
Agent hereunder, and the predecessor Collateral Agent shall also promptly
assign and deliver to the successor Collateral Agent any Collateral
subject to the lien and security interest of this Agreement which may then
be in its possession.
(iii) Any successor Collateral Agent appointed by a retiring
Collateral Agent pursuant to paragraph (k)(i) above shall be a state or
national bank or trust company in good standing, organized under the laws
of the United States of America or of any state, having a capital, surplus
and undivided profits aggregating at least $500,000,000 and whose
certificates of deposit have a Satisfactory Rating, if there be such a
bank or trust company willing and able to accept the duties hereunder upon
reasonable and customary terms. As used in this paragraph (k)(iii), the
term "Satisfactory Rating" means, with respect to any Person, that such
Person and its bank deposits or other short term credit obligations have
both a short-term bank deposit rating of Prime-2 or better from Xxxxx'x
Investors Service, Inc. and a short term credit obligation rating of A-3
or better from Standard and Poor's Rating Service, a division of The
XxXxxx-Xxxx Companies.
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(iv) Any corporation or limited liability company into which the
Collateral Agent may be merged or with which it may be consolidated, or
any corporation or limited liability company resulting from any merger or
consolidation to which the Collateral Agent shall be a party, shall be the
successor of the Collateral Agent hereunder without the execution or
filing of any paper or any further act on the part of any of the parties
hereto, anything to the contrary contained herein notwithstanding.
(l) Whenever Collateral Agent in good faith determines that it is
uncertain about how to distribute any funds which it has received, or whenever
Collateral Agent in good faith determines that there is any dispute among
Lenders and/or Swap Counterparties about how such funds should be distributed,
Collateral Agent may choose to defer distribution of the funds which are the
subject of such uncertainty or dispute. If Collateral Agent in good faith
believes that the uncertainty or dispute will not be promptly resolved, or if
Collateral Agent is otherwise required to invest funds pending distribution to
Lenders, Collateral Agent shall invest such funds pending distribution; all
interest on any such investment shall be distributed upon the distribution of
such investment and in the same proportion and to the same Persons as such
investment. All moneys received by Collateral Agent for distribution to Lenders
and Swap Counterparties shall be held by Collateral Agent pending such
distribution solely as Collateral Agent for such Lenders and Swap
Counterparties, and Collateral Agent shall have no equitable title to any
portion thereof except in its separate capacity as a Lender.
(m) The Second Lien Administrative Agent and each Second Lien Lender
hereby waives and agrees not to assert: (i) any right, now or hereafter
existing, to require Collateral Agent or the Senior Secured Creditor to proceed
against or exhaust any Collateral at any time securing the Senior Secured
Indebtedness or amounts payable under any Swap Agreement, or to marshal any
assets in favor of Second Lien Administrative Agent, any Second Lien Lender or
any other holder of Second Lien Indebtedness or to receive notice that the
Collateral Agent has elected to, or is pursuing, remedies against the
Collateral; and (ii) any notice of the incurrence of Senior Secured
Indebtedness, it being understood that Senior Secured Lenders may, in reliance
upon these subordination provisions, make advances under the Senior Secured Loan
Documents, or any other agreement, document, or instrument now or hereafter
relating to the Senior Secured Indebtedness (in compliance with the terms of
this Agreement), without notice to or authorization of Second Lien
Administrative Agent.
(n) For the limited purpose of perfecting the security interests of
the Senior Secured Creditor and the Second Lien Creditor in those types or items
of Collateral in which a security interest may only be perfected by possession
or control, each of the Senior Administrative Agent and the Second Lien
Administrative Agent hereby appoints the Collateral Agent as its agent and
bailee for the limited purpose of possessing or controlling on its behalf any
such Collateral that is in or may come into the possession of the Collateral
Agent from time to time, and the Collateral Agent agrees to act as the agent and
bailee for such limited purpose of perfecting the Senior Administrative Agent's
and the Second Lien Administrative Agent's security interests by possession or
control through an agent or bailee.
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Section 4. Collateral Accounts.
-------------------
(a) The Collateral Agent shall maintain one or more accounts (the
"Collateral Accounts") into which shall be deposited all amounts received by it
in its capacity as the Collateral Agent, in respect of any Senior Secured Loan
Document or Second Lien Loan Document, including all proceeds of Collateral. The
Collateral Accounts referred to in the preceding sentence shall be established
and maintained for the benefit of all Secured Parties. The Collateral Agent, for
the benefit of the Agents, the Lenders and the Swap Counterparties, shall have
exclusive dominion and control over the Collateral Accounts.
(b) Prior to the delivery of Notice of Default, any amounts
deposited in the Collateral Accounts shall be disbursed to the Borrowers. After
the delivery of a Notice of Default, all amounts deposited in the Collateral
Accounts shall be disbursed only as provided in Section 5 hereof.
Section 5. Application of Proceeds. All amounts deposited in the Collateral
Accounts shall be applied in the following order of priority:
(i) first, to pay obligations in respect of any expense
reimbursements, indemnities or other liabilities then due to any Agent
until such obligations have been paid in full;
(ii) second, to pay obligations in respect of any fees then due to
any Agent or the Issuing Bank until such obligations have been paid in
full;
(iii) third, to pay interest due and unpaid in respect of the Senior
Secured Revolving Loans and the reimbursement obligations with respect to
any letter of credit until such interest has been paid in full; (iv)
fourth, to pay (A) all amounts due and payable pursuant to the terms of
any Swap Agreement, and (B) the principal outstanding on the amounts
payable under Senior Secured Revolving Loans until such amounts payable
under Swap Agreements and Senior Secured Revolving Loans have been paid in
full;
(v) fifth, to cash collateralize the LC Exposure under of the Senior
Secured Credit Agreement;
(vi) sixth, to pay interest due and unpaid in respect of the Senior
Secured Term Loans until such interest has been paid in full;
(vii) seventh, to pay the principal outstanding on the Senior
Secured Term Loans until the Senior Secured Term Loans have been paid in
full;
(viii) eighth, to pay interest due and unpaid in respect of the
Second Lien Indebtedness until such interest has been paid in full;
(ix) ninth, to pay the principal outstanding on the Second Lien
Indebtedness until the Second Lien Indebtedness has been paid in full;
17
(x) tenth, to the Borrowers;
provided, however, if sufficient funds are not available to fund all payments to
be made in respect of any of the obligations described in any one of the
foregoing clauses (i) through (ix), the available funds being applied with
respect to any such obligations referred to in such clause shall be allocated to
the payment of such obligations ratably, based on the proportion of each
Agent's, each Lender's, each Swap Counterparty's or the Issuing Bank's interest
in the aggregate outstanding obligations described in such clause.
