THIRD AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT

EXECUTION

THIRD AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT

 

THIS THIRD AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (this “ Third Amendment ”) is entered into as of May 29, 2009 among QUEST CHEROKEE, LLC, a Delaware limited liability company (the “ Borrower ”), QUEST ENERGY PARTNERS, L.P., a Delaware limited partnership (the “ MLP ”), QUEST CHEROKEE OILFIELD SERVICE, LLC, a Delaware limited liability company (“ QCOS ”, QCOS and MLP collectively called the “ Guarantors ” and individually a “ Guarantor ”), ROYAL BANK OF CANADA, as Administrative Agent and Collateral Agent for the Lenders parties to the hereinafter defined Credit Agreement (in such capacities, the “ Administrative Agent ” and “ Collateral Agent ,” respectively), KEYBANK NATIONAL ASSOCIATION, as Documentation Agent, and the undersigned Lenders comprising Required Lenders.

Reference is made to the Amended and Restated Credit Agreement dated as of November 15, 2007 among Borrower, the Administrative Agent, the Collateral Agent and the Lenders parties thereto, as amended by a First Amendment to Amended and Restated Credit Agreement dated as of April 15, 2008 and a Second Amendment to Amended and Restated Credit Agreement dated as of October 28, 2008 (as amended, the “ Credit Agreement ”). Unless otherwise defined in this Third Amendment, capitalized terms used herein shall have the meaning set forth in the Credit Agreement; all section, exhibit and schedule references herein are to sections, exhibits and schedules in the Credit Agreement; and all paragraph references herein are to paragraphs in this Third Amendment.

RECITALS

A.    The Borrower, Administrative Agent and Lenders desire to enter into this Third Amendment.

Accordingly, for adequate and sufficient consideration, the parties hereto agree, as follows:

Paragraph 1.     Amendments . Effective as of the Third Amendment Effective Date (hereinafter defined), the Credit Agreement is amended as follows:

1.1

Definitions . Section 1.01 of the Credit Agreement is amended as follows:

 

(a)

The following definitions are amended in their entirety to read as follows:

“ Agreement means this Amended and Restated Credit Agreement as amended by the First Amendment to Credit Agreement, the Second Amendment to Credit Agreement and by the Third Amendment to Credit Agreement.”

“ Intercreditor Agreement means that certain Intercreditor Agreement dated July 11, 2008 among Royal Bank of Canada, as administrative agent and collateral agent for the Lenders under this Agreement, Royal Bank of Canada, as administrative agent and collateral agent for the lenders party to the Second Lien Senior Term Loan Agreement, Royal Bank of Canada, as collateral agent for the Lenders under this Agreement and the lenders party to the Second Lien Senior Term Loan Agreement and the Borrower, as amended and restated by an Amended and Restated Intercreditor and Collateral Agency Agreement, substantially in the form attached to the Third Amendment to Credit Agreement as Exhibit A, among the Borrower, Administrative Agent, Collateral Agent,

 

 

Approved Hedge Counterparty and administrative agent and collateral agent under the Second Lien Senior Term Loan Agreement, which at all times shall provide that (i) the Approved Hedge Counterparty has no voting rights under any Loan Document as a result of the existence of obligations owed to it under any Approved Hedge Counterparty Swap Contract and (ii) the Approved Hedge Counterparty has a pro rata vote in connection with any action or proposed action to enforce any Lien upon any Collateral.”

“ Lender Hedging Agreement means (i) a Swap Contract between a Company and a Lender or an Affiliate of a Lender and (ii) an Approved Hedge Counterparty Swap Contract.”

“ Obligations means all advances to, and debts, liabilities, obligations, covenants and duties of, any Loan Party arising under any Loan Document, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest that accrues after the commencement by or against any Loan Party of any proceeding under any Debtor Relief Laws naming such Person as the debtor in such proceeding. In addition, all references to the “ Obligations ” in the Collateral Documents and in Sections 2.13 and 10.09 of this Agreement shall, in addition to the foregoing, also include all present and future indebtedness, liabilities, and obligations (and all renewals and extensions thereof or any part thereof) now or hereafter owed to any Lender or any Affiliate of a Lender arising pursuant to any Lender Hedging Agreement and all present and future indebtedness, liabilities, and obligations (and all renewals and extensions thereof or any part thereof) now or hereafter owed to the Approved Hedge Counterparty arising pursuant to any Approved Hedge Counterparty Swap Contract.”

