Exhibit 10.2

 

Execution Version

 

AMENDED AND RESTATED GUARANTEE AND PLEDGE AGREEMENT

 

 

made by

 

Kodiak Oil & Gas Corp.

 

in favor of

 

 

WELLS FARGO BANK, N.A.,

 

as Administrative Agent

 

 

Dated as of October 28, 2011

 

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TABLE OF CONTENTS

ARTICLE I Definitions

2

 

 

 

Section 1.01

Definitions

2

Section 1.02

Other Definitional Provisions; References

3

 

 

 

ARTICLE II Guarantee

3

 

 

 

Section 2.01

Guarantee

3

Section 2.02

Payments

4

 

 

 

ARTICLE III Grant of Security Interest

4

 

 

 

Section 3.01

Grant of Security Interest

4

Section 3.02

Transfer of Pledged Securities

5

 

 

 

ARTICLE IV Acknowledgments, Waivers and Consents

5

 

 

 

Section 4.01

Acknowledgments, Waivers and Consents

5

Section 4.02

No Subrogation, Contribution or Reimbursement

7

 

 

 

ARTICLE V Representations and Warranties

8

 

 

 

Section 5.01

Representations in Credit Agreement

8

Section 5.02

Benefit to the Guarantor

8

Section 5.03

Solvency

8

Section 5.04

Title; No Other Liens

9

Section 5.05

Perfected First Priority Liens

9

Section 5.06

Legal Name, Organizational Status, Chief Executive Office

9

Section 5.07

Prior Names, Addresses, Locations of Tangible Assets

9

Section 5.08

Pledged Securities

9

 

 

 

ARTICLE VI Covenants

10

 

 

 

Section 6.01

Covenants in Credit Agreement

10

Section 6.02

Maintenance of Perfected Security Interest; Further Documentation

10

Section 6.03

Changes in Locations, Name, etc.

10

Section 6.04

Pledged Securities

11

 

 

 

ARTICLE VII Remedial Provisions

12

 

 

 

Section 7.01

Pledged Securities

12

Section 7.02

New York UCC and Other Remedies

13

Section 7.03

Private Sales of Pledged Securities

14

Section 7.04

Waiver; Deficiency

15

Section 7.05

Non-Judicial Enforcement

15

 

 

 

ARTICLE VIII The Administrative Agent

15

 

 

 

Section 8.01

Administrative Agent’s Appointment as Attorney-in-Fact, Etc

15

Section 8.02

Duty of Administrative Agent

16

 

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Section 8.03

Execution of Financing Statements

17

Section 8.04

Authority of Administrative Agent

17

 

 

 

ARTICLE IX Subordination of Indebtedness

17

 

 

 

Section 9.01

Subordination of All Guarantor Claims

17

Section 9.02

Claims in Bankruptcy

18

Section 9.03

Payments Held in Trust

18

Section 9.04

Liens Subordinate

18

Section 9.05

Notation of Records

19

 

 

 

ARTICLE X Miscellaneous

19

 

 

 

Section 10.01

Waiver

19

Section 10.02

Notices

19

Section 10.03

Payment of Expenses, Indemnities, Etc

19

Section 10.04

Amendments in Writing

20

Section 10.05

Successors and Assigns

20

Section 10.06

Invalidity

20

Section 10.07

Counterparts

20

Section 10.08

Survival

20

Section 10.09

Captions

21

Section 10.10

No Oral Agreements

21

Section 10.11

Governing Law; Submission to Jurisdiction

21

Section 10.12

Acknowledgments

22

Section 10.13

Set-Off

23

Section 10.14

Releases

23

Section 10.15

Reinstatement

24

Section 10.16

Existing Guarantee and Collateral Agreement

24

Section 10.17

Acceptance

24

 

SCHEDULES:

 

1.                                       Notice Address of Guarantor

 

2.                                       Description of Pledged Securities

 

3.                                       Filings and Other Actions Required to
Perfect Security Interests

 

4.                                       Legal Name, Location of Jurisdiction of
Organization, Organizational Identification Number, Taxpayor Identification
Number and Chief Executive Office

 

5.                                       Prior Names and Prior Chief Executive
Office

 

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This AMENDED AND RESTATED GUARANTEE AND PLEDGE AGREEMENT, dated as of
October 28, 2011, is made by KODIAK OIL & GAS CORP., a corporation continued
under the laws of Yukon Territories, Canada, (the “Guarantor”), in favor of
WELLS FARGO BANK, N.A., as administrative agent (in such capacity, together with
its successors in such capacity, the “Administrative Agent”), for the banks and
other financial institutions (the “Lenders”) from time to time parties to that
certain Credit Agreement, dated as of even date herewith (as amended,
supplemented or otherwise modified from time to time, the “Credit Agreement”),
among KODIAK OIL & GAS (USA) INC., a Colorado corporation (the “Borrower”), the
Lenders, the Administrative Agent, and the other Agents party thereto.

 

A.            The Guarantor, as borrower, the lenders thereto, Wells Fargo Bank,
N.A., as administrative agent for the lenders thereto and others, are parties to
that certain Credit Agreement dated as of May 24, 2010, as amended by that
certain First Amendment dated as of November 30, 2010 and that Second Amendment
dated as of April 13, 2011 (as amended, the “Existing Credit Agreement”),
pursuant to which the Lenders have made certain credit available to and on
behalf of the Borrower.

 

B.            Pursuant to the Existing Credit Agreement, the Borrower, the
Guarantor and  Wells Fargo Bank, N.A., as administrative agent for the lenders
party to the Existing Credit Agreement and others, heretofore executed that
certain Guarantee and Pledge Agreement, dated as of May 24, 2010 (as amended,
supplemented, or otherwise modified, the “Existing Pledge”).

 

C.            The Borrower has requested, and Wells Fargo Bank, N.A., as
administrative agent for the lenders party to the Existing Credit Agreement, and
the lenders thereto have agreed, to amend and restate the Existing Credit
Agreement and the Existing Pledge.

 

D.            The Borrower, as borrower, the Lenders, the Administrative Agent,
as administrative agent for the Lenders and others, executed the Credit
Agreement pursuant to which, upon the terms and conditions stated therein, the
Lenders agreed to make loans and other extensions of credit to the Borrower.

 

NOW, THEREFORE, in consideration of the premises and to induce the
Administrative Agent and the Lenders to enter into the Credit Agreement and to
induce the Lenders to make their respective extensions of credit to the Borrower
thereunder, the Guarantor hereby agrees with the Administrative Agent, for the
ratable benefit of the Lenders and the other Secured Parties, as follows:

 

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ARTICLE I
Definitions

 

Section 1.01           Definitions.

 

(a)           As used in this Agreement, each term defined above shall have the
meaning indicated above.  Unless otherwise defined herein, terms defined in the
Credit Agreement and used herein shall have the meanings given to them in the
Credit Agreement, and all uncapitalized terms which are defined in the New York
UCC on the date hereof are used herein as so defined.

 

(b)           The following terms shall have the following meanings:

 

“Agreement” shall mean this Guarantee and Pledge Agreement, as the same may be
amended, supplemented or otherwise modified from time to time.

 

“Collateral” has the meaning assigned such term in Section 3.01.

 

“New York UCC” shall mean the Uniform Commercial Code, as it may be amended,
from time to time in effect in the State of New York.

 

“Issuers” shall mean, collectively, each issuer of a Pledged Security.

 

“Obligations” shall mean, collectively, all Indebtedness, liabilities and
obligations of the Borrower and its Subsidiaries to the Secured Parties, of
whatsoever nature and howsoever evidenced, due or to become due, now existing or
hereafter arising, whether direct or indirect, absolute or contingent, which may
arise under, out of, or in connection with the Credit Agreement, the other Loan
Documents, each Secured Swap Agreement and all other agreements, guarantees,
notes and other documents entered into by any party in connection therewith, and
any amendment, restatement or modification of any of the foregoing, including,
but not limited to, the full and punctual payment when due of any unpaid
principal of the Loans and LC Exposure, any amounts payable in respect of an
early termination under any Secured Swap Agreement, interest (including, without
limitation, interest accruing at any post-default rate and interest accruing
after the filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding, whether or not a claim for
post-filing or post-petition interest is allowed in such proceeding), fees,
reimbursement obligations, guaranty obligations, penalties, indemnities, legal
and other fees, charges and expenses, and amounts advanced by and expenses
incurred in order to preserve any collateral or security interest, whether due
after acceleration or otherwise.

 

“Pledged Securities” shall mean: (i) the equity interests described or referred
to in Schedule 2; and (ii) (a) the certificates or instruments, if any,
representing such equity interests, (b) all dividends (cash, stock or
otherwise), cash, instruments, rights to subscribe, purchase or sell and all
other rights and property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such equity
interests, (c) all

 

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replacements, additions to and substitutions for any of the property referred to
in this definition, including, without limitation, claims against third parties,
(d) the proceeds, interest, profits and other income of or on any of the
property referred to in this definition and (e) all books and records relating
to any of the property referred to in this definition.

 

“Secured Parties” shall mean, collectively, the Administrative Agent, the
Issuing Bank, the Lenders and any Secured Swap Party.