Section 6. Payment Default or Acceleration. Except under circumstances
when the terms of Section 9 of this Agreement are applicable, if (a) a Payment
Default or Senior Indebtedness Acceleration shall have occurred and be
continuing and (b) the Second Lien Lenders or the Second Lien Administrative
Agent or other representative shall have received a Payment Default Notice, then
neither of the Borrowers nor any Subsidiary may make, and no Second Lien Lender
shall accept, receive or collect, any direct or indirect payment or distribution
of any kind or character (in cash, securities, other Property, by setoff, or
otherwise other than Reorganization Securities) of any properties or assets of
the Borrowers or any of their Subsidiaries on account of the Subordinated
Obligations during the Payment Blockage Period; provided, however, that in the
case of any payment on or in respect of any Subordinated Obligation that would
(in the absence of any such Payment Default Notice) have been due and payable on
any date (a "Scheduled Payment Date") during such Payment Blockage Period
pursuant to the terms of the Second Lien Credit Agreement or the Second Lien
Notes, if requested, as in effect on the date hereof or as amended consistent
with the provisions of Section 15 of this Agreement, the provisions of this
Section 6 shall not prevent the making and acceptance of such payment (a
"Scheduled Payment"), together with any additional default interest as is due on
Second Lien Credit Agreement or the Second Lien Notes, on or after the date
immediately following the termination of such Payment Blockage Period. In the
event that, notwithstanding the foregoing, either of the Borrowers or any of
their Subsidiaries shall make any payment or distribution to any Second Lien
Lender prohibited by the foregoing provisions of this Section 6, then and in
such event such payment or distribution shall be held in trust for the benefit
of and immediately shall be paid over to the Collateral Agent for application as
set forth in Section 5 of this Agreement. Any Payment Default Notice shall be
deemed received by the Second Lien Lenders upon the date of actual receipt by
the Second Lien Lenders or the Second Lien Administrative Agent or other
representative designated pursuant to Section 16 hereof of such Payment Default
Notice in writing.
Section 7. Non-Payment Default. Except under circumstances when the terms
of this Section 6 or Section 9 of this Agreement are applicable, if (a) a
Non-Payment Default shall have occurred and be continuing, (b) the Second Lien
Lenders or the Second Lien Administrative Agent or other representative
designated pursuant to Section 16 hereof shall have received a Non-Payment
Default Notice, and (c) no Non-Payment Default Notice shall have been given
within the 360 day period immediately preceding the giving of such Non-Payment
Default Notice, then neither of the Borrowers nor any Subsidiary may make, and
no Second Lien Lender shall accept, receive or collect, any direct or indirect
payment or distribution of any kind or character (in cash, securities, other
Property, by setoff, or otherwise other than Reorganization Securities) of any
properties or assets of either of the Borrowers or any Subsidiary on account of
the Subordinated Obligations during the Non-Payment Blockage Period; provided,
however, that
18
in the case of any Scheduled Payment on or in respect of any Subordinated
Obligation that would (in the absence of any such Non-Payment Default Notice)
have been due and payable on any Scheduled Payment Date during such Non-Payment
Blockage Period pursuant to the terms of the Second Lien Loan Documents as in
effect on the date hereof or as amended consistent with the requirements of
Section 15 of this Agreement, the provisions of this Section 7 shall not prevent
the making and acceptance of such Scheduled Payment, together with any
additional default interest as is due on the Second Lien Notes, if any, on or
after the date immediately following the termination of such Non-Payment
Blockage Period. In the event that, notwithstanding the foregoing, either of the
Borrowers or any Subsidiary shall make any payment or distribution to any Second
Lien Lender prohibited by the foregoing provisions of this Section 7, then and
in such event such payment or distribution shall be held in trust for the
benefit of and immediately shall be paid over to the Collateral Agent for
application pursuant to Section 5 of this Agreement. Any Non-Payment Default
Notice shall be deemed received by the Second Lien Lenders upon the date of
actual receipt by the Second Lien Lenders or the Second Lien Administrative
Agent or other representative of such Non-Payment Default Notice in writing.
Section 8. Standstill. At any time that the Second Lien Lenders are not
permitted to receive payments on the Subordinated Obligations pursuant to either
Section 6 or 7 of this Agreement, the Second Lien Lenders and the Second Lien
Administrative Agent or other representative of the Second Lien Lenders
designated hereunder will not commence any Enforcement Action relative to either
of the Borrowers or any of their Subsidiaries during the Standstill Period. Upon
the termination of the Standstill Period, the Second Lien Lenders may exercise
all rights or remedies they may have in law or equity; provided, however, that
if a Standstill Period terminates pursuant to clause (e) of the definition
thereof, no Second Lien Lender and no agent or representative thereof shall
exercise any remedies against, or attempt to foreclose upon, garnish, sequester
or execute upon, any Property known to it as constituting Collateral (other than
to file or record any judgment Liens it may have obtained against such
Collateral) during the period that such Standstill Period would have been in
effect but for termination pursuant to clause (e) of the definition of
"Standstill Period;" provided further, that the Payment Blockage Period or the
Non-Payment Blockage Period, as the case may be, if not also terminated, shall
continue for its full period notwithstanding the termination of the Standstill
Period. Notwithstanding the foregoing, no Standstill Period may be commenced
while any other Standstill Period exists or within 180 days following the
termination of any prior Standstill Period (provided that this sentence shall
not relieve any Second Lien Lender of its obligation to provide notice under
Section 12 of this Agreement).
