EXHIBIT 4.2
LOAN TRANSFER AGREEMENT
This LOAN TRANSFER AGREEMENT (this "Agreement") is dated as of July 22,
2004, by and among QUEST CHEROKEE, LLC, a Delaware limited liability company
("Borrower"), BLUESTEM PIPELINE, LLC, a Delaware limited liability company
("Bluestem"), QUEST OIL & GAS CORPORATION, a Kansas corporation ("QOG"), QUEST
ENERGY SERVICE, INC., a Kansas corporation ("QES"), STP CHEROKEE, INC., an
Oklahoma corporation ("STP"), PONDEROSA GAS PIPELINE COMPANY, INC., a Kansas
corporation ("Ponderosa"), PRODUCERS SERVICE INCORPORATED, a Kansas corporation
("PSI"), X-X GAS GATHERING, L.L.C., a Kansas limited liability company ("JWGG"),
CHEROKEE ENERGY PARTNERS LLC, a Delaware limited liability company ("Cherokee
Partners" and, together with QOG, QES, STP, Ponderosa, PSI, and JWGG, the "Quest
Pledgors" and, each individually, a "Quest Pledgor"), BANK ONE, NA, as
administrative agent for the Revolver Lenders (defined below) under the Revolver
Credit Agreement (defined below) (the "Revolver Agent"), the Revolver Lenders,
BANK ONE, NA, as issuing bank under the Revolver Credit Agreement (the "Letter
of Credit Issuer"), BANK ONE, NA, as administrative agent for the Term Lenders
(defined below) under the Term Credit Agreement (defined below) (the "Term
Agent"), the Term Lenders, BANK ONE, NA, as Collateral Agent under the
Intercreditor Agreement (defined below) (the "Collateral Agent" and, together
with the Revolver Agent and the Term Agent, collectively, the "Agents"), UBS AG,
STAMFORD BRANCH, as administrative agent and collateral agent for the New
Lenders (defined below) under the New Credit Agreement (defined below) (the "New
Agent"), and the New Lenders.
RECITALS
A. Pursuant to the terms of that certain Credit Agreement dated as of
December 22, 2003 (as amended, the "Revolver Credit Agreement"), among the
Borrower, the Revolver Agent, and the Banks (as defined in the Revolver Credit
Agreement) party thereto (collectively, the "Revolver Lenders"), the Revolver
Lenders have made certain loans and other financial accommodations to the
Borrower, Bluestem and certain of the Quest Pledgors, as evidenced by the
Revolver Credit Agreement and (i) the promissory notes described on Exhibit A
hereto (collectively, the "Revolver Notes"), (ii) the Letters of Credit (as
defined in the Revolver Credit Agreement) listed on Exhibit F hereto (the
"Outstanding Letters of Credit"), and (iii) the Hedge Agreements (as defined in
the Revolver Credit Agreement) identified on Exhibit C hereto (the "Outstanding
Hedge Agreements").
B. Pursuant to the terms of that certain Senior Term Second Lien
Secured Credit Agreement dated as of December 22, 2003 (as amended, the "Term
Credit Agreement" and, together with the Revolver Credit Agreement, the
"Existing Credit Agreements"), among the Borrower, Bluestem, the Term Agent, and
the Lenders (as defined in the Term Credit Agreement) party thereto
(collectively, the "Term Lenders" and, together with the Revolver Lenders, the
"Existing Lenders"), the Term Lenders have made certain loans and other
financial accommodations to the Borrower, Bluestem and certain of the Quest
Pledgors, as evidenced by the Term Credit Agreement.
C. The aggregate of the indebtedness outstanding under the Existing
Credit Agreements, except and excluding therefrom the indebtedness pertaining to
the Outstanding
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Letters of Credit and the indebtedness pertaining to the Outstanding Hedge
Agreements, is hereafter collectively referred to as the "Existing Debt;" the
documents securing, guaranteeing or otherwise pertaining to the indebtedness
under the Existing Credit Agreements (except and excluding therefrom the
Outstanding Hedge Agreements and any letter of credit application and/or or
reimbursement agreement pertaining to any of the Outstanding Letters of Credit)
described on Exhibit B attached hereto are hereafter collectively referred to as
the "Existing Loan Documents", and all property described in the Existing Loan
Documents as collateral securing such Existing Debt is hereafter collectively
referred to as the "Collateral".
D. To set forth the relative rights of the Revolver Agent and the
Revolver Lenders, on the one hand, and the Term Agent and the Term Lenders, on
the other hand, the Borrower, Bluestem, the Quest Pledgors, the Agents and the
Existing Lenders executed that certain Collateral Agency and Intercreditor
Agreement dated as of December 22, 2003 (as amended, the "Intercreditor
Agreement").