 

“Securities Act” shall mean the Securities Act of 1933, as amended.

 

Section 1.02           Other Definitional Provisions; References.  The meanings
given to terms defined herein shall be equally applicable to both the singular
and plural forms of such terms.  The gender of all words shall include the
masculine, feminine, and neuter, as appropriate.  The words “herein,” “hereof,”
“hereunder” and other words of similar import when used in this Agreement refer
to this Agreement as a whole, and not to any particular article, section or
subsection.  Any reference herein to a Section shall be deemed to refer to the
applicable Section of this Agreement unless otherwise stated herein.  Any
reference herein to an exhibit, schedule or annex shall be deemed to refer to
the applicable exhibit, schedule or annex attached hereto unless otherwise
stated herein.

 

ARTICLE II
Guarantee

 

Section 2.01           Guarantee.

 

(a)           The Guarantor hereby unconditionally and irrevocably guarantees to
the Administrative Agent, for the ratable benefit of the Secured Parties and
each of their respective successors, endorsees, transferees and assigns, the
prompt and complete payment and performance by the Borrower and its Subsidiaries
when due (whether at the stated maturity, by acceleration or otherwise) of the
Obligations.  This is a guarantee of payment and not collection and the
liability of the Guarantor is primary and not secondary.

 

(b)           Anything herein or in any other Loan Document to the contrary
notwithstanding, the maximum liability of the Guarantor hereunder and under the
other Loan Documents shall in no event exceed the amount which can be guaranteed
by the Guarantor under applicable federal and state laws relating to the
insolvency of debtors.

 

(c)           The Guarantor agrees that the Obligations may at any time and from
time to time exceed the amount of the liability of the Guarantor hereunder
without impairing the guarantee contained in this Article II or affecting the
rights and remedies of the Administrative Agent or any Secured Party hereunder.

 

(d)           The Guarantor agrees that if the maturity of any of the
Obligations is accelerated by bankruptcy or otherwise, such maturity shall also
be deemed accelerated for the purpose of this guarantee without demand or notice
to the Guarantor.  The guarantee contained in

 

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this Article II shall remain in full force and effect until all the Obligations
shall have been satisfied by payment in full, no Letter of Credit shall be
outstanding and all Secured Swap Agreements secured hereby, the Credit Agreement
and the total Commitments shall be terminated, notwithstanding that from time to
time during the term of the Credit Agreement, no Obligations may be outstanding.

 

(e)           No payment made by the Borrower, any other guarantor or any other
Person or received or collected by the Administrative Agent or any other Secured
Party from the Borrower, any other guarantor or any other Person by virtue of
any action or proceeding or any set-off or appropriation or application at any
time or from time to time in reduction of or in payment of the Obligations shall
be deemed to modify, reduce, release or otherwise affect the liability of the
Guarantor hereunder which shall, notwithstanding any such payment (other than
any payment made by the Guarantor in respect of the Obligations or any payment
received or collected from the Guarantor in respect of the Obligations), remain
liable for the Obligations up to the maximum liability of the Guarantor
hereunder until the Obligations are paid in full, no Letter of Credit shall be
outstanding, and all Secured Swap Agreements secured hereby, the Credit
Agreement and the total Commitments are terminated.

 

Section 2.02           Payments.  The Guarantor hereby agrees and guarantees
that payments hereunder will be paid to the Administrative Agent without set-off
or counterclaim in United States dollars at the Administrative Agent’s principal
office in Denver, Colorado.

 

ARTICLE III
Grant of Security Interest

 

Section 3.01           Grant of Security Interest.  The Guarantor hereby
pledges, assigns and transfers to the Administrative Agent, and grants to the
Administrative Agent, for the ratable benefit of the Secured Parties, a security
interest in all of the following property now owned or at any time hereafter
acquired by the Guarantor or in which the Guarantor now has or at any time in
the future may acquire any right, title or interest and whether now existing or
hereafter coming into existence (collectively, the “Collateral”), as collateral
security for the prompt and complete payment and performance when due (whether
at the stated maturity, by acceleration or otherwise) of the Obligations:

 

(1)           all Pledged Securities;

 

(2)                                  all books and records pertaining to the
Collateral; and

 

(3)           to the extent not otherwise included, all Proceeds and products of
any and all of the foregoing and all collateral security and guarantees given
with respect to any of the foregoing.

 

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Section 3.02           Transfer of Pledged Securities.  All certificates and
instruments representing or evidencing the Pledged Securities shall be delivered
to and held pursuant hereto by the Administrative Agent or a Person designated
by the Administrative Agent and, in the case of an instrument or certificate in
registered form, shall be duly indorsed to the Administrative Agent or in blank
by an effective indorsement (whether on the certificate or instrument or on a
separate writing), and accompanied by any required transfer tax stamps to effect
the pledge of the Pledged Securities to the Administrative Agent. 
Notwithstanding the preceding sentence, all Pledged Securities must be delivered
or transferred in such manner, and the Guarantor shall take all such further
action as may be requested by the Administrative Agent, as to permit the
Administrative Agent to be a “protected purchaser” to the extent of its security
interest as provided in Section 8-303 of the New York UCC (if the Administrative
Agent otherwise qualifies as a protected purchaser).

 

ARTICLE IV
Acknowledgments, Waivers and Consents

 

Section 4.01           Acknowledgments, Waivers and Consents.

 

(a)           The Guarantor acknowledges and agrees that the obligations
undertaken by it under this Agreement involve the guarantee and provision of
collateral security for the obligations of Persons other than the Guarantor and
that the Guarantor’s guarantee and provision of collateral security for the
Obligations are absolute, irrevocable and unconditional under any and all
circumstances.  In full recognition and furtherance of the foregoing, the
Guarantor understands and agrees, to the fullest extent permitted under
applicable law and except as may otherwise be expressly and specifically
provided in the Loan Documents, that the Guarantor  shall remain obligated
hereunder (including, without limitation, with respect to the guarantee by the
Guarantor hereby and the collateral security provided by the Guarantor herein)
and the enforceability and effectiveness of this Agreement and the liability of
the Guarantor, and the rights, remedies, powers and privileges of the
Administrative Agent and the other Secured Parties under this Agreement and the
other Loan Documents shall not be affected, limited, reduced, discharged or
terminated in any way:

 

(i)            notwithstanding that, without any reservation of rights against
the Guarantor and without notice to or further assent by the Guarantor, (A) any
demand for payment of any of the Obligations made by the Administrative Agent or
any other Secured Party may be rescinded by the Administrative Agent or such
other Secured Party and any of the Obligations continued; (B) the Obligations,
the liability of any other Person upon or for any part thereof or any collateral
security or guarantee therefor or right of offset with respect thereto, may,
from time to time, in whole or in part, be renewed, extended, amended, modified,
accelerated, compromised, waived, surrendered or released by, or any indulgence
or forbearance in respect thereof granted by, the Administrative Agent or any
other Secured Party; (C) the Credit Agreement, the other Loan Documents, any
Secured Swap Agreement and any other documents executed and delivered in
connection therewith may be amended, modified, supplemented or terminated, in
whole or in part, as the Administrative Agent (or the Majority Lenders or all

 

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Lenders, as the case may be) may deem advisable from time to time; (D) the
Borrower, its Subsidiaries or any other Person may from time to time accept or
enter into new or additional agreements, security documents, guarantees or other
instruments in addition to, in exchange for or relative to, any Loan Document or
Permitted Hedge Agreement, all or any part of the Obligations or any Collateral
now or in the future serving as security for the Obligations; (E) any collateral
security, guarantee or right of offset at any time held by the Administrative
Agent or any other Secured Party for the payment of the Obligations may be sold,
exchanged, waived, surrendered or released; and (F) any other event shall occur
which constitutes a defense or release of sureties generally; and

 

(ii)           without regard to, and the Guarantor hereby expressly waives to
the fullest extent permitted by law any defense now or in the future arising by
reason of, (A) the illegality, invalidity or unenforceability of the Credit
Agreement, any other Loan Document, any Secured Swap Agreement, any of the
Obligations or any other collateral security therefor or guarantee or right of
offset with respect thereto at any time or from time to time held by the
Administrative Agent or any other Secured Party, (B) any defense, set-off or
counterclaim (other than a defense of payment or performance) which may at any
time be available to or be asserted by the Guarantor or any other Person against
the Administrative Agent or any other Secured Party, (C) the insolvency,
bankruptcy arrangement, reorganization, adjustment, composition, liquidation,
disability, dissolution or lack of power of the Guarantor or any other Person at
any time liable for the payment of all or part of the Obligations or the failure
of the Administrative Agent or any other Secured Party to file or enforce a
claim in bankruptcy or other proceeding with respect to any Person; or any sale,
lease or transfer of any or all of the assets of the Guarantor, or any changes
in the shareholders of the Guarantor; (D) the fact that any Collateral or Lien
contemplated or intended to be given, created or granted as security for the
repayment of the Obligations shall not be properly perfected or created, or
shall prove to be unenforceable or subordinate to any other Lien, it being
recognized and agreed by the Guarantor that it is not entering into this
Agreement in reliance on, or in contemplation of the benefits of, the validity,
enforceability, collectability or value of any of the Collateral for the
Obligations; (E) any failure of the Administrative Agent or any other Secured
Party to marshal assets in favor of the Guarantor or any other Person, to
exhaust any collateral for all or any part of the Obligations, to pursue or
exhaust any right, remedy, power or privilege it may have against the Guarantor
or any other Person or to take any action whatsoever to mitigate or reduce the
Guarantor’s liability under this Agreement or any other Loan Document; (F) any
law which provides that the obligation of a surety or guarantor must neither be
larger in amount nor in other respects more burdensome than that of the
principal or which reduces a surety’s or guarantor’s obligation in proportion to
the principal obligation; (G) the possibility that the Obligations may at any
time and from time to time exceed the aggregate liability of the Guarantor under
this Agreement; or (H) any other circumstance or act whatsoever (with or without
notice to or knowledge of the Guarantor), which constitutes, or might be
construed to constitute, an equitable or legal discharge or defense of the
Borrower for the Obligations, or of the Guarantor under the guarantee contained
in Article II or with respect to the collateral security provided by the
Guarantor herein, or which might be available to a surety or guarantor, in
bankruptcy or in any other instance.