Section 9. Insolvency; Bankruptcy; Etc. In the event of the institution of
any Insolvency Proceeding relative to either of the Borrowers or any of their
Subsidiaries, then:
(a) The holders of the Senior Secured Indebtedness shall be entitled
to receive payment in full in cash of the Senior Indebtedness and cash
collateral in respect of all outstanding letters of credit and Swap
Counterparties shall be entitled to receive all amounts payable under the Swap
Agreements, in each case as provided pursuant to Section 5 of this Agreement,
before the Second Lien Lenders are entitled to receive any direct or indirect
payment or distribution of any kind or character, whether in cash, Property or
securities (other than Reorganization Securities) on account of the Subordinated
Obligations.
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(b) Any direct or indirect payment or distribution of any kind or
character, whether in cash, Property or securities, by setoff or otherwise,
which may be payable or deliverable in such proceedings in respect of the
Subordinated Obligations but for the provisions of this Agreement shall be paid
or delivered by the Person making such payment or distribution, whether either
of the Borrowers, any Subsidiary of the Borrowers, a trustee in bankruptcy, a
receiver, a liquidating trustee, or otherwise, to the Collateral Agent for the
account of the holders of Senior Secured Indebtedness and/or the Swap
Counterparties, to the extent necessary to make payment in full in cash of all
Senior Secured Indebtedness remaining unpaid, to fully cash collateralize all
outstanding letters of credit, and to make payment of amounts payable under the
Swap Agreements; provided, however, that no such delivery of any Reorganization
Securities shall be made to any holders of the Senior Secured Indebtedness or to
any Swap Counterparty. In the event that, notwithstanding the foregoing
provisions of this Section 9, the Senior Secured Creditor or the Second Lien
Creditor shall have received any such payment or distribution of any kind or
character, whether in cash, Property or securities (other than Reorganization
Securities), by setoff or otherwise, then and in such event such payment or
distribution shall be held in trust for the benefit of, and immediately shall be
paid over to, the Collateral Agent for application to the payment of all Senior
Secured Indebtedness, amounts payable under Swap Agreements and Second Lien
Indebtedness remaining unpaid, pursuant to the terms of Section 5 of this
Agreement.
(c) If no proof of claim is filed in any Insolvency Proceeding with
respect to any Subordinated Obligations by the tenth day prior to the bar date
for any such proof of claim, the Collateral Agent may, after notice to the
Second Lien Lenders or the Second Lien Administrative Agent or other
representative designated pursuant to Section 16 hereof, file such a proof of
claim on behalf of the Second Lien Lenders, and each Second Lien Lender hereby
irrevocably appoints the Collateral Agent as its agent and attorney-in-fact for
such limited purpose; provided, that the foregoing shall not confer to the
holder of any Senior Secured Indebtedness the right to vote on behalf of the
Second Lien Lenders in any Insolvency Proceedings.
Section 10. No Impairment. No right of any present or future holder of
Senior Secured Indebtedness to enforce subordination as herein provided shall at
any time in any way be prejudiced or impaired by any act or failure to act on
the part of either of the Borrowers or any Subsidiary or by any non-compliance
by either of the Borrowers or any Subsidiary with the terms, provisions, and
covenants of this Agreement, the Second Lien Credit Agreement or the Second Lien
Notes, if any, regardless of any knowledge thereof any such Second Lien Lender
may have or be otherwise charged with. The provisions of this Agreement shall be
enforceable directly by the Collateral Agent, by any present or future holder of
the Senior Secured Indebtedness and/or the Senior Indebtedness Representative.
Section 11. Rights of Creditors; Subrogation. The provisions of this
Agreement are for the purpose of defining the relative rights of holders of the
Senior Secured Indebtedness, any Swap Counterparty, holders of Senior Secured
Term Indebtedness and the Second Lien Lenders, and nothing herein shall impair,
as between the Borrowers and the Guarantors and the Second Lien Lenders, the
obligation of the Borrowers and the Guarantors, which are unconditional and
absolute, to pay to the Second Lien Lenders the principal of the Second Lien
Indebtedness and interest thereon in accordance with their terms and the
provisions thereof, nor shall anything
20
herein, except as otherwise provided in Section 8 of this Agreement, prevent the
Second Lien Lenders from exercising all remedies otherwise permitted by
applicable law or hereunder upon default under the Second Lien Credit Agreement
or under the Second Lien Notes, if requested, (including the right to demand
payment and xxx for performance thereof and of the Second Lien Notes, if
requested, and to accelerate the maturity thereof as provided by the terms of
the Second Lien Credit Agreement or the Second Lien Notes, if requested),
subject to the rights of holders of the Senior Secured Indebtedness and Swap
Counterparties under this Agreement. Upon payment in full of the Senior Secured
Indebtedness in cash and termination of the commitments of any holder of the
Senior Secured Indebtedness to make loans or extensions of credit, expiration or
termination of all letters of credit issued under the Senior Secured Credit
Agreement and payment of any amounts payable under the Swap Agreements, the
Second Lien Lenders shall, to the extent of any payments or distributions paid
or delivered to the Collateral Agent for payment to holders of the Senior
Secured Indebtedness or otherwise applied to the Senior Secured Indebtedness
pursuant to the provisions of this Agreement, be subrogated to the rights of the
holders of the Senior Secured Indebtedness to receive payments or distributions
of assets of the Borrowers or any Guarantor made on Senior Secured Indebtedness
(and any security therefor) until the Subordinated Obligations shall be paid in
full (and, for this purpose, no such payments or distributions paid or delivered
to the Collateral Agent for payment to the holders of the Senior Secured
Indebtedness and the Swap Counterparties or otherwise applied to the Senior
Secured Indebtedness and any amounts payable under the Swap Agreements shall be
deemed to have discharged the Subordinated Obligations), and, for the purposes
of such subrogation, no payments to the Collateral Agent for payment to the
holders of the Senior Secured Indebtedness and Swap Counterparties of any cash,
assets, stock, or obligations to which the Second Lien Lenders would be entitled
except for the provisions of this Agreement shall, as between the Borrowers and
the Guarantors, any of their respective creditors (other than the holders of the
Senior Secured Indebtedness and Swap Counterparties), and the Second Lien
Lenders, be deemed to be a payment by either of the Borrowers or any Guarantor
to or on account of Subordinated Obligations. The fact that failure to make any
payment on account of the Subordinated Obligations is caused by reason of the
operation of any provision of this Agreement shall not be construed as
preventing the occurrence of an Event of Default.
