Exhibit 10.4

 

 

 

INTERCREDITOR AGREEMENT

dated as of March 3, 2017 between

Wilmington Trust, National Association,

as Priority Lien Agent,

and

Wilmington Trust, National Association,

as Second Lien Agent

 

 

THIS IS THE INTERCREDITOR AGREEMENT REFERRED TO IN (A) THE INDENTURE DATED AS OF
MARCH 3, 2017, AMONG GASTAR EXPLORATION INC., CERTAIN OF ITS SUBSIDIARIES FROM
TIME TO TIME PARTY THERETO AND WILMINGTON TRUST, NATIONAL ASSOCIATION, AS
TRUSTEE AND COLLATERAL TRUSTEE, (B) THE THIRD AMENDED AND RESTATED CREDIT
AGREEMENT DATED AS OF MARCH 3, 2017, AS AMENDED, SUPPLEMENTED, RESTATED OR
OTHERWISE MODIFIED FROM TIME TO TIME, AMONG GASTAR EXPLORATION INC., THE LENDERS
FROM TIME TO TIME PARTY THERETO AND WILMINGTON TRUST, NATIONAL ASSOCIATION, AS
ADMINISTRATIVE AGENT, (C) THE OTHER LOAN DOCUMENTS REFERRED TO IN SUCH CREDIT
AGREEMENT AND (D) THE OTHER COLLATERAL AGREEMENTS REFERRED TO IN SUCH INDENTURE.

 

 

 

--------------------------------------------------------------------------------

TABLE OF CONTENTS

 

         Page   ARTICLE I DEFINITIONS  

SECTION 1.01

 

Construction; Certain Defined Terms

     1   ARTICLE II LIEN PRIORITIES  

SECTION 2.01

 

Relative Priorities

     10  

SECTION 2.02

 

Prohibition on Marshalling, Etc.

     11  

SECTION 2.03

 

No New Liens

     11  

SECTION 2.04

 

Similar Collateral and Agreements

     11   ARTICLE III ENFORCEMENT RIGHTS; PURCHASE OPTION  

SECTION 3.01

 

Limitation on Enforcement Action

     12  

SECTION 3.02

 

Standstill Periods; Permitted Enforcement Action

     12  

SECTION 3.03

 

Insurance

     14  

SECTION 3.04

 

Notification of Release of Collateral, Enforcement Action and Default

     14  

SECTION 3.05

 

No Interference; Payment Over

     15  

SECTION 3.06

 

Purchase Option

     16   ARTICLE IV OTHER AGREEMENTS  

SECTION 4.01

 

Release of Liens; Automatic Release of Second Liens

     19  

SECTION 4.02

 

Certain Agreements With Respect to Insolvency or Liquidation Proceedings

     20  

SECTION 4.03

 

Reinstatement

     22  

SECTION 4.04

 

Refinancings

     23  

SECTION 4.05

 

Amendments to Priority Lien Documents and Second Lien Documents

     23  

SECTION 4.06

 

Legends

     25  

SECTION 4.07

 

Second Lien Secured Parties Rights as Unsecured Creditors; Judgment Lien
Creditor

     25  

SECTION 4.08

 

Postponement of Subrogation

     25  

SECTION 4.09

 

Acknowledgment by the Secured Debt Representatives

     25   ARTICLE V GRATUITOUS BAILMENT FOR PERFECTION OF CERTAIN SECURITY
INTERESTS  

SECTION 5.01

 

General

     26  

SECTION 5.02

 

Deposit Accounts

     26   ARTICLE VI APPLICATION OF PROCEEDS; DETERMINATION OF AMOUNTS  

SECTION 6.01

 

Application of Proceeds

     27  

SECTION 6.02

 

Determination of Amounts

     27  

 

i

--------------------------------------------------------------------------------

ARTICLE VII NO RELIANCE; NO LIABILITY; OBLIGATIONS ABSOLUTE;   CONSENT OF
GRANTORS; ETC.  

SECTION 7.01

 

No Reliance; Information

     28  

SECTION 7.02

 

No Warranties or Liability

     28  

SECTION 7.03

 

Obligations Absolute

     29  

SECTION 7.04

 

Grantors Consent

     29   ARTICLE VIII REPRESENTATIONS AND WARRANTIES  

SECTION 8.01

 

Representations and Warranties of Each Party

     30  

SECTION 8.02

 

Representations and Warranties of Each Representative

     30   ARTICLE IX MISCELLANEOUS  

SECTION 9.01

 

Notices

     30  

SECTION 9.02

 

Waivers; Amendment

     31  

SECTION 9.03

 

Actions Upon Breach; Specific Performance

     31  

SECTION 9.04

 

Parties in Interest

     32  

SECTION 9.05

 

Survival of Agreement

     32  

SECTION 9.06

 

Counterparts

     32  

SECTION 9.07

 

Severability

     32  

SECTION 9.08

 

Governing Law; Jurisdiction; Consent to Service of Process

     32  

SECTION 9.09

 

WAIVER OF JURY TRIAL

     33  

SECTION 9.10

 

Headings

     33  

SECTION 9.11

 

Conflicts

     33  

SECTION 9.12

 

Provisions Solely to Define Relative Rights

     33  

SECTION 9.13

 

Certain Terms Concerning the Second Lien Agent

     34  

SECTION 9.14

 

Certain Terms Concerning the Priority Lien Agent and the Second Lien Agent

     34  

SECTION 9.15

 

Authorization of Secured Agents

     34  

SECTION 9.16

 

Further Assurances

     34  

SECTION 9.17

 

Relationship of Secured Parties

     35  

SECTION 9.18

 

Reciprocal Rights (Excess Priority Lien Obligations)

     35   Annex and Exhibits        Annex I       

Exhibit A - Priority Confirmation Joinder

  

 

ii

--------------------------------------------------------------------------------

INTERCREDITOR AGREEMENT, dated as of March 3, 2017 (as amended, supplemented or
otherwise modified from time to time in accordance with the terms hereof, this
“Agreement”), between Wilmington Trust, National Association, as administrative
agent for the Priority Lien Secured Parties referred to herein (in such
capacity, and together with its successors and assigns (including under any
Priority Refinancing Credit Facility) in such capacity, the “Priority Lien
Agent”) and Wilmington Trust, National Association, as collateral trustee for
the Second Lien Secured Parties referred to herein (in such capacity, and
together with its successors in such capacity, the “Second Lien Agent”).

Reference is made to the Priority Credit Agreement (defined below) and the
Second Lien Indenture (defined below).

In consideration of the mutual agreements herein contained and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Priority Lien Agent (for itself and on behalf of the Priority
Lien Secured Parties) and the Second Lien Agent (for itself and on behalf of the
Second Lien Secured Parties) agree as follows:

ARTICLE I

DEFINITIONS

SECTION 1.01    Construction; Certain Defined Terms. (a) 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, (i) any
reference herein to any agreement, instrument, other document, statute or
regulation shall be construed as referring to such agreement, instrument, other
document, statute or regulation as from time to time amended, supplemented or
otherwise modified in accordance with the terms of each applicable Secured Debt
Document (including, for the avoidance of doubt, this Agreement), (ii) any
reference herein to any Person shall be construed to include such Person’s
successors and assigns, but shall not be deemed to include the subsidiaries of
such Person unless express reference is made to such subsidiaries, (iii) 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, (iv) all references herein to Articles, Sections and Annexes
shall be construed to refer to Articles, Sections and Annexes of this Agreement,
(v) unless otherwise expressly qualified herein, the words “asset” and
“property” shall be construed to have the same meaning and effect and to refer
to any and all tangible and intangible assets and properties, including cash,
securities, accounts and contract rights and (vi) the term “or” is not
exclusive.

(b)    All terms used in this Agreement that are defined in Article 1, 8 or 9 of
the New York UCC (whether capitalized herein or not) and not otherwise defined
herein have the meanings assigned to them in Article 1, 8 or 9 of the New York
UCC. If a term is defined in Article 9 of the New York UCC and another Article
of the UCC, such term shall have the meaning assigned to it in Article 9 of the
New York UCC.

(c)    As used in this Agreement, the following terms have the meanings
specified below:

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

 

1

--------------------------------------------------------------------------------

“Affiliate” of any specified Person means any other Person, directly or
indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, “control,”
as used with respect to any Person, means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise. For purposes of this definition,
the terms “controlling,” “controlled by” and “under common control with” have
correlative meanings.

“Bankruptcy Code” means Title 11 of the United States Code.

“Bankruptcy Law” means the Bankruptcy Code and any similar federal, state or
foreign law for the relief of debtors.

“Borrowing Base” means the maximum amount in dollars determined or redetermined
by Commercial Lenders under the Priority Credit Agreement or any Priority
Refinancing Credit Facility, as applicable, as the aggregate lending value to be
ascribed to the oil and gas properties of the Company and the Grantors against
which such lenders are prepared to provide loans or other Indebtedness to the
Company and the Grantors under the Priority Credit Agreement, using their
customary practices and standards for determining reserve based loans and which
are generally applied by lenders to borrowers in the oil and gas business, as
determined semi-annually during each year and/or on such other occasions as may
be provided for by the Priority Credit Agreement, and which is based upon, inter
alia, the review by such lenders of the Hydrocarbon reserves, royalty interests
and assets and liabilities of the Company and its Subsidiaries.

“Business Day” means any day excluding Saturday, Sunday and any other day on
which banking institutions are not required to be open in the State of New York
City, or the principal place of payment.

“Capital Stock” of any Person means any and all shares, interests (including
partnership interests), rights to purchase, warrants, options, participations or
other equivalents of or interests in (however designated) equity of such Person,
including any Preferred Stock, but excluding any debt securities convertible
into such equity.

“Cash Management Obligations” means any obligations of the Company or a Grantor
owed to any lender (or any Affiliate of any such lender) as permitted under the
Priority Credit Agreement in respect of treasury management arrangements or
depositary or other cash management services, including commercial credit card
and merchant card services.

“Collateral” means all of the assets and property of any Grantor, whether real,
personal or mixed, constituting the Priority Lien Collateral and/or the Second
Lien Collateral.

“Commercial Lenders” means commercial banks customarily engaged in oil and gas
reserves-based lending in the ordinary course of their respective businesses.

“Company” means Gastar Exploration Inc., a Delaware corporation.

“DIP Financing” has the meaning assigned to such term in Section 4.02(b).

“DIP Financing Liens” has the meaning assigned to such term in Section 4.02(b).

“DIP Lenders” has the meaning assigned to such term in Section 4.02(b).

 

2

--------------------------------------------------------------------------------

“Discharge of Priority Lien Obligations” means the occurrence of all of the
following:

(a)    termination or expiration of all commitments to extend credit that would
constitute Priority Lien Debt;

(b)    payment in full in cash of the principal of (to the extent such principal
does not constitute Excess Priority Lien Obligations) and interest and premium
(if any) on all Priority Lien Debt (other than any undrawn letters of credit);

(c)    discharge or cash collateralization (at the lower of (i) 105% of the
aggregate undrawn amount and (ii) the percentage of the aggregate undrawn amount
required for release of Liens under the terms of the applicable Priority Lien
Document) of all outstanding letters of credit constituting Priority Lien Debt
that are not Excess Priority Lien Obligations;

(d)    payment in full in cash of obligations in respect of Hedging Obligations
that are secured by the Priority Liens (and, with respect to any particular Swap
Agreement, termination of such agreement and payment in full in cash of all
obligations thereunder or entry into such other arrangements    satisfactory to
the Swap Counterparty (as defined in the Priority Lien Intercreditor Agreement)
party thereto (and communicated by the Swap Counterparty (as defined in the
Priority Lien Intercreditor Agreement) party thereto to the Priority Lien
Agent)) other than such Hedging Obligations that have been novated or
collateralized to the extent expressly required by the terms thereof; and

(e)    payment in full in cash of all other Priority Lien Obligations that are
outstanding and unpaid at the time the Priority Lien Debt is paid in full in
cash (other than any obligations for taxes, costs, indemnifications,
reimbursements, damages and other liabilities in respect of which no claim or
demand for payment has been made at or prior to such time);

provided that, if, at any time after the Discharge of Priority Lien Obligations
has occurred, the Company, any Grantor or any other guarantor enters into any
Priority Lien Document evidencing a Priority Lien Debt which incurrence is not
prohibited by the applicable Secured Debt Documents, then such Discharge of
Priority Lien Obligations shall automatically be deemed not to have occurred for
all purposes of this Agreement with respect to such new Priority Lien Debt
(other than with respect to any actions taken as a result of the occurrence of
such first Discharge of Priority Lien Obligations), and, from and after the date
on which the Company designates such Indebtedness as Priority Lien Debt in
accordance with this Agreement, the obligations under such Priority Lien
Document shall automatically and without any further action be treated as
Priority Lien Obligations for all purposes of this Agreement, including for
purposes of the Lien priorities and rights in respect of Collateral set forth in
this Agreement and any Second Lien Obligations shall be deemed to have been at
all times Second Lien Obligations and at no time Priority Lien Obligations. For
the avoidance of doubt, a Replacement as contemplated by Section 4.04(a) shall
not be deemed to cause a Discharge of Priority Lien Obligations.

“Discharge of Second Lien Obligations” means the occurrence of all of the
following:

(a)    payment in full in cash of the principal of and interest and premium (if
any) on all Second Lien Debt;

(b)    payment in full in cash of all other Second Lien Obligations that are
outstanding and unpaid at the time the Second Lien Debt is paid in full in cash
(other than any obligations for taxes, costs, indemnifications, reimbursements,
damages and other liabilities in respect of which no claim or demand for payment
has been made at or prior to such time);

 

3

--------------------------------------------------------------------------------

provided that, if at any time after the Discharge of Second Lien Obligations has
occurred, the Company, any Grantor or any other guarantor enters into any Second
Lien Document evidencing a Second Lien Obligation which incurrence is not
prohibited by the applicable Secured Debt Documents, then such Discharge of
Second Lien Obligations shall automatically be deemed not to have occurred for
all purposes of this Agreement with respect to such new Second Lien Obligations
(other than with respect to any actions taken as a result of the occurrence of
such first Discharge of Second Lien Obligations), and, from and after the date
on which the Company designates such Indebtedness as Second Lien Debt in
accordance with this Agreement, the obligations under such Second Lien Document
shall automatically and without any further action be treated as Second Lien
Obligations for all purposes of this Agreement, including for purposes of the
Lien priorities and rights in respect of Collateral set forth in this Agreement.
For the avoidance of doubt, a Replacement as contemplated by Section 4.04(a)
shall not be deemed to cause a Discharge of Second Lien Obligations.

“Disposition” means any sale, lease, exchange, assignment, license,
contribution, transfer or other disposition. “Dispose” shall have a correlative
meaning.

“Excess Priority Lien Obligations” means Obligations constituting Priority Lien
Obligations for the principal amount of loans and letters of credit under the
Priority Credit Agreement and/or any other Credit Facility pursuant to which
Priority Lien Debt has been incurred to the extent that such Obligations for
principal and letters of credit are in excess of the amount in clause (a) of the
definition of “Priority Lien Cap.”

“Financial Officer” of any Person means the Chief Financial Officer, Chief
Accounting Officer, principal accounting officer, Controller, Treasurer or
Assistant Treasurer of such Person.

“Governmental Authority” means the government of the United States or any other
nation, or any political subdivision thereof, whether state, provincial or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other Person exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.

“Grantor” means the Company, and each other subsidiary of the Company that shall
have granted any Lien in favor of any of the Priority Lien Agent or the Second
Lien Agent on any of its assets or properties to secure any of the Secured
Obligations.