 

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(b)           The Guarantor hereby waives to the extent permitted by law: 
(i) except as expressly provided otherwise in any Loan Document, all notices to
the Guarantor, or to any other Person, including but not limited to, notices of
the acceptance of this Agreement, the guarantee contained in Article II or the
provision of collateral security provided herein, or the creation, renewal,
extension, modification, accrual of any Obligations, or notice of or proof of
reliance by the Administrative Agent or any other Secured Party upon the
guarantee contained in Article II or upon the collateral security provided
herein, or of default in the payment or performance of any of the Obligations
owed to the Administrative Agent or any other Secured Party and enforcement of
any right or remedy with respect thereto; or notice of any other matters
relating thereto; the Obligations, and any of them, shall conclusively be deemed
to have been created, contracted or incurred, or renewed, extended, amended or
waived, in reliance upon the guarantee contained in Article II and the
collateral security provided herein and no notice of creation of the Obligations
or any extension of credit already or hereafter contracted by or extended to the
Borrower need be given to the Guarantor; and all dealings between the Borrower
and the Guarantor, on the one hand, and the Administrative Agent and the other
Secured Parties, on the other hand, likewise shall be conclusively presumed to
have been had or consummated in reliance upon the guarantee contained in
Article II and on the collateral security provided herein; (ii) diligence and
demand of payment, presentment, protest, dishonor and notice of dishonor;
(iii) any statute of limitations affecting the Guarantor’s liability hereunder
or the enforcement thereof; (iv) all rights of revocation with respect to the
Obligations, the guarantee contained in Article II and the provision of
collateral security herein; and (v) all principles or provisions of law which
conflict with the terms of this Agreement and which can, as a matter of law, be
waived.

 

(c)           When making any demand hereunder or otherwise pursuing its rights
and remedies hereunder against the Guarantor, the Administrative Agent or any
other Secured Party may, but shall be under no obligation to, join or make a
similar demand on or otherwise pursue or exhaust such rights and remedies as it
may have against the Borrower or any other Person or against any collateral
security or guarantee for the Obligations or any right of offset with respect
thereto, and any failure by the Administrative Agent or any other Secured Party
to make any such demand, to pursue such other rights or remedies or to collect
any payments from the Borrower or any other Person or to realize upon any such
collateral security or guarantee or to exercise any such right of offset, or any
release of the Borrower or any other Person or any such collateral security,
guarantee or right of offset, shall not relieve the Guarantor of any obligation
or liability hereunder, and shall not impair or affect the rights and remedies,
whether express, implied or available as a matter of law, of the Administrative
Agent or any other Secured Party against the Guarantor.  For the purposes hereof
“demand” shall include the commencement and continuance of any legal
proceedings.  Neither the Administrative Agent nor any other Secured Party shall
have any obligation to protect, secure, perfect or insure any Lien at any time
held by it as security for the Obligations or for the guarantee contained in
Article II or any property subject thereto.

 

Section 4.02           No Subrogation, Contribution or Reimbursement. 
Notwithstanding any payment made by the Guarantor hereunder or any set-off or
application of funds of the Guarantor by the Administrative Agent or any other
Secured Party, the Guarantor shall not be entitled to be

 

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subrogated to any of the rights of the Administrative Agent or any other Secured
Party against the Borrower or any collateral security or guarantee or right of
offset held by the Administrative Agent or any other Secured Party for the
payment of the Obligations, nor shall the Guarantor seek or be entitled to seek
any indemnity, exoneration, participation, contribution or reimbursement from
the Borrower in respect of payments made by the Guarantor hereunder, and the
Guarantor hereby expressly waives, releases, and agrees not to exercise any all
such rights of subrogation, reimbursement, indemnity and contribution.  The
Guarantor further agrees that to the extent that such waiver and release set
forth herein is found by a court of competent jurisdiction to be void or
voidable for any reason, any rights of subrogation, reimbursement, indemnity and
contribution the Guarantor may have against the Borrower or against any
collateral or security or guarantee or right of offset held by the
Administrative Agent or any other Secured Party shall be junior and subordinate
to any rights the Administrative Agent and the other Secured Parties may have
against the Borrower and the Guarantor and to all right, title and interest the
Administrative Agent and the other Secured Parties may have in any collateral or
security or guarantee or right of offset.  The Administrative Agent, for the
benefit of the Secured Parties, may use, sell or dispose of any item of
Collateral or security as it sees fit without regard to any subrogation rights
the Guarantor may have, and upon any disposition or sale, any rights of
subrogation the Guarantor may have shall terminate.

 

ARTICLE V
Representations and Warranties

 

To induce the Administrative Agent and the other Secured Parties to enter into
the Credit Agreement and to induce the Lenders to make their respective
extensions of credit to the Borrower thereunder and to induce the Lenders and
Affiliates of the Lenders to enter into Secured Swap Agreements, the Guarantor
hereby represents and warrants to the Administrative Agent and each other
Secured Party that:

 

Section 5.01           Representations in Credit Agreement.  The representations
and warranties set forth in Article VII of the Credit Agreement as they relate
to the Guarantor or to the Loan Documents to which the Guarantor is a party are
true and correct in all material respects, provided that each reference in each
such representation and warranty to the Borrower’s knowledge shall, for the
purposes of this Section 5.01, be deemed to be a reference to the Guarantor’s
knowledge.

 

Section 5.02           Benefit to the Guarantor.  The Borrower is a member of an
affiliated group of companies that includes the Guarantor, and the Borrower and
the Guarantor are engaged in related businesses.  The Guarantor is the parent of
the Borrower and its guaranty and surety obligations pursuant to this Agreement
reasonably may be expected to benefit, directly or indirectly, it; and it has
determined that this Agreement is necessary and convenient to the conduct,
promotion and attainment of the business of the Guarantor and the Borrower.

 

Section 5.03           Solvency.  The Guarantor (i) is not insolvent as of the
date hereof and will not be rendered insolvent as a result of this Agreement
(after giving effect to Section 2.01(a)), (ii) is not engaged in a business or a
transaction, or about to engage in a business or a transaction,

 

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for which any Property or assets remaining with it constitute unreasonably small
capital, and (iii) does not intend to incur, or believe it will incur, debts
that will be beyond its ability to pay as such debts mature.

 

Section 5.04           Title; No Other Liens.  Except for the security interest
granted to the Administrative Agent for the ratable benefit of the Secured
Parties pursuant to this Agreement and Excepted Liens, the Guarantor is the
legal and beneficial owner of the Collateral free and clear of any and all
Liens.  No financing statement or other public notice with respect to all or any
part of the Collateral is on file or of record in any public office, except such
as have been filed in favor of the Administrative Agent, for the ratable benefit
of the Secured Parties, pursuant to this Agreement, the Security Instruments or
as are filed to secure Liens permitted by Section 9.03 of the Credit Agreement.

 

Section 5.05           Perfected First Priority Liens.  The security interests
granted pursuant to this Agreement (a) upon completion of the filings and other
actions specified on Schedule 3 (which, in the case of all filings and other
documents referred to on said Schedule, have been delivered to the
Administrative Agent in completed and duly executed form), will constitute valid
perfected security interests in all of the Collateral in favor of the
Administrative Agent, for the ratable benefit of the Secured Parties, as
collateral security for the Guarantor’s obligations, enforceable in accordance
with the terms hereof against all creditors of the Guarantor and any Persons
purporting to purchase any Collateral from the Guarantor and (b) are prior to
all other Liens on the Collateral in existence on the date hereof except for
Excepted Liens which have priority over the Liens on the Collateral by operation
of law.  No effective financing statement or other registration or instrument
similar in effect covering any Collateral is on file in any recording office
except any that has been filed in favor of the Secured Parties relating to this
Agreement and any that has been filed to perfect or protect any Excepted Lien.

 

Section 5.06           Legal Name, Organizational Status, Chief Executive
Office.  On the date hereof, the correct legal name of the Guarantor, the
Guarantor’s jurisdiction of organization, organizational number, taxpayor
identification number and the location of the Guarantor’s chief executive office
or sole place of business are specified on Schedule 4.