“ Secured Parties means the Lenders party to this Agreement, the Lenders and/or any Affiliate of a Lender party to a Lender Hedging Agreement and the Approved Hedge Counterparty party to an Approved Hedge Counterparty Swap Contract. The term “ Secured Parties ” shall include a former Lender or an Affiliate of a former Lender that is party to a Swap Contract with any Loan Party; provided that such former Lender or Affiliate was a Lender or an Affiliate of a Lender at the time it entered into such Swap Contract.”

“ Swap Termination Value means, in respect of any one or more Swap Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a) the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts (which may include any Lender and the Approved Hedge Counterparty).”

(b)       The following definitions are inserted alphabetically into Section 1.01 of the Credit Agreement:

“ Approved Hedge Counterparty means BP Corporation North America, Inc. or any of its Affiliates that enters into (i) a novation agreement or similar arrangement with any Lender or an Affiliate of a Lender and is substituted as a counterparty for such

 

 

Lender or Affiliate of a Lender under any Lender Hedging Agreement or (ii) an Approved Hedge Counterparty Swap Contract.”

“ 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 a Company.”

“ Third Amendment Effective Date means May 29, 2009.”

“ Third Amendment to Credit Agreement means that certain Third Amendment to Amended and Restated Credit Agreement dated as of May 29, 2009, among the Borrower, Royal Bank of Canada, as Administrative Agent, Collateral Agent and as a Lender, KeyBank National Association, as Documentation Agent and the Lenders party thereto comprising Required Lenders.”

1.2         Section 2.11(d) . Section 2.11(d) of the Credit Agreement is amended to read in its entirety as follows:

“(d)      If at any time insufficient funds are received by and available to the Administrative Agent to pay fully the Obligations, or if an Event of Default exists, any payment or prepayment shall be applied in the following order: (i) to the payment of enforcement expenses incurred by the Administrative Agent, including Attorney Costs; (ii) to the ratable payment of all fees, expenses and indemnities (including amounts payable under Article III ) for which the Administrative Agent, Lenders or Approved Hedge Counterparty have not been paid or reimbursed in accordance with the Loan Documents or Approved Hedge Counterparty Swap Contract (as used in this Section 2.11(d)(ii) , a “ ratable payment ” for any Lender, the Administrative Agent or 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 Lender, the Administrative Agent or Approved Hedge Counterparty bears to the total aggregate fees, expenses and indemnities owed to all Lenders, the Administrative Agent and Approved Hedge Counterparty on such date of determination); (iii) to the ratable payment of accrued and unpaid Letter of Credit fees, the Outstanding Amount of L/C Borrowings, accrued and unpaid interest on, and principal of, the Outstanding Amount of Revolving Loans and the Outstanding Amount of Obligations under Lender Hedging Agreements; (it being understood that for purposes of this clause (iii) 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 Section 2.11(d)(iii) , “ ratable payment ” means for any Lender (or Lender Affiliate, in the case of Lender Hedging Agreements or the Approved Hedge Counterparty, in the case of an Approved Hedge Counterparty Swap Contract), on any date of determination, that proportion which the accrued and unpaid Letter of Credit fees, the Outstanding Amount of L/C Borrowings, accrued and unpaid interest on, and principal of, the Outstanding Amount of Revolving Loans and the Outstanding Amount of Obligations under Lender Hedging Agreements owed to such Lender (or Lender Affiliate, in the case of Lender Hedging Agreements or the Approved Hedge Counterparty, in the case of an Approved Hedge Counterparty Swap Contract) bears to the accrued and unpaid Letter of Credit fees, the Outstanding Amount of L/C

 

 

Borrowings, accrued and unpaid interest on, and principal of, the Outstanding Amount of Revolving Loans and the Outstanding Amount of Obligations under Lender Hedging Agreements owed to all Lenders)(and Affiliates, in the case of Lender Hedging Agreements or the Approved Hedge Counterparty, in the case of an Approved Hedge Counterparty Swap Contract)); (iv) to Cash Collateralize the Letters of Credit; and (v) to the payment of the remaining Obligations, if any, in the order and manner the Required Lenders deem appropriate. Subject to Section 2.14(g) , amounts used to Cash Collateralize the aggregate undrawn amount of Letters of Credit pursuant to clause (iv) above shall be applied to satisfy drawings under such Letters of Credit as they occur. If any amount remains on deposit as Cash Collateral after all Letters of Credit have either been fully drawn or expired, such remaining amount shall be applied to the other Obligations, if any, in the order set forth above.”