“Hedging Obligations” means, with respect to any Grantor, the obligations of
such Grantor under any Swap Agreement that are “Secured Obligations”, as defined
in the Priority Lien Credit Agreement, including:

(i)    interest rate swap agreements, interest rate cap agreements and interest
rate collar agreements entered into with one of more financial institutions and
designed to protect such Grantor or any subsidiary thereof entering into the
agreement against fluctuations in interest rates with respect to Indebtedness
incurred;

(ii)    foreign exchange contracts and currency protection agreements entered
into with one or more financial institutions and designed to protect such
Grantor or any subsidiary thereof entering into the agreement against
fluctuations in currency exchanges rates with respect to Indebtedness incurred;

(iii)    any commodity futures contract, commodity option or other similar
agreement or arrangement designed to protect against fluctuations in the price
of oil, natural gas or other commodities used, produced, processed or sold by
that Grantor or any subsidiary thereof at the time; and

 

4

--------------------------------------------------------------------------------

(iv)     other agreements or arrangements designed to protect such Grantor or
any subsidiary thereof against fluctuations in interest rates, commodity prices
or currency exchange rates.

“Hydrocarbons” means oil, gas, casinghead gas, drip gasoline, natural gasoline,
condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons and all
products refined or separated therefrom.

“Indebtedness” has the meaning assigned to such term in the Priority Credit
Agreement (as in effect on the date hereof).

“Insolvency or Liquidation Proceeding” means:

(a)    any case commenced by or against the Company or any other Grantor under
the Bankruptcy Code or any other Bankruptcy Law, any other proceeding for the
reorganization, arrangement, recapitalization or adjustment or marshalling of
the assets or liabilities of the Company or any other Grantor, any receivership
or assignment for the benefit of creditors relating to the Company or any other
Grantor or any similar case or proceeding relative to the Company or any other
Grantor or its creditors, as such, in each case whether or not voluntary;

(b)    any liquidation, dissolution, marshalling of assets or liabilities or
other winding up of or relating to the Company or any other Grantor, in each
case whether or not voluntary and whether or not involving bankruptcy or
insolvency; or

(c)    any other proceeding of any type or nature in which substantially all
claims of creditors of the Company or any other Grantor are determined and any
payment or distribution is or may be made on account of such claims.

“Lien” means any mortgage, pledge, security interest or encumbrance, Lien or
charge of any kind (including any conditional sale or other title retention
agreement or lease in the nature thereof).

“New York UCC” means the Uniform Commercial Code as from time to time in effect
in the State of New York.

“Obligations” means, with respect to any Indebtedness, all obligations for
principal, premium, interest, penalties, fees, indemnifications, reimbursements,
and other amounts payable pursuant to the documentation governing such
Indebtedness.

“Officers’ Certificate” means a certificate signed by two officers of the
Company, one of whom must be either the principal executive officer or a
Financial Officer of the Company.

“Priority Lien Agent” has the meaning assigned to such term in the preamble
hereto.

“Person” means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, limited
liability company, government or any agency or political subdivision thereof or
other entity.

“Preferred Stock” as applied to the Capital Stock of any Person, means Capital
Stock of any class or classes (however designated) which is preferred as to the
payment of dividends or distributions, or as to the distribution of assets upon
any voluntary or involuntary liquidation or dissolution of such Person, over
shares of Capital Stock of any other class of such Person.

 

5

--------------------------------------------------------------------------------

“Priority Credit Agreement” means the Third Amended and Restated Credit
Agreement, dated as of March 3, 2017, among the Company, as borrower, certain
subsidiaries of the Company from time to time party thereto, as guarantors, the
Priority Lien Agent, and the lenders party thereto from time to time, as
amended, restated, adjusted, waived, renewed, extended, supplemented or
otherwise modified from time to time to the extent not otherwise prohibited by
the terms hereof with the same and/or different lenders and/or agents and any
credit agreement, loan agreement, note agreement, promissory note, indenture or
any other agreement or instrument evidencing or governing the terms of any
Priority Refinancing Credit Facility.

“Priority Lien” means a Lien granted by the Company or any other Grantor in
favor of the Priority Lien Agent, at any time, upon any Property of the Company
or such other Grantor to secure Priority Lien Obligations.

“Priority Lien Cap” means, as of any date, the sum of

(a)    the aggregate principal amount of all Indebtedness (including any
interest paid-in-kind) outstanding at any time under the Priority Credit
Agreement (with outstanding letters of credit being deemed to have a principal
amount equal to the stated amount thereof) not in excess of the lesser of
(i) the greater of $250,000,000 and the Borrowing Base in effect at the time of
incurrence of such Indebtedness and (ii) $300,000,000, in either case, plus

(b)    Priority Lien Protective Advances, plus

(c)    the amount of all Hedging Obligations, to the extent such Hedging
Obligations are secured by the Priority Liens, plus

(d)    the amount of all Cash Management Obligations, to the extent such Cash
Management Obligations are secured by the Priority Liens, plus

(e)    the amount of accrued and unpaid interest (whether incurred before or
after commencement of an Insolvency or Liquidation Proceeding, and whether or
not allowable in an Insolvency or Liquidation Proceeding but excluding any
interest paid-in-kind) and outstanding fees, expenses (including legal fees) and
indemnities, to the extent such Obligations are secured by the Priority Liens.

“Priority Lien Collateral” means all “Collateral”, as defined in the Priority
Credit Agreement or any other Priority Lien Document, and any other assets of
any Grantor now or at any time hereafter subject to Liens which secure, but only
to the extent securing, any Priority Lien Obligation.

“Priority Lien Debt” means the Indebtedness under the Priority Credit Agreement
(including letters of credit and reimbursement obligations with respect thereto
(with outstanding letters of credit being deemed to have a principal amount
equal to the stated amount thereof)) that was permitted to be incurred and
secured under the Priority Credit Agreement and the Second Lien Indenture (or as
to which the lenders under the Priority Credit Agreement obtained an Officers’
Certificate at the time of incurrence to the effect that such Indebtedness was
permitted to be incurred and secured by all applicable Secured Debt Documents)
and additional Indebtedness under any Priority Refinancing Credit Facility.

“Priority Lien Documents” means the Priority Credit Agreement, the Priority Lien
Security Documents, the other “Loan Documents” (as defined in the Priority
Credit Agreement), all other loan documents, notes, guarantees, instruments and
agreements governing or evidencing, or executed or delivered in connection with,
any Priority Refinancing Credit Facility and the “Swap Documents” (as defined in
the Priority Lien Intercreditor Agreement).

 

6

--------------------------------------------------------------------------------

“Priority Lien Intercreditor Agreement” has the meaning given to the term “Swap
Intercreditor Agreement” in the Priority Lien Credit Agreement. For the
avoidance of doubt, the Second Lien Agent is not party to the Priority Lien
Intercreditor Agreement.

“Priority Lien Obligations” means the Priority Lien Debt and all other
Obligations in respect of or in connection with Priority Lien Debt together with
Hedging Obligations and Cash Management Obligations, in each case, to the extent
that such Obligations are secured by Priority Liens. For the avoidance of doubt,
Hedging Obligations shall only constitute Priority Lien Obligations to the
extent that such Hedging Obligations are secured pursuant to the terms of the
Priority Lien Intercreditor Agreement and Priority Lien Security Documents.
Notwithstanding any other provision hereof, the term “Priority Lien Obligations”
will include accrued interest, fees, costs, and other charges incurred under the
Priority Credit Agreement and the other Priority Lien Documents, whether
incurred before or after commencement of an Insolvency or Liquidation
Proceeding, and whether or not allowable in an Insolvency or Liquidation
Proceeding. To the extent that any payment with respect to the Priority Lien
Obligations (whether by or on behalf of any Grantor, as proceeds of security,
enforcement of any right of set-off, or otherwise) is declared to be fraudulent
or preferential in any respect, set aside, or required to be paid to a debtor in
possession, trustee, receiver, or similar Person, then the obligation or part
thereof originally intended to be satisfied will be deemed to be reinstated and
outstanding as if such payment had not occurred.

“Priority Lien Protective Advances” means any advance made by one or more
Priority Lien Secured Parties for the purpose of (a) maintaining, protecting or
preserving the Collateral and/or the Priority Lien Secured Parties’ rights under
the Priority Lien Documents or which is otherwise made for the benefit of the
Priority Lien Secured Parties, (b) enhancing the likelihood of, or maximizing
the amount of, repayment of any Priority Lien Obligation and/or (c) paying any
other amount chargeable to, or required to be paid by, any Grantor hereunder or
under any other Priority Lien Document as a result of the actions described
under clauses (a) or (b) above; provided that in no event shall the aggregate
amount of any such advances exceed $5,000,000.

“Priority Lien Release Notice” has the meaning assigned to such term in
Section 4.01.

“Priority Lien Secured Parties” means, at any time, the Priority Lien Agent,
each lender or issuing bank under the Priority Credit Agreement, each holder,
provider or obligee of any Hedging Obligations and Cash Management Obligations
and, in each case, that is a secured party (or a party entitled to the benefits
of the security) under any Priority Lien Document, the beneficiaries of each
indemnification obligation undertaken by any Grantor under any Priority Lien
Document, each other Person that provides letters of credit, guarantees or other
credit support related thereto under any Priority Lien Document and each other
holder of, or obligee in respect of, any Priority Lien Obligations (including
pursuant to a Priority Refinancing Credit Facility), in each case to the extent
designated as a secured party (or a party entitled to the benefits of the
security) under any Priority Lien Document outstanding at such time.

“Priority Lien Security Documents” means the Priority Credit Agreement (insofar
as the same grants a Lien on the Collateral), each agreement listed in Part A of
Exhibit B hereto, and any other security agreements, pledge agreements,
collateral assignments, mortgages, deeds of trust, control agreements, or grants
or transfers for security, now existing or entered into after the date hereof,
executed and delivered by the Company or any other Grantor creating (or
purporting to create) a Lien upon Collateral in favor of the Priority Lien Agent
(including any such agreements, assignments, mortgages, deeds of trust and other
documents or instruments associated with any Priority Refinancing Credit
Facility).

 

7

--------------------------------------------------------------------------------

“Priority Refinancing Credit Facility” means any conforming oil and gas
reserves-based revolving credit facility, the majority of the commitments under
which are held by Commercial Lenders, that (i) refunds, refinances or replaces
the Priority Credit Agreement or any other Priority Refinancing Credit Facility,
in each case, in whole and with all commitments thereunder terminated,
(ii) Indebtedness under which is permitted to be incurred under the Second Lien
Indenture, and (iii) the Priority Liens securing such Priority Refinancing
Credit Facility are subject to the terms of this Agreement for all purposes
(including the Lien priorities as set forth herein as of the date hereof) and
(iv) with respect to which the Priority Lien Agent thereunder has complied with
Section 4.04(a).

“Property” means any interest in any kind of property or asset, whether real,
personal or mixed, or tangible or intangible, including, without limitation,
cash, securities, accounts and contract rights.

“Replaces” means, (a) in respect of any agreement with reference to the Priority
Credit Agreement or the Priority Lien Obligations or any Priority Refinancing
Credit Facility, that such agreement refunds, refinances or replaces the
Priority Credit Agreement, the Priority Lien Obligations or any Priority
Refinancing Credit Facility in full (in a transaction that is in compliance with
Section 4.04(a)) and that all commitments thereunder are terminated or (b) in
respect of any agreement with reference to the Second Lien Documents, the Second
Lien Obligations that such Indebtedness refunds, refinances or replaces the
Second Lien Documents, the Second Lien Obligations in whole (in a transaction
that is in compliance with Section 4.04(a)) and that all commitments thereunder
are terminated, or, to the extent permitted by the terms of the Second Lien
Documents, the Second Lien Obligations, in part. “Replace,” “Replaced” and
“Replacement” shall have correlative meanings.

“Second Lien” means a Lien granted by a Second Lien Document to the Second Lien
Agent, at any time, upon any Collateral by any Grantor to secure Second Lien
Obligations.

“Second Lien Agent” has the meaning assigned to such term in the preamble
hereto.

“Second Lien Collateral” means all “Collateral”, as defined in any Second Lien
Document, and any other assets of any Grantor now or at any time hereafter
subject to Liens which secure, but only to the extent securing, any Second Lien
Obligations.

“Second Lien Debt” means the Indebtedness under the Second Lien Indenture and
guarantees thereof that was permitted to be incurred and secured in accordance
with the Secured Debt Documents and with respect to which the requirements of
Section 4.04(b) have been (or are deemed) satisfied.

“Second Lien Documents” means the Second Lien Indenture, the Second Lien
Security Documents and all other note documents (including the Indenture
Documents (as defined in the Second Lien Indenture)), notes, guarantees,
instruments and agreements governing or evidencing the Second Lien Obligations.

“Second Lien Indenture” means that certain Indenture, dated as of March 3, 2017,
among the Company, certain of its subsidiaries from time to time party thereto
and Wilmington Trust, National Association, as trustee and collateral trustee,
as amended, restated, adjusted, waived, renewed, extended, supplemented or
otherwise modified from time to time in accordance with the terms hereof.

 

8

--------------------------------------------------------------------------------

“Second Lien Obligations” means Second Lien Debt and all other Obligations (as
defined in the Second Lien Indenture) in respect thereof. Notwithstanding any
other provision hereof, the term “Second Lien Obligations” will include accrued
interest, fees, costs, and other charges incurred under the Second Lien
Indenture and the other Second Lien Documents, whether incurred before or after
commencement of an Insolvency or Liquidation Proceeding and whether or not
allowable in an Insolvency or Liquidation Proceeding. To the extent that any
payment with respect to the Second Lien Obligations (whether by or on behalf of
any Grantor, as proceeds of security, enforcement of any right of set-off, or
otherwise) is declared to be fraudulent or preferential in any respect, set
aside, or required to be paid to a debtor in possession, trustee, receiver, or
similar Person, then the obligation or part thereof originally intended to be
satisfied will be deemed to be reinstated and outstanding as if such payment had
not occurred.

“Second Lien Purchasers” has the meaning assigned to such term in Section 3.06.

“Second Lien Secured Parties” means, at any time, the Second Lien Agent, the
trustees, agents and other representatives of the holders of the Notes (as
defined in the Second Lien Indenture), the beneficiaries of each indemnification
obligation undertaken by any Grantor under any Second Lien Document and each
other holder of, or obligee in respect of, any Second Lien Obligations, any
holder or lender pursuant to any Second Lien Document outstanding at such time.

“Second Lien Security Documents” means the Second Lien Indenture (insofar as the
same grants a Lien on the Collateral), each agreement listed in Part B of
Exhibit B hereto, the Collateral Agreements (as defined in the Second Lien
Indenture) and any other security agreements, pledge agreements, collateral
assignments, mortgages, deeds of trust, collateral agency agreements, control
agreements, or grants or transfers for security, now existing or entered into
after the date hereof, executed and delivered by the Company or any other
Grantor creating (or purporting to create) a Lien upon Collateral in favor of
the Second Lien Agent.

“Section 363 Event” has the meaning assigned to such term in Section 4.02(d).

“Section 363 Notice” has the meaning assigned to such term in Section 4.02(d).

“Section 363 Objections” has the meaning assigned to such term in
Section 4.02(d).

“Secured Debt Documents” means the Priority Lien Documents and the Second Lien
Documents.

“Secured Debt Representative” means the Priority Lien Agent or the Second Lien
Agent, as applicable.

“Secured Obligations” means the Priority Lien Obligations and the Second Lien
Obligations.

“Secured Parties” means the Priority Lien Secured Parties and the Second Lien
Secured Parties.

“Security Documents” means the Priority Lien Security Documents and the Second
Lien Security Documents.

“Standstill Period” has the meaning assigned to such term in Section 3.02.

 

9

--------------------------------------------------------------------------------

“subsidiary” means, with respect to any Person, any corporation, limited
liability company, association, partnership or other business entity of which
more than 50% of the total voting power of shares of Voting Stock is at the time
owned or controlled, directly or indirectly, by (a) such Person; (b) such Person
and one or more subsidiaries of such Person; or (c) one or more subsidiaries of
such Person.