Section 12. Notice of Acceleration, Enforcement Action.
------------------------------------------
(a) Each Second Lien Lender agrees that in the event any event of
default under the Second Lien Credit Agreement (or the Second Lien Notes, if
any) (a "Second Lien Event of Default") shall occur, and as a result thereof,
any Second Lien Lender or the Second Lien Administrative Agent or other
representative of such Second Lien Lender accelerates maturity of the Second
Lien Notes, if any, then such Second Lien Lender or the Second Lien
Administrative Agent or other representative shall give prompt (and in any event
within three (3) Business Days) notice thereof in writing to the holders of the
Senior Secured Indebtedness or the Senior Secured Indebtedness Representative.
Neither of the Borrowers nor any Subsidiary may pay any Second Lien Notes until
ten (10) Business Days after the Senior Secured Lenders or Senior Secured
Indebtedness Representative, the Second Lien Administrative Agent and the
Collateral Agent receives the notice described above and, after that ten (10)
Business Day period, may pay any Second Lien Notes, and the Second Lien Lenders
may receive or collect such payment, only if the provisions of this Agreement do
not prohibit such payment at that time.
21
(b) Each Second Lien Lender agrees that in the event any Second Lien
Event of Default shall occur, and as a result thereof, any Second Lien Lender or
the Second Lien Administrative Agent or other representative of such Second Lien
Lender intends to commence any Enforcement Action, then such Second Lien Lender
or the Second Lien Administrative Agent or other representative shall first
deliver notice thereof in writing to the Senior Secured Indebtedness
Representative and the Collateral Agent both (i) not less than ten (10) days
prior to taking any such Enforcement Action, and (ii) one (1) Business Day after
such Enforcement Action is taken.
Section 13. Reinstatement. The provisions of this Agreement shall remain
in force and effect until the indefeasible payment in full in cash of all Senior
Secured Indebtedness and all amounts payable under any Swap Agreement and the
termination of all commitments of any holder of the Senior Secured Indebtedness
to make loans or extensions of credit, and expiration or termination of all
letters of credit issued by any holder of the Senior Secured Indebtedness. To
the extent any payment of or distribution in respect of the Senior Secured
Indebtedness or any amount payable under any Swap Agreement (whether by or on
behalf of either of the Borrowers or any of their Subsidiaries, as proceeds of
security or enforcement of any right of set off or otherwise) is declared to be
fraudulent or preferential, set aside or required to be paid to the Borrowers or
any of their Subsidiaries or any receiver, trustee in bankruptcy, liquidating
trustee, agent or other similar person under any bankruptcy, insolvency,
receivership, fraudulent conveyance or similar law, then if such payment or
distribution is recovered by, or paid over to, the Borrower or any Subsidiary or
such receiver, trustee in bankruptcy, liquidating trustee, agent or other
similar Person, the Senior Secured Indebtedness or part thereof and/or payment
obligation under such Swap Agreement originally intended to be satisfied shall
be deemed to be reinstated and outstanding as if such payment has not occurred
and the provisions of this Agreement shall continue to be applicable in respect
of said reinstated Senior Secured Indebtedness or payment obligation under such
Swap Agreement.
Section 14. Rights of Holders of the Senior Secured Indebtedness and Swap
Counterparties. The holders of the Senior Secured Indebtedness may, at any time
and from time to time subject to the terms of the Senior Secured Indebtedness,
without the consent of or notice to the Second Lien Lenders or the Second Lien
Administrative Agent or other representative of the Second Lien Lenders, without
incurring responsibility to the Second Lien Lenders and without impairing or
releasing the subordination or other benefits provided in this Agreement or the
obligations hereunder of the Second Lien Lenders hereunder, do any one or more
of the following: (a) change the manner, place or terms of payment or extend the
time of payment of, or renew, increase (but not in excess of the cap provided
for in the definition of "Senior Secured Indebtedness"), alter or amend, Senior
Secured Indebtedness or any instrument evidencing the same or any covenant or
agreement under which Senior Secured Indebtedness is outstanding or secured or
any liability of any obligor thereon; (b) instruct the Collateral Agent to sell,
exchange, release or otherwise deal with any property pledged, mortgaged or
otherwise securing Senior Secured Indebtedness; (c) settle or compromise any
Senior Secured Indebtedness or any liability of any obligor thereon or release
any Person liable in any manner for the payment of Senior Secured Indebtedness;
and (d) waive any default under Senior Secured Indebtedness and exercise or
refrain from exercising any rights against either of the Borrowers, any of their
Subsidiary or any other Person. The foregoing provisions are not intended to
permit a change to the definition of "Senior Secured Indebtedness." Each Swap
Counterparty, mutis mutandis, shall have rights
22
with respect to the related Swap Agreement and the terms and conditions thereof
in all respects equivalent to those of holders of Senior Secured Indebtedness
under this Section 14 with respect to the Senior Secured Indebtedness under the
Senior Secured Credit Agreement.