E. The Agents and the Existing Lenders (collectively, "Assignors" and,
each individually, an "Assignor") have agreed to irrevocably sell, transfer and
assign to the New Agent and the lenders (collectively, the "New Lenders" and,
together with the New Agent, collectively, the "Assignees" and, each
individually, an "Assignee") party to that certain Credit Agreement dated as of
July 22, 2004, among the New Agent, the New Lenders, the Borrower and the
Subsidiary Guarantors (as defined therein) (the "New Credit Agreement"), all of
their interests in, to and under the Existing Debt and the Existing Loan
Documents, including, without limitation, the security interests and liens
created thereby and Assignors' rights to all principal now due or hereafter due
and all interest, fees, costs and expenses relating thereto, SAVE AND EXCEPT (i)
the Letter of Credit Issuer's lien and security interest in the Cash Collateral
(defined below), which the Letter of Credit Issuer shall retain to secure any
drawing under the Outstanding Letters of Credit, (ii) the Letter of Credit
Issuer's rights under any reimbursement agreement executed in connection with
the Outstanding Letters of Credit, (iii) the Revolver Agent's and the Revolver
Lenders' rights of indemnification which by their terms would survive the
termination of the Existing Loan Documents, (iv) the Term Agent's and Term
Lenders' rights of indemnification which by their terms would survive the
termination of the Existing Loan Documents and (v) the Collateral Agent's rights
of indemnification which by their terms would survive the termination of the
Existing Loan Documents (the foregoing interests and rights, save and except the
interests and rights described or to which reference is made in the preceding
clauses (i) through (v), inclusive, being collectively referred to herein as the
"Assigned Rights"), all subject to the terms and conditions set forth herein.
AGREEMENTS
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound
hereby, the parties hereto agree as follows:
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1. Sale and Assignment; Purchase Price; Cash Collateral.
(a) Upon receipt by (i) the Revolver Agent and the Term Agent of
the applicable portions of the Purchase Price (defined below), (ii) the Letter
of Credit Issuer of the Cash Collateral (defined below), (iii) Bank One, NA of
the Hedge Assignment (defined below), duly executed by the parties thereto, and
(iv) the Agents of an amount sufficient to pay the fees and expenses referenced
in Section 4 below, (A) each Assignor shall sell, transfer, assign, grant and
convey unto Assignees, their successors and assigns, on the Assignment Date
(defined below) its interest in the Assigned Rights, WITHOUT RECOURSE,
REPRESENTATION OR WARRANTY, (B) the Assignees shall assume any and all of
Assignors' obligations in and to the Assigned Rights and (C) the Collateral
Agent shall release all liens and security interests in collateral (the
"Released Collateral") granted to the Collateral Agent pursuant to (1) that
certain Pledge Agreement dated as of December 22, 2003, executed by QOG, QES,
STP, Ponderosa, PSI and JWGG in favor of the Collateral Agent for the benefit of
the Existing Lenders, and (2) that certain Pledge Agreement dated as of December
22, 2003, executed by Cherokee Partners in favor of the Collateral Agent for the
benefit of the Existing Lenders (such Pledge Agreement, together with the Pledge
Agreement referenced in the preceding clause (1), are hereinafter referred to as
the "Released Collateral Documents");
(b) In full payment for the Existing Debt and the Assigned Rights,
the New Agent, on behalf of the New Lenders, will pay, by wire-transfer using
the wiring instructions set forth on Exhibit D hereto (and assuming (i) no
change in the applicable interest rates under the Existing Credit Agreements
after the date hereof and (ii) no further borrowings under the Existing Credit
Agreements after the date hereof), the following amounts to the following
parties on or prior to 2:00 p.m. (Chicago, Illinois time) on July 22, 2004: (a)
$68,782,943.86, to Revolver Agent, for the benefit of the Revolver Lenders; and
(b) $35,211,150.00, to Term Agent, for the benefit of the Term Lenders (such
amounts are referred to collectively herein as the "Purchase Price"). Upon
receipt of the Purchase Price, the Revolver Agent or the Term Agent (as
applicable) will promptly pay to each Existing Lender such Existing Lender's pro
rata share of the Purchase Price. A detailed breakdown of the principal, accrued
interest, breakage costs and fees and expenses comprising the Purchase Price is
set forth on Exhibit E. If the Purchase Price is not received on or prior to
2:00 p.m. (Chicago, Illinois time) on July 22, 2004, but is received on or prior
to 2:00 p.m. (Chicago, Illinois time) on July 23, 2004 (assuming (i) no change
in the applicable interest rates under the Existing Credit Agreements after the
date hereof and (ii) no further borrowings under the Existing Credit Agreements
after the date hereof) the Purchase Price will be as follows: (a) $68,798,910.29
paid to the Revolver Agent for the benefit of the Revolver Lenders, and (b)
$35,219,900.00 paid to the Term Agent for the benefit of the Term Lenders. The
Agents hereby reserve the right to notify the Borrower and the New Agent of any
change in the applicable interest rate under the Existing Credit Agreements and
of any further borrowing under the Existing Credit Agreements after the date
hereof and to adjust the Purchase Price accordingly;
(c) The Borrower shall deposit into account number 1623641584 (the
"Cash Collateral Account") held with the Letter of Credit Issuer
$1,317,750.00(1) to be held by the Letter
------------------------
(1) This amount represents 105% of the face amount of the Outstanding Letters of
Credit.