“Swap Agreement” has the meaning assigned to such term in the Priority Lien
Credit Agreement.

“Voting Stock” of a Person means all classes of Capital Stock of such Person
then outstanding and normally entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof.

ARTICLE II

LIEN PRIORITIES

SECTION 2.01    Relative Priorities. (a) The grant of the Priority Liens
pursuant to the Priority Lien Documents and the grant of the Second Liens
pursuant to the Second Lien Documents create two separate and distinct Liens on
the Collateral.

(b)    Notwithstanding anything contained in this Agreement, the Priority Lien
Documents, the Second Lien Documents, or any other agreement or instrument or
operation of law to the contrary, or any other circumstance whatsoever and
irrespective of (i) how a Lien was acquired (whether by grant, possession,
statute, operation of law, subrogation, or otherwise), (ii) the time, manner, or
order of the grant, attachment or perfection of a Lien, (iii) any conflicting
provision of the New York UCC or other applicable law, (iv) any defect in, or
non-perfection, setting aside, or avoidance of, a Lien or a Priority Lien
Document or a Second Lien Document, (v) the modification of a Priority Lien
Obligation or a Second Lien Obligation, and (vi) the subordination of a Lien on
Collateral securing a Priority Lien Obligation to a Lien securing another
obligation of the Company or other Person that is permitted under the Priority
Lien Documents as in effect on the date hereof or securing a DIP Financing, or
the subordination of a Lien on Collateral securing a Second Lien Obligation to a
Lien securing another obligation of the Company or other Person (other than a
Priority Lien Obligation) that is permitted under the Second Lien Documents as
in effect on the date hereof, the Second Lien Agent, on behalf of itself and the
other Second Lien Secured Parties, hereby agrees that (i) any Priority Lien on
any Collateral now or hereafter held by or for the benefit of any Priority Lien
Secured Party shall be senior in right, priority, operation, effect and all
other respects to any and all Second Liens on any Collateral, in any case,
subject to the Priority Lien Cap as provided herein, and (ii) any Second Lien on
any Collateral now or hereafter held by or for the benefit of any Second Lien
Secured Party shall be junior and subordinate in right, priority, operation,
effect and all other respects to any and all Priority Liens on any Collateral,
in any case, subject to the Priority Lien Cap as provided herein.

(c)    It is acknowledged that, subject to the Priority Lien Cap (as provided
herein), (i) the aggregate amount of the Priority Lien Obligations may be
increased from time to time pursuant to the terms of the Priority Lien
Documents, (ii) a portion of the Priority Lien Obligations consists or may
consist of Indebtedness that is revolving in nature, and the amount thereof that
may be outstanding at any time or from time to time may be increased or reduced
and subsequently reborrowed, and (iii) (A) the Priority Lien Documents may be
replaced, restated, supplemented, restructured or otherwise amended or modified
from time to time and (B) the Priority Lien Obligations may be increased,
extended, renewed, replaced, restated, supplemented, restructured, repaid,
refunded, refinanced or otherwise amended or modified from time to time, in the
case of the foregoing (A) and (B) all without affecting the

 

10

--------------------------------------------------------------------------------

subordination of the Second Liens or the provisions of this Agreement defining
the relative rights of the Priority Lien Secured Parties and the Second Lien
Secured Parties. The Lien priorities provided for herein shall not be altered or
otherwise affected by any amendment, modification, supplement, extension,
increase, renewal, restatement or Replacement of either the Priority Lien
Obligations (or any part thereof) or the Second Lien Obligations (or any part
thereof), by the release of any Collateral or of any guarantees for any Priority
Lien Obligations or by any action that any Secured Debt Representative or
Secured Party may take or fail to take in respect of any Collateral.

SECTION 2.02    Prohibition on Marshalling, Etc.. Until the Discharge of
Priority Lien Obligations, the Second Lien Agent will not assert any
marshalling, appraisal, valuation, or other similar right that may otherwise be
available to a junior secured creditor.

SECTION 2.03    No New Liens. The parties hereto agree that, (a) so long as the
Discharge of Priority Lien Obligations has not occurred, none of the Grantors
shall, nor shall any Grantor permit any of its subsidiaries to, (i) grant or
permit any additional Liens on any asset of a Grantor to secure any Second Lien
Obligation, or take any action to perfect any additional Liens, unless it has
granted, or substantially concurrently therewith grants (or offers to grant), a
Lien on such asset of such Grantor to secure (A) the Priority Lien Obligations
and has taken all actions required to perfect such Liens and (B) the Second Lien
Obligations and has taken all actions required to perfect such Liens; provided,
however, the refusal or inability of the Priority Lien Agent to accept such Lien
will not prevent the Second Lien Agent from taking the Lien or (ii) grant or
permit any additional Liens on any asset of a Grantor to secure any Priority
Lien Obligation, or take any action to perfect any additional Liens, unless it
has granted, or substantially concurrently therewith grants (or offers to
grant), a Lien on such asset of such Grantor to secure the Second Lien
Obligations and has taken all actions required to perfect such Liens. To the
extent that the provisions of the immediately preceding sentence are not
complied with for any reason, without limiting any other right or remedy
available to the Priority Lien Agent, the other Priority Lien Secured Parties,
the Second Lien Agent or the other Second Lien Secured Parties, the Second Lien
Agent, for itself and on behalf of the other Second Lien Secured Parties, agrees
that any amounts received by or distributed to any Second Lien Secured Party
pursuant to or as a result of any Lien granted in contravention of this
Section 2.03 shall be subject to Section 3.05(b).

SECTION 2.04    Similar Collateral and Agreements. The parties hereto
acknowledge and agree that it is their intention that the Priority Lien
Collateral and the Second Lien Collateral be identical. In furtherance of the
foregoing, the parties hereto agree (a) to cooperate in good faith in order to
determine, upon any reasonable request by the Priority Lien Agent or the Second
Lien Agent, the specific assets included in the Priority Lien Collateral and the
Second Lien Collateral, the steps taken to perfect the Priority Liens and the
Second Liens, and the identity of the respective parties obligated under the
Priority Lien Documents and the Second Lien Documents in respect of the Priority
Lien Obligations and the Second Lien Obligations, respectively, (b) that the
Second Lien Security Documents creating Liens on the Collateral shall be in all
material respects the same forms of documents as the respective Priority Lien
Security Documents creating Liens on the Collateral other than (i) with respect
to the priority nature of the Liens created thereunder in such Collateral,
(ii) such other modifications to such Second Lien Security Documents which are
less restrictive than the corresponding Priority Lien Security Documents,
(iii) provisions in the Second Lien Security Documents which are solely
applicable to the rights and duties of the Second Lien Agent or the other Second
Lien Secured Parties, and (iv) with such deletions or modifications of
representations, warranties and covenants as are customary with respect to
security documents establishing Liens securing debt securities sold in similar
private transactions that are not subject to the registration requirements of
the Securities Act and (c) that at no time shall there be any Grantor that is an
obligor in respect of the Second Lien Obligations that is not also an obligor in
respect of the Priority Lien Obligations.

 

11

--------------------------------------------------------------------------------

ARTICLE III

ENFORCEMENT RIGHTS; PURCHASE OPTION

SECTION 3.01    Limitation on Enforcement Action. Prior to the Discharge of
Priority Lien Obligations, the Second Lien Agent, for itself and on behalf of
each Second Lien Secured Party, hereby agrees that, subject to Section 3.02,
Section 3.05(b) and Section 4.07, none of the Second Lien Agent or any other
Second Lien Secured Party shall commence any judicial or nonjudicial foreclosure
proceedings with respect to, seek to have a trustee, receiver, liquidator or
similar official appointed for or over, attempt any action to take possession
of, exercise any right, remedy or power with respect to, or otherwise take any
action to enforce its interest in or realize upon, or take any other action
available to it in respect of, any Collateral under any Second Lien Security
Document, applicable law or otherwise (including but not limited to any right of
setoff), it being agreed that only the Priority Lien Agent, acting in accordance
with the applicable Priority Lien Documents, shall have the exclusive right (and
whether or not any Insolvency or Liquidation Proceeding has been commenced), to
take any such actions or exercise any such remedies, in each case, without any
consultation with or the consent of the Second Lien Agent or any other Second
Lien Secured Party. In exercising rights and remedies with respect to the
Collateral, the Priority Lien Agent and the other Priority Lien Secured Parties
may enforce the provisions of the Priority Lien Documents and exercise remedies
thereunder, all in such order and in such manner as they may determine in their
sole discretion and regardless of whether such exercise and enforcement is
adverse to the interest of any Second Lien Secured Party. Such exercise and
enforcement shall include the rights of an agent appointed by them to Dispose of
Collateral upon foreclosure, to incur expenses in connection with any such
Disposition and to exercise all the rights and remedies of a secured creditor
under the Uniform Commercial Code, the Bankruptcy Code or any other Bankruptcy
Law. Without limiting the generality of the foregoing, prior to the Discharge of
Priority Lien Obligations, the Priority Lien Agent will have the exclusive right
to deal with that portion of the Collateral consisting of deposit accounts and
securities accounts (collectively “Accounts”), including exercising rights under
control agreements with respect to such Accounts. The Second Lien Agent, for
itself and on behalf of the other Second Lien Secured Parties, hereby
acknowledges and agrees that no covenant, agreement or restriction contained in
any Second Lien Security Document or any other Second Lien Document other than
this Agreement, shall be deemed to restrict in any way the rights and remedies
of the Priority Lien Agent or the other Priority Lien Secured Parties with
respect to the Collateral as set forth in this Agreement. Notwithstanding the
foregoing, subject to Section 3.05, the Second Lien Agent, on behalf of the
Second Lien Secured Parties, may, but will have no obligation to, take all such
actions (not adverse to the Priority Liens or the rights of the Priority Lien
Agent and the Priority Lien Secured Parties) it deems necessary to perfect or
continue the perfection of the Second Liens in the Collateral. Nothing herein
shall limit the right or ability of the Second Lien Secured Parties to
(i) purchase (by credit bid or otherwise) all or any portion of the Collateral
in connection with any enforcement of remedies by the Priority Lien Agent to the
extent that, and so long as, the Priority Lien Secured Parties receive payment
in full in cash of all Priority Lien Obligations (other than the Excess Priority
Lien Obligations, except as provided in Section 6.01) after giving effect
thereto or (ii) file a proof of claim with respect to the Second Lien
Obligations.

SECTION 3.02    Standstill Periods; Permitted Enforcement Action. (a) Prior to
the Discharge of Priority Lien Obligations and notwithstanding the foregoing
Section 3.01, both before and during an Insolvency or Liquidation Proceeding
after a period of 180 days has elapsed (which period will be tolled during any
period in which the Priority Lien Agent is not entitled, on behalf of the
Priority Lien Secured Parties, to enforce or exercise any rights or remedies
with respect to any Collateral as a result of (A) any injunction issued by a
court of competent jurisdiction or (B) the automatic stay or any other stay in
any Insolvency or Liquidation Proceeding) since the date on which the Second
Lien Agent has delivered to the Priority Lien Agent written notice of an Event
of Default under any Second Lien Document arising from the failure to pay any
Second Lien Obligations or the acceleration of any Second

 

12

--------------------------------------------------------------------------------

Lien Debt (the “Standstill Period”), the Second Lien Agent and the other Second
Lien Secured Parties may enforce or exercise any rights or remedies with respect
to any Collateral; provided, however that notwithstanding the expiration of the
Standstill Period, in no event may the Second Lien Agent or any other Second
Lien Secured Party enforce or exercise any rights or remedies with respect to
any Collateral, or commence, join with any Person at any time in commencing, or
petition for or vote in favor of any resolution for, any such action or
proceeding, if the Priority Lien Agent on behalf of the Priority Lien Secured
Parties or any other Priority Lien Secured Party shall have commenced, and shall
be diligently pursuing (or shall have sought or requested relief from, or
modification of, the automatic stay or any other stay or other prohibition in
any Insolvency or Liquidation Proceeding to enable the commencement and pursuit
thereof), the enforcement or exercise of any rights or remedies with respect to
the Collateral or any such action or proceeding (prompt written notice thereof
to be given to the Second Lien Agent by the Priority Lien Agent); provided,
further, that, at any time after the expiration of the Standstill Period, if
neither the Priority Lien Agent nor any other Priority Lien Secured Party shall
have commenced and be diligently pursuing (or shall have sought or requested
relief from, or modification of, the automatic stay or any other stay or other
prohibition in any Insolvency or Liquidation Proceeding to enable the
commencement and pursuit thereof) the enforcement or exercise of any rights or
remedies with respect to any material portion of the Collateral or any such
action or proceeding, and the Second Lien Agent shall have commenced the
enforcement or exercise of any rights or remedies with respect to any material
portion of the Collateral or any such action or proceeding, then for so long as
the Second Lien Agent is diligently pursuing such rights or remedies, none of
any Priority Lien Secured Party or the Priority Lien Agent shall take any action
of a similar nature with respect to such Collateral, or commence, join with any
Person at any time in commencing, or petition for or vote in favor of any
resolution for, any such action or proceeding.

(b)    Second Lien Permitted Actions. Anything to the contrary in this Article
III or in any other provision of this Agreement notwithstanding, Second Lien
Agent and /or any Second Lien Secured Party may:

(i)    if an Insolvency or Liquidation Proceeding has been commenced by or
against any Grantor, file a claim or statement of interest with respect to the
Second Lien Debt;

(ii)    take any action (not adverse to the priority status of the Liens on the
Collateral securing the Priority Lien Debt, or the rights of Priority Lien Agent
or any other Priority Lien Secured Party to undertake enforcement actions with
respect to the Collateral or otherwise) in order to create or perfect its Lien
in and to the Collateral;

(iii)    file any necessary responsive or defensive pleadings in opposition to
any motion, claim, adversary proceeding, or other pleading made by any person
objecting to or otherwise seeking the disallowance of the claims of the Second
Lien Secured Parties, including any claims secured by the Collateral, if any;

(iv)    file any pleadings, objections, motions or agreements which assert
rights or interests available to, or exercise rights as (to the extent not
prohibited by Section 4.07), unsecured creditors of the Grantors arising under
any Insolvency or Liquidation Proceeding or applicable non-Bankruptcy Law, in
each case not inconsistent with the terms of this Agreement;

(v)    vote on any plan of reorganization and make any filings (including proofs
of claim) and arguments and motions that are, in each case, not in contravention
of the provisions of this Agreement, with respect to the Second Lien Debt and
the Collateral;

 

13

--------------------------------------------------------------------------------

(vi)    seek to enforce any of the terms of the Second Lien Loan Documents to
the extent not expressly prohibited by the other provisions of this Agreement;

(vii)    join (but not exercise any control with respect to) any judicial
foreclosure proceeding or other judicial Lien enforcement proceeding with
respect to the Collateral initiated by Priority Lien Agent (or any Priority Lien
Secured Parties) to the extent that any such action could not reasonably be
expected, in any material respect, to restrain, hinder, limit, delay for any
material period or otherwise interfere with an enforcement action by Priority
Lien Agent (it being understood that neither Second Lien Agent nor any Second
Lien Secured Party shall be entitled to receive any proceeds of any Collateral
unless otherwise expressly permitted herein);

(viii)    bid for or purchase Collateral at any public, private or judicial
foreclosure upon such Collateral initiated by Priority Lien Agent or any
Priority Lien Secured Party, or any sale of Collateral during an Insolvency or
Liquidation Proceeding; provided that such bid may only include a “credit bid”
in respect of any Second Lien Debt to the extent that, and so long as, the
Priority Lien Secured Parties receive payment in full in cash of all Priority
Lien Obligations (other than the Excess Priority Lien Obligations) after giving
effect thereto; and

(ix)    take or otherwise exercise any enforcement actions after the expiration
of the Standstill Period to the extent specifically permitted in the second
proviso to Section 3.02(a) or with the consent of the Priority Lien Agent or as
required by a court of competent jurisdiction.