Section 15. Amendments.
----------
(a) Except as set forth in this Section 15, no amendment, waiver,
discharge or termination of this Agreement, any of the terms hereof or any of
the definitions used in this Agreement, that would have the effect of modifying
this Agreement shall be effective unless it is in writing and signed by Senior
Secured Creditor and Second Lien Creditor and, to the extent applicable, any
Swap Counterparty affected thereby.
(b) No amendment of this Agreement or the definitions used in this
Agreement that would have the effect of modifying this Agreement or the
definitions used in this Agreement in such a way so as to adversely affect the
rights of the Senior Secured Lenders or any Swap Counterparty shall be effective
unless it is in writing and made with the prior written consent of the Required
Senior Secured Lenders or the Senior Secured Indebtedness Representative acting
at their written direction on their behalf.
(c) No amendment of this Agreement or the definitions used in this
Agreement that would have the effect of modifying this Agreement or the
definitions used in this Agreement in such a way so as to adversely affect the
rights of the Senior Secured Revolving Lenders shall be effective unless it is
in writing and made with the prior written consent of the Required Senior
Secured Revolving Lenders or the Senior Secured Indebtedness Representative
acting at their written direction on their behalf.
(d) No amendment of this Agreement or the definitions used in this
Agreement that would have the effect of modifying this Agreement or the
definitions used in this Agreement in such a way so as to adversely affect the
rights of the Senior Secured Term Lenders shall be effective unless it is in
writing and made with the prior written consent of the Required Senior Secured
Term Lenders or the Senior Secured Indebtedness Representative acting at their
written direction on their behalf.
(e) No amendment of this Agreement or the definitions used in this
Agreement that would have the effect of modifying this Agreement or the
definitions used in this Agreement in such a way so as to adversely affect the
rights of the Second Lien Lenders shall be effective unless it is in writing and
made with the prior written consent of the Required Second Lien Lenders or the
Second Lien Administrative Agent acting at their written direction on their
behalf.
Section 16. Identity of Second Lien Lenders for Notice Purposes. For
purposes of any notice required or permitted to be given hereunder by the
Collateral Agent, the holders of the Senior Secured Indebtedness or the Senior
Secured Indebtedness Representative to the Second Lien Lenders, or any of them,
the Collateral Agent, the holders of the Senior Secured Indebtedness and the
Senior Secured Indebtedness Representative shall be entitled to rely,
conclusively, on the identity and address of each Second Lien Lender as set
forth in the Second Lien Loan Agreement or as otherwise set forth in the most
recent notice received by the Senior
23
Secured Indebtedness Representative from a Second Lien Lender referring to the
Second Lien Loan Agreement for purposes of providing the identity and address of
each Second Lien Lender. The Second Lien Lenders agree that any notices required
to be given to the Second Lien Lenders shall be effective if such notice is
given to the Second Lien Administrative Agent or other representative of the
Second Lien Lenders. For so long as the Subordinated Obligations are
outstanding, the Second Lien Lenders agree to designate and maintain an agent or
other representative for such purposes.
Section 17. Liens.
-----
(a) All Liens granted by either of the Borrowers, or any Guarantor,
which at any time secure the Second Lien Credit Agreement, any Second Lien Note
or any other Second Lien Loan Document are hereby made, and will at all times
prior to the full payment or discharge of the Senior Secured Indebtedness and
the payment in full of all amounts payable and termination of all of the Swap
Agreements be, subject and subordinate to all Liens granted by either of the
Borrowers or any Guarantor which at any time secure the Senior Secured
Indebtedness and amounts payable under Swap Agreements, which subordination
shall be effective whether or not all such Liens securing Senior Secured
Indebtedness and amounts payable under Swap Agreements have been properly
recorded, filed and otherwise perfected prior to all such Liens securing any
Second Lien Note and regardless of the relative priority of such Liens as
determined without regard to this Agreement. The mortgages included in the
Senior Secured Loan Documents do (and other mortgages, security agreements and
similar Senior Secured Loan Documents may) describe the indebtedness secured
thereby in a manner which might include indebtedness (including amounts payable
under Swap Agreements) other than the Senior Secured Indebtedness. For so long
as any Second Lien Note is outstanding, as between the Second Lien Lenders and
the holders of the Senior Secured Indebtedness and any Swap Counterparty, only
the Senior Secured Indebtedness and amounts payable under the Swap Agreements
shall be deemed to be secured by any Liens granted under the Senior Secured Loan
Documents.
(b) Each Second Lien Lender agrees that it will not initiate, join
in or prosecute any claim, action or other proceeding challenging the validity
or enforceability of the Senior Secured Indebtedness or any Swap Agreement or
the Liens securing the Senior Secured Indebtedness and amounts payable under any
Swap Agreement.
Section 18. Purchase of the Senior Indebtedness.
