EXECUTION
AMENDED AND RESTATED
INTERCREDITOR AGREEMENT
AND
COLLATERAL AGENCY
AGREEMENT
Amending and Restating Intercreditor
Agreement dated July 11, 2008
Among
ROYAL BANK OF
CANADA,
as First Lien Agent,
ROYAL BANK OF
CANADA,
as Second Lien Agent,
BP CORPORATION NORTH AMERICA,
INC.,
as Approved Hedge
Counterparty
ROYAL BANK OF
CANADA,
as Collateral Agent
and
QUEST CHEROKEE,
LLC,
as an Obligor
Dated as of June 18,
2009
TABLE OF CONTENTS
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ARTICLE 1 - DEFINITIONS
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3
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Section 1.01.
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Defined Terms
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3
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Section 1.03.
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Terms Generally.
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9
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ARTICLE 2 - LIEN PRIORITIES.
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10
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Section 2.01.
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Subordination of Second Liens.
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10
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Section 2.02.
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Nature of First Lien Obligations
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10
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Section 2.03
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Status of Liens: Collateral.
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10
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Section 2.04.
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Agreements Regarding Actions to Perfect
Liens.
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11
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Section 2.05.
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Legends.
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12
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Section 2.06
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No New Second Liens
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12
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Section 2.07.
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Similar Liens and Agreements
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13
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ARTICLE 3 - ENFORCEMENT RIGHTS
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13
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Section 3.01.
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Separate Debts
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13
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Section 3.02.
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Limits of Enforcement of Second Lien
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13
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Section 3.03.
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Election to Pursue Remedies
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14
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Section 3.04.
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Duty of Collateral Agent.
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14
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Section 3.05
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Standstill and Waivers
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15
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Section 3.06.
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Judgment Secured Parties
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16
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Section 3.07.
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Cooperation
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16
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Section 3.08.
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No Additional Rights For the Borrower
Hereunder
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16
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Section 3.09.
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Actions Upon Breach.
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17
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ARTICLE 4 - APPLICATION OF PROCEEDS OF
COLLATERAL; DISPOSITIONS AND RELEASES OF COLLATERAL; INSPECTION AND
INSURANCE
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17
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Section 4.01.
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Notices under Related Documents.
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17
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Section 4.02.
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Voting Procedure.
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17
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Section 4.03.
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Application of Proceeds; Turnover
Provisions
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18
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Section 4.04.
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Payments by Collateral Agent
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19
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Section 4.05.
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Notice of Amount of Obligations
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19
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Section 4.06.
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Pro Rata Treatment; Participations
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19
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Section 4.07.
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Release of Collateral.
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20
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Section 4.08.
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Releases of Second Lien.
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20
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Section 4.09.
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Form and Sufficiency of Release
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21
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Section 4.10.
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Inspection Rights and Insurance.
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21
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ARTICLE 5 - INSOLVENCY PROCEEDINGS
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21
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Section 5.01.
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Filing of Motions
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21
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Section 5.02.
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Financing Matters
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22
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Section 5.03.
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Relief From the Automatic Stay
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22
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Section 5.04.
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Adequate Protection
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22
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Section 5.05.
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Avoidance Issues
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23
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Section 5.06.
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Asset Dispositions in an Insolvency
Proceeding
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23
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Section 5.07.
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Grants of Security and Separate
Classification
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24
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Section 5.08.
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No Waivers of Rights of First Lien Secured
Parties
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24
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Section 5.09.
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Plans of Reorganization
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24
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Section 5.10.
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Other Matters
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24
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Section 5.11.
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Effectiveness in Insolvency
Proceedings
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24
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ARTICLE 6 - SECOND LIEN DOCUMENTS AND FIRST LIEN
DOCUMENTS.
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25
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Section 6.01.
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Restriction on Second Lien Document
Amendments
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25
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Section 6.02.
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Restriction on First Lien Document
Amendment
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25
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ii
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Section 6.03.
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Application of First Lien Security Document
Amendments to Second Lien Security Documents
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25
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Section 6.04.
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Restriction on Second Lien Agreement
Amendments
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25
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Section 6.05.
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Authorization of Actions to be Taken by
Collateral Agent under the Security Documents
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26
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Section 6.06.
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Authorization of Receipt of Funds by Collateral
Agent under Security Documents
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26
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Section 6.07.
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Property of Obligors and Owners
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26
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Section 6.08.
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Secured Party Dealings; Good Faith
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26
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Section 6.09.
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Production Proceeds Prior to Triggering
Event
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26
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ARTICLE 7 - RELIANCE; WAIVERS, ETC.
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27
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Section 7.01.
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Reliance
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27
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Section 7.02.
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No Warranties or Liability
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27
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Section 7.03.
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No Waivers
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27
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ARTICLE 8 - OBLIGATIONS
UNCONDITIONAL.
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27
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Section 8.01.
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First Lien Obligations Unconditional
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27
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Section 8.02.
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Second Lien Obligations Unconditional
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28
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ARTICLE 9 - MISCELLANEOUS.
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28
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Section 9.01
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Authority
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28
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Section 9.02
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Termination/Withdrawal/Redesignation of
Contracts.
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28
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Section 9.03.
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Conflicts
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29
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Section 9.04.
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Marshaling
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29
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Section 9.05
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Additional Parties
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29
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Section 9.06.
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Continuing Nature of Provisions
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30
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Section 9.07.
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Amendments
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30
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Section 9.08.
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Information Concerning Financial Condition of
the Borrower and the other Obligors
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30
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Section 9.09.
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PAYMENT OF EXPENSES AND TAXES;
INDEMNIFICATION
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30
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Section 9.10.
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Governing Law
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31
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Section 9.11.
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Submission to Jurisdiction; Waivers.
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32
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Section 9.13.
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Successors and Assigns
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33
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Section 9.14.
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Further Assurances
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33
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Section 9.15.
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Subrogation
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33
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Section 9.16.
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Application of Payments
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33
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Section 9.17.
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Specific Performance
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33
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Section 9.18.
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Headings
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33
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Section 9.19.
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Severability
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33
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Section 9.20.
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Counterparts; Integration;
Effectiveness
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34
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Section 9.21.
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Entire Agreement
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34
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Section 9.22.
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Limitation by Law
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34
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Section 9.23.
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No Impairment
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34
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Section 9.24.
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Status of Obligations
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34
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Section 9.25.
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Counterclaims and Defenses by
Obligors
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34
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Section 9.26.
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Amendment and Restatement
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35
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ARTICLE 10 - COLLATERAL AGENT.
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35
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Section 10.01.
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Appointment of Collateral Agent
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35
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Section 10.02.
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Nature of Duties of Collateral Agent
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35
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Section 10.03.
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Lack of Reliance on Collateral Agent.
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35
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Section 10.04.
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Certain Rights of Collateral Agent
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36
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Section 10.05.
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Reliance by Collateral Agent
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36
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Section 10.06.
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Collateral Agent’s Reimbursements and
Indemnification
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37
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iii
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Section 10.07.
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Collateral Agent in its Individual
Capacity
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37
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Section 10.08.
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Secured Parties as Owners
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37
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Section 10.09.
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Successor Collateral Agent.
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37
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Section 10.10.
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Employment of Collateral Agent and
Counsel
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38
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Section 10.11.
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Limitation on Liability of Secured Parties and
Collateral Agent
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38
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ANNEXES
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Annex 1
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Security Documents
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Annex 2
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Form of Supplemental Amended and Restated
Intercreditor and Collateral Agency Agreement
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AMENDED AND RESTATED
INTERCREDITOR
AND COLLATERAL AGENCY
AGREEMENT
THIS AMENDED AND RESTATED
INTERCREDITOR AND COLLATERAL AGENCY AGREEMENT dated as of June 18,
2009 (the “ Effective Date ”) is entered into by
and among ROYAL BANK OF CANADA, in its capacity as administrative
and collateral agent (in such capacities, with its successors and
assigns, the “ First Lien Agent ”) for the First
Lien Lenders (as defined below), in its capacity as administrative
agent and collateral agent (in such capacities, with its successors
and assigns, the “ Second Lien Agent ”) for the
Second Lien Lenders (as defined below), and as collateral agent for
Secured Parties (as defined below) (in such capacity, “
Collateral Agent ”), QUEST CHEROKEE, LLC, a Delaware
limited liability company (the “ Borrower ”),
each of the other undersigned Obligors (as defined below), and the
Approved Hedge Counterparty.