SECTION 3.03    Insurance. (a) Unless and until the Discharge of Priority Lien
Obligations has occurred (subject to the terms of Section 3.02, including the
rights of the Second Lien Secured Parties following expiration of any applicable
Standstill Period), the Priority Lien Agent shall have the sole and exclusive
right, subject to the rights of the Grantors under the Priority Lien Documents,
to adjust and settle claims in respect of Collateral under any insurance policy
in the event of any loss thereunder and to approve any award granted in any
condemnation or similar proceeding (or any deed in lieu of condemnation)
affecting the Collateral. Unless and until the Discharge of Priority Lien
Obligations has occurred, and subject to the rights of the Grantors under the
Priority Lien Documents, all proceeds of any such policy and any such award (or
any payments with respect to a deed in lieu of condemnation) in respect to the
Collateral shall, subject to Section 6.01, be paid to the Priority Lien Agent
pursuant to the terms of the Priority Lien Documents (including for purposes of
cash collateralization of commitments, letters of credit and Hedging
Obligations). If the Second Lien Agent or any Second Lien Secured Party shall,
at any time, receive any proceeds of any such insurance policy or any such award
or payment in contravention of the foregoing, it shall, subject to Section 6.01,
pay such proceeds over to the Priority Lien Agent. In addition, if by virtue of
being named as an additional insured or loss payee of any insurance policy of
any Grantor covering any of the Collateral, the Second Lien Agent or any other
Second Lien Secured Party shall have the right to adjust or settle any claim
under any such insurance policy, then unless and until the Discharge of Priority
Lien Obligations has occurred, the Second Lien Agent or any such Second Lien
Secured Party shall, until the Discharge of Priority Lien Obligations has
occurred, follow the instructions of the Priority Lien Agent, or of the Grantors
under the Priority Lien Documents to the extent the Priority Lien Documents
grant such Grantors the right to adjust or settle such claims, with respect to
such adjustment or settlement (subject to the terms of Section 3.02, including
the rights of the Second Lien Secured Parties following expiration of any
applicable Standstill Period).

SECTION 3.04    Notification of Release of Collateral, Enforcement Action and
Default.

(a)    Each of the Priority Lien Agent and the Second Lien Agent shall give the
other Secured Debt Representatives prompt written notice of the Disposition by
it of, and/or release by it of the

 

14

--------------------------------------------------------------------------------

Lien on, any Collateral. Such notice shall describe in reasonable detail the
subject Collateral, the parties involved in such Disposition or release, the
place, time, manner and method thereof, and the consideration, if any, received
therefor; provided, however, that the failure to give any such notice shall not
in and of itself in any way impair the effectiveness of any such Disposition or
release or result in any liability to the Priority Lien Agent or the Second Lien
Agent, as applicable.

(b)    Priority Lien Agent shall provide reasonable prior notice (and, in all
events, no less than five Business Days) to Second Lien Agent, and on a
confidential basis, of its initial material enforcement action against the
Collateral, other than any notice sent to a depository bank or the exercise of
any set off rights. Second Lien Agent shall provide reasonable prior notice
(and, in all events, no less than five Business Days) to Priority Lien Agent
(prior to the Discharge of Priority Lien Obligations) of its initial material
enforcement action against the Collateral. Notwithstanding the foregoing, (i) in
no event shall the failure to deliver any notice required pursuant to this
clause (b) affect the validity or enforceability of the applicable enforcement
action for which notice should have been provided under this clause (b) or
result in any liability to the Priority Lien Agent or the Second Lien Agent, as
applicable and (ii) no party hereto shall object to or challenge (or have any
right to object to or challenge), in a proceeding or otherwise, the validity or
enforceability of such enforcement action as a result of the failure to deliver
such notice.

(c)    Each of the Priority Lien Agent and the Second Lien Agent shall give the
other Secured Debt Representatives prompt written notice (and, in all events,
within 3 Business Days) of any Event of Default (in each case as defined in the
applicable Secured Debt Documents) to the extent that notice of such Event of
Default is being provided by such Secured Debt Representative (or any Secured
Parties) to any Grantor; provided that, notwithstanding the foregoing, (i) in no
event shall the failure to deliver any notice required pursuant to this clause
(c) affect the ability of such Person responsible for delivery of such notice
from exercising any rights or remedies available to it hereunder with respect to
such Event of Default or the validity or enforceability of any such exercise of
rights or remedies or result in any liability to the Priority Lien Agent or the
Second Lien Agent, as applicable and (ii) no party hereto shall object to or
challenge (or have any right to object to or challenge), in a proceeding or
otherwise, the validity or enforceability of such exercise of rights or remedies
as a result of the failure to deliver such notice.

SECTION 3.05    No Interference; Payment Over.

(a)    No Interference. The Second Lien Agent, for itself and on behalf of each
Second Lien Secured Party, agrees that each Second Lien Secured Party (A) will
not take or cause to be taken any action the purpose or effect of which is, or
could be, to make any Second Lien pari passu with, or to give such Second Lien
Secured Party any preference or priority relative to, any Priority Lien with
respect to the Collateral or any part thereof, (B) will not (I) challenge or
question in any proceeding the validity or enforceability of any Priority Lien
Obligations or Priority Lien Document, or the validity or enforceability of the
priorities, rights or duties established by the provisions of this Agreement or
(II) initiate a challenge or question in any proceeding the validity,
attachment, perfection or priority of any Priority Lien (unless, for the
avoidance of doubt, the same or related subject matter has been (I) asserted by
any other party in any Insolvency or Liquidation Proceedings or (II) raised or
determined, in each case, as a substantive matter by the court in any such
Insolvency or Liquidation Proceedings), (C) will not take or cause to be taken
any action the purpose or effect of which is to materially interfere, hinder or
delay, in any manner, whether by judicial proceedings or otherwise, any sale,
transfer or other Disposition of the Collateral by any Priority Lien Secured
Party or the Priority Lien Agent acting on their behalf, (D) shall have no right
to (I) direct the Priority Lien Agent or any other Priority Lien Secured Party
to exercise any right, remedy or power with respect to any Collateral or
(II) consent to the exercise by the Priority Lien Agent or any other Priority
Lien Secured Party of any right, remedy or power with respect to any Collateral,
(E) will

 

15

--------------------------------------------------------------------------------

not institute any suit or assert in any suit or Insolvency or Liquidation
Proceeding any claim against the Priority Lien Agent or other Priority Lien
Secured Party seeking damages from or other relief by way of specific
performance, instructions or otherwise with respect to, and neither the Priority
Lien Agent nor any other Priority Lien Secured Party shall be liable for, any
action taken or omitted to be taken by the Priority Lien Agent or other Priority
Lien Secured Party with respect to any Priority Lien Collateral, (F) will not
seek, and hereby waives any right, to have any Collateral or any part thereof
marshaled upon any foreclosure or other Disposition of such Collateral, (G) will
not attempt, whether by judicial proceedings or otherwise, to invalidate the
enforceability of any provision of this Agreement, (H) will not object to
forbearance by the Priority Lien Agent or any Priority Lien Secured Party, and
(I) will not assert, and hereby waives, to the fullest extent permitted by law,
any right to demand, request, plead or otherwise assert or claim the benefit of
any marshalling, appraisal, valuation or other similar right that may be
available under applicable law with respect to the Collateral or any similar
rights a junior secured creditor may have under applicable law.

(b)    Payment Over. The Second Lien Agent, for itself and on behalf of each
other Second Lien Secured Party, hereby agrees that if any Second Lien Secured
Party shall obtain possession of any Collateral or shall realize any proceeds or
payment in respect of any Collateral, pursuant to the exercise of any rights or
remedies with respect to the Collateral under any Second Lien Security Document
or by the exercise of any rights available to it under applicable law or in any
Insolvency or Liquidation Proceeding, to the extent permitted hereunder, at any
time prior to the Discharge of Priority Lien Obligations secured by such
Collateral, then it shall hold such Collateral, proceeds or payment in trust for
the Priority Lien Agent and the other Priority Lien Secured Parties and transfer
such Collateral, proceeds or payment, as the case may be, to the Priority Lien
Agent as promptly as practicable. Furthermore, the Second Lien Agent or such
Second Lien Secured Party, as the case may be, shall, at the Grantors’ expense,
promptly send written notice to the Priority Lien Agent upon receipt of proceeds
or payment in respect to such Collateral and if directed by the Priority Lien
Agent within five (5) days after receipt by the Priority Lien Agent of such
written notice, shall, to the extent consistent with Section 6.01(a), deliver
such Collateral, proceeds or payment to the Priority Lien Agent in the same form
as received, with any necessary endorsements, or as a court of competent
jurisdiction may otherwise direct. The Priority Lien Agent is hereby authorized
to make any such endorsements as agent for the Second Lien Agent or any other
Second Lien Secured Party. The Second Lien Agent, for itself and on behalf of
each other Second Lien Secured Party, agrees that if, at any time, it obtains
written notice from the Priority Lien Agent that all or part of any payment with
respect to any Priority Lien Obligations previously made shall be rescinded for
any reason whatsoever, it will, to the extent consistent with Section 6.01(a),
promptly pay over to the Priority Lien Agent any payment received by it and then
in its possession or under its direct control in respect of any such Priority
Lien Collateral and shall, to the extent consistent with Section 6.01(a),
promptly turn any such Collateral then held by it over to the Priority Lien
Agent, and the provisions set forth in this Agreement will be reinstated as if
such payment had not been made, until the Discharge of Priority Lien
Obligations. All Second Liens will remain attached to and enforceable against
all proceeds so held or remitted, subject to the priorities set forth in this
Agreement. Anything contained herein to the contrary notwithstanding, this
Section 3.05(b) shall not apply to any proceeds of Collateral realized in a
transaction not prohibited by this Agreement or the Priority Lien Documents and
as to which the possession or receipt thereof by the Second Lien Agent or any
other Second Lien Secured Party, is otherwise permitted by this Agreement and
the Priority Lien Documents.

SECTION 3.06    Purchase Option.

(a)    Notwithstanding anything in this Agreement to the contrary, on or at any
time after (i) the commencement of an Insolvency or Liquidation Proceeding,
(ii) the acceleration of the Priority Lien Obligations, (iii) the exercise or
undertaking of any enforcement action in respect of any Collateral by any
Priority Lien Secured Parties under any Priority Lien Document, (iv) the
occurrence of

 

16

--------------------------------------------------------------------------------

any payment event of default under any Priority Lien Document, (v) the delivery
of any Priority Lien Release Notice or any failure of the Priority Lien Agent to
deliver any required Priority Lien Release Notice in accordance with this
Agreement, (vi) the proposal of any DIP Financing or (vii) the delivery of any
Section 363 Notice or the occurrence of any Section 363 Event, each of the
holders of the Second Lien Debt and each of their respective Affiliates or
designees (such holders and their respective Affiliates that make such election,
the “Second Lien Purchasers”) will have the several right, at their respective
sole option and election (but will not be obligated), at any time upon prior
written notice from (or on behalf of) the Second Lien Purchasers to the Priority
Lien Agent, to purchase from the Priority Lien Secured Parties (A) all (but not
less than all) Priority Lien Obligations (including unfunded commitments) other
than any Priority Lien Obligations constituting Excess Priority Lien Obligations
and (B) if applicable, all loans (and related obligations, including interest,
fees and expenses) provided by any of the Priority Lien Secured Parties in
connection with a DIP Financing that are outstanding on the date of such
purchase. Promptly following the receipt of such notice, the Priority Lien Agent
will deliver to the Second Lien Agent a statement of the amount of Priority Lien
Debt, other Priority Lien Obligations (other than any Priority Lien Obligations
constituting Excess Priority Lien Obligations) and DIP Financing (including
interest, fees, expenses and other obligations in respect of such DIP Financing)
provided by any of the Priority Lien Secured Parties, if any, then outstanding
and the amount of the cash collateral requested by the Priority Lien Agent to be
delivered pursuant to Section 3.06(b)(ii) below. The right to purchase provided
for in this Section 3.06 will expire unless, within 10 Business Days after the
receipt by the Second Lien Agent of such notice from the Priority Lien Agent,
the Second Lien Agent delivers to the Priority Lien Agent an irrevocable
commitment of the Second Lien Purchasers to purchase (A) all (but not less than
all) of the Priority Lien Obligations (including unfunded commitments) other
than any Priority Lien Obligations constituting Excess Priority Lien Obligations
and (B) if applicable, all loans (and related obligations, including interest,
fees and expenses) provided by any of the Priority Lien Secured Parties in
connection with a DIP Financing and to otherwise complete such purchase on the
terms set forth under this Section 3.06.

(b)    On the date specified by the Second Lien Agent (on behalf of the Second
Lien Purchasers) in such irrevocable commitment (which shall not be less than
five Business Days nor more than 15 Business Days, after the receipt by the
Priority Lien Agent of such irrevocable commitment), the Priority Lien Secured
Parties shall sell to the Second Lien Purchasers (i) all (but not less than all)
Priority Lien Obligations (including unfunded commitments) other than any
Priority Lien Obligations constituting Excess Priority Lien Obligations and
(ii) if applicable, all loans (and related obligations, including interest, fees
and expenses) provided by any of the Priority Lien Secured Parties in connection
with a DIP Financing that are outstanding on the date of such sale, subject to
any required approval of any Governmental Authority then in effect, if any, and
only if on the date of such sale, the Priority Lien Agent (or, in the case of
clause (ii) below, the issuer of the outstanding letters of credit) receives the
following:

(i)    payment, as the purchase price for all Priority Lien Obligations sold in
such sale, of an amount equal to the full amount of (i) all Priority Lien
Obligations (other than outstanding letters of credit as referred to in clause
(ii) below) other than any Priority Lien Obligations constituting Excess
Priority Lien Obligations and (ii) if applicable, all loans (and related
obligations, including interest, fees and expenses) provided by any of the
Priority Lien Secured Parties in connection with a DIP Financing then
outstanding (including principal, interest, fees, reasonable attorneys’ fees and
legal expenses, but excluding contingent indemnification obligations for which
no claim or demand for payment has been made at or prior to such time); provided
that in the case of Hedging Obligations that constitute Priority Lien
Obligations the Second Lien Purchasers shall cause the applicable agreements
governing such Hedging Obligations to be novated to counterparties acceptable to
each applicable Swap Counterparty (as defined in the Priority Lien Intercreditor
Agreement) in its sole discretion or, if such agreements have been terminated,
such purchase price shall include the net aggregate

 

17

--------------------------------------------------------------------------------

amount owing to each Swap Counterparty (as defined in the Priority Lien
Intercreditor Agreement) pursuant to the terms of such agreements, including
without limitation all amounts owing to each such Swap Counterparty (as defined
in the Priority Lien Intercreditor Agreement) as a result of the termination or
early termination thereof;

(ii)    a cash collateral deposit in such amount as the issuer of any
outstanding letters of credit constituting Priority Lien Obligations determines
is reasonably necessary to secure the payment of such outstanding letters of
credit that may become due and payable after such sale (but not in any event in
an amount greater than one hundred five percent (105%) of the amount then
reasonably estimated by such letter of credit issuer to be the aggregate
outstanding amount of such letters of credit at such time), which cash
collateral shall be (A) held by such letter of credit issuer as security solely
to reimburse itself for such letters of credit that become due and payable after
such sale and any fees and expenses incurred in connection with such letters of
credit and (B) returned to the party designated by the Second Lien Purchasers
(except as may otherwise be required by applicable law or any order of any court
or other Governmental Authority) promptly after the expiration or termination
from time to time of all payment contingencies affecting such letters of credit
(and, in all events, within five Business Days after such letter of credit
issuer’s knowledge of such expiration or termination); and

(iii)    any customary agreements, documents or instruments which the Priority
Lien Agent or requisite Priority Lien Secured Parties may reasonably request
pursuant to which the Second Lien Agent (or any other representative appointed
by the holders of a majority in aggregate principal amount of the Second Lien
Debt then outstanding) and the Second Lien Purchasers in such sale expressly
assume and adopt all of the obligations of the Priority Lien Agent and the
Priority Lien Secured Parties under the Priority Lien Documents and in
connection with loans (and related obligations, including interest, fees and
expenses) provided by any of the Priority Lien Secured Parties in connection
with a DIP Financing on and after the date of the purchase and sale and the
Second Lien Agent (or any other representative appointed by the holders of a
majority in aggregate principal amount of the Second Lien Debt then outstanding)
becomes a successor agent thereunder.