-----------------------------------
In the event that (i) a Payment Blockage Period or a Non-Payment Blockage
Period shall have commenced pursuant to Section 6 or 7 hereof, respectively, and
shall be continuing, or (ii) an event of default under the Second Lien Loan
Documents shall have occurred and is continuing, regardless of whether any
notice has been sent pursuant to Section 12 hereof, or (iii) if any Insolvency
Proceeding has been commenced and is continuing, the Second Lien Lenders may, in
their sole and absolute discretion, purchase all, but not less than all, of the
Senior Secured Indebtedness from the Senior Secured Lenders by sending a notice
to buy the Senior Secured Indebtedness and Liens securing same from the Senior
Secured Lenders upon the following terms and conditions: (w) the Second Lien
Lenders shall give written notice to the Senior Secured Lenders, informing the
Senior Secured Lenders of the Second Lien Lenders
24
election to purchase the Senior Secured Indebtedness and Liens securing same
(the purchase hereinafter called a "Purchase" and any such notice being
hereinafter called a "Purchase Notice"), (x) the Second Lien Lenders shall have
forty-five (45) days from the date of the Purchase Notice to consummate the
purchase of the Senior Secured Indebtedness for an amount equal to 100% of the
outstanding Senior Secured Indebtedness (including, without limitation,
principal, interest, fees, and expenses (reimbursable under the Senior Secured
Loan Documents) outstanding on the date of the purchase, (y) if based upon the
receipt of a Payment Default Notice or a Non-Payment Default Notice, as the case
may be, said Purchase shall not occur (at Senior Secured Lenders' election) if
all events of default that precipitated the delivery of the Payment Default
Notice or the Non-Payment Default Notice have been waived or cured prior to the
consummation of the Purchase, and (z) upon receipt of payment with respect to
the Purchase as described above, the Senior Secured Lenders shall execute an
assignment of the Senior Secured Indebtedness and Liens securing same to the
Second Lien Lenders without recourse and without representation or warranty
(either express or implied), other than to the effect that the Senior Secured
Lenders at the closing of the Purchase have sold or assigned the Senior Secured
Indebtedness and Liens securing same to the Second Lien Lenders and the amount
of the Senior Secured Indebtedness. Contemporaneously with the consummation of
the Purchase, the Borrowers and the Guarantors shall acknowledge such assignment
and shall do all things necessary to give full force and effect thereto.
Section 19. Legend.
------
(a) Each Second Lien Note shall be conspicuously inscribed with a
legend substantially in the form and substance as follows:
PAYMENT OF THIS INSTRUMENT SHALL, TO THE EXTENT SET FORTH IN THE
INTERCREDITOR AGREEMENT DATED AS OF NOVEMBER 14, 2005 BY AND AMONG
QUEST RESOURCE CORPORATION AND QUEST CHEROKEE, LLC, GUGGENHEIM
CORPORATE FUNDING, LLC, AS SENIOR SECURED ADMINISTRATIVE AGENT UNDER
THE TERMS OF THE SENIOR SECURED CREDIT AGREEMENT DATED AS OF NOVEMBER
14, 2005, ON ITS OWN BEHALF AND ON BEHALF OF THE SENIOR SECURED
LENDERS PARTIES THERETO, GUGGENHEIM CORPORATE FUNDING, LLC, AS SECOND
LIEN ADMINISTRATIVE AGENT, UNDER THE TERMS OF THE SECOND LIEN TERM
LOAN AGREEMENT DATED AS OF NOVEMBER 14, 2005, ON ITS OWN BEHALF AND
ON BEHALF OF THE SECOND LIEN LENDERS PARTIES THERETO, BE SUBORDINATE
AND JUNIOR IN RIGHT OF PAYMENT TO THE PRIOR PAYMENT IN FULL OF ALL
SENIOR SECURED INDEBTEDNESS AND ALL AMOUNTS PAYABLE UNDER ANY SWAP
AGREEMENT, THE PROVISIONS OF WHICH INTERCREDITOR AGREEMENT BEING
INCORPORATED HEREIN AND BY THIS REFERENCE BEING MADE A PART HEREOF.
(b) The Borrowers and each Second Lien Lender or the Second Lien
Administrative Agent or other representative of the Second Lien Lenders shall
cause each mortgage, security agreement and other instrument securing all or any
part of the Subordinated
25
Obligations to be conspicuously inscribed with a legend substantially in the
form and substance as follows:
ALL LIENS GRANTED BY THIS INSTRUMENT SHALL, TO THE EXTENT SET FORTH
IN THE INTERCREDITOR AGREEMENT DATED AS OF NOVEMBER 14, 2005 BY AND
AMONG QUEST RESOURCE CORPORATION AND QUEST CHEROKEE, LLC, GUGGENHEIM
CORPORATE FUNDING, LLC, AS ADMINISTRATIVE AGENT UNDER THE TERMS OF
THE SENIOR CREDIT AGREEMENT DATED AS OF NOVEMBER 14, 2005, ON ITS OWN
BEHALF AND ON BEHALF OF SENIOR SECURED LENDERS PARTIES THERETO,
GUGGENHEIM CORPORATE FUNDING, LLC, ADMINISTRATIVE AGENT UNDER THE
TERMS OF THE SECOND LIEN TERM LOAN AGREEMENT DATED AS OF NOVEMBER 14,
2005, ON ITS OWN BEHALF AND ON BEHALF OF THE SECOND LIEN LENDERS
PARTIES THERETO, BE SUBORDINATE AND JUNIOR TO ALL LIENS GRANTED BY
GRANTOR TO SECURE THE SENIOR SECURED INDEBTEDNESS REGARDLESS OF THE
RELATIVE PRIORITY OF SUCH LIENS AS DETERMINED WITHOUT REGARD TO SUCH
INTERCREDITOR AGREEMENT, THE PROVISIONS OF WHICH INTERCREDITOR
AGREEMENT BEING INCORPORATED HEREIN AND BY THIS REFERENCE BEING MADE
A PART HEREOF.
Section 20. Representations and Warranties. Each of the parties hereto
hereby represents and warrants that (a) it has full power, authority and legal
right to make and perform this Agreement, and (b) this Agreement is its legal,
valid and binding obligation, enforceable against it in accordance with its
terms.