 

Section 5.07           Prior Names, Addresses, Locations of Tangible Assets. 
Schedule 5 correctly sets forth (a) all names and trade names that the Guarantor
has used in the last five years and (b) the chief executive office of the
Guarantor over the last five years (if different from that which is set forth in
Section 5.06 above).

 

Section 5.08           Pledged Securities.  The shares (or such other interests)
of Pledged Securities pledged by the Guarantor hereunder constitute all the
issued and outstanding shares (or such other interests) of all classes of the
capital stock or other equity interests of each Issuer owned by the Guarantor. 
All the shares (or such other interests) of the Pledged Securities have been
duly authorized and validly issued and are fully paid and nonassessable; and the
Guarantor is the record and beneficial owner of, and has good title to, the
Pledged Securities pledged by it hereunder, free of any and all Liens except
Excepted Liens or options in favor of, or claims of, any other Person, except
the security interest created by this Agreement.

 

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ARTICLE VI
Covenants

 

The Guarantor covenants and agrees with the Administrative Agent and the other
Secured Parties that, from and after the date of this Agreement until the
Obligations shall have been paid in full, no Letter of Credit shall be
outstanding and the total Commitments shall have terminated:

 

Section 6.01           Covenants in Credit Agreement.  The Guarantor shall take,
or shall refrain from taking, as the case may be, each action that is necessary
to be taken or not taken, as the case may be, so that no Default or Event of
Default is caused by the failure to take such action or to refrain from taking
such action by the Guarantor.

 

Section 6.02           Maintenance of Perfected Security Interest; Further
Documentation.

 

(a)           The Guarantor shall maintain the security interest created by this
Agreement as a perfected security interest having at least the priority
described in Section 5.05 and shall defend such security interest against the
claims and demands of all Persons whomsoever except for Excepted Liens.

 

(b)           At any time and from time to time, upon the request of the
Administrative Agent or any other Secured Party, and at the sole expense of the
Guarantor, the Guarantor will promptly and duly give, execute, deliver, indorse,
file or record any and all financing statements, continuation statements,
amendments, notices (including, without limitation, notifications to financial
institutions and any other Person), contracts, agreements, assignments,
certificates, stock powers or other instruments, obtain any and all governmental
approvals and consents and take or cause to be taken any and all steps or acts
that may be necessary or advisable or as the Administrative Agent may reasonably
request to create, perfect, establish the priority of, or to preserve the
validity, perfection or priority of, the Liens granted by this Agreement or to
enable the Administrative Agent or any other Secured Party to enforce its
rights, remedies, powers and privileges under this Agreement with respect to
such Liens or to otherwise obtain or preserve the full benefits of this
Agreement and the rights, powers and privileges herein granted.

 

(c)           This Section 6.02 and the obligations imposed on the Guarantor by
this Section 6.02 shall be interpreted as broadly as possible in favor of the
Administrative Agent and the other Secured Parties in order to effectuate the
purpose and intent of this Agreement.

 

Section 6.03           Changes in Locations, Name, etc.The Guarantor recognizes
that financing statements pertaining to the Collateral have been or may be filed
where the Guarantor maintains any Collateral or is organized.  Without
limitation of any other covenant herein, the Guarantor will not cause or permit
(a) any change to be made in its name, identity or corporate structure or (b)
the Guarantor’s jurisdiction of organization, unless the Guarantor shall have
first (i) notified the Administrative Agent and the other Secured Parties of
such change at least thirty (30) days prior to the effective date of such
change, and (ii) taken all action reasonably requested by the Administrative
Agent or any other Secured Party for the purpose of maintaining the perfection
and priority of the Administrative Agent’s security interests under this
Agreement.  In any notice

 

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furnished pursuant to this Section 6.03, the Guarantor will expressly state in a
conspicuous manner that the notice is required by this Agreement and contains
facts that may require additional filings of financing statements or other
notices for the purposes of continuing perfection of the Administrative Agent’s
security interest in the Collateral.

 

Section 6.04           Pledged Securities.

 

(a)           If the Guarantor shall become entitled to receive or shall receive
any stock certificate or other instrument (including, without limitation, any
certificate or instrument representing a dividend or a distribution in
connection with any reclassification, increase or reduction of capital or any
certificate or instrument issued in connection with any reorganization), option
or rights in respect of the capital stock or other equity interests of any
Issuer, whether in addition to, in substitution of, as a conversion of, or in
exchange for, any shares (or such other interests) of the Pledged Securities, or
otherwise in respect thereof, the  Guarantor shall accept the same as the agent
of the Administrative Agent and the other Secured Parties, hold the same in
trust for the Administrative Agent and the other Secured Parties and deliver the
same forthwith to the Administrative Agent in the exact form received, duly
indorsed by the Guarantor to the Administrative Agent, if required, together
with an undated stock power or other equivalent instrument of transfer
acceptable to the Administrative Agent covering such certificate or instrument
duly executed in blank by the Guarantor and with, if the Administrative Agent so
requests, signature guaranteed, to be held by the Administrative Agent, subject
to the terms hereof, as additional collateral security for the Obligations.

 

(b)           Without the prior written consent of the Administrative Agent, the
Guarantor will not (i) unless otherwise permitted hereby, vote to enable, or
take any other action to permit, any Issuer to issue any stock or other equity
interests of any nature or to issue any other securities or interests
convertible into or granting the right to purchase or exchange for any stock or
other equity interests of any nature of any Issuer, (ii) sell, assign, transfer,
exchange or otherwise dispose of, or grant any option with respect to, the
Pledged Securities or Proceeds thereof (except pursuant to a transaction
expressly permitted by the Credit Agreement), (iii) create, incur or permit to
exist any Lien except for Excepted Liens or option in favor of, or any claim of
any Person with respect to, any of the Pledged Securities or Proceeds thereof,
or any interest therein, except for the security interests created by this
Agreement or (iv) enter into any agreement or undertaking restricting the right
or ability of the Guarantor or the Administrative Agent to sell, assign or
transfer any of the Pledged Securities or Proceeds thereof.

 

(c)           The Guarantor shall furnish to the Administrative Agent such stock
powers and other equivalent instruments of transfer as may be required by the
Administrative Agent to assure the transferability of and the perfection of the
security interest in the Pledged Securities when and as often as may be
reasonably requested by the Administrative Agent.

 

(d)           The Pledged Securities will at all times constitute not less than
100% of the capital stock or other equity interests of the Issuer thereof owned
by the Guarantor.  The Guarantor will not permit any Issuer of any of the
Pledged Securities to issue any new shares (or

 

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other interests) of any class of capital stock or other equity interests of such
Issuer without the prior written consent of the Administrative Agent.

 

ARTICLE VII
Remedial Provisions

 

Section 7.01           Pledged Securities.

 

(a)           Unless an Event of Default shall have occurred and be continuing
and the Administrative Agent shall have given notice to the Guarantor of the
Administrative Agent’s intent to exercise its corresponding rights pursuant to
Section 7.01(b), the Guarantor shall be permitted to receive all cash dividends
paid in respect of the Pledged Securities paid in the normal course of business
of the relevant Issuer, to the extent permitted in the Credit Agreement, and to
exercise all voting and corporate rights with respect to the Pledged Securities.

 

(b)           If an Event of Default shall occur and be continuing, then at any
time in the Administrative Agent’s discretion without notice, (i) the
Administrative Agent shall have the right to receive any and all cash dividends,
payments or other Proceeds paid in respect of the Pledged Securities and make
application thereof to the Obligations in accordance with Section 10.02 of the
Credit Agreement, and (ii) any or all of the Pledged Securities shall be
registered in the name of the Administrative Agent or its nominee, and the
Administrative Agent or its nominee may thereafter exercise (x) all voting,
corporate and other rights pertaining to such Pledged Securities at any meeting
of shareholders (or other equivalent body) of the relevant Issuer or Issuers or
otherwise and (y) any and all rights of conversion, exchange and subscription
and any other rights, privileges or options pertaining to such Pledged
Securities as if it were the absolute owner thereof (including, without
limitation, the right to exchange at its discretion any and all of the Pledged
Securities upon the merger, consolidation, reorganization, recapitalization or
other fundamental change in the organizational structure of any Issuer, or upon
the exercise by the Guarantor or the Administrative Agent of any right,
privilege or option pertaining to such Pledged Securities, and in connection
therewith, the right to deposit and deliver any and all of the Pledged
Securities with any committee, depositary, transfer agent, registrar or other
designated agency upon such terms and conditions as the Administrative Agent may
determine), all without liability except to account for property actually
received by it, but the Administrative Agent shall have no duty to the Guarantor
to exercise any such right, privilege or option and shall not be responsible for
any failure to do so or delay in so doing.

 

(c)           The Guarantor hereby authorizes and instructs each Issuer of any
Pledged Securities pledged by the Gurantor hereunder to (i) comply with any
instruction received by it from the Administrative Agent in writing that (x)
states that an Event of Default has occurred and is continuing and (y) is
otherwise in accordance with the terms of this Agreement, without any other or
further instructions from the Guarantor, and the Guarantor agrees that each
Issuer shall be fully protected in so complying, and (ii) unless otherwise
expressly permitted hereby, pay any dividends or other payments with respect to
the Pledged Securities directly to the Administrative Agent.