(c)    Such purchase of the Priority Lien Obligations (including unfunded
commitments) and any loans provided by any of the Priority Lien Secured Parties
in connection with a DIP Financing shall be made on a pro rata basis among the
Second Lien Purchasers giving notice to the Priority Lien Agent of their
interest to exercise the purchase option hereunder according to each such Second
Lien Purchaser’s portion of the Second Lien Debt outstanding on the date of
purchase or such portion as such Second Lien Purchasers may otherwise agree
among themselves. Such purchase price and cash collateral shall be remitted by
wire transfer in federal funds to such bank account of the Priority Lien Agent
as the Priority Lien Agent may designate in writing to the Second Lien Agent for
such purpose. Interest shall be calculated to but excluding the Business Day on
which such sale occurs if the amounts so paid by the Second Lien Purchasers to
the bank account designated by the Priority Lien Agent are received in such bank
account prior to 12:00 noon, New York City time, and interest shall be
calculated to and including such Business Day if the amounts so paid by the
Second Lien Purchasers to the bank account designated by the Priority Lien Agent
are received in such bank account later than 12:00 noon, New York City time.

(d)    Such sale shall be expressly made without representation or warranty of
any kind by the Priority Lien Secured Parties as to the Priority Lien
Obligations, the Collateral or otherwise and without recourse to any Priority
Lien Secured Party, except that the Priority Lien Secured Parties shall
represent and warrant severally as to the Priority Lien Obligations (including
unfunded commitments) and any loans provided by any of the Priority Lien Secured
Parties in connection with a DIP Financing then

 

18

--------------------------------------------------------------------------------

owing to it: (i) that such applicable Priority Lien Secured Party own such
Priority Lien Obligations (including unfunded commitments) and any loans
provided by any of the Priority Lien Secured Parties in connection with a DIP
Financing; and (ii) that such applicable Priority Lien Secured Party has the
necessary corporate or other governing authority to assign such interests.

(e)    After such sale becomes effective, the outstanding letters of credit will
remain enforceable against the issuers thereof and will remain secured by the
Priority Liens upon the Collateral in accordance with the applicable provisions
of the Priority Lien Documents as in effect at the time of such sale, and the
issuers of letters of credit will remain entitled to the benefit of the Priority
Liens upon the Collateral and sharing rights in the proceeds thereof in
accordance with the provisions of the Priority Lien Documents as in effect at
the time of such sale, as fully as if the sale of the Priority Lien Debt had not
been made, but only the Person or successor agent to whom the Priority Liens are
transferred in such sale will have the right to foreclose upon or otherwise
enforce the Priority Liens and only the Second Lien Purchasers in the sale will
have the right to direct such Person or successor as to matters relating to the
foreclosure or other enforcement of the Priority Liens.

(f)    Each Grantor irrevocably consents to any assignment effected to one or
more Second Lien Purchasers pursuant to this Section 3.06 (so long as they meet
all eligibility standards contained in all relevant Priority Lien Documents),
other than obtaining the consent of any Grantor to an assignment to the extent
required by such Priority Lien Documents.

ARTICLE IV

OTHER AGREEMENTS

SECTION 4.01    Release of Liens; Automatic Release of Second Liens. Prior to
the Discharge of Priority Lien Obligations, the Second Lien Agent, for itself
and on behalf of each other Second Lien Secured Party, agrees that, in the event
the Priority Lien Agent or the requisite Priority Lien Secured Parties under the
Priority Lien Documents release the Priority Lien on any Collateral, the Second
Lien on such Collateral shall terminate and be released (automatically and
without further action) to the extent that (i) such release is permitted under
the Second Lien Documents, (ii) if the notice required by the penultimate
sentence of this Section 4.01 has been provided (subject to the proviso
therein), such release is effected in connection with the Priority Lien Agent’s
foreclosure upon, or other exercise of rights or remedies with respect to, such
Collateral, or (iii) such release is effected in connection with a sale or other
Disposition of any Collateral (or any portion thereof) under Section 363 of the
Bankruptcy Code or any other provision of the Bankruptcy Code if the requisite
Priority Lien Secured Parties under the Priority Lien Documents shall have
consented to such sale or Disposition of such Collateral; provided that, in the
case of each of clauses (i), (ii) and (iii), the Second Liens on such Collateral
shall attach to all proceeds thereof (and shall remain subject and subordinate
to all Priority Liens securing Priority Lien Obligations, subject to the
Priority Lien Cap as set forth in this Agreement). The Priority Lien Agent
agrees to give the Second Lien Agent no less than 10 Business Days advance
written notice of any proposed release pursuant to clauses (ii) or (iii) (other
than pursuant to Section 363 of the Bankruptcy Code) of this Section 4.01
(provided that such notice shall not be required to the extent extraordinary
exigent circumstances shall arise that would irrevocably substantially impair
the rights of the Priority Lien Secured Parties if such release were to be
delayed by such 10 Business Day period) (each such notice, a “Priority Lien
Release Notice”). Notwithstanding the foregoing in this Section 4.01, if the
Second Lien Purchasers have exercised their purchase option (or have committed
to exercise their purchase option) pursuant to Section 3.06(a), no release
pursuant to clauses (ii) and (iii) of this Section 4.01 shall be permitted under
this Section 4.01 to the extent (and only to the extent) that the Second Lien
Purchasers shall not have defaulted on their obligations to consummate the
purchase of the Priority Lien Debt and other amounts contemplated by Section
3.06(a).

 

19

--------------------------------------------------------------------------------

SECTION 4.02    Certain Agreements With Respect to Insolvency or Liquidation
Proceedings. (a) The parties hereto, which for avoidance of doubt includes the
Grantors, acknowledge that this Agreement is a “subordination agreement” under
Section 510(a) of the Bankruptcy Code and shall continue in full force and
effect, notwithstanding the commencement of any Insolvency or Liquidation
Proceeding by or against the Company or any of its subsidiaries. All references
in this Agreement to the Company or any of its subsidiaries or any other Grantor
will include such Person or Persons as a debtor-in-possession and any receiver
or trustee for such Person or Persons in an Insolvency or Liquidation
Proceeding. For the purposes of this Section 4.02, unless otherwise provided
herein, clauses (b) through and including (l) shall be in full force and effect
prior to the Discharge of Priority Lien Obligations.

(b)    If the Company or any of its subsidiaries shall become subject to any
Insolvency or Liquidation Proceeding and shall, as debtor(s)-in-possession, or
if any receiver or trustee for such Person or Persons shall, move for approval
of financing (“DIP Financing”) to be provided by one or more lenders (the “DIP
Lenders”) under Section 364 of the Bankruptcy Code or the use of cash collateral
under Section 363 of the Bankruptcy Code, the Second Lien Agent, for itself and
on behalf of each Second Lien Secured Party, agrees that neither it nor any
other Second Lien Secured Party will raise any objection, contest or oppose, and
each Second Lien Secured Party will waive any claim such Person may now or
hereafter have, to any such financing or to the Liens on the Collateral securing
the same (“DIP Financing Liens”), or to any use, sale or lease of cash
collateral that constitutes Collateral or to any grant of administrative expense
priority under Section 364 of the Bankruptcy Code, unless (A) the Priority Lien
Agent or the Priority Lien Secured Parties oppose or object to such DIP
Financing or such DIP Financing Liens or such use of cash collateral, (B) the
maximum principal amount of Indebtedness permitted under such DIP Financing
exceeds the sum of the amount of Priority Lien Obligations refinanced with the
proceeds thereof (not including the amount of any Excess Priority Lien
Obligations) and that amount equal to 15% of the aggregate principal amount of
the Priority Lien Obligations outstanding immediately prior to the commencement
of such Insolvency or Liquidation Proceeding (not including any Excess Priority
Lien Obligations), (C) the terms of such DIP Financing provide for the sale of a
substantial part of the Collateral (unless a Discharge of Priority Lien
Obligations shall be effected substantially contemporaneously with such sale) or
require the confirmation of a plan of reorganization containing specific terms
or provisions (other than repayment in cash of such DIP Financing on the
effective date thereof), (D) the proposed effective interest rate of any such
DIP Financing is not commercially reasonable under the circumstances (as
reasonably determined in the good faith of the Board of Directors of the
Company), (E) the Second Lien Secured Parties are not permitted to seek adequate
protection to the extent permitted by Section 4.02(f) or (F) such DIP Financing
directly or indirectly provides for, or has the effect of providing for, the
payment (whether in cash or otherwise) of any Excess Priority Lien Obligations
prior to the Discharge of Second Lien Obligations. To the extent such DIP
Financing Liens are senior to, or rank pari passu with, the Priority Liens, the
Second Lien Agent will, for itself and on behalf of the other Second Lien
Secured Parties, subordinate the Second Liens on the Collateral to the Priority
Liens and to such DIP Financing Liens, so long as the Second Lien Agent, on
behalf of the Second Lien Secured Parties, retains Liens on all the Collateral,
including proceeds thereof arising after the commencement of any Insolvency or
Liquidation Proceeding, with the same priority relative to the Priority Liens as
existed prior to the commencement of the case under the Bankruptcy Code.
Notwithstanding the foregoing in this Section 4.02, the Second Lien Agent and
the Second Lien Secured Parties shall have the right to (i) object to any
provisions of the DIP Financing provided by the Priority Lien Agent or any
Priority Lien Secured Parties relating to any provision or content of a plan of
reorganization (other than repayment in cash of such DIP Financing on the
effective date thereof) or (ii) object to any DIP Financing to the extent that
it permits the Priority Lien Agent or any Priority Lien Secured Parties to be
granted adequate protection in the form of additional collateral without the
Second Lien Agent and the Second Lien Secured Parties being granted adequate
protection in the form of a Lien on such additional collateral that is
subordinated to the Liens securing the Priority Lien Debt on the same basis as
the other Liens securing the Second Lien Debt are so subordinated to Liens
securing the Priority Lien Debt under this Agreement.

 

20

--------------------------------------------------------------------------------

(c)    Prior to the Discharge of Priority Lien Obligations, without the consent
of the Priority Lien Agent, in its sole discretion, the Second Lien Agent, for
itself and on behalf of each other Second Lien Secured Party, agrees not to
propose, support or enter into any DIP Financing.

(d)    The Second Lien Agent, for itself and on behalf of each other Second Lien
Secured Party, agrees that it will not object to, oppose or contest (or join
with or support any third party objecting to, opposing or contesting)
(“Section 363 Objections”) a sale or other Disposition, a motion to sell or
Dispose or the bidding procedure for such sale or Disposition of any Collateral
(or any portion thereof) under Section 363 of the Bankruptcy Code or any other
provision of the Bankruptcy Code (any such sale or motion, a “Section 363 Event”
and any notice or ruling issued by a court of competent jurisdiction in respect
of such Section 363 Event, a “Section 363 Notice”) if the requisite Priority
Lien Secured Parties under the Priority Lien Documents shall have consented to
such sale or Disposition and to such motion to sell or Dispose or such bidding
procedure for such sale or Disposition of such Collateral, and if all Priority
Liens and Second Liens will attach to the proceeds of the sale in the same
respective priorities as set forth in this Agreement. Notwithstanding the
foregoing in this Section 4.02(d), if the Second Lien Purchasers have exercised
their purchase option (or have committed to exercise their purchase option)
pursuant to Section 3.06(a), Section 363 Objections shall be permitted to be
made by the Second Lien Agent or any other Second Lien Secured Party.

(e)    The Second Lien Agent, for itself and on behalf of each other Second Lien
Secured Party, waives any claim that may be had against the Priority Lien Agent
or any other Priority Lien Secured Party arising out of any DIP Financing Liens
(that is granted in a manner that is consistent with this Agreement) or
administrative expense priority under Section 364 of the Bankruptcy Code.

(f)    The Second Lien Agent, for itself and on behalf of each other Second Lien
Secured Party, agrees that neither the Second Lien Agent nor any other Second
Lien Secured Party will file or prosecute in any Insolvency or Liquidation
Proceeding any motion for adequate protection (or any comparable request for
relief) based upon their interest in the Collateral, nor object to, oppose or
contest (or join with or support any third party objecting to, opposing or
contesting) (i) any request by the Priority Lien Agent or any other Priority
Lien Secured Party for adequate protection or (ii) any objection by the Priority
Lien Agent or any other Priority Lien Secured Party to any motion, relief,
action or proceeding based on the Priority Lien Agent or Priority Lien Secured
Parties claiming a lack of adequate protection, except that the Second Lien
Secured Parties may freely seek and obtain: (A) relief granting adequate
protection in the form of a replacement Lien co-extensive in all respects with,
but subordinated (as set forth in Section 2.01) to, and with the same relative
priority to the Priority Liens as existed prior to the commencement of the
Insolvency or Liquidation Proceeding, all Liens granted in the Insolvency or
Liquidation Proceeding to, or for the benefit of, the Priority Lien Secured
Parties; and (B) any relief upon a motion for adequate protection (or any
comparable relief), without any condition or restriction whatsoever, at any time
after the Discharge of Priority Lien Obligations.

(g)    The Second Lien Agent, for itself and on behalf of each other Second Lien
Secured Party, agrees that in any Insolvency or Liquidation Proceeding, neither
the Second Lien Agent nor any other Second Lien Secured Party shall support or
vote to accept any plan of reorganization or disclosure statement of the Company
or any other Grantor unless (i) such plan is accepted by the Class of Priority
Lien Secured Parties in accordance with Section 1126(c) of the Bankruptcy Code
or otherwise provides for the payment in full in cash of all Priority Lien
Obligations (including all post-petition interest approved by the bankruptcy
court, fees and expenses and cash collateralization of all letters of credit) on
the effective date of such plan of reorganization, or (ii) such plan provides on
account of the Priority Lien

 

21

--------------------------------------------------------------------------------

Secured Parties for the retention by the Priority Lien Agent, for the benefit of
the Priority Lien Secured Parties, of the Liens on the Collateral securing the
Priority Lien Obligations, and on all proceeds thereof whenever received, and
such plan also provides that any Liens retained by, or granted to, the Second
Lien Agent are only on property securing the Priority Lien Obligations and shall
have the same relative priority with respect to the Collateral or other
property, respectively, as provided in this Agreement with respect to the
Collateral. Except as provided herein, each of the Second Lien Secured Parties
shall remain entitled to vote their claims in any such Insolvency or Liquidation
Proceeding.    

(h)    The Second Lien Agent, for itself and on behalf of each other Second Lien
Secured Party, agrees that until the Discharge of Priority Lien Obligations has
occurred, subject to the provisions of Section 3.02, neither the Second Lien
Agent nor any other Second Lien Secured Party shall seek relief, pursuant to
Section 362(d) of the Bankruptcy Code or otherwise, from the automatic stay of
Section 362(a) of the Bankruptcy Code or from any other stay in any Insolvency
or Liquidation Proceeding in respect of the Collateral if the Priority Lien
Agent has not received relief from the automatic stay (or it has not been lifted
for the Priority Lien Agent’s benefit), without the prior written consent of the
Priority Lien Agent.