 

1.3         Section 2.13 . Section 2.13 of the Credit Agreement is amended to read in its entirety as follows:

“ 2.13      Pari Passu Lien Securing Lender Hedging Obligations . All Obligations arising under the Loan Documents, including, without limitation, Obligations under this Agreement and Obligations under any Lender Hedging Agreement (but not Indebtedness of any Loan Party owing to any non-Lender, non-Lender Affiliate or any Person other than the Approved Hedge Counterparty which enters into a Swap Contract with the Borrower or any other Loan Party), shall be secured pari passu by the Collateral. No Lender, any Affiliate of a Lender or the Approved Hedge Counterparty shall have any voting rights under any Loan Document as a result of the existence of obligations owed to it under any such Lender Hedging Agreement.”

 

1.4         Section 7.03(a)(i) . Section 7.03(a)(i) of the Credit Agreement is amended to read in its entirety as follows:

“(i)       that the Swap Contract shall not contain any provision (a) exonerating the non-defaulting party from its obligation to make payments on outstanding transactions to the defaulting party and (b) requiring any Company at any time or under any circumstance to post any cash collateral or letter of credit or grant a Lien of any collateral to secure any Company’s obligations under such Swap Contract (except for Lender Hedging Agreements which shall be secured by a pari passu Lien on the Collateral as provided in Section 2.13 but which shall not be secured by any other or additional collateral; provided further in no event may any Approved Hedge Counterparty Swap Contract require any Company at any time or under any circumstance to post any cash collateral or letter of credit as long as this Agreement is in effect);.”

Paragraph 2. Effective Date . This Third Amendment shall not become effective until the date (such date, the “ Third Amendment Effective Date ”) the Administrative Agent receives all of the agreements, documents, certificates, instruments, and other items described below:

(a)        this Third Amendment, executed by the Borrower, the Guarantors, the Administrative and the Required Lenders;

(b)       from the Borrower and the existing Guarantors, such certificates of secretary, assistant secretary, manager, or general partner, as applicable, as the Administrative Agent may require, certifying (i) resolutions of its board of directors, managers or members (or their equivalent) authorizing the execution and performance of this Third Amendment and the other Loan Documents which such Person is executing in connection herewith, (ii) the incumbency and signature of the officer executing such

 

 

documents, and (iii) no change in such Person's organizational documents since November 15, 2007, other than the Amendment No. 1 to the Partnership Agreement (MLP) effective as of January 1, 2008;

(c)        fees and expenses required to be paid pursuant to Paragraph 5 of this Third Amendment, to the extent invoiced prior to the Third Amendment Effective Date; and

(d)       such other assurances, certificates, documents and consents as the Administrative Agent may require.

Paragraph 3 .     Acknowledgment and Ratification . The Borrower and the Guarantors each (i) consent to the agreements in this Third Amendment and (ii) agree and acknowledge that the execution, delivery, and performance of this Third Amendment shall in no way release, diminish, impair, reduce, or otherwise affect the respective obligations of the Borrower or any Guarantor under the Loan Documents to which it is a party, which Loan Documents shall remain in full force and effect, as amended and waived hereby, and all rights thereunder are hereby ratified and confirmed.

Paragraph 4.     Representations . The Borrower and the Guarantors each represent and warrant to the Administrative Agent and the Lenders that as of the Third Amendment Effective Date and after giving effect to the waivers and amendments set forth in this Third Amendment (a) all representations and warranties in the Loan Documents are true and correct in all material respects as though made on the date hereof, except to the extent that any of them speak to a different specific date, and (b) no Default or Event of Default exists.

Paragraph 5.     Expenses . The Borrower shall pay on demand all reasonable costs, fees, and expenses paid or incurred by the Administrative Agent incident to this Third Amendment, including, without limitation, Attorney Costs in connection with the negotiation, preparation, delivery, and execution of this Third Amendment and any related documents, filing and recording costs, and the costs of title insurance endorsements, if any.

Paragraph 6.

Miscellaneous .

(a)        This Third Amendment is a “Loan Document” referred to in the Credit Agreement. The provisions relating to Loan Documents in Article X of the Credit Agreement are incorporated in this Third Amendment by reference. Unless stated otherwise (i) the singular number includes the plural and vice versa and words of any gender include each other gender, in each case, as appropriate, (ii) headings and captions may not be construed in interpreting provisions, (iii) this Third Amendment will be construed, and its performance enforced, under New York law and applicable federal law, (iv) if any part of this Third Amendment is for any reason found to be unenforceable, all other portions of it nevertheless remain enforceable, and (v) this Third Amendment may be executed in any number of counterparts with the same effect as if all signatories had signed the same document, and all of those counterparts must be construed together to constitute the same document.