RECITALS
A. The
Borrower, the First Lien Agent and certain financial institutions
(with their respective successors and assigns, the “ First
Lien Lenders ”) are parties to an Amended and Restated
Credit Agreement dated as of November 15, 2007, as amended by a
First Amendment to Amended and Restated Credit Agreement dated as
of April 15, 2008, a Second Amendment to Amended and Restated
Credit Agreement dated as of October 28, 2008 and a Third Amendment
to Amended and Restated Credit Agreement of even date herewith (the
“ Third Amendment to First Lien Credit Agreement
”)(as amended, supplemented, restated or otherwise modified
from time to time, the “ Existing First Lien Credit
Agreement ”), pursuant to which such financial
institutions have agreed to make loans and issue letters of credit
to or for the Borrower.
B. The
Borrower, the Second Lien Agent and certain lenders (with their
respective successors and assigns, the “ Second Lien
Lenders ”) are parties to a Second Lien Senior Term Loan
Agreement dated as of July 11, 2008 (as amended, supplemented,
restated or otherwise modified from time to time, the “
Existing Second Lien Loan Agreement ”), pursuant to
which such financial institutions have made a term loan to the
Borrower.
C. Pursuant
to the First Lien Security Documents (as defined below) Borrower
and the other Obligors have granted liens and security interests in
the Collateral (as defined below) in favor of the First Lien Agent
on behalf of the First Lien Secured Parties, as security for the
payment and performance of the First Lien Obligations (as defined
below).
D. Pursuant
to the Second Lien Security Documents (as defined below) Borrower
and the other Obligors have granted liens and security interests in
the Collateral in favor of the Second Lien Agent, on behalf of
Second Lien Secured Parties, as security for the payment and
performance of the Second Lien Obligations (as defined below),
which liens and security interests will be junior, subject and
subordinated to the First Liens (as defined below).
E. Pursuant
to the Security Documents (as defined below) Borrower and the other
Obligors have granted liens and security interests in the
Collateral (i) in favor of the First Lien Agent, on behalf of the
First Lien Secured Parties, as security for the payment and
performance of the First Lien Obligations and (ii) in favor of the
Second Lien Agent, on behalf of the Second Lien Secured Parties, as
security for the payment and performance of the Second Lien
Obligations, which liens and security interests will be junior,
subject and subordinated to the First Liens.
F. Pursuant
to that certain Intercreditor Agreement dated as of July 11, 2008
entered into among the First Lien Agent, on behalf of the First
Lien Lenders, the Second Lien Agent, on behalf of the Second Lien
Lenders, the Collateral Agent and the Borrower (the “
Original Intercreditor Agreement ”) (i) the First Lien
Lenders agreed to permit the grant of the Second Liens (as defined
below) on the terms and conditions of the Original Intercreditor
Agreement and (ii) the Collateral Agent agreed to act as collateral
agent for First Lien Secured Parties and Second Lien Secured
Parties for the purposes of dealing with the Collateral and
apportioning payments among the First Lien Secured Parties and the
Second Lien Secured Parties with respect to proceeds thereof.
Pursuant to Section 10.1 of the Original Intercreditor Agreement
the First Lien Agent and the Second Lien Agent each appointed the
Collateral Agent to act as collateral agent in connection with the
Security Documents.
G. Certain
First Lien Lenders (or their Affiliates) have entered into Lender
Hedging Agreements with Borrower. Borrower and such First Lien
Lenders (or their Affiliates) desire to enter into novation or
similar agreements pursuant to which the Approved Hedge
Counterparty will be substituted as a counterparty for such First
Lien Lender (or its Affiliate) and upon such novation or similar
agreement such Lender Hedging Agreements will become Approved Hedge
Counterparty Swap Contracts.
H. In
the future, Borrower and Approved Hedge Counterparty may enter into
additional or supplemental Approved Hedge Counterparty Swap
Contracts.
I. The
Approved Hedge Counterparty will not agree to enter into any
novation or similar agreements to be substituted as a counterparty
for any Lender (or Lender Affiliate) under any Lender Hedging
Agreement and will not enter into any future Approved Hedge
Counterparty Swap Contract unless the Approved Hedge Counterparty
is entitled to share on a pro rata basis in the First Liens created
pursuant to the First Lien Security Documents in the
Collateral.
J. Pursuant
to the Third Amendment to First Lien Credit Agreement, the Required
First Lien Lenders (as defined below) have amended the Existing
First Lien Credit Agreement to provide that under the Existing
First Lien Credit Agreement (i) the Approved Hedge Counterparty is
a “Secured Party,” (ii) each Approved Hedge
Counterparty Swap Contract is a “Lender Hedging
Agreement,” (iii) all Approved Hedge Counterparty Obligations
are “Obligations”.
K. The
Borrower, the First Lien Lenders and the Second Lien Lenders will
all benefit from the Approved Hedge Counterparty entering into
novation or similar agreements to be substituted as a counterparty
for any Lender (or Lender Affiliate) under any Lender Hedging
Agreement and from any future Approved Hedge Counterparty Swap
Contract.
L. The
First Lien Lenders have authorized the First Lien Agent and the
Second Lien Lenders have authorized the Second Lien Agent, on their
respective behalf’s, to enter into this Agreement to amend
and restate in its entirety the Original Intercreditor Agreement
and to secure, inter alia, on a first lien basis the Approved Hedge
Counterparty Obligations and the other First Lien Obligations and
to secure on a second lien basis the Second Lien
Obligations.
M. The
Approved Hedge Counterparty, the Borrower, the First Lien Agent, on
behalf of the First Lien Lenders and the Second Lien Agent, on
behalf of the Second Lien Lenders, and Collateral Agent are
entering into this Agreement to amend and restate the Original
Intercreditor Agreement in its entirety and to establish their
relative rights with respect to payment of their respective
Obligations owed by Borrower, to agree as to the exercise of
certain remedies and to appoint a collateral agent for the purposes
of dealing with the Security Documents and apportioning payments
among Secured Parties and for other purposes as set forth
herein.
NOW THEREFORE, in consideration of
the foregoing and the mutual covenants herein contained and other
good and valuable consideration, the existence and sufficiency of
which is expressly recognized by all of the parties hereto, the
parties agree to amend and restate the Original Intercreditor
Agreement as follows:
ARTICLE 1 -
DEFINITIONS
Section 1.01.
Defined Terms . The terms defined in the recitals
shall have the meanings assigned to those terms in such recitals,
and the following terms shall have the meanings assigned as
follows:
“ Additional Termination
Event ” has the meaning given that term in Section
4.06.
“ Affiliate ”
means, as to any Person, any other Person directly or indirectly
controlling, controlled by, or under direct or indirect common
control with, such Person. A Person shall be deemed to be
controlled by any other Person if such other Person possesses,
directly or indirectly, power to direct or cause the direction of
the management and policies of such Person whether by contract or
otherwise.
“ Agreement ”
means the Original Intercreditor Agreement, as amended and restated
by this Agreement and as it may be supplemented, modified or
amended from time to time as permitted herein. Any references to
the Original Intercreditor Agreement in any Transaction Document
shall refer to this Agreement.
“ Approved Hedge
Counterparty ” means BP Corporation North America, Inc.
or any of its Affiliates.
“ Approved Hedge
Counterparty Obligations ” means all obligations of any
Obligor under all Approved Hedge Counterparty Swap Contracts,
including all unpaid amounts, settlement amounts, indemnities,
costs, expenses (including reasonable attorneys’ fees),
interest on past due amounts and other liabilities and obligations
then due and unpaid by such Obligor.
“Approved Hedge
Counterparty Swap Contract” means (i) any Lender Hedging Agreement to which
the Approved Hedge Counterparty has become a party by novation or
otherwise and succeeded to the rights and obligations of a Lender
or an Affiliate of a Lender and (ii) any Swap Contract entered into
by the Approved Hedge Counterparty with the Borrower or any other
Obligor.
“ Bankruptcy Code
” means the United States Bankruptcy Code (11 U.S.C.
§101 et seq.), as amended from time to time.
“ Borrower ” has
the meaning given that term in the introductory
paragraph.
“ Borrowing Base Oil and
Gas Properties ” means those Oil and Gas Properties of
the Borrower and each of the other Obligors that are subject to the
Liens created by the Security Documents.
“ Business Day ”
means any day other than a Saturday, Sunday, or other day on which
commercial banks are authorized to close under the laws of New
York, or are in fact closed.
“ Cash Management
Obligations ” means, with respect to any Obligor, any
obligations of such Obligor owed to the First Lien Agent or any
First Lien Lender (or any of their respective Affiliates) in
respect of treasury management arrangements, depositary or other
cash management services.