(i)    Without the express written consent of the Priority Lien Agent, none of
the Second Lien Agent or any other Second Lien Secured Party shall (or shall
join with or support any third party in opposing, objecting to or contesting, as
the case may be), in any Insolvency or Liquidation Proceeding involving any
Grantor, (i) except as contemplated by clause (a)(i)(B)(II) of Section 3.05,
oppose, object to or contest the determination of the extent of any Liens held
by any of Priority Lien Secured Party or the value of any claims of any such
holder under Section 506(a) of the Bankruptcy Code or (ii) oppose, object to or
contest the payment to the Priority Lien Secured Party of interest, fees or
expenses under Section 506(b) of the Bankruptcy Code.

(j)    The Second Lien Agent, for itself and on behalf of each other Second Lien
Secured Party, hereby agrees that prior to the Discharge of Priority Lien
Obligations or the effectiveness of a purchase by Second Lien Purchasers in
accordance with Section 3.06, whichever occurs first, the Priority Lien Agent
shall have the exclusive right to credit bid the Priority Lien Obligations and
further that none of the Second Lien Agent or any other Second Lien Secured
Party shall (or shall join with or support any third party in opposing,
objecting to or contesting, as the case may be) oppose, object to or contest
such credit bid of the Priority Lien Obligations by the Priority Lien Agent.

(k)    Without the consent of the Priority Lien Agent in its sole discretion,
the Second Lien Agent, for itself and on behalf of each other Second Lien
Secured Party, agrees it will not file an involuntary bankruptcy claim or seek
the appointment of an examiner or a trustee for the Company or any of its
subsidiaries.

(l)    The Second Lien Agent, for itself and on behalf of each other Second Lien
Secured Party, waives any right to assert or enforce any claim under
Sections 506(c) or 552 of the Bankruptcy Code as against any Priority Lien
Secured Party or any of the Collateral, except as expressly permitted by this
Agreement.

SECTION 4.03    Reinstatement.

(a)    If any Priority Lien Secured Party is required in any Insolvency or
Liquidation Proceeding or otherwise to turn over or otherwise pay to the estate
of any Grantor any amount (a “Recovery”) for any reason whatsoever, then the
Priority Lien Obligations shall be reinstated to the extent of such Recovery and
the Priority Lien Secured Parties shall be entitled to a reinstatement of
Priority Lien Obligations with respect to all such recovered amounts. The Second
Lien Agent, for itself and on behalf

 

22

--------------------------------------------------------------------------------

of each other Second Lien Secured Party, agrees that if, at any time, a Second
Lien Secured Party receives notice of any Recovery, the Second Lien Secured
Party shall, to the extent consistent with Section 6.01(a), promptly pay over to
the Priority Lien Agent any payment received by it and then in its possession or
under its control in respect of any Collateral subject to any Priority Lien
securing such Priority Lien Obligations and shall, to the extent consistent with
Section 6.01(a), promptly turn any Collateral subject to any such Priority Lien
then held by it over to the Priority Lien Agent, and the provisions set forth in
this Agreement shall be reinstated as if such payment had not been made. If this
Agreement shall have been terminated prior to any such Recovery, this Agreement
shall be reinstated in full force and effect, and such prior termination shall
not diminish, release, discharge, impair or otherwise affect the obligations of
the parties hereto from such date of reinstatement. Any amounts received by the
Second Lien Agent or any other Second Lien Secured Party and then in its
possession or under its control on account of the Second Lien Obligations after
the termination of this Agreement shall, in the event of a reinstatement of this
Agreement pursuant to this Section 4.03 and to the extent consistent with
Section 6.01(a), be held in trust for and paid over to the Priority Lien Agent
for the benefit of the Priority Lien Secured Parties for application to the
reinstated Priority Lien Obligations until the discharge thereof.

(b)    This Section 4.03 shall survive termination of this Agreement.

SECTION 4.04    Refinancings.

(a)    The Priority Lien Obligations may be Replaced by any Priority Refinancing
Credit Facility without notice to, or the consent of any Secured Party, all
without affecting the Lien priorities provided for herein or the other
provisions hereof; provided, that (i) the Second Lien Agent shall receive on or
prior to incurrence of a Priority Refinancing Credit Facility (A) an Officers’
Certificate from the Company stating and certifying that (I) the incurrence
thereof and the related Liens are permitted to be incurred by each applicable
Secured Debt Document, (II) the requirements of Section 4.06 have been
satisfied, and (III) such Priority Refinancing Credit Facility constitutes
“Priority Lien Debt” for the purposes of the Secured Debt Documents and this
Agreement, (B) a Priority Confirmation Joinder from an authorized agent, trustee
or other representative of the holders or lenders of any Indebtedness that
Replaces the Priority Lien Obligations and, to the extent necessary or
appropriate to facilitate such transaction, a new intercreditor agreement
substantially similar to this Agreement, as in effect on the date hereof and
(C) evidence that the Company has duly authorized, executed (if applicable) and
recorded (or caused to be recorded) in each appropriate governmental office all
relevant filings and recordations deemed necessary by the Company and the holder
of such Replacement, or its Secured Debt Representative, to ensure that such
Replacement is secured by the Collateral in accordance with the applicable
Security Documents (provided that such filings and recordings may be authorized,
executed and recorded following any incurrence on a post-closing basis if
permitted by the applicable Secured Debt Representative), and (ii) the aggregate
outstanding principal amount of the Priority Lien Obligations, after giving
effect to such Priority Refinancing Credit Facility, shall not exceed the
Priority Lien Cap.

(b)    Notwithstanding anything contained in this Section 4.04, nothing in this
Agreement will be construed to allow the Company or any other Grantor to incur
additional Indebtedness (or to incur, assume or otherwise permit or allow to
exist any Liens) unless otherwise permitted by the terms of each applicable
Secured Debt Document.

SECTION 4.05    Amendments to Priority Lien Documents and Second Lien Documents
.

(a)    Prior to the Discharge of Second Lien Obligations, without the prior
written consent of the Second Lien Agent, no Priority Lien Document may be
amended, supplemented, restated or otherwise modified and/or refinanced or
entered into to the extent such amendment, supplement,

 

23

--------------------------------------------------------------------------------

restatement or modification and/or refinancing, or the terms of any new Priority
Lien Document would (i) adversely affect the Lien priority rights of the Second
Lien Secured Parties or the rights of the Second Lien Secured Parties, as the
case may be, to receive required payments that are due and payable (or than are
otherwise owed) pursuant to the Second Lien Documents, (ii) except upon
compliance with Section 2.03, grant any Liens on any additional Collateral to
secure the Obligations under the Priority Lien Security Documents,
(iii) contravene the provisions of this Agreement or the Second Lien Documents,
(iv) increase the outstanding principal amount of the loans and other extensions
of credit and the stated amount of letters of credit under the Priority Credit
Agreement and/or any Priority Refinancing Credit Facility and/or any other
Priority Lien Documents to an aggregate amount being in excess of the amount set
forth in clause (a) of the definition of “Priority Lien Cap”, (v) change any
covenants, defaults, or events of default under any Priority Lien Document
(including the addition of covenants, defaults, or events of default not
contained in the Priority Credit Agreement or other Priority Lien Documents as
in effect on the date hereof) to restrict any Grantor from making payments of
the Second Lien Debt that would otherwise be permitted under the Priority Lien
Documents as in effect on the date hereof, or (vi) except as otherwise
contemplated or required by the Priority Lien Documents (as in effect on the
date hereof) or any equivalent terms in any Priority Lien Document entered into
after the date hereof that are no more extensive than the Priority Lien
Documents as in effect on the date hereof, and except in connection with any DIP
Financing permitted hereunder, expressly subordinate the Lien on the Collateral
under the Priority Lien Documents to Liens on the Collateral securing any other
Indebtedness.

(b)    Prior to the Discharge of Priority Lien Obligations, without the prior
written consent of the Priority Lien Agent, no Second Lien Document may be
amended, supplemented, restated or otherwise modified and/or refinanced or
entered into to the extent such amendment, supplement, restatement or
modification and/or refinancing, or the terms of any new Second Lien Document
would (i) adversely affect the Lien priority rights of the Priority Lien Secured
Parties or the rights of the Priority Lien Secured Parties to receive payments
owing pursuant to the Priority Lien Documents, (ii) except as otherwise provided
for in this Agreement, add any Liens securing the Collateral granted under the
Second Lien Security Documents, (iii) confer any additional material rights on
the Second Lien Agent or any other Second Lien Secured Party in a manner adverse
in any material respect to the Priority Lien Secured Parties (other than for
periods following the latest maturity date under the Priority Credit Agreement)
unless a similar modification is concurrently made under the Priority Lien
Documents, (iv) contravene the provisions of this Agreement or the Priority Lien
Documents, (v) change to earlier dates any dates upon which required payments of
principal or interest are due thereon (except to the extent that equivalent
changes are implemented under the First Lien Documents), (vi) change the
mandatory redemption, prepayment, repurchase, tender or defeasance provisions
thereof in a manner that would require a redemption, prepayment, repurchase,
tender or defeasance not required pursuant to the terms of such Second Lien
Document as of the date hereof, or in a manner materially adverse to the
interests of the Priority Lien Secured Parties, (vii) change any covenants,
defaults, or events of default under the Second Lien Indenture or any other
Second Lien Document (including the addition of covenants, defaults, or events
of default not contained in the Second Lien Indenture or other Second Lien
Documents as in effect on the date hereof) to restrict any Grantor from making
payments of the Priority Lien Debt that would otherwise be permitted under the
Second Lien Documents as in effect on the date hereof, (viii) change any default
or event of default thereunder in a manner materially adverse to Grantors
thereunder (it being understood that any waiver of any such default or event of
default, in and of itself, shall not be deemed to be materially adverse to
Grantors) when taken as a whole, than any corresponding defaults or events of
default under the Priority Lien Documents (other than for periods following the
Discharge of Priority Lien Obligations) unless a similar amendment or
modification is concurrently made under the Priority Lien Documents, or
(ix) increase materially the non-monetary obligations of Grantors thereunder or
confer any additional material rights on the Second Lien Secured Parties that
would be adverse to the interests of the Priority Lien Secured Parties (as in
effect from time to time) (other than for periods following the latest maturity
date under the Priority Credit Agreement) unless a similar modification is
concurrently made under the Priority Lien Documents.

 

24

--------------------------------------------------------------------------------

SECTION 4.06    Legends. Each of:

(a)    the Priority Lien Agent acknowledges and agrees with respect to the
Priority Credit Agreement and the Priority Lien Security Documents, and

(b)    the Second Lien Agent acknowledges and agrees with respect to the Second
Lien Indenture and the Second Lien Security Documents,

that the Second Lien Indenture, the Second Lien Documents (other than control
agreements to which both the Priority Lien Agent and the Second Lien Agent are
parties), and each Security Document (other than control agreements to which
both the Priority Lien Agent and the Second Lien Agent are parties) granting any
security interest in the Collateral will contain the appropriate legend set
forth on Annex I.

SECTION 4.07    Second Lien Secured Parties Rights as Unsecured Creditors;
Judgment Lien Creditor. Both before and during an Insolvency or Liquidation
Proceeding, any of the Second Lien Secured Parties may take any actions and
exercise any and all rights that would be available to a holder of unsecured
claims; provided, however, that the Second Lien Secured Parties may not take any
of the actions prohibited by Section 3.05(a) or Section 4.02 or any other
provisions in this Agreement; provided, further, that in the event that any of
the Second Lien Secured Parties becomes a judgment Lien creditor in respect of
any Collateral as a result of its enforcement of its rights as an unsecured
creditor with respect to the Second Lien Obligations, such judgment Lien shall
be subject to the terms of this Agreement for all purposes (including in
relation to the Priority Lien Obligations and the Second Lien Obligations, as
applicable) as the Second Liens are subject to this Agreement.

SECTION 4.08    Postponement of Subrogation. The Second Lien Agent, for itself
and on behalf of each other Second Lien Secured Party, hereby agrees that no
payment or distribution to any Priority Lien Secured Party pursuant to the
provisions of this Agreement shall entitle any Second Lien Secured Party to
exercise any rights of subrogation in respect thereof until the Discharge of
Priority Lien Obligations shall have occurred. Following the Discharge of
Priority Lien Obligations, but subject to the reinstatement as provided in
Section 4.03, each Priority Lien Secured Party will execute such documents,
agreements, and instruments as any Second Lien Secured Party may reasonably
request to evidence the transfer by subrogation to any such Person of an
interest in the Priority Lien Obligations resulting from payments or
distributions to such Priority Lien Secured Party by such Person, so long as all
costs and expenses (including all reasonable legal fees and disbursements)
incurred in connection therewith by such Priority Lien Secured Party are paid by
such Person upon request for payment thereof.

SECTION 4.09    Acknowledgment by the Secured Debt Representatives. Each of the
Priority Lien Agent, for itself and on behalf of the other Priority Lien Secured
Parties, and the Second Lien Agent, for itself and on behalf of the other Second
Lien Secured Parties, hereby acknowledges that this Agreement is a material
inducement to enter into a business relationship, that each has relied on this
Agreement to enter into the Priority Credit Agreement and the Second Lien
Indenture, as applicable, and all documentation related thereto, and that each
will continue to rely on this Agreement in their related future dealings.

SECTION 4.10    Automatic Amendments to Second Lien Security Documents. In the
event the Priority Lien Agent or the other Priority Lien Secured Parties and the
relevant Grantors enter into any amendment, waiver or consent in respect of any
of the documents evidencing or giving rise the Priority Liens for the purpose of
adding to, or deleting from, or waiving or consenting to any departures

 

25

--------------------------------------------------------------------------------

from any provision thereof, such amendment, waiver or consent shall apply
automatically (to the extent permitted by law) to any comparable provision of
the comparable Second Lien Security Documents evidencing or giving rise to the
Second Liens without any action by or consent of the Second Lien Secured
Parties, provided, that (other than with respect to amendments, modifications or
waivers that secure additional extensions of credit and add additional secured
creditors and do not violate the express provisions of the Second Lien
Indenture), (A) no such amendment, waiver or consent shall effect the release of
Liens on Collateral unless such release is otherwise permitted under this
Agreement and the Second Lien Indenture, (B) no such amendment, waiver or
consent that materially and adversely affects the rights of the Second Lien
Secured Parties but does not so materially and adversely affect the Priority
Lien Secured Parties in a like or similar manner shall apply to the Second Lien
Security Documents without the consent of the Second Lien Agent (acting with the
consent of the majority of the Second Lien Secured Parties in accordance with
the Second Lien Indenture), (C) notice of such amendment, waiver or consent
shall be given by the Company to the Second Lien Agent no later than five days
prior its effectiveness, provided that to the extent permitted by law, the
failure to give such notice shall not affect the effectiveness and validity
thereof, (D) if any Priority Lien Secured Parties are paid or otherwise receive
any fee or other consideration for granting any such amendment, waiver or
consent, the holders of the Notes (as defined in the Second Lien Indenture)
shall receive an equal fee or consideration and (E) no such amendment, waiver or
consent shall affect the rights and duties of the Second Lien Agent without the
prior written consent of the Second Lien Agent.