 

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(d)           After the occurrence and during the continuation of an Event of
Default, if the Issuer of any Pledged Securities is the subject of bankruptcy,
insolvency, receivership, custodianship or other proceedings under the
supervision of any Governmental Authority, then all rights of the Guarantor in
respect thereof to exercise the voting and other consensual rights which the
Guarantor would otherwise be entitled to exercise with respect to the Pledged
Securities issued by such Issuer shall cease, and all such rights shall
thereupon become vested in the Administrative Agent who shall thereupon have the
sole right to exercise such voting and other consensual rights, but the
Administrative Agent shall have no duty to exercise any such voting or other
consensual rights and shall not be responsible for any failure to do so or delay
in so doing.

 

Section 7.02           New York UCC and Other Remedies.

 

(a)           If an Event of Default shall occur and be continuing, the
Administrative Agent, on behalf of the Secured Parties, may exercise in its
discretion, in addition to all other rights, remedies, powers and privileges
granted to them in this Agreement, the other Loan Documents, any Secured Swap
Agreement and in any other instrument or agreement securing, evidencing or
relating to the Obligations, all rights, remedies, powers and privileges of a
secured party under the New York UCC (whether the New York UCC is in effect in
the jurisdiction where such rights, remedies, powers or privileges are asserted)
or any other applicable law or otherwise available at law or equity.  Without
limiting the generality of the foregoing, the Administrative Agent, without
demand of performance or other demand, presentment, protest, advertisement or
notice of any kind (except any notice required by law referred to below) to or
upon the Guarantor or any other Person (all and each of which demands, defenses,
advertisements and notices are hereby waived), may in such circumstances
forthwith collect, receive, appropriate and realize upon the Collateral, or any
part thereof, and/or may forthwith sell, lease, assign, give option or options
to purchase, or otherwise dispose of and deliver the Collateral or any part
thereof (or contract to do any of the foregoing), in one or more parcels at
public or private sale or sales, at any exchange, broker’s board or office of
the Administrative Agent or any other Secured Party or elsewhere upon such terms
and conditions as it may deem advisable and at such prices as it may deem best,
for cash or on credit or for future delivery without assumption of any credit
risk.  The Administrative Agent or any other Secured Party shall have the right
upon any such public sale or sales, and, to the extent permitted by law, upon
any such private sale or sales, to purchase the whole or any part of the
Collateral so sold, free of any right or equity of redemption in the Guarantor,
which right or equity is hereby waived and released.  If an Event of Default
shall occur and be continuing, the Guarantor further agrees, at the
Administrative Agent’s request, to assemble the Collateral and make it available
to the Administrative Agent at places which the Administrative Agent shall
reasonably select, whether at the Guarantor’s premises or elsewhere.  Any such
sale or transfer by the Administrative Agent either to itself or to any other
Person shall be absolutely free from any claim of right by the Guarantor,
including any equity or right of redemption, stay or appraisal which the
Guarantor has or may have under any rule of law, regulation or statute now
existing or hereafter adopted.  Upon any such sale or transfer, the
Administrative Agent shall have the right to deliver, assign and transfer to the
purchaser or transferee thereof the Collateral so sold or transferred.  The

 

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Administrative Agent shall apply the net proceeds of any action taken by it
pursuant to this Section 7.02, after deducting all reasonable costs and expenses
of every kind incurred in connection therewith or incidental to the care or
safekeeping of any of the Collateral or in any way relating to the Collateral or
the rights of the Administrative Agent and the other Secured Parties hereunder,
including, without limitation, reasonable attorneys’ fees and disbursements, to
the payment in whole or in part of the Obligations, in accordance with Section
10.02 of the Credit Agreement, and only after such application and after the
payment by the Administrative Agent of any other amount required by any
provision of law, including, without limitation, Section 9-615 of the New York
UCC, need the Administrative Agent account for the surplus, if any, to the
Guarantor.  To the extent permitted by applicable law, the Guarantor waives all
claims, damages and demands it may acquire against the Administrative Agent or
any other Secured Party arising out of the exercise by them of any rights
hereunder.  If any notice of a proposed sale or other disposition of Collateral
shall be required by law, such notice shall be deemed reasonable and proper if
given at least 10 days before such sale or other disposition.

 

(b)           In the event that the Administrative Agent elects not to sell the
Collateral, the Administrative Agent retains its rights to dispose of or utilize
the Collateral or any part or parts thereof in any manner authorized or
permitted by law or in equity, and to apply the proceeds of the same towards
payment of the Obligations.  Each and every method of disposition of the
Collateral described in this Agreement shall constitute disposition in a
commercially reasonable manner.  The Administrative Agent may appoint any Person
as agent to perform any act or acts necessary or incident to any sale or
transfer of the Collateral.

 

Section 7.03           Private Sales of Pledged Securities.  The Guarantor
recognizes that the Administrative Agent may be unable to effect a public sale
of any or all the Pledged Securities, by reason of certain prohibitions
contained in the Securities Act and applicable state securities laws or
otherwise, and may be compelled to resort to one or more private sales thereof
to a restricted group of purchasers which will be obliged to agree, among other
things, to acquire such securities for their own account for investment and not
with a view to the distribution or resale thereof.  The Guarantor acknowledges
and agrees that any such private sale may result in prices and other terms less
favorable than if such sale were a public sale and, notwithstanding such
circumstances, agrees that any such private sale shall be deemed to have been
made in a commercially reasonable manner.  The Administrative Agent shall be
under no obligation to delay a sale of any of the Pledged Securities for the
period of time necessary to permit the Issuer thereof to register such
securities for public sale under the Securities Act, or under applicable state
securities laws, even if such Issuer would agree to do so.  The Guarantor agrees
to use commercially reasonable efforts to do or cause to be done all such other
acts as may reasonably be necessary to make such sale or sales of all or any
portion of the Pledged Securities pursuant to this Section 7.03 valid and
binding and in compliance with any and all other applicable Governmental
Requirements.  The Guarantor further agrees that a breach of any of the
covenants contained in this Section 7.03 will cause irreparable injury to the
Administrative Agent and the other Secured Parties, that the Administrative
Agent and the other Secured Parties have no adequate remedy at law in respect of
such breach and, as a consequence, that each and every covenant contained in
this Section 7.03 shall be specifically enforceable against the Guarantor,

 

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and the Guarantor hereby waives and agrees not to assert any defenses against an
action for specific performance of such covenants.

 

Section 7.04           Waiver; Deficiency.  To the extent permitted by
applicable law, the Guarantor waives and agrees not to assert any rights or
privileges which it may acquire under the New York UCC or any other applicable
law.  The Guarantor shall remain liable for any deficiency if the proceeds of
any sale or other disposition of the Collateral are insufficient to pay its
Obligations and the fees and disbursements of any attorneys employed by the
Administrative Agent or any other Secured Party to collect such deficiency.

 

Section 7.05           Non-Judicial Enforcement.  The Administrative Agent may
enforce its rights hereunder without prior judicial process or judicial hearing,
and to the extent permitted by law, the Guarantor expressly waives any and all
legal rights which might otherwise require the Administrative Agent to enforce
its rights by judicial process.

 

ARTICLE VIII
The Administrative Agent

 

Section 8.01           Administrative Agent’s Appointment as Attorney-in-Fact,
Etc.

 

(a)           The Guarantor hereby irrevocably constitutes and appoints the
Administrative Agent and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of the Guarantor and in the name of
the Guarantor or in its own name, for the purpose of carrying out the terms of
this Agreement, to take any and all reasonably appropriate action and to execute
any and all documents and instruments which may be reasonably necessary or
desirable to accomplish the purposes of this Agreement, and, without limiting
the generality of the foregoing, the Guarantor hereby gives the Administrative
Agent the power and right, on behalf of the Guarantor, without notice to or
assent by the Guarantor, to do any or all of the following:

 

(i)            pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral, effect any repairs or any insurance called
for by the terms of this Agreement and pay all or any part of the premiums
therefor and the costs thereof;

 

(ii)           execute, in connection with any sale provided for in Section 7.02
or Section 7.03, any endorsements, assignments or other instruments of
conveyance or transfer with respect to the Collateral; and

 

(iii)          (A) direct any party liable for any payment under any of the
Collateral to make payment of any and all moneys due or to become due thereunder
directly to the Administrative Agent or as the Administrative Agent shall
direct; (B) ask or demand for, collect, and receive payment of and receipt for,
any and all moneys, claims and other amounts due or to become due at any time in
respect of or arising out of any Collateral; (C) defend any suit, action or
proceeding brought against the Guarantor with respect to any Collateral; (D)
settle, compromise or adjust any such suit, action or proceeding and, in
connection therewith, give such

 

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discharges or releases as the Administrative Agent may deem appropriate; and (E)
generally, sell, transfer, pledge and make any agreement with respect to or
otherwise deal with any of the Collateral as fully and completely as though the
Administrative Agent were the absolute owner thereof for all purposes, and do,
at the Administrative Agent’s option and the Guarantor’s expense, at any time,
or from time to time, all acts and things which the Administrative Agent deems
necessary to protect, preserve or realize upon the Collateral and the
Administrative Agent’s and the other Secured Parties’ security interests therein
and to effect the intent of this Agreement, all as fully and effectively as the
Guarantor might do.