“ Collateral ”
means the properties and rights described in the Security Documents
as security for any of the Obligations, and shall include any
amounts on deposit in any deposit account or securities account
which have been pledged to secure all or any portion of the
Obligations.
“ Collateral Agent
” has the meaning given that term in the introductory
paragraph.
“ Comparable Second Lien
Security Document ” means, in relation to any Collateral
subject to any First Lien Security Document, that Second Lien
Security Document that creates a security interest in the same
Collateral, granted by the same Obligor, as applicable.
“ DIP Financing ”
has the meaning given that term in Section 5.02.
“ Effective Date
” has the meaning given that term in the introductory
paragraph.
“ Enforcement Action
” means, with respect to the Collateral, the exercise of any
rights and remedies with respect to any Collateral securing the
Obligations or the commencement or prosecution of enforcement of
any of the rights and remedies under, as applicable, the First Lien
Documents or the Second Lien Documents, or applicable law,
including without limitation the exercise of any rights of set-off
or recoupment, and the exercise of any rights or remedies of a
secured creditor under the UCC of an applicable jurisdiction or
under the Bankruptcy Code.
“ Exempt LC ” has
the meaning given that term in Section 4.06.
“ Existing First Lien
Credit Agreement ” has the meaning given that term in
Recital A.
“ Existing Second Lien Loan
Agreement ” has the meaning given that term in Recital
B.
“ First Lien Agent
” has the meaning given that term in the introductory
paragraph and includes any successor agent under any First Lien
Agreement if the Existing First Lien Credit Agreement is replaced,
refunded or refinanced.
“First Lien
Agreement ” means
(i) the Existing First Lien Credit Agreement and (ii) any
other credit agreement, loan agreement, note agreement, promissory
note, indenture or other agreement or instrument evidencing or
governing the terms of any indebtedness or other financial
accommodation that has been incurred to extend, replace, refinance
or refund in whole or in part the indebtedness and other
obligations outstanding under the Existing First Lien Credit
Agreement or any other agreement or instrument referred to in this
clause (ii). Any reference to the First Lien Agreement
hereunder shall be deemed a reference to any First Lien Agreement
then extant.
“ First Lien Collateral
” means all assets, whether now owned or hereafter acquired
by the Borrower or any other Obligor, in which a Lien is granted or
purported to be granted in favor of First Lien Secured Parties or
in favor of Collateral Agent for the benefit of First Lien Secured
Parties, as security for any First Lien Obligation.
“ First Lien Documents
” means the First Lien Agreement, each Approved Hedge
Counterparty Swap Contract and each First Lien Security
Document.
“ First Lien Lenders
” has the meaning given that term in Recital A and includes
any successor lenders under the Existing First Lien Credit
Agreement and any successor lenders under any First Lien Agreement
if the Existing First Lien Credit Agreement is replaced, refunded
or refinanced.
“ First Lien Obligation
Triggering Event ” means (i) the occurrence and
continuance of an Event of Default under the First Lien Agreement
or any similar provision(s) in any Approved Hedge Counterparty Swap
Contract, (ii) Collateral Agent shall have received from the
Approved Hedge Counterparty written notice (a) that either an event
of default or a termination event has occurred and is continuing
under one or more of its Approved Hedge Counterparty Swap
Contracts, (b) that an early termination date has been designated
as a result thereof, (c) that specifies the sum of all unpaid
amounts and settlement payments then due as the result of the
designation of such early termination date and the amount of
interest and other amounts then due and payable by the Obligors in
respect thereof, and (d) that the amount set forth in clause (c)
has not been paid in full or discharged to the satisfaction of such
Approved Hedge Counterparty, or (iii) Collateral Agent shall have
received from the First Lien Agent
written notice (y) that an
“Event of Default” under the First Lien Agreement has
occurred and is continuing and (z) that the unpaid principal amount
of the notes under the First Lien Agreement and all interest
accrued and unpaid thereon have been declared to be then due and
payable.
“ First Lien
Obligations ” means (i) all principal of and
interest (including without limitation any Post-Petition Interest)
and premium (if any) on all loans made pursuant to the First Lien
Agreement, (ii) all reimbursement obligations (if any) and
interest thereon (including without limitation any Post-Petition
Interest) with respect to any letter of credit or similar
instruments issued pursuant to the First Lien Agreement,
(iii) all Hedging Obligations of any Obligor owed to a First
Lien Secured Party including, without limitation, any Approved
Hedge Counterparty Swap Contract, (iv) all Cash Management
Obligations of any Obligor, and (v) all fees, expenses and
other amounts payable from time to time pursuant to the First Lien
Documents, in each of the foregoing cases whether or not allowed or
allowable against any Obligor or their estates in an Insolvency
Proceeding. To the extent any payment with respect to any First
Lien Obligation (whether by or on behalf of any Obligor, as
proceeds of security, enforcement of any right of setoff or
otherwise) is declared to be a fraudulent conveyance or a
preference in any respect, set aside or required to be paid to a
debtor in possession, any Second Lien Secured Party, receiver or
similar Person, then the obligation or part thereof originally
intended to be satisfied shall, for the purposes of this Agreement
and the rights and obligations of the First Lien Secured Parties
and the Second Lien Secured Parties, be deemed to be reinstated and
outstanding as if such payment had not occurred.
“ First Lien Obligations
Payment Date ” means the first date on which (i) the
First Lien Obligations (other than those that constitute Unasserted
Contingent Obligations) have been indefeasibly paid in cash in full
(or cash collateralized or defeased in accordance with the terms of
the First Lien Documents), (ii) all commitments to extend
credit under the First Lien Documents have been terminated, and
(iii) there are no outstanding letters of credit or similar
instruments issued under the First Lien Documents (other than such
as have been cash collateralized or defeased in accordance with the
terms of the First Lien Security Documents).
“ First Lien Secured
Parties ” means the First Lien Agent, the First Lien
Lenders (or their Affiliates), the Approved Hedge Counterparty and
any other holders of First Lien Obligations, including replacement
First Lien Lenders, and Collateral Agent, acting in its capacity as
collateral agent for the benefit of First Lien Secured Parties
under any Security Document.
“ First Lien Security
Documents ” means each guaranty, mortgage, security
agreement, pledge and control agreement listed on Annex 1 under
Part 1 “First Lien Security Documents” and any other
documents that are designated under the First Lien Agreement as
“Collateral Documents” for purposes of this Agreement
that grant a Lien in favor of First Lien Agent for the benefit of
First Lien Secured Parties, or in favor of Collateral Agent, for
the benefit of First Lien Secured Parties, to secure First Lien
Obligations.
“ First Liens ”
means (i) the first and prior liens and security interests granted
in the Collateral in favor of the First Lien Agent on behalf of the
First Lien Secured Parties, as security for the payment and
performance of the First Lien Obligations and (ii) the first and
prior liens and security interests granted in the Collateral in
favor of the Collateral Agent on behalf of the First Lien Secured
Parties, as security for the payment and performance of the First
Lien Obligations.
“ Hedging Obligations
” means, with respect to any Obligor, any obligations of such
Obligor owed to any First Lien Secured Party (or any of its
Affiliates) or to any Second Lien Secured Party (or any of its
Affiliates) in respect of any Lender Hedging Agreement, including
all unpaid amounts, settlement amounts, indemnities, costs,
expenses (including reasonable attorneys’ fees), interest on
past due amounts and other liabilities and obligations then due and
unpaid by any Obligor under such Lender Hedging
Agreement.
“ Indemnitee ”
has the meaning given that term in Section 9.09.
“ Indemnified
Liabilities ” has the meaning given that term in Section
9.09.
“ Insolvency Proceeding
” means any proceeding in respect of bankruptcy, insolvency,
winding up, receivership, dissolution or assignment for the benefit
of creditors, in each of the foregoing events whether under the
Bankruptcy Code or any similar federal, state or foreign
bankruptcy, insolvency, reorganization, receivership or similar
law.
“ ISDA ” means
the International Swaps and Derivatives Association,
Inc.
“ Lender Hedging
Agreement ” means (i) a Swap Contract between Borrower
and a First Lien Lender or an Affiliate of a First Lien Lender and
(ii) an Approved Hedge Counterparty Swap Contract.
“ Lien ” means,
with respect to any asset, (a) any mortgage, deed of trust,
deed to secure debt, lien, pledge, hypothecation, assignment,
encumbrance, charge or security interest in, on or of such asset,
(b) the interest of a vendor or a lessor under any conditional
sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as
any of the foregoing) relating to such asset, and (c) in the
case of securities, any purchase option, call or similar right of a
third party with respect to such securities.