Section 21. Successors and Assigns. This Agreement, and the terms,
covenants and conditions hereof, shall be binding upon, and inure to the benefit
of the successors and assigns of Senior Secured Creditor, any Swap Counterparty,
Second Lien Creditor, Borrowers and Guarantors regardless of whether Senior
Secured Creditor, Second Lien Creditor or Guarantors comply with the provisions
of Section 12(b) of the Senior Secured Credit Agreement.
Section 22. GOVERNING LAW. IN ALL RESPECTS, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY, AND PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS
ARISING HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE PRINCIPLES
THEREOF REGARDING THE CONFLICTS OF LAW, AND ANY APPLICABLE LAWS OF THE UNITED
STATES OF AMERICA. THE PARTIES HERETO CONSENT TO PERSONAL JURISDICTION, WAIVE
ANY OBJECTION AS TO JURISDICTION OR VENUE, AND AGREE NOT TO ASSERT ANY DEFENSE
BASED ON LACK OF JURISDICTION OR VENUE IN ANY STATE OR FEDERAL COURT IN THE
BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK. SERVICE OF PROCESS ON ANY OF THE
PARTIES HERETO IN ANY ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL
BE, EFFECTIVE
26
IF MAILED TO SUCH PARTY AT THE ADDRESS LISTED IN SECTION 23 OF THIS AGREEMENT.
Section 23. Notices. Whenever it is provided herein that any notice,
demand, request, consent, approval, declaration or other communication shall or
may be given to or served upon any of the parties by another, or whenever any of
the parties desires to give or serve upon another any such communication with
respect to this Agreement, each such notice, demand, request, consent, approval,
declaration, or other communication shall be in writing (including by facsimile)
and shall be deemed to have been duly given and received, for purposes hereof,
when delivered by hand or three days after being deposited in the mail, postage
prepaid, certified, return receipt requested, or, in the case of facsimile
notice, when sent, answer back received, in each case, addressed as follows:
If to Borrower: Quest Resources Corporation
___________________________
___________________________
Attn: _____________________
Telecopy No: ______________
With a Copy to: ___________________________
___________________________
___________________________
Attn: _____________________
Telecopy No: ______________
If to Guarantors: To each of them
c/o Quest Resources Corporation
___________________________
Attn: _____________________
Telecopy No: ______________
With a Copy to: ___________________________
___________________________
___________________________
Attn: _____________________
Telecopy No: ______________
If to Senior Secured
Creditor: Guggenheim Corporate Funding, LLC
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx Xxxxxxx
Telecopy No.:_______________
27
with a copy to: Sidley Xxxxxx Xxxxx & Xxxx LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx Xxxxxx, Esq.
Xxxx X. Xxxxxxxxxx, Esq.
Telecopy No.: (000) 000-0000
If to Second Lien
Creditor: Guggenheim Corporate Funding, LLC
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx Xxxxxxx
Telecopy No.:_____________
with a copy to: Sidley Xxxxxx Xxxxx & Xxxx LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx Xxxxxx, Esq.
Xxxx X. Xxxxxxxxxx, Esq.
Telecopy No.: (000) 000-0000
If to the Initial
Swap Counterparty: BP Corporation North America Inc.
___________________________
___________________________
Attn: _____________________
Telecopy No: ______________
or at such address as may be substituted by notice given as herein provided. The
giving of any notice required hereunder may be waived in writing by the party
entitled to receive such notice. Failure or delay in delivering copies of any
notice, demand, request, consent, approval, declaration or other communication
to the persons designated above to receive copies shall in no way adversely
affect the effectiveness of such notice, demand, request, consent, approval,
declaration or other communication.
Section 24. Further Assurances. Second Lien Creditor hereby covenants and
agrees to take any and all additional actions and execute, deliver, file and/or
record any and all additional agreements, documents and instruments as may be
necessary or as Senior Secured Creditor may from time to time reasonably request
to effect the provisions of this Agreement. Second Lien Creditor hereby agrees
to make reference in all Second Lien Loan Documents to its obligations under
this Agreement.
Section 25. Modifications in Writing. No amendment, modification,
supplement, termination, consent or waiver of or to any provision of this
Agreement nor any consent to any departure therefrom shall in any event be
effective unless the same shall be in writing and signed by or on behalf of each
party hereto. Any waiver of any provision of this Agreement, and any consent to
any departure from the terms of any provision of this Agreement, shall be
effective only in the specific instance and for the specific purpose for which
given.
28
Section 26. Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provisions or the remaining provisions of this Agreement.
Section 27. Equitable Remedies. Each party to this Agreement acknowledges
that the breach by it of any of the provisions of this Agreement is likely to
cause irreparable damage to the other party. Therefore, the relief to which any
party shall be entitled in the event of any such breach or threatened breach
shall include, but not be limited to, a mandatory injunction for specific
performance, injunctive or other judicial relief to prevent a violation of any
of the provisions of this Agreement, damages and any other relief to which it
may be entitled at law or in equity.
Section 28. Revival. Second Lien Creditor further agrees that, to the
extent that any Loan Party makes a payment or payments to Senior Secured
Creditor, which payment or payments or any parts thereof are subsequently
invalidated, avoided, declared to be fraudulent or preferential, set aside, or
required to be repaid to a debtor in possession, a trustee, a receiver or any
other party under Xxxxx 00, Xxxxxx Xxxxxx Code, any state or federal law, common
law, or equitable cause, then to the extent of such payment or repayment, the
obligation or part thereof intended to be satisfied shall be revived and
continued in full force and effect as a part of the obligations of the Loan
Parties under the Senior Secured Indebtedness as if such payment had not been
made, and shall be subject in all respects to the provisions in favor of Senior
Secured Creditor hereunder.