ARTICLE V

GRATUITOUS BAILMENT FOR PERFECTION OF CERTAIN SECURITY INTERESTS

SECTION 5.01    General. Prior to the Discharge of Priority Lien Obligations,
the Priority Lien Agent agrees that if it shall at any time hold a Priority Lien
on any Collateral that can be perfected by the possession or control of such
Collateral or of any Account in which such Collateral is held, and if such
Collateral or any such Account is in fact in the possession or under the control
of the Priority Lien Agent, the Priority Lien Agent will serve as gratuitous
bailee for the Second Lien Agent for the sole purpose of perfecting the Second
Lien of the Second Lien Agent on such Collateral. It is agreed that the
obligations of the Priority Lien Agent and the rights of the Second Lien Agent
and the other Second Lien Secured Parties in connection with any such bailment
arrangement will be in all respects subject to the provisions of Article II.
Notwithstanding anything to the contrary herein, the Priority Lien Agent will be
deemed to make no representation as to the adequacy of the steps taken by it to
perfect the Second Lien on any such Collateral and shall have no responsibility,
duty, obligation or liability to the Second Lien Agent, any other Second Lien
Secured Party or any other Person for such perfection or failure to perfect, it
being understood that the sole purpose of this Article is to enable the Second
Lien Secured Parties to obtain a perfected Second Lien in such Collateral to the
extent, if any, that such perfection results from the possession or control of
such Collateral or any such Account by the Priority Lien Agent. The Priority
Lien Agent acting pursuant to this Section 5.01 shall not have by reason of the
Priority Lien Security Documents, the Second Lien Security Documents, this
Agreement or any other document or theory, a fiduciary relationship in respect
of any Priority Lien Secured Party, the Second Lien Agent or any Second Lien
Secured Party. Subject to Section 4.03, from and after the Discharge of Priority
Lien Obligations, the Priority Lien Agent shall take all such actions in its
power as shall reasonably be requested by the Second Lien Agent (at the sole
cost and expense of the Grantors) to transfer possession or control of such
Collateral or any such Account (in each case to the extent the Second Lien Agent
has a Lien on such Collateral or Account after giving effect to any prior or
concurrent releases of Liens) to the Second Lien Agent for the benefit of all
Second Lien Secured Parties.

SECTION 5.02    Deposit Accounts. Prior to the Discharge of Priority Lien
Obligations, to the extent that any Account is under the control of the Priority
Lien Agent at any time, the

 

26

--------------------------------------------------------------------------------

Priority Lien Agent will act as gratuitous bailee for the Second Lien Agent for
the purpose of perfecting the Liens of the Second Lien Secured Parties in such
Accounts and the cash and other assets therein as provided in Section 3.01 (but
will have no duty, responsibility or obligation to the Second Lien Secured
Parties (including, without limitation, any duty, responsibility or obligation
as to the maintenance of such control, the effect of such arrangement or the
establishment of such perfection) except as set forth in the last sentence of
this Section 5.02). Unless the Second Liens on such Collateral shall have been
or concurrently are released, after the occurrence of Discharge of Priority Lien
Obligations, the Priority Lien Agent shall, at the request of the Second Lien
Agent, cooperate with the Grantors and the Second Lien Agent (at the expense of
the Grantors) in permitting control of any other Accounts to be transferred to
the Second Lien Agent (or for other arrangements with respect to each such
Accounts satisfactory to the Company and the Second Lien Agent to be made).

ARTICLE VI

APPLICATION OF PROCEEDS; DETERMINATION OF AMOUNTS

SECTION 6.01    Application of Proceeds. (a) Prior to the Discharge of Priority
Lien Obligations, and regardless of whether an Insolvency or Liquidation
Proceeding has been commenced, Collateral or proceeds received in connection
with the enforcement or exercise of any rights or remedies with respect to any
portion of the Collateral or with respect to the occurrence of any “Change of
Control” (or similar term) as such term is defined under any Priority Lien
Document or the Second Lien Documents, will be applied:

(i)    first, to the payment in full in cash of all Priority Lien Obligations
that are not Excess Priority Lien Obligations, which Collateral or proceeds
shall be applied by the Priority Lien Agent pursuant to the Priority Lien
Intercreditor Agreement,

(ii)    second, to the payment in full in cash of all Second Lien Obligations,

(iii)    third, to the payment in full in cash of all Excess Priority Lien
Obligations, and

(iv)    fourth, to the Company or as otherwise required by applicable law.

For the avoidance of doubt and notwithstanding anything to the contrary
contained in this Section 6.01(a), the provisions of this Section 6.01(a) shall
not apply to any payments required to be made by the Company or any of its
Subsidiaries in connection with any “Change of Control” offer to purchase
Indebtedness under any Second Lien Documents which is permitted to be made under
the terms of the Priority Lien Documents.

(b)    Following the Discharge of Priority Lien Obligations but prior to the
Discharge of Second Lien Obligations, and regardless of whether an Insolvency or
Liquidation Proceeding has been commenced, Collateral or proceeds received in
connection with the enforcement or exercise of any rights or remedies with
respect to any portion of the Collateral will be applied:

(i)    first, to the payment in full in cash of all Second Lien Obligations, and

(ii)    second, to the Company or as otherwise required by applicable law.

SECTION 6.02    Determination of Amounts. Whenever a Secured Debt Representative
shall be required, in connection with the exercise of its rights or the
performance of its

 

27

--------------------------------------------------------------------------------

obligations hereunder, to determine the existence or amount of any Priority Lien
Obligations (or the existence of any commitment to extend credit that would
constitute Priority Lien Obligations or that distributions have been made in
accordance with the Priority Lien Intercreditor Agreement), Second Lien
Obligations, or the existence of any Lien securing any such obligations, or the
Collateral subject to any such Lien, it may request that such information be
furnished to it in writing by the other Secured Debt Representatives and shall
be entitled to make such determination on the basis of the information so
furnished; provided, however, that if a Secured Debt Representative shall fail
or refuse reasonably promptly to provide the requested information, the
requesting Secured Debt Representative shall be entitled to make any such
determination by such method as it may, in the exercise of its good faith
judgment, determine, including by reliance upon a certificate of the Company.
Each Secured Debt Representative may rely conclusively, and shall be fully
protected in so relying, on any determination made by it in accordance with the
provisions of the preceding sentence (or as otherwise directed by a court of
competent jurisdiction) and shall have no liability to the Company or any of its
subsidiaries, any Secured Party or any other Person as a result of such
determination.

ARTICLE VII

NO RELIANCE; NO LIABILITY; OBLIGATIONS ABSOLUTE;

CONSENT OF GRANTORS; ETC.

SECTION 7.01    No Reliance; Information. The Priority Lien Secured Parties and
the Second Lien Secured Parties shall have no duty to disclose to any Second
Lien Secured Party or to any Priority Lien Secured Party, as the case may be,
any information relating to the Company or any of the other Grantors, or any
other circumstance bearing upon the risk of non-payment of any of the Priority
Lien Obligations or the Second Lien Obligations, as the case may be, that is
known or becomes known to any of them or any of their Affiliates. In the event
any Priority Lien Secured Party or any Second Lien Secured Party, in its sole
discretion, undertakes at any time or from time to time to provide any such
information to, any Second Lien Secured Party or any Priority Lien Secured
Party, as the case may be, it shall be under no obligation (a) to make, and
shall not make or be deemed to have made, any express or implied representation
or warranty, including with respect to the accuracy, completeness, truthfulness
or validity of the information so provided, (b) to provide any additional
information or to provide any such information on any subsequent occasion or
(c) to undertake any investigation.

SECTION 7.02    No Warranties or Liability.

(a)    The Priority Lien Agent, for itself and on behalf of the other Priority
Lien Secured Parties, acknowledges and agrees that, except for the
representations and warranties set forth in Article VIII, neither the Second
Lien Agent nor any other Second Lien Secured Party has made any express or
implied representation or warranty, including with respect to the execution,
validity, legality, completeness, collectability or enforceability of any of the
Second Lien Documents, the ownership of any Collateral or the perfection or
priority of any Liens thereon.

(b)    The Second Lien Agent, for itself and on behalf of the other Second Lien
Secured Parties, acknowledges and agrees that, except for the representations
and warranties set forth in Article VIII, neither the Priority Lien Agent nor
any other Priority Lien Secured Party has made any express or implied
representation or warranty, including with respect to the execution, validity,
legality, completeness, collectability or enforceability of any of the Priority
Lien Documents, the ownership of any Collateral or the perfection or priority of
any Liens thereon.

(c)    The Priority Lien Agent and the other Priority Lien Secured Parties shall
have no express or implied duty to the Second Lien Agent or any other Second
Lien Secured Party, and the

 

28

--------------------------------------------------------------------------------

Second Lien Agent and the other Second Lien Secured Parties shall have no
express or implied duty to the Priority Lien Agent, any other Priority Lien
Secured Party, to act or refrain from acting in a manner which allows, or
results in, the occurrence or continuance of a default or an event of default
under any Priority Lien Document and any Second Lien Document (other than, in
each case, this Agreement), regardless of any knowledge thereof which they may
have or be charged with.

(d)    The Second Lien Agent, for itself and on behalf of each other Second Lien
Secured Party, hereby waives any claim that may be had against the Priority Lien
Agent or any other Priority Lien Secured Party arising out of any actions which
the Priority Lien Agent or such Priority Lien Secured Party takes or omits to
take (including actions with respect to the creation, perfection or continuation
of Liens on any Collateral, actions with respect to the foreclosure upon, sale,
release or depreciation of, or failure to realize upon, any Collateral, and
actions with respect to the collection of any claim for all or only part of the
Priority Lien Obligations from any account debtor, guarantor or any other party)
in accordance with this Agreement and the Priority Lien Documents or the
valuation, use, protection or release of any security for such Priority Lien
Obligations.

SECTION 7.03    Obligations Absolute. The Lien priorities provided for herein
and the respective rights, interests, agreements and obligations hereunder of
the Priority Lien Agent and the other Priority Lien Secured Parties, the Second
Lien Agent and the other Second Lien Secured Parties shall remain in full force
and effect irrespective of:

(a)    any lack of validity or enforceability of any Secured Debt Document;

(b)    any change in the time, place or manner of payment of, or in any other
term of (including the Replacing of), all or any portion of the Priority Lien
Obligations, it being specifically acknowledged that a portion of the Priority
Lien Obligations consists or may consist of Indebtedness that is revolving in
nature, and the amount thereof that may be outstanding at any time or from time
to time may be increased or reduced and subsequently reborrowed;

(c)    any amendment, waiver or other modification, whether by course of conduct
or otherwise, of any Secured Debt Document;

(d)    the securing of any Priority Lien Obligations or Second Lien Obligations
with any additional collateral or guarantees, or any exchange, release, voiding,
avoidance or non-perfection of any security interest in any Collateral or any
other collateral or any release of any guarantee securing any Priority Lien
Obligations or Second Lien Obligations;

(e)    the commencement of any Insolvency or Liquidation Proceeding in respect
of the Company or any other Grantor; or

(f)    any other circumstances that otherwise might constitute a defense
available to, or a discharge of, the Company or any other Grantor in respect of
the Priority Lien Obligations or the Second Lien Obligations.

SECTION 7.04    Grantors Consent. Each Grantor hereby consents to the provisions
of this Agreement and the intercreditor arrangements provided for herein and
agrees that the obligations of the Grantors under the Secured Debt Documents
will in no way be diminished or otherwise affected by such provisions or
arrangements (except as expressly provided herein).

 

29

--------------------------------------------------------------------------------

ARTICLE VIII

REPRESENTATIONS AND WARRANTIES

SECTION 8.01    Representations and Warranties of Each Party. Each party hereto
represents and warrants to the other parties hereto as follows:

(a)    Such party is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization and has all requisite power and
authority to enter into and perform its obligations under this Agreement.

(b)    This Agreement has been duly executed and delivered by such party.

(c)    The execution, delivery and performance by such party of this Agreement
(i) do not require any consent or approval of, registration or filing with or
any other action by any Governmental Authority of which the failure to obtain
could reasonably be expected to have a Material Adverse Effect (as defined in
the Priority Credit Agreement), (ii) will not violate any applicable law or
regulation or any order of any Governmental Authority or any indenture,
agreement or other instrument binding upon such party which could reasonably be
expected to have a Material Adverse Effect and (iii) will not violate the
charter, by-laws or other organizational documents of such party.

SECTION 8.02    Representations and Warranties of Each Representative. Each of
the Priority Lien Agent and the Second Lien Agent represents and warrants to the
other parties hereto that it is authorized under the Priority Credit Agreement
and the Second Lien Indenture, as the case may be, to enter into this Agreement.

ARTICLE IX

MISCELLANEOUS

SECTION 9.01    Notices. All notices and other communications provided for
herein shall be in writing and shall be delivered by hand or overnight courier
service, mailed by certified or registered mail or sent by telecopy, as follows:

 

  (a) if to the Priority Lien Agent, to it at:

Wilmington Trust, National Association

Rodney Square, 1100 North Market Street

Wilmington, DE 19890

Attention: Jennifer K. Anderson

Facsimile No.: (302) 636-4145

email: JKAnderson@wilmingtontrust.com

with a copy to:

Arnold & Porter Kaye Scholer LLP

250 West 55th Street

New York, NY 10019

Attention: Alan Glantz

Facsimile No.: (212) 836-6763

email: Alan.Glantz@APKS.com

 

30

--------------------------------------------------------------------------------

  (b) if to the Second Lien Agent, to it at:

Wilmington Trust, National Association

Global Capital Markets

15950 N. Dallas Parkway, Suite 550

Dallas, TX 75248

Facsimile: 888-316-6238

Attn: Gastar Exploration Inc. Account Manager

(c)    if to any other Secured Debt Representative, to such address as specified
in the Priority Confirmation Joinder.

Any party hereto may change its address or facsimile number for notices and
other communications hereunder by notice to the other parties hereto. All
notices and other communications given to any party hereto in accordance with
the provisions of this Agreement shall be deemed to have been given on the date
of receipt (if a Business Day) and on the next Business Day thereafter (in all
other cases) if delivered by hand or overnight courier service or sent by
telecopy or on the date five Business Days after dispatch by certified or
registered mail if mailed, in each case delivered, sent or mailed (properly
addressed) to such party as provided in this Section 9.01 or in accordance with
the latest unrevoked direction from such party given in accordance with this
Section 9.01. As agreed to in writing among the Company, the Priority Lien Agent
and the Second Lien Agent from time to time, notices and other communications
may also be delivered by e-mail to the e-mail address of a representative of the
applicable person provided from time to time by such person.

SECTION 9.02    Waivers; Amendment. (a) No failure or delay on the part of any
party hereto in exercising any right or power hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the parties hereto are
cumulative and are not exclusive of any rights or remedies that they would
otherwise have. No waiver of any provision of this Agreement or consent to any
departure by any party therefrom shall in any event be effective unless the same
shall be permitted by paragraph (b) of this Section 9.02, and then such waiver
or consent shall be effective only in the specific instance and for the purpose
for which given. No notice or demand on any party hereto in any case shall
entitle such party to any other or further notice or demand in similar or other
circumstances.

(b)    Neither this Agreement nor any provision hereof may be terminated,
waived, amended or modified except pursuant to an agreement or agreements in
writing entered into by each Secured Debt Representative; provided, however,
that this Agreement may be amended from time to time as provided in
Section 4.04; and provided further, however, that this Agreement may not be
amended or modified in a manner that adversely affects the rights or obligations
of the Grantors hereunder in any material respects without the consent of the
Company. Any amendment of this Agreement that is proposed to be effected without
the consent of a Secured Debt Representative as permitted by the proviso to the
preceding sentence shall be submitted to such Secured Debt Representative for
its review at least 5 Business Days prior to the proposed effectiveness of such
amendment.

SECTION 9.03    Actions Upon Breach; Specific Performance. (a) Prior to the
Discharge of Priority Lien Obligations, if any Second Lien Secured Party,
contrary to this Agreement,

 

31

--------------------------------------------------------------------------------

commences or participates in any action or proceeding against any Grantor or the
Collateral, such Grantor, with the prior written consent of the Priority Lien
Agent, may interpose as a defense or dilatory plea the making of this Agreement,
and any Priority Lien Secured Party may intervene and interpose such defense or
plea in its or their name or in the name of such Grantor.