“ Obligations ”
means the First Lien Obligations and the Second Lien
Obligations.
“ Obligors ”
means Borrower and each direct or indirect Affiliate or shareholder
(or equivalent) of the Borrower or any of its Affiliates that is
now or hereafter becomes a party to any Security
Document.
“ Oil and Gas
Properties ” means fee, leasehold or other interests in
or under mineral estates or hydrocarbon leases with respect to
properties situated in the United States of America, including
overriding royalty and royalty interests, leasehold estate
interests, net profits interests, production payment interests and
mineral fee interests, together with contracts executed in
connection therewith and all tenements, hereditaments,
appurtenances and properties, real or personal, appertaining,
belonging, affixed or incidental thereto.
“ Original Intercreditor
Agreement ” has the meaning given that term in Recital
F.
“ Person ” means,
any person, individual, sole proprietorship, partnership, joint
venture, corporation, limited liability company, unincorporated
organization, association, institution, entity, party, including
any government and any political subdivision, agency or
instrumentality thereof.
“ Post-Petition
Interest ” means any interest or entitlement to fees or
expenses that accrues after the commencement of any Insolvency
Proceeding, whether or not allowed or allowable in any such
Insolvency Proceeding.
“ Principal Agreements
” means collectively the Principal First Lien Agreements and
the Principal Second Lien Agreements.
“ Principal First Lien
Agreements ” means Approved Hedge Counterparty Swap
Contracts and the First Lien Agreement.
“ Principal Second Lien
Agreements ” means the Second Lien Agreement.
“ Proved Reserves
” means “Proved Reserves” as defined in the
Definitions for Oil and Gas reserves promulgated by the Society of
Petroleum Engineers (or any generally recognized successor) as in
effect at the time in question.
“ PV10 ” means
the present worth of future net income, discounted to present value
at the simple interest rate of ten percent (10%) per
year.
“ Recovery ” has
the meaning given that term in Section 5.05.
“ Required First Lien
Lenders ” means “Required Lenders” as defined
in the Existing First Lien Credit Agreement and includes any
comparable defined term under any First Lien Agreement if the
Existing First Lien Credit Agreement is replaced, refunded or
refinanced.
“ Required First Lien
Secured Parties ” has the meaning given that term in
Section 4.02(a).
“ Reserve Report
” means a report prepared by an internal petroleum engineer
of the Borrower regarding the Proved Reserves attributable to the
Borrowing Base Oil and Gas Properties, using the criteria and
parameters required by and acceptable to the Securities and
Exchange Commission and incorporating the present cost of
appropriate plugging and abandonment obligations to be incurred in
the future, taking into account any plugging and abandonment fund
required to be accrued or established by Borrower out of cash flow
from the Borrowing Base Oil and Gas Properties covered by such
report with respect to such future obligations.
“ Second Lien Agent
” has the meaning given that term in the introductory
paragraph and includes any successor agent under any Second Lien
Agreement if the Existing Second Lien Loan Agreement is replaced,
refunded or refinanced.
“ Second Lien Agreement
” means (i) the Existing Second Lien Loan Agreement and
(ii) any other credit agreement, loan agreement, note
agreement, promissory note, indenture, or other agreement or
instrument evidencing or governing the terms of any indebtedness or
other financial accommodation that has been incurred to extend,
replace, refinance or refund in whole or in part the indebtedness
and other obligations outstanding under the Existing Second Lien
Loan Agreement or other agreement or instrument referred to in this
clause (ii). Any reference to the Second Lien Agreement
hereunder shall be deemed a reference to any Second Lien Agreement
then extant.
“ Second Lien
Collateral ” means all assets, whether now owned or
hereafter acquired by the Borrower or any other Obligor, in which a
Lien is granted or purported to be granted in favor of Second Lien
Secured Parties, or in favor Collateral Agent for the benefit of
Second Lien Secured Parties, as security for any Second Lien
Obligation.
“ Second Lien Documents
” means each Second Lien Agreement and each Second Lien
Security Document
“ Second Lien Lenders
” has the meaning given that term in Recital B and includes
any successor lenders under the Existing Second Lien Loan Agreement
and any successor lenders under any Second Lien Agreement if the
Existing Second Lien Loan Agreement is replaced, refunded or
refinanced.
“ Second Lien Obligation
Triggering Event ” means (i) the occurrence and
continuance of an Event of Default under the Second Lien Agreement
or any similar provision(s) in any Lender Hedging Agreement, or
(ii) Collateral Agent shall have received from the Second Lien
Agent written notice (a) that an “Event of Default”
under the Second Lien Agreement has occurred and is continuing and
(b) that the unpaid principal amount of the notes under the Second
Lien Agreement and all interest accrued and unpaid thereon have
been declared to be then due and payable.
“ Second Lien
Obligations ” means (i) all principal of and
interest (including without limitation any Post-Petition Interest)
and premium (if any) on all indebtedness under the Second Lien
Agreement, (ii) Hedging Obligations of any Obligor owed to a Second
Lien Secured Party; and (iii) all fees, expenses and other
amounts payable from time to time pursuant to the Second Lien
Documents, in each case whether or not allowed or allowable against
any Obligor or their estates in an Insolvency Proceeding. To the
extent any payment with respect to any Second Lien Obligation
(whether by or on behalf of any
Obligor, as proceeds of security,
enforcement of any right of setoff or otherwise) is declared to be
a fraudulent conveyance or a preference in any respect, set aside
or required to be paid to a debtor in possession, then the
obligation or part thereof originally intended to be satisfied
shall, for the purposes of this Agreement and the rights and
obligations of the First Lien Secured Parties and the Second Lien
Secured Parties, be deemed to be reinstated and outstanding as if
such payment had not occurred.
“ Second Lien Secured
Parties ” means the Second Lien Agent, the Second Lien
Lenders (or their Affiliates), and any other holders of Second Lien
Obligations, including replacement Second Lien Lenders, and
Collateral Agent, acting in its capacity as collateral agent for
the benefit of Second Lien Secured Parties under any Security
Document.
“ Second Lien Security
Documents ” means each guaranty, mortgage, security
agreement, pledge and control agreement listed on Annex 1 under
Part 2 “Second Lien Security Documents” and any other
documents that are designated under the Second Lien Agreement as
“Collateral Documents” for purposes of this Agreement
that grant a Lien in favor of Second Lien Agent for the benefit of
Second Lien Secured Parties, or in favor of Collateral Agent, for
the benefit of Second Lien Secured Parties, to secure Second Lien
Obligations.
“ Second Liens ”
means (i) the second and junior liens and security interests
granted in the Collateral in favor of the Second Lien Agent on
behalf of the Second Lien Secured Parties, as security for the
payment and performance of the Second Lien Obligations and (ii) the
second and junior liens and security interests granted in the
Collateral in favor of the Collateral Agent on behalf of the Second
Lien Secured Parties, as security for the payment and performance
of the Second Lien Obligations.
“ Secured Parties
” means the First Lien Secured Parties and the Second Lien
Secured Parties.
“ Security Documents
” means the guaranties, deeds of trust, mortgages, security
agreements, pledge agreements, and related financing statements
listed on Annex 1.
“ Standstill Period
” has the meaning given that term in Section
3.02(a)(i).
“ Swap Contract ”
means (a) any and all interest rate swap transactions, basis swaps,
credit derivative transactions, forward rate transactions,
commodity swaps, commodity options, forward commodity contracts,
equity or equity index swaps or options, bond or bond price or bond
index swaps or options or forward bond or forward bond price or
forward bond index transactions, interest rate options, forward
foreign exchange transactions, cap transactions, floor
transactions, collar transactions, currency swap transactions,
cross-currency rate swap transactions, currency options, spot
contracts, or any other similar transactions or any combination of
any of the foregoing (including any options to enter into any of
the foregoing), whether or not any such transaction is governed by
or subject to any master agreement, and (b) any and all
transactions of any kind, and the related confirmations, which are
subject to the terms and conditions of, or governed by, any form of
master agreement published by the ISDA, any International Foreign
Exchange Master Agreement, or any other master agreement (any such
master agreement, together with any related schedules, a “
Master Agreement ”), including any such
obligations or liabilities under any Master Agreement.
“ Third Amendment to First
Lien Credit Agreement ” has the meaning given that term
in Recital A.