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of Credit Issuer as cash collateral (the "Cash Collateral") for the Letter of
Credit Exposure (as defined in the Revolver Credit Agreement) in respect of the
Outstanding Letters of Credit;
(d) Bank One, NA, acting in its individual capacity, JPMorgan
Chase Bank, the Borrower and UBS AG shall each execute and deliver to the other,
an Assignment, Assumption and Consent Agreement (the "Hedge Assignment") with
respect to the Outstanding Hedge Agreements; and
(e) This Agreement shall be effective upon the satisfaction of
each of the conditions set forth in this Section 1 (the date on which the last
of such conditions to be satisfied is satisfied being herein referred to as the
"Assignment Date"), whereupon the Revolver Agent on behalf of the Revolver
Lenders and the Term Agent on behalf of the Term Lenders shall promptly deliver
to the Borrower and the New Agent the Receipt (the form of which is attached
hereto as Annex 1) confirming (i) the Revolver Agent's and the Term Agent's
receipt of the applicable portions of the Purchase Price and (ii) the
satisfaction of all other conditions set forth in this Section 1. Except as set
forth in Sections 2 and 3 below, this Agreement shall expire at, and the
Assignors shall have no further obligations to Assignees after, 2:00 p.m.
(Chicago, Illinois time) on July 22, 2004, unless each of the conditions set
forth in this Section 1 is timely satisfied on or before such date as provided
herein.
2. Delivery of Existing Loan Documents and Termination Statements. As
soon as reasonably practicable, but in any event within fifteen Business Days
(as defined in the New Credit Agreement) after the Assignment Date, (a) each
Agent will deliver to the New Agent (for the benefit of the Assignees), at no
cost or expense to Assignors, all Existing Loan Documents in the possession of
such Agent (and, in the case of the original Revolver Notes, the Revolver Agent
shall deliver, or cause the applicable Revolver Lender to deliver, each of the
original Revolver Notes, endorsed to the order of the New Agent, for the benefit
of the New Lenders, in substantially the form of the endorsement attached hereto
as Exhibit H), and (b) the Collateral Agent shall deliver appropriate
assignments, in recordable form (as applicable), of any and all security
documents securing the Existing Debt (other than the Released Collateral
Documents) at 000 XXXXXXXXXX XXXX., XXXXXXXX, XX 00000, ATTENTION: General
Counsel (the "Delivery Address"), and shall deliver all certificates and
transfer powers evidencing the Released Collateral to Cherokee Partners at the
following address: Cherokee Energy Partners LLC c/o ArcLight Capital Partners,
000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx, Xxxxxx, XX 00000, Attention: Xxxx Xxxxxxx;
provided, that Collateral Agent shall execute and deliver to the New Agent, for
the benefit of the New Lenders, at no cost or expense to Assignors, such
original assignments (in recordable form) of the mortgages and deeds of trust
described on Exhibit G hereto (collectively, the "Existing Mortgage") on the
Assignment Date at the Delivery Address. The Agents and the Existing Lenders
authorize the New Agent following the payment of the Purchase Price and upon
satisfaction of the other conditions set forth in Section 1 hereof, to file any
UCC-3 termination statements pertaining to UCC financing statements filed by the
Agents in respect of the collateral of the Borrower, its subsidiaries and the
Quest Pledgors.
3. Further Assurances. Following the Assignment Date, (a) Assignors
agree, at no cost or expense to Assignors, to promptly do or cause to be done
such further acts and to execute such further instruments as the New Agent or
any New Lender may reasonably request in order to carry out the purposes of this
Agreement and (b) Borrower, Bluestem, Quest Pledgors and
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Assignees agree (i) at no cost or expense to Assignors, to promptly do or cause
to be done such further acts and to execute such further instruments as any
Agent may reasonably request in order to carry out the purposes of this
Agreement and (ii) to pay all fees and expenses incurred by the Agents, Revolver
Lenders, Term Lenders and the Letter of Credit Issuer in connection with the
preparation, execution, delivery, administration, and enforcement of the Hedge
Assignment, the Outstanding Letters of Credit, the Cash Collateral Account (and
the pledge thereof as security for the Letter of Credit Exposure referenced in
Section 1(c) hereof) and this Agreement.
4. Fees and Expenses. On or prior to the Assignment Date and as a
condition precedent to the assignment, sale and transfer of the Assigned Rights,
the Borrower shall pay to the Revolver Agent, the Term Agent and the Collateral
Agent all accrued and unpaid fees and expenses (including, without limitation,
attorneys' fees) payable by the Borrower, Bluestem or any Quest Pledgor to any
Agent pursuant to the terms of the Revolver Credit Agreement, the Term Credit
Agreement, the Intercreditor Agreement, any other Loan Document or any
Outstanding Hedge Agreement. From and after the Assignment Date, the Borrower
shall promptly pay to the Revolver Agent, the Term Agent, the Collateral Agent
and the Letter of Credit Issuer all reasonable fees and expenses (including,
without limitation, reasonable attorneys' fees) incurred by such parties in
connection with the preparation, negotiation and execution of this Agreement,
the consummation of the transactions contemplated hereby, and the satisfaction
of the obligations of the Revolver Agent, the Term Agent, the Collateral Agent
and the Letter of Credit Issuer hereunder.