 

Anything in this Section 8.01(a) to the contrary notwithstanding, the
Administrative Agent agrees that it will not exercise any rights under the power
of attorney provided for in this Section 8.01(a) unless an Event of Default
shall have occurred and be continuing.

 

(b)           If the Guarantor fails to perform or comply with any of its
agreements contained herein within the applicable grace periods, the
Administrative Agent, at its option, but without any obligation so to do, may
perform or comply, or otherwise cause performance or compliance, with such
agreement.

 

(c)           The expenses of the Administrative Agent incurred in connection
with actions undertaken as provided in this Section 8.01, together with interest
thereon at the post-default rate specified in Section 3.02(d) of the Credit
Agreement from the date of payment by the Administrative Agent to the date
reimbursed by the Guarantor, shall be payable by the Guarantor to the
Administrative Agent on demand.

 

(d)           The Guarantor hereby ratifies all that said attorneys shall
lawfully do or cause to be done by virtue and in compliance hereof.  All powers,
authorizations and agencies contained in this Agreement are coupled with an
interest and are irrevocable until this Agreement is terminated and the security
interests created hereby are released.

 

Section 8.02           Duty of Administrative Agent.  The Administrative Agent’s
sole duty with respect to the custody, safekeeping and physical preservation of
the Collateral in its possession, under Section 9-207 of the New York UCC or
otherwise, shall be to deal with it in the same manner as the Administrative
Agent deals with similar property for its own account and shall be deemed to
have exercised reasonable care in the custody and preservation of the Collateral
in its possession if the Collateral is accorded treatment substantially equal to
that which comparable secured parties accord comparable collateral.  Neither the
Administrative Agent, any other Secured Party nor any of their respective
officers, directors, employees or agents shall be liable for failure to demand,
collect or realize upon any of the Collateral or for any delay in doing so or
shall be under any obligation to sell or otherwise dispose of any Collateral
upon the request of the Guarantor or any other Person or to take any other
action whatsoever with regard to the Collateral or any part thereof.  The powers
conferred on the Administrative Agent and the other Secured Parties hereunder
are solely to protect the Administrative Agent’s and the other Secured Parties’
interests in the Collateral and shall not impose any duty upon the
Administrative Agent or any other Secured Party to exercise any such powers. 
The Administrative Agent and the other Secured Parties shall be accountable only
for amounts that they actually receive as a result of the

 

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exercise of such powers, and neither they nor any of their officers, directors,
employees or agents shall be responsible to the Guarantor for any act or failure
to act hereunder, except for their own gross negligence or willful misconduct. 
To the fullest extent permitted by applicable law, the Administrative Agent
shall be under no duty whatsoever to make or give any presentment, notice of
dishonor, protest, demand for performance, notice of non-performance, notice of
intent to accelerate, notice of acceleration, or other notice or demand in
connection with any Collateral or the Obligations, or to take any steps
necessary to preserve any rights against the Guarantor or other Person or
ascertaining or taking action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relative to any Collateral, whether or not
it has or is deemed to have knowledge of such matters.  The Guarantor, to the
extent permitted by applicable law, waives any right of marshaling in respect of
any and all Collateral, and waives any right to require the Administrative Agent
or any other Secured Party to proceed against the Guarantor or other Person,
exhaust any Collateral or enforce any other remedy which the Administrative
Agent or any other Secured Party now has or may hereafter have against the
Guarantor or other Person.

 

Section 8.03           Execution of Financing Statements.  Pursuant to the New
York UCC and any other applicable law, the Guarantor authorizes the
Administrative Agent, its counsel or its representative, at any time and from
time to time, to file or record financing statements, continuation statements,
amendments thereto and other filing or recording documents or instruments with
respect to the Collateral without the signature of the Guarantor in such form
and in such offices as the Administrative Agent reasonably determines
appropriate to perfect the security interests of the Administrative Agent under
this Agreement.  A photographic or other reproduction of this Agreement shall be
sufficient as a financing statement or other filing or recording document or
instrument for filing or recording in any jurisdiction.

 

Section 8.04           Authority of Administrative Agent.  The Guarantor
acknowledges that the rights and responsibilities of the Administrative Agent
under this Agreement with respect to any action taken by the Administrative
Agent or the exercise or non-exercise by the Administrative Agent of any option,
voting right, request, judgment or other right or remedy provided for herein or
resulting or arising out of this Agreement shall, as between the Administrative
Agent and the other Secured Parties, be governed by the Credit Agreement and by
such other agreements with respect thereto as may exist from time to time among
them, but, as between the Administrative Agent and Guarantor, the Administrative
Agent shall be conclusively presumed to be acting as agent for the Secured
Parties with full and valid authority so to act or refrain from acting, and the
Guarantor shall be under any obligation, or entitlement, to make any inquiry
respecting such authority.

 

ARTICLE IX
Subordination of Indebtedness

 

Section 9.01           Subordination of All Guarantor Claims.  As used herein,
the term “Guarantor Claims” shall mean all debts and obligations of the Borrower
to the Guarantor, whether such debts and obligations now exist or are hereafter
incurred or arise, or whether the

 

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obligation of the debtor thereon be direct, contingent, primary, secondary,
several, joint and several, or otherwise, and irrespective of whether such debts
or obligations be evidenced by note, contract, open account, or otherwise, and
irrespective of the Person or Persons in whose favor such debts or obligations
may, at their inception, have been, or may hereafter be created, or the manner
in which they have been or may hereafter be acquired by. After and during the
continuation of an Event of Default, the Guarantor shall not receive or collect,
directly or indirectly, from any obligor in respect thereof any amount upon the
Guarantor Claims.

 

Section 9.02           Claims in Bankruptcy.  In the event of receivership,
bankruptcy, reorganization, arrangement, debtor’s relief or other insolvency
proceedings involving the Guarantor, the Administrative Agent on behalf of the
Secured Parties shall have the right to prove their claim in any proceeding, so
as to establish their rights hereunder and receive directly from the receiver,
trustee or other court custodian, dividends and payments which would otherwise
be payable upon Guarantor Claims.  The Guarantor hereby assigns such dividends
and payments to the Administrative Agent for the benefit of the Secured Parties
for application against the Obligations as provided under Section 10.02 of the
Credit Agreement.  Should any Agent or Secured Party receive, for application
upon the Obligations, any such dividend or payment which is otherwise payable to
the Guarantor, and which, as between the Guarantor, shall constitute a credit
upon the Guarantor Claims, then upon payment in full of the Obligations, the
intended recipient shall become subrogated to the rights of the Administrative
Agent and the other Secured Parties to the extent that such payments to the
Administrative Agent and the other Secured Parties on the Guarantor Claims have
contributed toward the liquidation of the Obligations, and such subrogation
shall be with respect to that proportion of the Obligations which would have
been unpaid if the Administrative Agent and the other Secured Parties had not
received dividends or payments upon the Guarantor Claims.

 

Section 9.03           Payments Held in Trust.  In the event that
notwithstanding Section 9.01 and Section 9.02, the Guarantor should receive any
funds, payments, claims or distributions which is prohibited by such Sections,
then it agrees: (a) to hold in trust for the Administrative Agent and the other
Secured Parties an amount equal to the amount of all funds, payments, claims or
distributions so received, and (b) that it shall have absolutely no dominion
over the amount of such funds, payments, claims or distributions except to pay
them promptly to the Administrative Agent, for the benefit of the Secured
Parties; and the Guarantor covenants promptly to pay the same to the
Administrative Agent.

 

Section 9.04           Liens Subordinate.  The Guarantor agrees that, until the
Obligations are paid in full and the total Commitments terminated, any Liens
securing payment of the Guarantor Claims shall be and remain inferior and
subordinate to any Liens securing payment of the Obligations, regardless of
whether such encumbrances in favor of the Guarantor, the Administrative Agent or
any other Secured Party presently exist or are hereafter created or attach. 
Without the prior written consent of the Administrative Agent, the Guarantor,
during the period in which any of the Obligations are outstanding or the total
Commitments are in effect, shall not (a) exercise or enforce any creditor’s
right it may have against any debtor in respect of the Guarantor Claims, or (b)
foreclose, repossess, sequester or otherwise take steps or institute

 

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any action or proceeding (judicial or otherwise, including without limitation
the commencement of or joinder in any liquidation, bankruptcy, rearrangement,
debtor’s relief or insolvency proceeding) to enforce any Lien held by it.

 

Section 9.05           Notation of Records.  Upon the request of the
Administrative Agent, all promissory notes and all accounts receivable ledgers
or other evidence of the Guarantor Claims accepted by or held by the Guarantor
shall contain a specific written notice thereon that the indebtedness evidenced
thereby is subordinated under the terms of this Agreement.