“ Transaction Documents
” means this Agreement, the Principal Agreements and the
Security Documents.
“ Triggering Event
” shall mean either a First Lien Obligation Triggering Event
or a Second Lien Obligation Triggering Event.
“ Unasserted Contingent
Obligations ” shall mean, at any time, First Lien
Obligations or Second Lien Obligations for taxes, costs,
indemnifications, reimbursements, damages and other liabilities
(excluding (i) the principal of, and interest and premium (if
any) on, and fees and expenses relating to, any First Lien
Obligation or Second Lien Obligation, as the case may be, and
(ii) contingent reimbursement obligations in respect of
amounts that may be drawn under outstanding letters of credit) in
respect of which no assertion of liability (whether oral or
written) and no claim or demand for payment (whether oral or
written) has been made (and, in the case of First Lien Obligations
for indemnification, no notice for indemnification has been issued
by the indemnitee) at such time.
“ UCC ” shall
mean the Uniform Commercial Code as in effect from time to time in
the State of New York.
Section 1.02.
Headings . Article and section headings of this
Agreement are for convenience of reference only, and shall not
govern the interpretation of any of the provisions of this
Agreement.
Section 1.03.
Terms
Generally . The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. The words
“include”, “includes” and
“including” shall be deemed to be followed by the
phrase “without limitation”. The word
“will” shall be construed to have the same meaning and
effect as the word “shall”. Unless the context requires
otherwise (a) any definition of or reference to any agreement,
instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to
time amended, supplemented, renewed, replaced, increased, restated
or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any
reference herein to any Person shall be construed to include such
Person’s successors and assigns; provided such successors and
assigns are permitted by the Principal Agreement to which such
Person is a party and such Person complies with Section 9.25
hereof, (c) the words “herein”, “hereof”
and “hereunder”, and words of similar import, shall be
construed to refer to this Agreement in its entirety and not to any
particular provision hereof, and (d) all references herein to
Recitals, Articles, Sections, Exhibits and Annexes shall be
construed to refer to Recitals, Articles and Sections of, and
Exhibits and Annexes to, this Agreement unless otherwise
indicated.
ARTICLE 2 – LIEN
PRIORITIES .
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Section 2.01.
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Subordination of Second
Liens .
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(a) Any
and all Liens now existing or hereafter created or arising in favor
of any Second Lien Secured Party, or in favor of Collateral Agent
for the benefit of Second Lien Secured Parties, securing the Second
Lien Obligations, regardless of how acquired, whether by grant,
statute, operation of law, subrogation or otherwise, are expressly
junior in priority, operation and effect to any and all Liens now
existing or hereafter created or arising in favor of the First Lien
Secured Parties, or in favor of Collateral Agent for the benefit of
First Lien Secured Parties, securing the First Lien Obligations,
notwithstanding (i) anything to the contrary contained in any
agreement or filing to which any Second Lien Secured Party may now
or hereafter be a party, and regardless of the time, order or
method of grant, attachment, recording or perfection of any
financing statements or other Liens or any defect or deficiency or
alleged defect or deficiency in any of the foregoing, (ii) any
provision of the UCC or any applicable law or any First Lien
Document or Second Lien Document or any other circumstance
whatsoever and (iii) the fact that any such Liens in favor of
any First Lien Secured Party or in favor of the Collateral Agent
for the benefit of First Lien Secured Parties securing any of the
First Lien Obligations are (x) subordinated to any Lien
securing any obligation of any Obligor other than the Second Lien
Obligations or (y) otherwise subordinated, voided, avoided,
invalidated or lapsed.
No First Lien Secured Party or
Second Lien Secured Party shall object to or contest, or support
any other Person in contesting or objecting to, in any proceeding
(including without limitation, any Insolvency Proceeding), the
validity, extent, perfection, priority or enforceability of any
security interest in the Collateral granted to the other or to the
Collateral Agent. Notwithstanding any failure by any First Lien
Secured Party or Second Lien Secured Party or by Collateral Agent
on their behalf to perfect its security interests in the Collateral
or any avoidance, invalidation or subordination by any third party
or court of competent jurisdiction of the security interests in the
Collateral granted to the First Lien Secured Parties or the Second
Lien Secured Parties, or to the Collateral Agent for their benefit,
the priority and rights as between the First Lien Secured Parties
and the Second Lien Secured Parties with respect to the Collateral
and proceeds thereof shall be as set forth herein.
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Section 2.02.
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Nature of First Lien
Obligations .
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(a) The
Second Lien Agent on behalf of itself and the other Second Lien
Secured Parties acknowledges that all or a portion of the First
Lien Obligations are revolving in nature and that the amount
thereof that may be outstanding at any time or from time to time
may be increased or reduced and subsequently reborrowed, and that
subject to Section 6.02 the terms of the First Lien Obligations may
be modified, extended or amended from time to time, and that the
aggregate amount of the First Lien Obligations may be increased,
replaced or refinanced, in each event, without notice to or consent
by the Second Lien Secured Parties and without affecting the
provisions hereof. The Lien priorities provided in Section 2.01
shall not be altered or otherwise affected by any such amendment,
modification, supplement, extension, repayment, reborrowing,
increase, replacement, renewal, restatement or refinancing of
either the First Lien Obligations or the Second Lien Obligations,
or any part thereof.
(b) First
Lien Agent under any First Lien Agreement, on behalf of itself and
the other First Lien Lenders, consents to Obligor entering into
Approved Hedge Counterparty Swap Contracts and agrees that each of
such Swap Contracts is a Lender Hedging Agreement.
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Section 2.03
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Status of Liens:
Collateral .
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(a) Each
of the Approved Hedge Counterparty, First Lien Agent, for itself
and on behalf of the First Lien Lenders, and Second Lien Agent, for
itself and on behalf of the Second Lien Lenders, agrees that,
subject to Section 4.03 and notwithstanding anything to the
contrary contained in any First
Lien Document or Second Lien
Document, (i) all First Lien Secured Parties shall rank pari passu
in priority with respect to any First Lien on any Collateral
securing the First Lien Obligations, and (ii) all First Liens on
any Collateral securing any First Lien Obligations shall rank pari
passu with one another.
(b) Each
of the Approved Hedge Counterparty and First Lien Agent, for itself
and on behalf of the First Lien Lenders, agrees (i) that if any
such Person takes any additional Collateral in respect of any First
Lien Obligations, such Person shall take any and all action
necessary to create and perfect First Liens on any such Collateral
in favor of the other First Lien Lenders for the equal and ratable
benefit of all First Lien Lenders (subject to Section 4.03),
including, without limitation, executing and delivering mortgages,
security agreements, financing statements, amendments to financing
statements, and any other agreements, documents, certificates or
instruments necessary to accomplish the foregoing and (ii) to take
any and all action necessary to create and perfect Second Liens on
any such Collateral in favor of the Second Lien Lenders for the
equal and ratable benefit of all Second Lien Lenders (subject to
Section 4.03) .
(c) Each
of the Approved Hedge Counterparty, First Lien Agent, for itself
and on behalf of the First Lien Lenders, and Second Lien Agent, for
itself and on behalf of the Second Lien Lenders, agrees to take any
and all action necessary to cause Collateral Agent to be designated
as the sole secured party for the benefit of the Approved Hedge
Counterparty, First Lien Agent, First Lien Lenders, Second Lien
Agent and Second Lien Lenders, in respect of any Lien on any
Collateral securing the First Lien Obligations or the Second Lien
Obligations, including, without limitation, executing and
delivering mortgages, security agreements, financing statements,
amendments to financing statements, and any other agreements,
documents, certificates or instruments evidencing or required or
permitted to be filed to create or perfect a Lien on
Collateral.
(d) Each
of the Approved Hedge Counterparty, First Lien Agent, for itself
and on behalf of the First Lien Lenders, Second Lien Agent, for
itself and on behalf of the Second Lien Lenders and each Obligor
will from time to time sign, execute, deliver and file, alone or
with Collateral Agent or any other Secured Party or any other
Obligor, and hereby authorizes Collateral Agent to file, any
financing statements or security agreements pertaining to the
Collateral, or any part thereof; and take all further action that
may be necessary or desirable, or that Collateral Agent may
reasonably request, to confirm, perfect, preserve and protect the
security interests intended to be granted under the Security
Documents, and in addition, each of the Secured Parties and the
Obligors hereby authorizes Collateral Agent to execute and deliver
on behalf of such Person and to file such other financing
statements or security agreements without the signature of such
Person either in Collateral Agent’s name or in the name of
such Person and as agent and attorney-in-fact for such Person. Each
Secured Party and each Obligor shall do all such additional and
further acts or things, give such assurances and execute such
agreements, documents, certificates or instruments as Collateral
Agent requires to vest more completely in and assure to Collateral
Agent and Secured Parties their rights under this Agreement
(including this Section 2.03), including, without limiting the
generality of the foregoing, marking conspicuously each note or
other instrument evidencing the First Lien Obligations and Second
Lien Obligations with the legend described in Section 2.05(b) and,
at the request of Collateral Agent, each of its records pertaining
to the Collateral with such legend.