5. Indemnification. From and after the Assignment Date, (a) the New
Agent shall be deemed for all purposes to replace the Revolver Agent, the Term
Agent and the Collateral Agent under the Existing Loan Documents and (b) the New
Agent shall be deemed for all purposes to have assumed all obligations of
Revolver Agent, the Term Agent and the Collateral Agent under the Existing Loan
Documents. The Borrower, Bluestem, the Quest Pledgors, the New Agent and the New
Lenders acknowledge and agree that Assignors are entering into this Agreement to
accommodate each of them, and in connection therewith, (i) the Borrower,
Bluestem and the Quest Pledgors, jointly and severally agree to indemnify and
hold the Assignors, the Letter of Credit Issuer and each of their directors,
officers, employees, agents, affiliates, attorneys, successors and assigns
(collectively, the "Indemnified Parties") harmless from any and all claims,
covenants, promises, agreements, obligations, controversies, losses, damages,
costs, expenses, demands, causes of action, judgments or liabilities related to
this Agreement (each, a "Loss"), except with respect to any Loss arising out of
the gross negligence or willful misconduct of the Assignors or the Assignees,
and (ii) the New Agent and the New Lenders party hereto agree to indemnify and
hold each of the Indemnified Parties harmless from any and all Losses to the
extent arising out of the New Agent's or the New Lenders' gross negligence or
willful misconduct in connection with this Agreement or the Existing Loan
Documents, except with respect to any Loss arising solely out of the gross
negligence or willful misconduct of the Assignors.
6. Disclaimer. ASSIGNEES ACKNOWLEDGE AND AGREE THAT ASSIGNORS HAVE NOT
MADE, DO NOT MAKE AND SPECIFICALLY NEGATE AND DISCLAIM ANY REPRESENTATIONS,
WARRANTIES, PROMISES, COVENANTS,
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AGREEMENTS OR GUARANTIES OF ANY KIND OR CHARACTER WHATSOEVER, WHETHER EXPRESS OR
IMPLIED (INCLUDING WITHOUT LIMITATION, ANY WARRANTY OF FITNESS FOR A PARTICULAR
PURPOSE), ORAL OR WRITTEN, PAST, PRESENT OR FUTURE, OF, AS TO, CONCERNING OR
WITH RESPECT TO THE ASSIGNED RIGHTS OR FUTURE PERFORMANCE OF THE ASSIGNED RIGHTS
OR COLLATERAL RELATING THERETO INCLUDING WITHOUT LIMITATION THE FOLLOWING: (a)
THE BORROWER'S, BLUESTEM'S OR ANY QUEST PLEDGOR'S TITLE TO THE PROPERTIES
REFERRED TO ABOVE OR IN ANY OF THE EXISTING LOAN DOCUMENTS; (b) THE ACCURACY OF
THE PROPERTY DESCRIPTION OR OF ANY RECORDING OR OTHER INFORMATION STATED,
RECITED OR REFERRED TO ABOVE OR IN ANY OF THE EXISTING LOAN DOCUMENTS; (c) THE
VALIDITY, ENFORCEABILITY OR PRIORITY OF THE NOTES, THE OTHER EXISTING LOAN
DOCUMENTS OR THE OUTSTANDING HEDGE AGREEMENTS, THE LIENS OR THE COLLECTIBILITY
OF THE LOANS RELATED THERETO; (d) THE EXISTENCE OR BASIS FOR ANY CLAIM,
COUNTERCLAIM, DEFENSE OR OFFSET RELATING TO THE EXISTING DEBT OR THE COMPLIANCE
OF THE EXISTING DEBT WITH ANY LAWS, ORDINANCES OR REGULATIONS OF ANY
GOVERNMENTAL OR OTHER BODY; (e) THE LEGAL, FINANCIAL OR OTHER CAPACITY,
CONDITION OR STATUS OF THE MAKER OR ANY OTHER OBLIGOR, GUARANTOR OR SURETY ON
THE NOTES; (f) THE ECONOMIC, ENVIRONMENTAL OR OTHER VALUE, CONDITION OR STATUS
OF ANY COLLATERAL; AND (g) THE PRESENCE ON OR DISCHARGE OR EMISSION FROM SUCH
PROPERTY OR OTHER COLLATERAL, WHETHER NOW OR IN THE PAST, OF ANY HAZARDOUS
SUBSTANCES (AS DEFINED IN THE REVOLVER CREDIT AGREEMENT). ASSIGNEES FURTHER
ACKNOWLEDGE AND AGREE THAT HAVING BEEN GIVEN THE OPPORTUNITY TO INSPECT THE
ASSIGNED RIGHTS AND COLLATERAL RELATING THERETO, ASSIGNEES ARE RELYING SOLELY ON
THEIR OWN INVESTIGATIONS AND NOT ON ANY INFORMATION PROVIDED OR TO BE PROVIDED
BY ASSIGNORS.
7. Release. The Borrower, Bluestem and the Quest Pledgors jointly and
severally forever release the Assignors and each of their directors, officers,
employees, agents, affiliates, attorneys, successors and assigns from and
against any and all claims, covenants, promises, agreements, obligations,
commitments, controversies, losses, damages, costs, expenses, demands, causes of
action, judgments or liabilities of any kind or character whatsoever, whether
matured or contingent or known or unknown, that such parties may have arising
out of, or with respect to, directly or indirectly, the Existing Loan Documents,
the Outstanding Hedge Agreements and the transactions covered thereunder,
whether arising before or after the Assignment Date.