 

ARTICLE X
Miscellaneous

 

Section 10.01         Waiver.  No failure on the part of the Administrative
Agent or any other Secured Party to exercise and no delay in exercising, and no
course of dealing with respect to, any right, remedy, power or privilege under
any of the Loan Documents shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, power or privilege under any of the
Loan Documents preclude any other or further exercise thereof or the exercise of
any other right, remedy, power or privilege.  The rights, remedies, powers and
privileges provided herein are cumulative and not exclusive of any rights,
remedies, powers and privileges provided by law.  The exercise by the
Administrative Agent of any one or more of the rights, powers and remedies
herein shall not be construed as a waiver of any other rights, powers and
remedies, including, without limitation, any rights of set-off.

 

Section 10.02         Notices.  All notices and other communications provided
for herein shall be given in the manner and subject to the terms of Section
12.01 of the Credit Agreement; provided that any such notice, request or demand
to or upon the Guarantor shall be addressed to the Guarantor at its notice
address set forth on Schedule 1.

 

Section 10.03         Payment of Expenses, Indemnities, Etc.

 

(a)           The Guarantor agrees to pay or promptly reimburse the
Administrative Agent and each other Secured Party for all advances, charges,
costs and expenses (including, without limitation, all costs and expenses of
holding, preparing for sale and selling, collecting or otherwise realizing upon
the Collateral and all attorneys’ fees, legal expenses and court costs) incurred
by any Secured Party in connection with the exercise of its respective rights
and remedies hereunder, including, without limitation, any advances, charges,
costs and expenses that may be incurred in any effort to enforce any of the
provisions of this Agreement or any obligation of the Guarantor in respect of
the Collateral or in connection with (i) the preservation of the Lien of, or the
rights of the Administrative Agent or any other Secured Party under this
Agreement, (ii) any actual or attempted sale, lease, disposition, exchange,
collection, compromise, settlement or other realization in respect of, or care
of, the Collateral, including all such costs and expenses incurred in any
bankruptcy, reorganization, workout or other similar proceeding, or (iii)
collecting against the Guarantor under the guarantee contained in Article II or
otherwise enforcing or preserving any rights under this Agreement and the other
Loan Documents to which the Guarantor is a party.

 

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(b)           The Guarantor agrees to pay, and to save the Administrative Agent
and the other Secured Parties harmless from, any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, reasonable
costs, reasonable expenses or disbursements of any kind or nature whatsoever
(including, without limitation, court costs and reasonable attorneys’ fees, any
and all liabilities with respect to, or resulting from any delay in paying, any
and all stamp, excise, sales or other taxes which may be payable or determined
to be payable with respect to any of the Collateral or in connection with any of
the transactions contemplated by this Agreement) incurred because of, incident
to, or with respect to, the Collateral (including, without limitation, any
exercise of rights or remedies in connection therewith) or the execution,
delivery, enforcement, performance and administration of this Agreement, to the
extent the Borrower would be required to do so pursuant to Section 12.03 of the
Credit Agreement.  All amounts for which the Guarantor is liable pursuant to
this Section 10.03 shall be due and payable by the Guarantor to the Secured
Parties upon demand.

 

Section 10.04         Amendments in Writing.  None of the terms or provisions of
this Agreement may be waived, amended, supplemented or otherwise modified except
in accordance with Section 12.02 of the Credit Agreement.

 

Section 10.05         Successors and Assigns.  This Agreement shall be binding
upon the successors and assigns of the Guarantor and shall inure to the benefit
of the Administrative Agent and the other Secured Parties and their successors
and assigns permitted under the Credit Agreement; provided that except as set
forth in Section 9.11 of the Credit Agreement, the Guarantor may not assign,
transfer or delegate any of its rights or obligations under this Agreement
without the prior written consent of the Administrative Agent and the Lenders.

 

Section 10.06         Invalidity.  In the event that any one or more of the
provisions contained in this Agreement or in any of the Loan Documents to which
the Guarantor is a party shall, for any reason, be held invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Agreement or such other Loan
Document and the remaining provisions hereof shall remain in full force and
effect and shall be liberally construed to carry out the provisions and intent
hereof; provided, if any one or more of the provisions contained in this
Agreement shall be determined or held to be invalid or unenforceable because
such provision is overly broad as to duration, geographic scope, activity,
subject or otherwise, such provision shall be deemed amended (and any court or
other tribunal shall be entitled to reform this Agreement accordingly) by
limiting and reducing it to the extent necessary to make such provision valid
and enforceable

 

Section 10.07         Counterparts.  This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument and any of the parties hereto may execute this Agreement by
signing any such counterpart.

 

Section 10.08         Survival.  The obligations of the parties under Section
10.03 shall survive the repayment of the Loans and the termination of the
Letters of Credit, Secured Swap Agreements, Credit Agreement and total
Commitments.  To the extent that any payments on the Obligations or proceeds of
any Collateral are subsequently invalidated, declared to be fraudulent

 

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or preferential, set aside or required to be repaid to a trustee, debtor in
possession, receiver or other Person under any bankruptcy law, common law or
equitable cause, then to such extent, the Obligations so satisfied shall be
revived and continue as if such payment or proceeds had not been received and
the Administrative Agent’s and the other Secured Parties’ Liens, security
interests, rights, powers and remedies under this Agreement and each Security
Instrument shall continue in full force and effect.  In such event, each
Security Instrument shall be automatically reinstated and the Guarantor shall
take such action as may be reasonably requested by the Administrative Agent and
the other Secured Parties to effect such reinstatement.

 

Section 10.09         Captions.  Captions and section headings appearing herein
are included solely for convenience of reference and are not intended to affect
the interpretation of any provision of this Agreement.

 

Section 10.10         No Oral Agreements.  The Loan Documents (other than the
Letters of Credit) embody the entire agreement and understanding between the
parties and supersede all other agreements and understandings between such
parties relating to the subject matter hereof and thereof.  The Loan Documents
represent the final agreement between the parties and may not be contradicted by
evidence of prior, contemporaneous or subsequent oral agreements of the
parties.  There are no unwritten oral agreements between the parties.

 

Section 10.11         Governing Law; Submission to Jurisdiction.

 

(a)           This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York.

 

(b)           Any legal action or proceeding with respect to this Agreement or
any other Loan Documents to which the Guarantor is a party shall be brought in
the courts of the State of New York or of the United States of America for the
Southern District of New York, and each of the Lenders, the Administrative Agent
and the Guarantor hereby accepts for itself and (to the extent permitted by law)
in respect of its Property, generally and unconditionally, the jurisdiction of
the aforesaid courts.  Each of the Lenders, the Administrative Agent and the
Guarantor hereby irrevocably waives any objection, including, without
limitation, any objection to the laying of venue or based on the grounds of
forum non conveniens, which it may now or hereafter have to the bringing of any
such action or proceeding in such respective jurisdictions.  This submission to
jurisdiction is non-exclusive and does not preclude the Administrative Agent or
any Lender from obtaining jurisdiction over the Guarantor in any court otherwise
having jurisdiction.

 

(c)           Each of the Lenders, the Administrative Agent and the Guarantor
irrevocably consents to the service of process of any of the aforementioned
courts in any such action or proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, to such Person at the address
specified on its signature page of this Agreement or the Credit Agreement, as
applicable, such service to become effective thirty (30) days after such
mailing.  Nothing herein shall affect the right of the Administrative Agent or
any Lender or any holder of a Note or the Guarantor to serve process in any
other manner permitted by law or to commence legal proceedings or otherwise
proceed against the Guarantor in any other jurisdiction.

 

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(d)           The Guarantor and each Lender hereby (i) irrevocably and
unconditionally waive, to the fullest extent permitted by law, trial by jury in
any legal action or proceeding relating to this Agreement or any other Loan
Document and for any counterclaim therein; (ii) irrevocably waive, to the
maximum extent not prohibited by law, any right it may have to claim or recover
in any such litigation any special, exemplary, punitive or consequential
damages, or damages other than, or in addition to, actual damages; (iii) certify
that no party hereto nor any representative or agent of counsel for any party
hereto has represented, expressly or otherwise, or implied that such party would
not, in the event of litigation, seek to enforce the foregoing waivers, and (iv)
acknowledge that it has been induced to enter into this Agreement, the Loan
Documents and the transactions contemplated hereby and thereby by, among other
things, the mutual waivers and certifications contained in this Section 10.11.

 

Section 10.12         Acknowledgments.  The Guarantor hereby acknowledges that:

 

(a)           it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents to which it is a party;

 

(b)           neither the Administrative Agent nor any other Secured Party has
any fiduciary relationship with or duty to the Guarantor arising out of or in
connection with this Agreement or any of the other Loan Documents, and the
relationship between the Guarantor, on the one hand, and the Administrative
Agent and the other Secured Parties, on the other hand, in connection herewith
or therewith is solely that of debtor and creditor; and

 

(c)           no joint venture is created hereby or by the other Loan Documents
or otherwise exists by virtue of the transactions contemplated hereby among the
Secured Parties or among the Guarantor and the Lenders.