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Section 2.04.
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Agreements Regarding Actions
to Perfect Liens .
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(a) The
Second Lien Agent on behalf of itself and the other Second Lien
Secured Parties agrees that UCC-1 financing statements, mortgages,
patent, trademark or copyright filings or other filings or
recordings filed or recorded by or on behalf of the Second Lien
Agent shall be in form satisfactory to the First Lien
Agent.
(b) The
Collateral Agent hereby acknowledges that, to the extent that it
holds, or a third party holds on its behalf, physical possession of
or “control” (as defined in the UCC) over Collateral
pursuant to the First Lien Security Documents, such possession or
control is also for the benefit of the Second Lien Agent and the
other Second Lien Secured Parties for purposes of perfecting their
security interest in such Collateral. Nothing in the preceding
sentence shall be construed to impose any duty on the Collateral
Agent (or any third party acting on its behalf) with respect to
such Collateral or provide the Second Lien Agent or any other
Second Lien Secured Party with any rights with respect to such
Collateral beyond those specified in this Agreement and the Second
Lien Security Documents; provided that subsequent to the
occurrence of the First Lien Obligations Payment Date, the
Collateral Agent shall promptly deliver written notice of the
occurrence of same to Second Lien Agent and shall (x) deliver
to the Second Lien Agent, at the Borrower’s sole cost and
expense, the Collateral in its possession or control together with
any necessary endorsements to the extent required by the Second
Lien Documents, and shall deliver to Borrower written notice of
such action, or (y) direct and deliver such Collateral as a
court of competent jurisdiction otherwise directs, and provided
further that the provisions of this Agreement are intended
solely to govern the respective Lien priorities as between the
First Lien Secured Parties and the Second Lien Secured Parties, and
shall not impose on the Collateral Agent or the First Lien Secured
Parties any obligations in respect of the disposition of any
Collateral (or any proceeds thereof) that would conflict with prior
perfected Liens or any claims thereon in favor of any other Person
that is not a Secured Party.
(a) The
Collateral Agent, First Lien Agent (on behalf of itself and the
other First Lien Secured Parties) and Second Lien Agent (on behalf
of itself and the other Second Lien Secured Parties) agree that all
mortgages, deeds of trust, deeds and similar instruments
(collectively, “ mortgages ”) now or hereafter
filed against real property in favor of Second Lien Agent or
Collateral Agent for the benefit of the Second Lien Secured
Parties, including without limitation all Security Documents, shall
be in form satisfactory to the First Lien Agent and shall contain
the following notation: “ALL LIENS GRANTED BY THIS INSTRUMENT
SHALL, TO THE EXTENT SET FORTH IN THE INTERCREDITOR AGREEMENT DATED
JULY 11, 2008 BY AND AMONG QUEST CHEROKEE, LLC, ROYAL BANK OF
CANADA, AS FIRST LIEN AGENT, ROYAL BANK OF CANADA, AS SECOND LIEN
AGENT AND PARTIES THERETO, BE SUBORDINATE AND JUNIOR TO ALL LIENS
GRANTED BY GRANTOR TO SECURE THE FIRST LIEN OBLIGATIONS REGARDLESS
OF THE RELATIVE PRIORITY OF SUCH LIENS, SUCH INTERCREDITOR
AGREEMENT BEING INCORPORATED HEREIN AND BY THIS REFERENCE BEING
MADE A PART HEREOF.”
(b) Upon
written request from the Collateral Agent, each Secured Party shall
mark, or cause to be marked, at all times on each note or other
instrument evidencing the Obligations to which it is a holder a
legend, in form and substance satisfactory to Collateral Agent,
indicating that with respect to Obligations of an Obligor, the
rights, remedies and obligations of the Obligors and the holders of
such note or other instrument shall be limited by and subject to
the terms of this Agreement.
Section 2.06
No New Second Liens . So long as the First Lien
Obligations Payment Date has not occurred, the parties hereto agree
that no Second Lien Secured Party shall acquire or hold any Lien on
any assets of any Obligor securing any Second Lien Obligation which
assets are not also subject to a First Lien in favor of the First
Lien Secured Parties under the First Lien Documents or under
Security Documents. If any Second Lien Secured Party shall
(nonetheless and in breach hereof) acquire or hold any Lien on any
assets of any Obligor securing any Second Lien Obligation which
assets are not also subject to a First Lien in favor of the First
Lien Secured Parties under the First Lien Documents, then the
Second Lien Agent (or the relevant Second Lien Secured Party)
shall, and shall be deemed to have, without the need for any
further consent of any other Second Lien Secured Party and
notwithstanding anything to the contrary in any other Second Lien
Document be deemed to hold and have held such Lien
for the benefit of the First Lien
Agent as security for the First Lien Obligation and shall assign
such Lien to the Collateral Agent or the First Lien Agent (in which
case the Second Lien Agent may retain a junior Second Lien on such
assets subject to the terms hereof).
Section 2.07.
Similar Liens and Agreements . The parties hereto
agree that it is their intention that the First Lien Collateral and
the Second Lien Collateral be identical. To the extent that,
notwithstanding this Section 2.07, the First Lien Collateral and
Second Lien Collateral are not identical, the Second Lien Agent, on
behalf of Second Lien Secured Parties, agrees that any amounts
received by or distributed to any of them pursuant to or as a
result of Liens on Second Lien Collateral that is not First Lien
Collateral, shall be subject to Section 4.03. In furtherance of the
foregoing, the parties hereto agree, subject to the other
provisions of this Agreement:
(a) upon
reasonable request by the First Lien Agent or the Second Lien
Agent, to cooperate in good faith (and to direct their counsel to
cooperate in good faith) from time to time in order to determine
the specific items included in the First Lien Collateral and the
Second Lien Collateral and the steps taken to perfect their
respective Liens thereon and the identity of the respective parties
obligated under the First Lien Documents and the Second Lien
Documents;
(b) that
the documents and agreements creating or evidencing the First Lien
Collateral and the Second Lien Collateral and guarantees for the
First Lien Obligations and the Second Lien Obligations shall be
Security Documents or otherwise in all material respects the same
forms of documents other than with respect to the First Lien and
Second Lien nature of the obligations and Collateral thereunder;
and
(c) that
in the event either First Lien Agent shall obtain or record any
First Lien Documents in favor of First Lien Agent granting Liens on
Collateral to secure First Lien Obligations, or Second Lien Agent
shall obtain or record any Second Lien Documents in favor of Second
Lien Agent granting Liens on Collateral to secure Second Lien
Obligations, and such First Lien Documents or Second Lien Documents
are not Security Documents, then First Lien Agent or Second Lien
Agent, as the case may be, shall notify the other of such
documentation and provide a copy thereof.
ARTICLE 3 ENFORCEMENT
RIGHTS
Section 3.01.
Separate Debts . The amounts payable by the Obligors
to each Secured Party at any time under any of the Principal
Agreements to which such Secured Party is a party shall be separate
and independent debts, and each Secured Party shall be entitled to
enforce any right arising out of the applicable Principal Agreement
to which it is a party, subject to the terms thereof and of this
Agreement. First Lien Agent, for itself and on behalf of the First
Lien Lenders, and Second Lien Agent, for itself and on behalf of
the Second Lien Lenders and Approved Hedge Counterparty each hereby
agrees that no Secured Party other than Collateral Agent (in its
capacity as such) shall have any right individually to realize upon
any Liens granted under the Security Documents, it being understood
and agreed that such remedies may be exercised only by Collateral
Agent for the ratable benefit of Secured Parties.
Section 3.02.