8. Letters of Credit; Cash Collateral.
(a) Letter of Credit Issuer agrees with each Revolver Lender that,
on the Assignment Date, Letter of Credit Issuer shall be deemed to have
repurchased from each other Revolver Lender the participation interest in each
Outstanding Letter of Credit deemed sold to each Revolver Lender pursuant to
Section 2.1(b) of the Revolver Credit Agreement, and concurrently therewith, and
notwithstanding anything to the contrary contained in Section 2.1(b)
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of the Revolver Credit Agreement, each such Revolver Lender shall be released
and discharged from all obligations to reimburse the Letter of Credit Issuer as
provided in Section 2.1(b) of the Revolver Credit Agreement and in any letter of
credit application.
(b) Borrower and each Restricted Subsidiary (as defined in the
Revolver Credit Agreement) for which an Outstanding Letter of Credit has been
issued agree that their reimbursement obligations relative to the Outstanding
Letters of Credit will survive the assignment of the Revolver Credit Agreement
pursuant to this Agreement and will continue in full force and effect and be
governed by the letter of credit applications relating to the Outstanding
Letters of Credit (which letter of credit applications shall remain in effect
notwithstanding any references therein to the Revolver Credit Agreement) until
such reimbursement obligations are paid in full or otherwise discharged.
(c) As collateral security for the Letter of Credit Exposure in
connection with the Outstanding Letters of Credit, the Borrower hereby grants to
the Letter of Credit Issuer a continuing security interest in the Cash
Collateral and the Cash Collateral Account to secure any reimbursement
obligation of any one or more of the Borrower, Bluestem and the Quest Pledgors
arising by reason of the honoring by the Letter of Credit Issuer of any drawing
under any of the Outstanding Letters of Credit. The Borrower acknowledges that
the Letter of Credit Issuer has "control" (within the meaning of Section 9-104
of the Uniform Commercial Code in effect in the State of Texas) over the Cash
Collateral Account and agrees that the Letter of Credit Issuer may exercise and
enforce with respect to the Cash Collateral and the Cash Collateral Account, in
addition to all rights and remedies otherwise available to the Letter of Credit
Issuer, all rights and remedies available to a secured party under the Uniform
Commercial Code in effect in the State of Texas. The Borrower agrees that it
will, at any time and from time to time, promptly execute and deliver all
further instruments and documents and take all further action that may be
necessary or that the Letter of Credit Issuer may reasonably request in order
(i) to perfect and protect the security interests in the Cash Collateral and the
Cash Collateral Account created or purported to be created hereby and the first
priority of such security interests; (ii) to enable the Letter of Credit Issuer
to exercise and enforce its rights and remedies hereunder and under the Uniform
Commercial Code in effect in the State of Texas in respect of the Cash
Collateral and the Cash Collateral Account; or (iii) to otherwise effect the
purposes of this Agreement, including authorizing and filing such financing or
continuation statements, or amendments thereto, as may be necessary or that the
Letter of Credit Issuer may reasonably request in order to perfect and preserve
the security interests in the Cash Collateral and the Cash Collateral Account
created or purported to be created hereby.
(d) Upon presentation to the Letter of Credit Issuer by any
Beneficiary of a draft for payment under any Outstanding Letter of Credit, the
Letter of Credit Issuer shall, and shall be entitled to, apply, concurrently
with its payment made in honor of such draft, such amount of the Cash
Collateral, up to the full amount thereof, as is necessary to satisfy the
reimbursement obligation arising by reason of its honoring of such draft.
(e) The Borrower hereby covenants and agrees that it will obtain
the original Outstanding Letters of Credit from the appropriate beneficiaries,
and will return such Outstanding Letters of Credit to the Letter of Credit
Issuer within 45 days of the Assignment Date.
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(f) The Letter of Credit Issuer hereby covenants and agrees that,
upon receipt and cancellation of all Outstanding Letters of Credit, it will
promptly return to the Borrower the Cash Collateral (less (i) any Outstanding LC
Fees (defined below) then owed as provided herein, (ii) any portion thereof
applied to satisfy draw requests under Outstanding Letters of Credit as provided
above, and (iii) any fees owing to the Letter of Credit Issuer hereunder) and
release its liens and security interests in the Cash Collateral and the Cash
Collateral Account.
(g) The Letter of Credit Issuer shall have no obligation to invest
or pay interest on the Cash Collateral.
(h) The Borrower hereby covenants and agrees that if the original
outstanding Letters of Credit are not returned to the Letter of Credit Issuer in
accordance with Section 8(e) it will pay a fee (an "Outstanding LC Fee") in an
amount equal to three-tenths of one percent (.30%) of the stated amounts of the
Outstanding Letters of Credit on each Quarterly Date (as defined in the Revolver
Credit Agreement).