Paragraph 7 .     ENTIRE AGREEMENT. THIS THIRD AMENDMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES ABOUT THE SUBJECT MATTER OF THIS AMENDMENT AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

Paragraph 8.      Parties . This Third Amendment binds and inures to the benefit of the Borrower, the Guarantors, the Administrative Agent, the Collateral Agent, the Documentation Agent, the Lenders, and their respective successors and assigns.

 

 

Paragraph 9.     Further Assurances . The parties hereto each agree to execute from time to time such further documents as may be necessary to implement the terms of this Third Amendment.

Paragraph 10.    Release . As additional consideration for the execution, delivery and performance of this Third Amendment by the parties hereto and to induce the Administrative Agent, the Collateral Agent and the Lenders to enter into this Third Amendment, the Borrower warrants and represents to the Administrative Agent, the Collateral Agent and the Lenders that no facts, events, statuses or conditions exist or have existed which, either now or with the passage of time or giving of notice, or both, constitute or will constitute a basis for any claim or cause of action against the Administrative Agent, the Collateral Agent or any Lender or any defense to (i) the payment of Obligations under the Revolving Notes and/or the Loan Documents, or (ii) the performance of any of its obligations with respect to the Revolving Notes and/or the Loan Documents. In the event any such facts, events, statuses or conditions exist or have existed, Borrower unconditionally and irrevocably hereby RELEASES, RELINQUISHES and forever DISCHARGES Administrative Agent, the Collateral Agent and the Lenders, as well as their predecessors, successors, assigns, agents, officers, directors, shareholders, employees and representatives, of and from any and all claims, demands, actions and causes of action of any and every kind or character, past or present, which Borrower may have against any of them or their predecessors, successors, assigns, agents, officers, directors, shareholders, employees and representatives arising out of or with respect to (a) any right or power to bring any claim for usury or to pursue any cause of action based on any claim of usury, and (b) any and all transactions relating to the Loan Documents occurring prior to the date hereof, including any loss, cost or damage, of any kind or character, arising out of or in any way connected with or in any way resulting from the acts, actions or omissions of any of them, and their predecessors, successors, assigns, agents, officers, directors, shareholders, employees and representatives, including any breach of fiduciary duty, breach of any duty of fair dealing, breach of confidence, breach of funding commitment, undue influence, duress, economic coercion, conflict of interest, negligence, bad faith, malpractice, intentional or negligent infliction of mental distress, tortious interference with contractual relations, tortious interference with corporate governance or prospective business advantage, breach of contract, deceptive trade practices, libel, slander or conspiracy, but in each case only to the extent permitted by applicable Law.

The parties hereto have executed this Third Amendment in multiple counterparts to be effective as of the Third Amendment Effective Date.

Remainder of Page Intentionally Blank

Signature Pages to Follow.

 

 

            IN WITNESS WHEREOF, the parties hereto have caused this Third Amendment to be duly executed as of the Third Amendment Effective Date.

 

	BORROWER:
	QUEST CHEROKEE, LLC,
	as Borrower
	By:	/s/ David Lawler
		David Lawler
		President
	GUARANTORS:
	QUEST ENERGY PARTNERS, L.P.,
	as a Guarantor
	By:	QUEST ENERGY GP, LLC,
		Its General Partner
		By:	/s/ David Lawler
			David Lawler,
			President
	QUEST CHEROKEE OILFIELD SERVICE, LLC,
	as a Guarantor
	By:	QUEST CHEROKEE, LLC,
		Its Sole Member
		By:	/s/ David Lawler
			David Lawler,
			President

 

 

 

AGREED TO AS OF THE THIRD
AMENDMENT EFFECTIVE DATE:	ADMINISTRATIVE AGENT:
	ROYAL BANK OF CANADA,
	as Administrative Agent and Collateral Agent
	By:	/s/ Susan Khokher
	Name:	Susan Khokher
	Title:	Manager, Agency

 

 

 

AGREED TO AS OF THE THIRD
AMENDMENT EFFECTIVE DATE:	L/C ISSUER AND LENDER:
	ROYAL BANK OF CANADA, as a Lender
	and L/C Issuer
	By:	/s/ Jason York
	Name:	Jason York
	Title:	Authorized Signatory

 

 

 