Limits of Enforcement of Second Lien . Until the
First Lien Obligations Payment Date has occurred, whether or not a
Insolvency Proceeding has been commenced by or against any
Obligor:
(a) The
Second Lien Agent and the Second Lien Secured Parties (and
Collateral Agent, on behalf of Second Lien Agent or Second Lien
Secured Parties, under any Security Document):
(i) will
not exercise or seek to exercise any rights or remedies (including
setoff) with respect to the Collateral (including, without
limitation, the exercise of any right under any
lockbox agreement, account control
agreement, landlord waiver or bailee’s letter or similar
agreement or arrangement to which the Second Lien Agent or any
Second Lien Secured Party is a party), or institute any action or
proceeding with respect to such rights or remedies (including any
action of foreclosure); provided , however , that the
Second Lien Agent may exercise (and direct Collateral Agent to
exercise, pursuant to any Security Document) any or all such rights
and remedies of Second Lien Secured Parties under any Second Lien
Security Document after the passage of a period of 179 days from
the date of delivery of a notice in writing to the First Lien Agent
and Approved Hedge Counterparty that an Event of Default (as
defined in the Second Lien Agreement) has occurred under the Second
Lien Documents and the Second Lien Obligations have been
accelerated (with respect to each individual Event of Default, each
a “ Standstill Period ”) which notice may only
be delivered following the occurrence of and during the
continuation of an Event of Default (as defined in the Second Lien
Agreement) under the Second Lien Documents and the Second Lien
Obligations have been accelerated; provided , further
, however, notwithstanding anything herein to the contrary, in no
event shall the Second Lien Agent or any Second Lien Secured Party
exercise or continue to exercise any rights or remedies with
respect to the Collateral if, notwithstanding the expiration of any
outstanding Standstill Period, the First Lien Agent, First Lien
Lenders or Approved Hedge Counterparty (or the Collateral Agent on
their behalf) shall have commenced and are diligently pursuing the
exercise of any of their rights or remedies with respect the
Collateral (prompt notice of such exercise to be given to the
Second Lien Agent),
(ii) will
not contest, protest or object to any foreclosure proceeding or
action brought by the Collateral Agent, the First Lien Agent or any
First Lien Secured Party or any other exercise by the Collateral
Agent, the First Lien Agent or any First Lien Secured Party, of any
rights and remedies relating to the Collateral under the First Lien
Documents or otherwise, and
(iii) subject
to its rights under clause (a)(i) above, will not object to
the forbearance by the Collateral Agent, the First Lien Agent or
any First Lien Secured Party from bringing or pursuing any
foreclosure proceeding or action or any other exercise of any
rights or remedies relating to the Collateral.
Section 3.03.
Election to Pursue Remedies . Except as provided in
Section 3.02(a)(i) hereof following the expiration of a Standstill
Period, the First Lien Secured Parties shall have the exclusive
right (and under any Security Document shall have the exclusive
right to instruct the Collateral Agent) to take and continue any
Enforcement Action with respect to the Collateral, without any
consultation with or consent of any Second Lien Secured Party, but
subject to the proviso set forth in Section 5.01. Upon the
occurrence and during the continuance of a First Lien Obligation
Triggering Event, subject to the provisions of this Agreement, the
First Lien Agent and the other First Lien Secured Parties may (and
under any Security Document may instruct the Collateral Agent on
their behalf to) take and continue any Enforcement Action in such
order and manner as they may determine in their sole
discretion.
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Section 3.04.
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Duty of Collateral
Agent .
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(a) Collateral
Agent shall not be obligated to follow any instructions of Second
Lien Secured Parties if such instructions conflict with the
provisions of this Agreement, any Security Document or any
applicable law or Collateral Agent determines, in its sole and
absolute discretion, that such instructions are ambiguous,
inconsistent, in conflict with previously received instructions or
otherwise insufficient to direct the actions of Collateral Agent
provided that Collateral Agent explains the grounds for a refusal
based on a deficiency of instructions. On and after the First Lien
Obligations Payment Date, and at any time prior thereto following
the expiration of any applicable Standstill Period pursuant to
Section 3.02(a)(i) above, and subject to the first sentence of this
Section 3.04(a) and Article 10 hereof, Collateral
Agent agrees that it shall follow
instructions of Second Lien Secured Parties with respect to the
Collateral and Security Documents.
(b) Collateral
Agent shall not be obligated to follow any instructions of Required
First Lien Secured Parties if: (i) such instructions conflict with
the provisions of this Agreement, any Principal Agreement, any
Security Document or any applicable law, (ii) Collateral Agent
determines, in its sole and absolute discretion, that such
instructions are ambiguous, inconsistent, in conflict with
previously received instructions or otherwise insufficient to
direct the actions of Collateral Agent; provided that
Collateral Agent explains the grounds for a refusal based on a
deficiency of instructions, or (iii) Collateral Agent has not been
adequately indemnified to its satisfaction. Nothing in this
Agreement shall impair the right of Collateral Agent in its
discretion to take any action authorized under this Agreement or
any Security Document, to the extent that the consent of any party
hereto is not required or to the extent such action is not
prohibited by the terms hereof or thereof, which it deems proper
and consistent with the instructions given by First Lien Secured
Parties as provided for herein or otherwise in the best interest of
First Lien Secured Parties. In the absence of written instructions
from any party hereto for any particular matter, Collateral Agent
shall have no duty to take or refrain from taking any action unless
such action or inaction is explicitly required by the terms of this
Agreement, the Security Documents or applicable law. Collateral
Agent shall have no duty with respect to (i) a Triggering Event
unless it first receives notice that a Triggering Event has
occurred or (ii) the expiration of any Standstill Period unless it
first receives notice that such Standstill Period has
expired.
(c) Beyond
its duties expressly provided herein or in the Security Documents
and its duties to account to Secured Parties and/or the Obligors
for monies and other property received by it hereunder or under any
Security Document, Collateral Agent shall have no implied duty to
Secured Parties or any Obligor as to any property belonging to any
Obligor (whether or not the same constitutes Collateral) in its
possession or control or in the possession or control of any of its
agents or nominees, or any income thereon or as to the preservation
of rights against prior parties or any other rights pertaining
thereto or available at law or otherwise.
(d) Nothing
in this Section 3.04 shall impair the right of any Secured Party to
exercise its rights of netting or set-off, if any.
Section 3.05
Standstill and Waivers . The Second Lien Agent, on
behalf of itself and the other Second Lien Secured Parties, agrees
that, until the First Lien Obligations Payment Date has occurred,
subject to the proviso set forth in Section 5.01 and except as
permitted by Section 3.02(a):
(a) they
will not take or cause to be taken any action, the purpose or
effect of which is to make any Lien in respect of any Second Lien
Obligation pari passu with or senior to, or to give any Second Lien
Secured Party any preference or priority relative to, the Liens
with respect to the First Lien Obligations or the First Lien
Secured Parties with respect to any of the Collateral;
(b) they
will not oppose, object to, interfere with, hinder or delay, in any
manner, whether by judicial proceedings (including without
limitation the filing of an Insolvency Proceeding) or otherwise,
any foreclosure, sale, lease, exchange, transfer or other
disposition of the Collateral by the Collateral Agent, the First
Lien Agent or any other First Lien Secured Party or any other
Enforcement Action taken by or on behalf of the Collateral Agent,
the First Lien Agent or any other First Lien Secured
Party;
(c) they
have no right to (x) direct either the Collateral Agent, the
First Lien Agent or any other First Lien Secured Party to exercise
any right, remedy or power with respect to the Collateral or
pursuant to the First Lien Security Documents or (y) consent
or object to the exercise by the Collateral Agent, the First Lien
Agent or any other First Lien Secured Party of any right, remedy or
power with
respect to the Collateral or
pursuant to the First Lien Security Documents or to the timing or
manner in which any such right is exercised or not exercised (or,
to the extent they may have any such right described in this
clause (c), whether as a junior Lien creditor or otherwise,
they hereby irrevocably waive such right), except to the extent
such exercise was in violation of this Agreement;
(d) without
waiving any rights to take action as unsecured creditors, they will
not institute any suit or other proceeding or assert in any suit,
Insolvency Proceeding or other proceeding any claim against either
Collateral Agent, First Lien Agent or any other First Lien Secured
Party seeking damages from or other relief by way of specific
performance, instructions or otherwise, with respect to, and none
of the Collateral Agent, First Lien Agent nor any other First Lien
Secured Party shall be liable for, any action taken or omitted to
be taken by the Collateral Agent, the First Lien Agent or any other
First Lien Secured Party with respect to the Collateral or pursuant
to the First Lien Documents, so long as such actions or omissions
were not taken in violation of this Agreement;
(e) without
waiving any rights to take action as unsecured creditors, they will
not make any judicial or nonjudicial claim or demand or commence
any judicial or non-judicial proceedings against any Obligor or any
of its subsidiaries or Affiliates under or with respect to any
Second Lien Security Document seeking payment or damages from or
other relief by way of specific performance, instructions or
otherwise under or with respect to any Second Lien Security
Document (other than filing a proof of claim) or exercise any
right, remedy or power under or with respect to, or otherwise take
any action to enforce, other than filing a proof of claim, any
Second Lien Security Document;
(f) they
will not commence judicial or nonjudicial foreclosure proceedings
with respect to, seek to have a trustee, receiver, liquidator or
similar official appointed for or over, attempt any action to take
possession of, exercise any right, remedy or power with respect to,
or otherwise take any action to enforce their interest in or
realize upon, the Collateral or pursuant to the Second Lien
Security Documents; or
(g) they
will not seek, and hereby waive any right, to have the Collateral
or any part thereof marshaled upon any foreclosure or other
disposition of the Collateral.