9. Preservation of Liens and Security Interests. Except as expressly
set forth in Section 1 above with respect to the Released Collateral, nothing
contained herein shall be deemed to release, modify or impair the liens or
security interests in the Collateral comprising the Assigned Rights in any
respect, all of which shall continue to secure the obligations and indebtedness
under the New Credit Agreement, including, without limitation, the Obligations
(as defined in the New Credit Agreement) and all of which liens and security
interests are hereby ratified and confirmed. The Borrower hereby acknowledges
that the New Credit Agreement represents a renewal, extension, amendment and
modification of the Existing Debt, but does not represent a satisfaction or
novation thereof. Upon receipt of each original Revolver Note from the
applicable Revolver Lender, the New Agent shall xxxx such Revolver Note
"replaced" and promptly return such Revolver Note to the Borrower.
10. Miscellaneous. This Agreement shall be governed by and construed
under the laws of the State of Texas and shall be binding upon and inure to the
benefit of the parties hereto and their successors and assigns. This Agreement
may be executed in any number of counterparts, each of which shall be an
original, but all of which together shall constitute one instrument. Facsimiles
shall be effective as originals.
11. JURY WAIVER. THE PARTIES HERETO HEREBY WAIVE, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDINGS ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
[Signature Page to Follow]
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EXECUTED as of the date first above written.
QUEST CHEROKEE, LLC
By: /s/ XXXXX X. XXXX
-------------------------------
Name: Xxxxx X. Xxxx
-------------------------------
Title:
-------------------------------
BLUESTEM PIPELINE, LLC
By: /s/ XXXXX X. XXXX
-------------------------------
Name: Xxxxx X. Xxxx
-------------------------------
Title:
-------------------------------
QUEST OIL & GAS CORPORATION
By: /s/ XXXXX X. XXXX
-------------------------------
Name: Xxxxx X. Xxxx
-------------------------------
Title:
-------------------------------
QUEST ENERGY SERVICE, INC.
By: /s/ XXXXX X. XXXX
-------------------------------
Name: Xxxxx X. Xxxx
-------------------------------
Title:
-------------------------------
STP CHEROKEE, INC.
By: /s/ XXXXX X. XXXX
-------------------------------
Name: Xxxxx X. Xxxx
-------------------------------
Title:
-------------------------------
[Signature Page]
PONDEROSA GAS PIPELINE COMPANY, INC.
By: /s/ XXXXX X. XXXX
-------------------------------
Name: Xxxxx X. Xxxx
-------------------------------
Title:
-------------------------------
PRODUCERS SERVICE INCORPORATED
By: /s/ XXXXX X. XXXX
-------------------------------
Name: Xxxxx X. Xxxx
-------------------------------
Title:
-------------------------------
X-X GAS GATHERING, L.L.C.
By: /s/ XXXXX X. XXXX
-------------------------------
Name: Xxxxx X. Xxxx
-------------------------------
Title:
-------------------------------
CHEROKEE ENERGY PARTNERS, LLC
By: /s/ XXXXXXXXXXX X. XXXXXXX
-------------------------------
Name: Xxxxxxxxxxx X. Xxxxxxx
-------------------------------
Title:
-------------------------------
[Signature Page]
BANK ONE, NA, as Revolver Agent, Term
Agent, Collateral Agent, Letter of
Credit Issuer, and as a Revolver
Lender and a Term Lender
By: /s/ J. XXXXX XXXXXX
---------------------------------
J. Xxxxx Xxxxxx, Director,
Capital Markets
[Signature Page]
XXXXX FARGO BANK, N.A., as a Revolver
Lender
By: /s/ J. XXXX XXXXXXXXX
-------------------------------
Name: J. Xxxx Xxxxxxxxx
-------------------------------
Title: Vice President
-------------------------------
[Signature Page]
THE ROYAL BANK OF SCOTLAND plc, as a
Revolver Lender and a Term Lender
By: /s/ X.X. XXXXXX
-------------------------------
Name: X.X. Xxxxxx
-------------------------------
Title: Senior Vice President
-------------------------------
[Signature Page]
XXXXXX XXXXXXX FINANCING, INC., as a
Revolver Lender
By: /s/ XXXXX X. XXXXXX
------------------------------
Name: Xxxxx X. Xxxxxx
------------------------------
Title: Vice President
------------------------------
[Signature Page]
NATEXIS BANQUES POPULAIRES, as a
Revolver Lender
By: /s/ XXXXXX XXXXX
------------------------------
Name: Xxxxxx Xxxxx
------------------------------
Title: Vice President
------------------------------
By: /s/ XXXXXXX X. XXXXXXXXX
------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
------------------------------
Title: Vice President and Manager
------------------------------
[Signature Page]
HIGHLAND LEGACY LTD., by: Highland
Capital Management L.P., as
Collateral Manager, as a Term Lender
By: /s/ XXXX XXXXXXX
--------------------------------
Name: Xxxx Xxxxxxx
--------------------------------
Title: Senior Portfolio Manager
--------------------------------
Highland Capital Management L.P.
--------------------------------
[Signature Page]
NORTH AMERICAN COMPANY FOR LIFE AND
HEALTH INSURANCE, as a Term Lender
By: /s/ XXXXXX XXXXX
------------------------------
Name: Xxxxxx Xxxxx
------------------------------
Title: Managing Director
------------------------------
[Signature Page]
STELLAR FUNDING, LTD., as a Term
Lender
By: /s/ XXXXXX XXXXX
------------------------------
Name: Xxxxxx Xxxxx
------------------------------
Title: Managing Director
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[Signature Page]
XXX CAPITAL FUNDING LP by Highland
Capital Management L.P., as Collateral
Manager, as a Term Lender
By: /s/ XXXX XXXXXXX
--------------------------------
Name: Xxxx Xxxxxxx
--------------------------------
Title: Senior Portfolio Manager
--------------------------------
Highland Capital Management L.P.