AGREED TO AS OF THE THIRD
AMENDMENT EFFECTIVE DATE:	KEYBANK NATIONAL ASSOCIATION,
	as Documentation Agent and a Lender
	By:	/s/ Todd Coker
	Name:	Todd Coker
	Title:	Assistant Vice President

 

 

 

AGREED TO AS OF THE THIRD
AMENDMENT EFFECTIVE DATE:	U.S. BANK NATIONAL ASSOCIATION,
	as a Lender
	By:	/s/ Bruce E. Hernandez
	Name:	Bruce E. Hernandez
	Title:	Vice President

 

 

 

AGREED TO AS OF THE THIRD
AMENDMENT EFFECTIVE DATE:	SOCIÉTÉ GÉNÉRALE, as a Lender
	By:	/s/ Stephen W. Warfel
	Name:	Stephen W. Warfel
	Title:	Managing Director

 

 

 

AGREED TO AS OF THE THIRD
AMENDMENT EFFECTIVE DATE:	WACHOVIA BANK, N.A. , as a Lender
	By:
	Name:
	Title:

 

 

 

AGREED TO AS OF THE THIRD
AMENDMENT EFFECTIVE DATE:	COMERICA BANK, as a Lender
	By:	/s/ Peter L. Sefzik
	Name:	Peter L. Sefzik
	Title:	Senior Vice President

 

 

 

AGREED TO AS OF THE THIRD
AMENDMENT EFFECTIVE DATE:	AMEGY BANK, N.A. , as a Lender
	By:	/s/ Stewart T. Lang
	Name:	Stewart T. Lang
	Title:	VP Energy

 

 

 

AGREED TO AS OF THE THIRD
AMENDMENT EFFECTIVE DATE:	RZB FINANCE, LLC, as a Lender
	By:
	Name:
	Title:
	By:
	Name:
	Title:

 

 

 

EXHIBIT A

 

 

 

 

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 __, 2009

 

 

 

 

TABLE OF CONTENTS

ARTICLE 1 – DEFINITIONS

3

 

Section 1.01. Defined Terms

3

 

Section 1.02. Headings

9

 

Section 1.03. Terms Generally.

9

 

ARTICLE 2 – LIEN PRIORITIES.

9

 

Section 2.01. Subordination of Second Liens.

9

 

Section 2.02. Nature of First Lien Obligations

10

 

Section 2.03 Status of Liens: Collateral.

10

 

Section 2.04. Agreements Regarding Actions to Perfect Liens.

11

 

Section 2.05. Legends.

12

 

Section 2.06 No New Second Liens

12

 

Section 2.07. Similar Liens and Agreements

12

 

ARTICLE 3 – ENFORCEMENT RIGHTS

13

 

Section 3.01. Separate Debts

13

 

Section 3.02. Limits of Enforcement of Second Lien

13

 

Section 3.03. Election to Pursue Remedies

14

 

Section 3.04. Duty of Collateral Agent.

14

 

Section 3.05 Standstill and Waivers

15

 

Section 3.06. Judgment Secured Parties

16

 

Section 3.07. Cooperation

16

 

Section 3.08. No Additional Rights For the Borrower Hereunder

16

 

Section 3.09. Actions Upon Breach.

16

 

ARTICLE 4 – APPLICATION OF PROCEEDS OF COLLATERAL; DISPOSITIONS AND RELEASES OF COLLATERAL; INSPECTION AND INSURANCE

17

 

Section 4.01. Notices under Related Documents.

17

 

Section 4.02. Voting Procedure.

17

 

 

Section 4.03. Application of Proceeds; Turnover Provisions

17

 

Section 4.04. Payments by Collateral Agent

19

 

Section 4.05. Notice of Amount of Obligations

19

 

Section 4.06. Pro Rata Treatment; Participations

19

 

Section 4.07. Release of Collateral.

20

 

Section 4.08. Releases of Second Lien.

20

 

Section 4.09. Form and Sufficiency of Release

20

 

Section 4.10. Inspection Rights and Insurance.

21

 

ARTICLE 5 – INSOLVENCY PROCEEDINGS

21

 

Section 5.01. Filing of Motions

21

 

Section 5.02. Financing Matters

22

 

Section 5.03. Relief From the Automatic Stay

22

 

Section 5.04. Adequate Protection

22

 

Section 5.05. Avoidance Issues

23

 

Section 5.06. Asset Dispositions in an Insolvency Proceeding

23

 

Section 5.07. Grants of Security and Separate Classification

23

 

Section 5.08. No Waivers of Rights of First Lien Secured Parties

24

 

Section 5.09. Plans of Reorganization

24

 

Section 5.10. Other Matters

24

 

Section 5.11. Effectiveness in Insolvency Proceedings

24

 

ARTICLE 6 – SECOND LIEN DOCUMENTS AND FIRST LIEN DOCUMENTS.