Section 3.06.
Judgment Secured Parties . In the event that any
Second Lien Secured Party becomes a judgment Lien creditor in
respect of Collateral as a result of its enforcement of its rights
as an unsecured creditor, such judgment Lien shall be subject to
the terms of this Agreement for all purposes (including in relation
to the First Liens and the First Lien Obligations) to the same
extent as all other Liens, securing the Second Lien Obligations
(created pursuant to the Second Lien Security Documents) subject to
this Agreement.
Section 3.07.
Cooperation . The Second Lien Agent, on behalf of
itself and the other Second Lien Secured Parties, agrees that each
of them shall take such actions as the Collateral Agent, the First
Lien Agent or the Approved Hedge Counterparty shall reasonably
request in connection with the exercise by the Collateral Agent or
the First Lien Secured Parties of their rights set forth
herein.
Section 3.08.
No
Additional Rights For the Borrower Hereunder . Except as
provided in Section 3.09, if any First Lien Secured Party or
Second Lien Secured Party shall enforce its rights or remedies in
violation of the terms of this Agreement, the Borrower shall not be
entitled to use such violation as a defense, to any action by any
First Lien Secured Party or Second Lien Secured Party, nor to
assert such violation as a counterclaim or basis for set off or
recoupment against any First Lien Secured Party or Second Lien
Secured Party.
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Section 3.09.
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Actions Upon
Breach .
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(a) If
any Second Lien Secured Party, contrary to this Agreement,
commences or participates in any action or proceeding against the
Borrower or the Collateral, the Borrower, with the prior written
consent of the First Lien Agent, may interpose as a defense or
dilatory plea the making of this Agreement, and any First Lien
Secured Party may intervene and interpose such defense or plea in
its or their name or in the name of the Borrower, as
applicable.
(b) Should
any Second Lien Secured Party, contrary to this Agreement, in any
way take, attempt to or threaten to take any action with respect to
the Collateral (including, without limitation, any attempt to
realize upon or enforce any remedy with respect to this Agreement),
or fail to take any action required by this Agreement, any First
Lien Secured Party (in its or their own name or in the name of the
Borrower, as applicable) or the Borrower, as applicable, may obtain
relief against such Second Lien Secured Party by injunction,
specific performance and/or other appropriate equitable relief, it
being understood and agreed by the Second Lien Agent on behalf of
each Second Lien Secured Party that (i) the First Lien Secured
Parties’ damages from its actions may at that time be
difficult to ascertain and may be irreparable, and (ii) each
Second Lien Secured Party waives any defense that the Borrower
and/or the First Lien Secured Parties cannot demonstrate damage
and/or be made whole by the awarding of damages.
ARTICLE 4 APPLICATION OF PROCEEDS
OF COLLATERAL;
DISPOSITIONS AND RELEASES OF
COLLATERAL; INSPECTION AND INSURANCE
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Section 4.01.
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Notices under Related
Documents .
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(a) Each
Secured Party agrees: (i) to deliver to Collateral Agent, at the
same time it makes delivery to the Obligors, a copy of any notice
of default, notice of intent to accelerate or notice of
acceleration with respect to any of the Obligations subject to this
Agreement; and (ii) to deliver to Collateral Agent, at the same
time it makes delivery to any other Person, a copy of any notice of
the commencement of any judicial proceeding and a copy of any other
notice with respect to the exercise of remedies with respect to the
Obligations subject to this Agreement.
(b) Collateral
Agent shall deliver to each Secured Party (or their designated
representative if a group) promptly upon receipt thereof (and in
any event within two Business Days), duplicates or copies of any
notice received by it under Section 4.01(a) and all notices,
requests and other instruments received by Collateral Agent under
or pursuant to this Agreement or any Security Document, to the
extent that the same shall not have been previously furnished to
such Secured Party pursuant hereto or thereto.
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Section 4.02.
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Voting
Procedure .
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(a) When
this Agreement requires or permits a vote prior to the First Lien
Obligations Payment Date, the Collateral Agent shall poll the
Approved Hedge Counterparty and each other First Lien Secured Party
in order to determine the vote of First Lien Secured Parties
holding at least 51% of the total dollar value of First Lien
Obligations owing at the time of such poll (“ Required
First Lien Secured Parties ”). Such majority vote shall
be binding upon all First Lien Secured Parties, whether they voted
with the majority or not. The Obligors and First Lien Secured
Parties may rely on Collateral Agent with regard to any such vote
without any duty of further inquiry.
(b) After
the occurrence of the First Lien Obligations Payment Date, the
Collateral Agent shall poll each Second Lien Secured Party in order
to determine the vote of Second Lien Secured Parties holding at
least 51% of the total dollar value of Second Lien Obligations
owing at the time of such poll.
Such majority vote shall be binding
upon all Second Lien Secured Parties, whether they voted with the
majority or not. The Obligors and Second Lien Secured Parties may
rely on Collateral Agent with regard to any such vote without any
duty of further inquiry.
(c) For
purposes of this Section 4.02, in determining the total dollar
value of First Lien Obligations or the total dollar value of Second
Lien Obligations with respect to any Lender Hedging Agreement
(including any Approved Hedge Counterparty Swap Contract in the
case of First Lien Obligations), the methodology specified in
Clause “THIRD” of Section 4.03(a) shall be used to
calculate the total dollar value of any Lender Hedging
Agreement.
Section 4.03.
Application of Proceeds; Turnover Provisions . Upon
the occurrence and during the continuance of a Triggering Event and
following any Enforcement Action, all proceeds of Collateral
(including without limitation any interest earned thereon but net
of any taxes, assessments or prior Liens) resulting from the sale,
collection or other disposition of Collateral in connection with or
resulting from any Enforcement Action, and whether or not pursuant
to an Insolvency Proceeding, shall be promptly distributed by the
Collateral Agent in the following order of priority:
(a) first,
with respect to the First Lien Obligations, to the First Lien Agent
for application to the First Lien Obligations, until the First Lien
Obligations Payment Date has occurred, in the following order of
priority:
(1) FIRST:
to the payment of enforcement expenses incurred by the Collateral
Agent;
(2) SECOND:
to the ratable payment of all fees, expenses and indemnities for
which the First Lien Agent, First Lien Lenders or Approved Hedge
Counterparty have not been paid or reimbursed in accordance with
the First Lien Documents (as used in this subsection, a “
ratable payment ” for any First Lien Lender,
the First Lien Agent or the Approved Hedge Counterparty shall be,
on any date of determination, that proportion which the portion of
the total fees, expenses and indemnities owed to such First Lien
Lender, the First Lien Agent or the Approved Hedge Counterparty
bears to the total aggregate fees, expenses and indemnities owed to
all First Lien Lenders, the First Lien Agent and the Approved Hedge
Counterparty on such date of determination);
(3) THIRD:
to the ratable payment of accrued and unpaid letter of credit fees,
the outstanding amount of unreimbursed drawings under letters of
credit, accrued and unpaid interest on, and principal of, the
outstanding amount of loans and the outstanding amount of
obligations under Lender Hedging Agreements; provided, however,
Approved Hedge Counterparty Obligations are netted against any
Exempt LC that may be issued to Approved Hedge Counterparty to
remedy an Additional Termination Event as described in Section 4.06
(it being understood that for purposes of this clause (3) the
“outstanding amount of obligations under Lender Hedging
Agreements” refers to payments owing in connection with an
Early Termination Date as defined in the 2002 Master Agreement form
promulgated by the ISDA (or equivalent type payment obligation if
some other form of Swap Contract is in effect)(as used in this
subsection, “ ratable payment ” means for
any First Lien Lender (or First Lien Lender Affiliate, in the case
of Lender Hedging Agreements or the