--------------------------------
[Signature Page]
PAMCO CAYMAN LTD. by: Highland
Capital Management L.P., as
Collateral Manager, as a Term Lender
By: /s/ XXXX XXXXXXX
--------------------------------
Name: Xxxx Xxxxxxx
--------------------------------
Title: Senior Portfolio Manager
--------------------------------
Highland Capital Management L.P.
--------------------------------
[Signature Page]
SPECIAL SITUATIONS INVESTING GROUP
INC., as a Term Lender
By: /s/ XXXX XXXXXX
------------------------------
Name: Xxxx Xxxxxx
------------------------------
Title: Vice President
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[Signature Page]
UBS LOAN FINANCE LLC, as a New Lender
By: /s/ XXXXXXX X. SAINT
------------------------------
Name: Xxxxxxx X. Saint
------------------------------
Title: Director Banking Products
------------------------------
Services, U.S.
------------------------------
By: /s/ XXXXXXX XXXXXXXXX
------------------------------
Name: Xxxxxxx Xxxxxxxxx
------------------------------
Title: Associate Director Banking
------------------------------
Products Services, U.S.
------------------------------
UBS AG, STAMFORD BRANCH, as New Agent
By: /s/ XXXXXXX X. SAINT
------------------------------
Name: Xxxxxxx X. Saint
------------------------------
Title: Director Banking Products
------------------------------
Services, U.S.
------------------------------
By: /s/ XXXXXXX XXXXXXXXX
------------------------------
Name: Xxxxxxx Xxxxxxxxx
------------------------------
Title: Associate Director Banking
------------------------------
Products Services, U.S.
------------------------------
[Signature Page]
EXHIBIT A
REVOLVER NOTES
1. Amended and Restated Note dated February 12, 2004, executed by the
Borrower in favor of Bank One, NA, in the original principal amount of
$50,000,000.00.
2. Note dated February 12, 2004, executed by the Borrower in favor of Xxxxx
Fargo Bank, N.A., in the original principal amount of $42,857,142.86.
3. Note dated February 12, 2004, executed by the Borrower in favor of The
Royal Bank of Scotland plc, in the original principal amount of $42,857,142.86.
4. Note dated February 12, 2004, executed by the Borrower in favor of Xxxxxx
Xxxxxxx Financing, Inc., in the original principal amount of $35,714,285.71.
5. Note dated February 12, 2004, executed by the Borrower in favor of Natexis
Banques Populaires, in the original principal amount of $28,571,428.57.
EXHIBIT B
EXISTING LOAN DOCUMENTS
1. Revolver Credit Agreement.
2. Term Credit Agreement.
3. Intercreditor Agreement.
4. Existing Mortgage.
5. Pledge Agreement dated as of December 22, 2003, made by the Borrower in
favor of the Collateral Agent for the benefit of the Existing Lenders.
6. Guaranty dated as of December 22, 2003 made by Bluestem in favor of the
Existing Lenders.
EXHIBIT C
OUTSTANDING HEDGE AGREEMENTS
REFERENCE PRODUCT INDEX TRADE DATE
--------- ------- -------------- ----------
03NG23688 Swap Xxxxxxxx - TOK 12/23/03
03NG23697 Swap Xxxxxxxx - TOK 12/23/03
03NG23714 Collar Xxxxxxxx - TOK 12/23/03
03NG23422 Swap NYMEX (1) 12/11/03
03NG23684 Collar Xxxxxxxx - TOK 12/23/03
03NG23680 Collar Xxxxxxxx - TOK 12/23/03
EXHIBIT D
WIRING INSTRUCTIONS
Term Loan Purchase Price amount less $27,400 in legal fees ($35,183,750.00):
Wiring Instructions
ABA 000000000
Account Number 481152860000
Account Name LS2 Incoming Wire Account
Ref: Quest Cherokee Term Loan
Legal Fees in connection with Term Loan ($27,400):
Bank: Bank of America
000 Xxxx Xxxxxx
Xxxxxx, Xxxxx
ABA: 000000000
Acct Name: Gardere Xxxxx Xxxxxx LLP Operating Account
Account #: 018-043-896-0
Ref: Bank One, NA--Cherokee Energy
C/M # 116436--000121
Revolving Loan Purchase Price amount less $67,000 in legal fees
($68,719,708.86):
Wiring Instructions
ABA 000000000
Account Number 481152860000
Account Name LS2 Incoming Wire Account
Ref: Quest Cherokee
Legal Fees in connection with Revolving Loan ($67,000):
ABA 000000000
Swift Code TCB KUS 44
X.X. Xxxxxx Xxxxx Bank, N.A.
Account Name: Xxxxxx & Xxxxxx L.L.P.