Section 29. Exculpation Provisions. Each of the parties hereto
specifically agrees that it has a duty to read this Agreement and the Security
Instruments and agrees that it is charged with notice and knowledge of the terms
of this Agreement and the Security Instruments; that it has in fact read this
Agreement and is fully informed and has full notice and knowledge of the terms,
conditions, and effects of this Agreement; that it has independently made its
own analysis of the financial condition of the Borrower and the Guarantors and
their assets including, without limitation, their Collateral; that it has been
represented by independent legal counsel of its choice throughout the
negotiations preceding its execution of this Agreement and the Security
Instruments; and has received the advice of its attorney in entering into this
Agreement and the Security Instruments; and that it recognizes that certain of
the terms of this Agreement and the Security Instruments result in one party
assuming the liability inherent in some aspects of the transaction and relieving
the other party of its responsibility for such liability. Each party hereto
agrees and covenants that it will not contest the validity or enforceability of
any exculpatory provision of this Agreement and the Security Instruments on the
basis that the party had no notice or knowledge of such provision or that the
provision is not "conspicuous."
Section 30. WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION
WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED
BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE FEDERAL AND
STATE LAWS TO APPLY, THE PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A
JUDGE APPLYING SUCH APPLICABLE LAWS. THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL
BY
29
JURY IN ANY ACTION, SUIT OR PROCEEDING BROUGHT TO ENFORCE OR DEFEND ANY RIGHTS
OR REMEDIES UNDER THIS AGREEMENT.
Section 31. NO ORAL AGREEMENTS. THIS AGREEMENT AND THE LOAN DOCUMENTS
EMBODY THE ENTIRE AGREEMENT AND UNDERSTANDING BETWEEN THE PARTIES AND SUPERSEDE
ALL OTHER AGREEMENTS AND UNDERSTANDINGS BETWEEN SUCH PARTIES RELATING TO THE
SUBJECT MATTER HEREOF AND THEREOF. THIS AGREEMENT AND THE LOAN DOCUMENTS
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
Section 32. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Signatures given by
facsimile or other electronic transmission shall be binding and effective as
originals.
[Balance of page left blank intentionally.]
30
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their proper and duly authorized officers as of the day and
year first above written.
BORROWERS:
QUEST RESOURCES CORPORATION
By: /s/ Xxxxx X. Xxxx
---------------------------
Name: Xxxxx X. Xxxx
-------------------------
Title: Chief Executive Officer
------------------------
QUEST CHEROKEE, LLC
By: /s/ Xxxxx X. Xxxx
---------------------------
Name: Xxxxx X. Xxxx
-------------------------
Title: Chief Executive Officer
------------------------
SIGNATURE PAGE - SUBORDINATION AND INTERCREDITOR AGREEMENT
GUARANTOR:
STP CHEROKEE, INC.,
By: /s/ Xxxxx X. Xxxx
---------------------------
Name: Xxxxx X. Xxxx
-------------------------
Title: Chief Executive Officer
------------------------
SIGNATURE PAGE - SUBORDINATION AND INTERCREDITOR AGREEMENT
GUARANTOR:
QUEST OIL & GAS CORPORATION
By: /s/ Xxxxx X. Xxxx
---------------------------
Name: Xxxxx X. Xxxx
-------------------------
Title: Chief Executive Officer
------------------------
SIGNATURE PAGE - SUBORDINATION AND INTERCREDITOR AGREEMENT
GUARANTOR:
QUEST ENERGY SERVICE, INC.
By: /s/ Xxxxx X. Xxxx
---------------------------
Name: Xxxxx X. Xxxx
-------------------------
Title: Chief Executive Officer
------------------------
SIGNATURE PAGE - SUBORDINATION AND INTERCREDITOR AGREEMENT
GUARANTOR:
PONDEROSA GAS PIPELINE COMPANY, INC.
By: /s/ Xxxxx X. Xxxx
---------------------------
Name: Xxxxx X. Xxxx
-------------------------
Title: Chief Executive Officer
------------------------
GUARANTOR:
PRODUCERS SERVICE, INCORPORATED
By: /s/ Xxxxx X. Xxxx
---------------------------
Name: Xxxxx X. Xxxx
-------------------------
Title: Chief Executive Officer
------------------------
GUARANTOR:
X-X GAS GATHERING, LLC
By: /s/ Xxxxx X. Xxxx
---------------------------
Name: Xxxxx X. Xxxx
-------------------------
Title: Chief Executive Officer
------------------------
GUARANTOR:
BLUESTEM PIPELINE, LLC
By: /s/ Xxxxx X. Xxxx
---------------------------
Name: Xxxxx X. Xxxx
-------------------------
Title: Chief Executive Officer of
the Sole Member
------------------------
GUARANTOR:
QUEST CHEROKEE OILFIELD SERVICE, LLC
By: /s/ Xxxxx X. Xxxx
---------------------------
Name: Xxxxx X. Xxxx
-------------------------
Title: Chief Executive Officer of
the Sole Member
------------------------
SENIOR SECURED CREDITOR:
GUGGENHEIM CORPORATE FUNDING, LLC,
as Administrative Agent
By: /s/ Xxxx X. Xxxxxx
---------------------------
Name: Xxxx X. Xxxxxx
-------------------------
Title: Managing Director
------------------------
SECOND LIEN CREDITOR:
GUGGENHEIM CORPORATE FUNDING, LLC,
as Administrative Agent
By: /s/ Xxxx X. Xxxxxx
---------------------------
Name: Xxxx X. Xxxxxx
-------------------------
Title: Managing Director
------------------------
SWAP COUNTERPARTY:
BP CORPORATION NORTH AMERICA INC.,
as Swap Counterparty
By: /s/ Xxxxx Xxxxx
---------------------------
Name: Xxxxx Xxxxx
-------------------------
Title: Trade Control Mgr.
------------------------