24

 

Section 6.01. Restriction on Second Lien Document Amendments

24

 

Section 6.02. Restriction on First Lien Document Amendment

24

 

Section 6.03.         Application of First Lien Security Document Amendments to Second Lien Security Documents

25

 

Section 6.04. Restriction on Second Lien Agreement Amendments

25

 

 

Section 6.05.         Authorization of Actions to be Taken by Collateral Agent under the Security Documents

25

 

Section 6.06.         Authorization of Receipt of Funds by Collateral Agent under Security Documents

26

 

Section 6.07. Property of Obligors and Owners

26

 

Section 6.08. Secured Party Dealings; Good Faith

26

 

Section 6.09. Production Proceeds Prior to Triggering Event

26

 

ARTICLE 7 – RELIANCE; WAIVERS, ETC.

27

 

Section 7.01. Reliance

27

 

Section 7.02. No Warranties or Liability

27

 

Section 7.03. No Waivers

27

 

ARTICLE 8 – OBLIGATIONS UNCONDITIONAL.

27

 

Section 8.01. First Lien Obligations Unconditional

27

 

Section 8.02. Second Lien Obligations Unconditional

28

 

ARTICLE 9 – MISCELLANEOUS.

28

 

Section 9.01 Authority

28

 

Section 9.02 Termination/Withdrawal/Redesignation of Contracts.

28

 

Section 9.03. Conflicts

29

 

Section 9.04. Marshaling

29

 

Section 9.05 Additional Parties

29

 

Section 9.06. Continuing Nature of Provisions

29

 

Section 9.07. Amendments

29

 

Section 9.08.         Information Concerning Financial Condition of the Borrower and the other Obligors

30

 

Section 9.09. Payment of Expenses and Taxes; Indemnification

30

 

Section 9.10. Governing Law

31

 

Section 9.11. Submission to Jurisdiction; Waivers.

31

 

Section 9.12. Notices

32

 

 

Section 9.13. Successors and Assigns

32

 

Section 9.14. Further Assurances

33

 

Section 9.15. Subrogation

33

 

Section 9.16. Application of Payments

33

 

Section 9.17. Specific Performance

33

 

Section 9.18. Headings

33

 

Section 9.19. Severability

33

 

Section 9.20. Counterparts; Integration; Effectiveness

33

 

Section 9.21. Entire Agreement

34

 

Section 9.22. Limitation by Law

34

 

Section 9.23. No Impairment

34

 

Section 9.24. Status of Obligations

34

 

Section 9.25. Counterclaims and Defenses by Obligors

34

 

Section 9.26. Amendment and Restatement

35

 

ARTICLE 10 – COLLATERAL AGENT.

35

 

Section 10.01. Appointment of Collateral Agent

35

 

Section 10.02. Nature of Duties of Collateral Agent

35

 

Section 10.03. Lack of Reliance on Collateral Agent.

35

 

Section 10.04. Certain Rights of Collateral Agent

36

 

Section 10.05. Reliance by Collateral Agent

36

 

Section 10.06. Collateral Agent's Reimbursements and Indemnification

36

 

Section 10.07. Collateral Agent in its Individual Capacity

37

 

Section 10.08. Secured Parties as Owners

37

 

Section 10.09. Successor Collateral Agent.

37

 

Section 10.10. Employment of Collateral Agent and Counsel

38

 

Section 10.11. Limitation on Liability of Secured Parties and Collateral Agent

38

 

 

 

ANNEXES

Annex 1

Security Documents

 

Annex 2

Form of Supplemental Amended and Restated Intercreditor and Collateral Agency Agreement

 

 

AMENDED AND RESTATED INTERCREDITOR

AND COLLATERAL AGENCY AGREEMENT

THIS AMENDED AND RESTATED INTERCREDITOR AND COLLATERAL AGENCY AGREEMENT dated as of June __, 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 .

 

Section 2.01.

Subordination of Second Liens .

(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.

 

Section 2.02.

Nature of First Lien Obligations .

(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.

 

 

Section 2.03

Status of Liens: Collateral .

(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.

 

Section 2.04.

Agreements Regarding Actions to Perfect Liens .

(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.

 

Section 2.05.

Legends .

(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.

Section 3.04.

Duty of Collateral Agent .

(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