Account No.: 001-00000000
Reference Invoice No. 25102658
Billing Attorney: Xxxxx X. Xxxxxxxx
EXHIBIT E
PURCHASE PRICE
Revolver Credit Agreement
Principal $68,700,000.00
Interest $15,930.33
Breakage Costs $0.00
Legal Fees $67,000.00
Fee for Outstanding LCs $3,765.00
Fees and Expenses $13.53
Total: $68,786,708.86
Term Credit Agreement
Principal $35,000,000.00
Interest $8,750.00
Prepayment Liquidated Damages $175,000.00
Breakage Costs $0.00
Legal Fees $27,400.00
Fees and Expenses $0.00
Total: $35,211,150.00
EXHIBIT F
OUTSTANDING LETTERS OF CREDIT
L/C AMOUNT BENEFICIARY L/C NUMBER EXPIRY DATE
---------- ----------------------- ---------- -----------
$1,000,000 Devon Energy Production SLT346719 12/18/04
$200,000 Victore Insurance Co. SLT346833 2/25/05
$30,000 Kansas Corporation SLT346717 12/20/04
Commission
$25,000 Oklahoma Corporation SLT346716 12/19/04
Commission
EXHIBIT G
MORTGAGE DOCUMENTS
Mortgage, Deed of Trust, Security Agreement, Financing Statement and Assignment
of Production by Quest Cherokee, LLC in favor of Bank One, NA, as Collateral
Agent, or, alternatively, J. Xxxxx Xxxxxx, Trustee, for the benefit of Bank One,
NA, as Collateral Agent, counterparts of which were filed as follows:
KANSAS
CHATAUQUA COUNTY, KANSAS
1. Counterpart filed with the County Clerk of Chatauqua County, Kansas
on January 7, 2004, in Volume 117, Page 336.
ELK COUNTY, KANSAS
2. Counterpart filed with the County Clerk of Elk County, Kansas on
December 30, 2003, in Volume 112, Page 513.
LABETTE COUNTY, KANSAS
3. Counterpart filed with the County Clerk of Labette County, Kansas on
December 31, 2003, in Volume 33, Page 70.
XXXXXXXXXX COUNTY, KANSAS
4. Counterpart filed with the County Clerk of Xxxxxxxxxx County, Kansas
on December 30, 2003, in Volume 536, Page 519.
NEOSHO COUNTY, KANSAS
5. Counterpart filed with the County Clerk of Neosho County, Kansas on
December 30, 2003, in Volume 326, Page 245.
XXXXXX COUNTY, KANSAS
6. Counterpart filed with the County Clerk of Xxxxxx County, Kansas on
December 30, 2003, in Volume 267, Page 88.
XXXXXXX COUNTY, KANSAS
7. Counterpart filed with the County Clerk of Xxxxxxx County, Kansas on
December 30, 2003, in Volume 95, Page 72.
OKLAHOMA
XXXXX COUNTY, OKLAHOMA
8. Counterpart filed with the County Clerk of Xxxxx County, Oklahoma on
December 29, 2003, in Volume 521, Page 158.
NOWATA COUNTY, OKLAHOMA
9. Counterpart filed with the County Clerk of Nowata County, Oklahoma
on January 2, 2004, in Volume 709, Page 1.
EXHIBIT H
FORM OF REVOLVER NOTE ENDORSEMENT
Pay to the order of:
UBS AG, Stamford Branch
WITHOUT RECOURSE, REPRESENTATION OR WARRANTY
by [NAME REVOLVER LENDER]
ANNEX 1
FORM OF RECEIPT
July ___, 2004
VIA FACSIMILE
Quest Cherokee, LLC
c/x Xxxxxxx Xxxxxxxx Xxxxxx LLP
0000 Xxxxx Xxxxxx
Xxxxxx Xxxx, XX 00000
Fax: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxxxx
UBS AG, Stamford Branch, as administrative agent
c/o Xxxxxx Xxxxxx & Xxxxxxx LLP
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxx
Re: Receipt of Purchase Price and Satisfaction of Conditions under Loan
Transfer Agreement
Ladies and Gentlemen:
Reference is made to that certain Loan Transfer Agreement dated as of July
___, 2004 (the "AGREEMENT"), among Bank One, NA, as the Revolver Agent, the Term
Agent, and the Collateral Agent, UBS AG, Stamford Branch, as the New Agent, the
New Lenders party thereto, Quest Cherokee, LLC, Bluestem Pipeline, LLC, the
Quest Pledgors party thereto, the Revolver Lenders party thereto, and the Term
Lenders party thereto, relating to, inter alia, the purchase by the Assignees
from the Assignors of the Assigned Rights. Capitalized terms used but not
defined herein shall have the meanings set forth in the Agreement. We hereby
inform you that we have received the Purchase Price in accordance with the terms
of the Agreement, and the conditions precedent set forth in Section 1 of the
Agreement have been satisfied. Accordingly, the terms of the Agreement are
effective. Except as set forth in the Agreement, the Borrower, Bluestem and the
Quest Pledgors owe no further obligations to the Agents or the Existing Lenders
in connection with the Existing Loan Documents or the Released Collateral
Documents.
BANK ONE, NA, as Revolver Agent and
Term Agent
By:__________________________________
Name:________________________________
Title:_______________________________