 

(d)           each of the parties hereto specifically agrees that it has a duty
to read this Agreement and the Security Instruments and agrees that it is
charged with notice and knowledge of the terms of this Agreement and the
Security Instruments; that it has in fact read this Agreement and is fully
informed and has full notice and knowledge of the terms, conditions and effects
of this Agreement; that it has been represented by independent legal counsel of
its choice throughout the negotiations preceding its execution of this Agreement
and the Security Instruments; and has received the advice of its attorney in
entering into this Agreement and the Security Instruments; and that it
recognizes that certain of the terms of this Agreement and the Security
Instruments result in one party assuming the liability inherent in some aspects
of the transaction and relieving the other party of its responsibility for such
liability.  Each party hereto agrees and covenants that it will not contest the
validity or enforceability of any exculpatory provision of this Agreement and
the Security Instruments on the basis that the party had no notice or knowledge
of such provision or that the provision is not “conspicuous.”

 

(e)           the Guarantor warrants and agrees that each of the waivers and
consents set forth in this Agreement are made voluntarily and unconditionally
after consultation with outside legal counsel and with full knowledge of their
significance and consequences, with the understanding that events giving rise to
any defense or right waived may diminish, destroy or

 

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otherwise adversely affect rights which the Guarantor otherwise may have against
the Borrower, the Secured Parties or any other Person or against any
collateral.  If, notwithstanding the intent of the parties that the terms of
this Agreement shall control in any and all circumstances, any such waivers or
consents are determined to be unenforceable under applicable law, such waivers
and consents shall be effective to the maximum extent permitted by law.

 

Section 10.13         Set-Off.  The Guarantor agrees that, in addition to (and
without limitation of) any right of set-off, bankers’ lien or counterclaim a
Secured Party may otherwise have, each Secured Party shall have the right and be
entitled (after consultation with the Administrative Agent), at its option, to
offset (i) balances held by it or by any of its Affiliates for account of the
Guarantor or any Subsidiary at any of its offices, in United States dollars or
in any other currency, and (ii) amounts due and payable to such Lender (or any
Affiliate of such Lender) under any Secured Swap Agreement, against any
principal of or interest on any of such Secured Party’s Loans, or any other
amount due and payable to such Secured Party hereunder, which is not paid when
due (regardless of whether such balances are then due to such Person), in which
case it shall promptly notify the Borrower and the Administrative Agent thereof,
provided that such Secured Party’s failure to give such notice shall not affect
the validity thereof.

 

Section 10.14         Releases.

 

(a)           Release Upon Payment in Full.  The grant of a security interest
hereunder and all of rights, powers and remedies in connection herewith shall
remain in full force and effect until the Administrative Agent has
(i) retransferred and delivered all Collateral in its possession to the
Guarantor, and (ii) executed a written release or termination statement and
reassigned to the Guarantor without recourse or warranty any remaining
Collateral and all rights conveyed hereby.  Upon the complete payment of the
Obligations, the termination of the Letters of Credit, Secured Swap Agreements
secured hereby, Credit Agreement and the total Commitments and the compliance by
the Guarantor with all covenants and agreements hereof, the Administrative
Agent, at the written request and expense of the Borrower, will promptly
release, reassign and transfer the Collateral to the Guarantor and declare this
Agreement to be of no further force or effect.

 

(b)           Further Assurances.  If any of the Collateral shall be sold,
transferred or otherwise disposed of by the Guarantor in a transaction permitted
by the Credit Agreement, then the Administrative Agent, at the request and sole
expense of the Guarantor, shall promptly execute and deliver to the Guarantor
all releases or other documents reasonably necessary or desirable for the
release of the Liens created hereby on such Collateral and the capital stock of
the Guarantor.  At the request and sole expense of the Borrower, the Guarantor
shall be released from its obligations hereunder in the event that all the
capital stock of the Guarantor shall be sold, transferred or otherwise disposed
of in a transaction permitted by the Credit Agreement; provided that the
Borrower shall have delivered to the Administrative Agent, at least ten Business
Days prior to the date of the proposed release, a written request for release
identifying the Guarantor and the terms of the sale or other disposition in
reasonable detail, including the price thereof and any expenses in connection
therewith, together with a certification by the

 

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Borrower stating that such transaction is in compliance with the Credit
Agreement and the other Loan Documents.

 

(c)           Retention in Satisfaction.  Except as may be expressly applicable
pursuant to Section 9-620 of the New York UCC, no action taken or omission to
act by the Administrative Agent or the other Secured Parties hereunder,
including, without limitation, any exercise of voting or consensual rights or
any other action taken or inaction, shall be deemed to constitute a retention of
the Collateral in satisfaction of the Obligations or otherwise to be in full
satisfaction of the Obligations, and the Obligations shall remain in full force
and effect, until the Administrative Agent and the other Secured Parties shall
have applied payments (including, without limitation, collections from
Collateral) towards the Obligations in the full amount then outstanding or until
such subsequent time as is provided in Section 10.14(a).

 

Section 10.15         Reinstatement.  The obligations of the Guarantor under
this Agreement (including, without limitation, with respect to the guarantee
contained in Article II and the provision of collateral herein) shall continue
to be effective, or be reinstated, as the case may be, if at any time payment,
or any part thereof, of any of the Obligations is rescinded or must otherwise be
restored or returned by the Administrative Agent or any other Secured Party upon
the insolvency, bankruptcy, dissolution, liquidation or reorganization of the
Borrower or the Guarantor, or upon or as a result of the appointment of a
receiver, intervenor or conservator of, or trustee or similar officer for, the
Borrower or the Guarantor or any substantial part of its property, or otherwise,
all as though such payments had not been made.

 

Section 10.16         Existing Guarantee and Collateral Agreement

 

The Credit Agreement and any Notes issued in connection therewith have been
given in renewal, extension, rearrangement and increase, and not in
extinguishment of the obligations under the Existing Credit Agreement and the
notes and other documents related thereto.  All Liens, deeds of trust,
mortgages, assignments and security interests securing the Existing Credit
Agreement and the obligations relating thereto, including the Liens, assignments
and security interests of the Existing Pledge, are hereby ratified, confirmed,
renewed, extended, brought forward and rearranged as security for the
Obligations in addition to and cumulative of the Liens, assignments and security
interests of this Agreement.  None of the Liens and security interests created
pursuant to the Existing Pledge are released.  Additionally, the substantive
rights and obligations of the parties hereto shall be governed by this
Agreement, rather than the Existing Pledge.

 

Section 10.17         Acceptance.  The Guarantor hereby expressly waives notice
of acceptance of this Agreement, acceptance on the part of the Administrative
Agent and the other Secured Parties being conclusively presumed by their request
for this Agreement and delivery of the same to the Administrative Agent.

 

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IN WITNESS WHEREOF, each of the undersigned has caused this Amended and Restated
Guarantee and Pledge Agreement to be duly executed and delivered as of the date
first above written.

 

 

GUARANTOR:

KODIAK OIL & GAS CORP., a corporation continued under the laws of Yukon
Territories, Canada

 

 

 

 

 

 

 

By:

/s/ James P. Henderson

 

 

James P. Henderson

 

 

Chief Financial Officer

 

SIGNATURE PAGE
AMENDED AND RESTATED GUARANTEE AND PLEDGE AGREEMENT

 

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Acknowledged and Agreed to as

of the date hereof by:

 

ADMINISTRATIVE AGENT:

WELLS FARGO BANK, N.A.

 

 

 

 

 

 

 

By:

/s/ Suzanne F. Ridenhour

 

 

Suzanne F. Ridenhour

 

 

Vice President

 

SIGNATURE PAGE

AMENDED AND RESTATED GUARANTEE AND PLDEGE AGREEMENT

 

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Schedule 1

 

NOTICE ADDRESS OF GUARANTOR

 

1.             Kodiak Oil & Gas Corp.

 

Notice Address:

 

1625 Broadway, Suite 250

Attention:  Lynn Peterson

Telephone: 303-592-8071

Facsimile: 303-592-8075

 

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Schedule 2

 

DESCRIPTION OF PLEDGED SECURITIES

 

Pledged Securities:

 

Owner

 

Issuer

 

Class of Stock or
other Equity Interest

 

No. of
Shares

 

Certificated or
Uncertificated

Kodiak Oil & Gas Corp.

 

Kodiak Oil & Gas (USA) Inc.

 

Common

 

1

 

Certificated

 

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Schedule 3

 

FILINGS AND OTHER ACTIONS
REQUIRED TO PERFECT SECURITY INTERESTS

 

Delivery to Administrative Agent of Pledged Securities

 

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Schedule 4

 

CORRECT LEGAL NAME, LOCATION OF JURISDICTION OF ORGANIZATION, ORGANIZATIONAL
IDENTIFICATION NUMBER, TAXPAYOR IDENTIFICATION NUMBER AND CHIEF EXECUTIVE OFFICE

 

1.             Kodiak Oil & Gas Corp., a corporation continued under the laws of
Yukon Territories,

Canada

Organizational Identification Number:  20061166885

Taxpayer Identification Number:  N/A

Chief Executive Office: 1625 Broadway, Suite 250, Denver, Colorado 80202

 

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Schedule 5

 

PRIOR NAMES AND PRIOR CHIEF EXECUTIVE OFFICE

 

1.             Kodiak Oil & Gas Corp., a corporation continued under the laws of
Yukon Territories,

Canada

Prior Names:  None

Prior Chief Executive Office: 1625 Broadway, Suite 330

Denver, Colorado 80202

 

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