(b)    Prior to the Discharge of Priority Lien Obligations, should any Second
Lien Secured Party contrary to this Agreement, in any way take, attempt to or
threaten to take any action with respect to the Collateral (including any
attempt to realize upon or enforce any remedy with respect to this Agreement),
or take any other action in violation of this Agreement or fail to take any
action required by this Agreement, the Priority Lien Agent or any other Priority
Lien Secured Party (in its own name or in the name of the relevant Grantor) or
the relevant Grantor, with the prior written consent of the Priority Lien Agent,
may obtain relief against such Second Lien Secured Party by injunction, specific
performance and/or other appropriate equitable relief, it being understood and
agreed by the Second Lien Agent on behalf of each Second Lien Secured Party that
(I) the Priority Lien Secured Parties’ damages from its actions may at that time
be difficult to ascertain and may be irreparable, and (II) each Second Lien
Secured Party waives any defense that the Grantors and/or the Priority Lien
Secured Parties cannot demonstrate damage and/or be made whole by the awarding
of damages.

SECTION 9.04    Parties in Interest. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns, as well as the other Secured Parties, all of whom are intended to be
bound by, and to be third party beneficiaries of, this Agreement.

SECTION 9.05    Survival of Agreement. All covenants, agreements,
representations and warranties made by any party in this Agreement shall be
considered to have been relied upon by the other parties hereto and shall
survive the execution and delivery of this Agreement.

SECTION 9.06    Counterparts. This Agreement may be executed in counterparts,
each of which shall constitute an original but all of which when taken together
shall constitute a single contract. Delivery of an executed signature page to
this Agreement by facsimile transmission shall be as effective as delivery of a
manually signed counterpart of this Agreement.

SECTION 9.07    Severability. Any provision of this Agreement held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction. The parties shall endeavor in good-faith negotiations to replace
the invalid, illegal or unenforceable provisions with valid provisions the
economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.

SECTION 9.08    Governing Law; Jurisdiction; Consent to Service of Process.
(a) THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK,
WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAW PRINCIPLES (BUT GIVING EFFECT TO
SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATION LAW).

(b)    Each party hereto hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of the Supreme Court
of the State of New York sitting in New York County and of the United States
District Court of the Southern District of New York, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to this
Agreement, or for recognition or enforcement of any judgment, and each of the
parties hereto hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in such New
York State court or, to the extent permitted by law, in such federal court. Each

 

32

--------------------------------------------------------------------------------

of the parties hereto agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. Nothing in this
Agreement shall affect any right that any party hereto may otherwise have to
bring any action or proceeding relating to this Agreement in the courts of any
jurisdiction.

(c)    Each party hereto hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement in any court referred to in
paragraph (b) of this Section 9.08. Each of the parties hereto hereby
irrevocably waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any such
court.

(d)    Each party to this Agreement irrevocably consents to service of process
in the manner provided for notices in Section 9.01. Nothing in this Agreement
will affect the right of any party to this Agreement to serve process in any
other manner permitted by law.

SECTION 9.09    WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT
OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE
BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION.

SECTION 9.10    Headings. Article, Section and Annex headings used herein are
for convenience of reference only, are not part of this Agreement and are not to
affect the construction of, or to be taken into consideration in interpreting,
this Agreement.

SECTION 9.11    Conflicts. In the event of any conflict or inconsistency between
the provisions of this Agreement and the provisions of any Secured Debt
Documents, the provisions of this Agreement shall control.

SECTION 9.12    Provisions Solely to Define Relative Rights. The provisions of
this Agreement are and are intended solely for the purpose of defining the
distinct and separate relative rights of the Priority Lien Secured Parties and
the Second Lien Secured Parties. None of the Company, any other Grantor or any
other creditor thereof shall have any rights or obligations hereunder, except as
expressly provided in this Agreement (provided that nothing in this Agreement is
intended to or will amend, waive or otherwise modify the provisions of the
Priority Credit Agreement or the Second Lien Indenture, as applicable), and
except as expressly provided in this Agreement neither the Company nor any other
Grantor may rely on the terms hereof (other than Sections 4.01, 4.02, 4.04, or
4.05, Article VII and Article IX). Nothing in this Agreement is intended to or
shall impair the obligations of the Company or any other Grantor, which are
absolute and unconditional, to pay the Obligations under the Secured Debt
Documents as and when the same shall become due and payable in accordance with
their terms. Notwithstanding anything to the contrary herein, the Grantors shall
not be required to act or refrain from acting pursuant to this Agreement with
respect to any Collateral in any manner that would cause a default under any
Priority Lien Document.

 

33

--------------------------------------------------------------------------------

SECTION 9.13    Certain Terms Concerning the Second Lien Agent. The Second Lien
Agent is executing and delivering this Agreement solely in its capacity as such
and pursuant to direction set forth in the Second Lien Indenture; and in so
doing, the Second Lien Agent shall not be responsible for the terms or
sufficiency of this Agreement for any purpose. The Second Lien Agent shall have
no duties or obligations under or pursuant to this Agreement other than such
duties and obligations as may be expressly set forth in this Agreement as duties
and obligations on its part to be performed or observed. Notwithstanding
anything to the contrary contained in this Agreement, for purposes of clarity
and avoidance of doubt, the Second Lien Agent shall have no duties or
obligations with respect to covenants and agreements made by or on behalf of any
other Second Lien Secured Party in this Agreement. In entering into this
Agreement, or in taking (or forbearing from) any action under or pursuant to the
Agreement, the Second Lien Agent shall have and be protected by all of the
rights, immunities, indemnities and other protections granted to it under the
Second Lien Indenture and the other Second Lien Documents (including, without
limitation, Article 12 and Section 10.12 of the Second Lien Indenture).

SECTION 9.14    Certain Terms Concerning the Priority Lien Agent and the Second
Lien Agent. Notwithstanding anything to the contrary contained in this
Agreement, none of the Priority Lien Agent or the Second Lien Agent shall have
any liability or responsibility for the actions or omissions of any other
Secured Party, or for any other Secured Party’s compliance with (or failure to
comply with) the terms, covenants and agreements set forth in this Agreement.
Neither the Priority Lien Agent nor the Second Lien Agent shall have individual
liability to any Person if it shall mistakenly pay over or distribute to any
Secured Party (or the Company or any other Grantor) any amounts in violation of
the terms of this Agreement, so long as the Priority Lien Agent or the Second
Lien Agent, as the case may be, is acting in good faith. Each party hereto
hereby acknowledges and agrees that each of the Priority Lien Agent and the
Second Lien Agent is entering into this Agreement solely in its capacity under
the Priority Lien Documents and the Second Lien Documents, respectively, and not
in its individual capacity. The Priority Lien Agent shall not be deemed to owe
any fiduciary duty to the Second Lien Agent or any other Second Lien Secured
Party. The Second Lien Agent shall not be deemed to owe any fiduciary duty to
the Priority Lien Agent or any other Priority Lien Secured Party. The Second
Lien Agent shall not at any time be deemed or imputed to have any knowledge of
or receipt of any notices, information, correspondence or materials in the
possession of or given to the Priority Lien Agent, in its capacity as Priority
Lien Agent. The Priority Lien Agent shall not at any time be deemed or imputed
to have any knowledge of or receipt of any notices, information, correspondence
or materials in the possession of or given to the Second Lien Agent, in its
capacity as Second Lien Agent or as a trustee or collateral trustee under the
Second Lien Indenture.

SECTION 9.15    Authorization of Secured Agents. By accepting the benefits of
this Agreement and the other Priority Lien Security Documents, each Priority
Lien Secured Party authorizes the Priority Lien Agent to enter into this
Agreement and to act on its behalf as collateral agent hereunder and in
connection herewith. By accepting the benefits of this Agreement and the other
Second Lien Security Documents, each Second Lien Secured Party authorizes the
Second Lien Agent to enter into this Agreement and to act on its behalf as
collateral agent hereunder and in connection herewith.

SECTION 9.16    Further Assurances. Each of the Priority Lien Agent, for itself
and on behalf of the other Priority Lien Secured Party, the Second Lien Agent,
for itself and on behalf of the other Second Lien Secured Parties, and each
Grantor party hereto, for itself and on behalf of its subsidiaries, agrees that
it will execute, or will cause to be executed, any and all further documents,
agreements and instruments, and take all such further actions, as may be
required under any applicable law, or which the Priority Lien Agent or the
Second Lien Agent may reasonably request, to effectuate the terms of this
Agreement, including the relative Lien priorities provided for herein.

 

34

--------------------------------------------------------------------------------

SECTION 9.17    Relationship of Secured Parties. Nothing set forth herein shall
create or evidence a joint venture, partnership or an agency or fiduciary
relationship among the Secured Parties. None of the Secured Parties nor any of
their respective directors, officers, agents or employees shall be responsible
to any other Secured Party or to any other Person for any Grantor’s solvency,
financial condition or ability to repay the Priority Lien Obligations or the
Second Lien Obligations, or for statements of any Grantor, oral or written, or
for the validity, sufficiency or enforceability of the Priority Lien Documents
or the Second Lien Documents, or any security interests granted by any Grantor
to any Secured Party in connection therewith. Each Secured Party has entered
into its respective financing agreements with the Grantors based upon its own
independent investigation, and neither the Priority Lien Agent nor the Second
Lien Agent makes any warranty or representation to the other Secured Debt
Representatives or the Secured Parties for which it acts as agent nor does it
rely upon any representation of the other agents or the Secured Parties for
which it acts as agent with respect to matters identified or referred to in this
Agreement.

SECTION 9.18    Reciprocal Rights (Excess Priority Lien Obligations). The
parties agree that the provisions of Articles III, IV and V and Sections 7.02(d)
and 9.03, including, as applicable, the defined terms referenced therein (but
only to the extent used therein), which govern the relationship, and certain
rights, restrictions, and agreements, between the Priority Lien Agent and the
other Priority Lien Secured Parties with respect to the Priority Lien Debt, on
the one hand, and the Second Lien Agent and the other Second Lien Secured
Parties with respect to the Second Lien Debt, on the other hand, shall, from and
after the Discharge of Priority Lien Obligations and until the Discharge of
Second Lien Obligations, apply to and govern, mutatis mutandis, the relationship
between the Second Lien Agent and the other Second Lien Secured Parties with
respect to the Second Lien Debt, on the one hand (which, for purposes of this
Section 9.18 shall be treated for all purposes as the Priority Lien Debt as
referenced in such aforementioned provisions), and the Priority Lien Agent and
the other Priority Lien Secured Parties with respect to the Excess Priority Lien
Obligations (which, for purposes of this Section 9.18 shall be treated for all
purposes as the Second Lien Debt as referenced in such aforementioned
provisions), on the other hand.

[SIGNATURES BEGIN NEXT PAGE]

 

35

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.

 

WILMINGTON TRUST, NATIONAL ASSOCIATION,

as Priority Lien Agent

By:  

/s/ Jennifer Anderson

Name:   Jennifer Anderson Title:   Assistant Vice President

 

Signature page

Intercreditor Agreement

--------------------------------------------------------------------------------

WILMINGTON TRUST, NATIONAL ASSOCIATION,

as Second Lien Agent

By:  

/s/ Timothy P. Mowdy

Name:   Timothy P. Mowdy Title:   Administrative Vice President

 

Signature page

Intercreditor Agreement

--------------------------------------------------------------------------------

ACKNOWLEDGED AND AGREED AS OF THE DATE FIRST ABOVE WRITTEN: GRANTORS: GASTAR
EXPLORATION INC. By:  

/s/ J. Russell Porter

Name:   J. Russell Porter Title:   President and Chief Executive Officer

 

Signature page

Intercreditor Agreement

--------------------------------------------------------------------------------

NORTHWEST PROPERTY VENTURES LLC By:  

/s/ J. Russell Porter

Name:   J. Russell Porter Title:   President and Chief Executive Officer

 

Signature page

Intercreditor Agreement

--------------------------------------------------------------------------------

ANNEX I

Provision for all Priority Lien Security Documents and Second Lien Security
Documents that Grant a Security Interest in Collateral

Reference is made to the Intercreditor Agreement, dated as of March 3, 2017,
between Wilmington Trust, National Association, as Priority Lien Agent (as
defined therein), and Wilmington Trust, National Association, as Second Lien
Agent (as defined therein) (the “Intercreditor Agreement”). Each Person that is
secured hereunder, by accepting the benefits of the security provided hereby,
[(i) consents (or is deemed to consent), to the subordination of Liens provided
for in the Intercreditor Agreement,]1 [(i)][(ii)] agrees (or is deemed to agree)
that it will be bound by, and will take no actions contrary to, the provisions
of the Intercreditor Agreement, [(ii)][(iii)] authorizes (or is deemed to
authorize) the [Priority Lien Agent] [Second Lien Agent] on behalf of such
Person to enter into, and perform under, the Intercreditor Agreement and
[(iii)][(iv)] acknowledges (or is deemed to acknowledge) that a copy of the
Intercreditor Agreement was delivered, or made available, to such Person.

Notwithstanding any other provision contained herein, this Agreement, the Liens
created hereby and the rights, remedies, duties and obligations provided for
herein are subject in all respects to the provisions of the Intercreditor
Agreement and, to the extent provided therein, the applicable Security Documents
(as defined in the Intercreditor Agreement). In the event of any conflict or
inconsistency between the provisions of this Agreement and the Intercreditor
Agreement, the provisions of the Intercreditor Agreement shall control.

 

 

1  This bracketed language would not apply to the Priority Lien Security
Documents.

 

Annex I - 1

--------------------------------------------------------------------------------

EXHIBIT A

to Intercreditor Agreement

[FORM OF]

PRIORITY CONFIRMATION JOINDER

Reference is made to the Intercreditor Agreement, dated as of March 3, 2017 (as
amended, supplemented, amended and restated or otherwise modified and in effect
from time to time, the “Intercreditor Agreement”) between WILMINGTON TRUST,
NATIONAL ASSOCIATION, as Priority Lien Agent for the Priority Lien Secured
Parties (as defined therein), and WILMINGTON TRUST, NATIONAL ASSOCIATION, as
Second Lien Agent for the Second Lien Secured Parties (as defined therein).

Capitalized terms used but not otherwise defined herein shall have the meaning
set forth in the Intercreditor Agreement. This Priority Confirmation Joinder is
being executed and delivered pursuant to Section 4.04(a) of the Intercreditor
Agreement as a condition precedent to the debt being entitled to the rights and
obligations of Priority Lien Obligations under the Intercreditor Agreement, and
for which the undersigned is acting representative.

1. Joinder. The undersigned, [                    ], a [                    ],
(the “New Representative”) as [trustee] [collateral agent] [administrative
agent] [collateral agent] under that certain [describe applicable indenture,
credit agreement or other document governing the Priority Lien Obligations]
hereby:

(a)    represents that the New Representative has been authorized to become a
party to the Intercreditor Agreement on behalf of the Priority Lien Secured
Parties under a Priority Refinancing Credit Facility for all purposes thereof on
the terms set forth therein, and to be bound by the terms of the Intercreditor
Agreement as fully as if the undersigned had executed and delivered the
Intercreditor Agreement as of the date thereof; and

(b)    agrees that its address for receiving notices pursuant to the
Intercreditor Agreement shall be as follows:

[Address]

2.    Priority Confirmation. The undersigned New Representative, on behalf of
itself and each Priority Lien Secured Party for which the undersigned is acting
as [Administrative Agent] hereby agrees, for the benefit of all Secured Parties
and each future Secured Debt Representative, and as a condition to being treated
as Priority Lien Obligations under the Intercreditor Agreement, that the New
Representative is bound by the provisions of the Intercreditor Agreement,
including the provisions relating to the ranking of Priority Liens.

3.    Full Force and Effect of Intercreditor Agreement. Except as expressly
supplemented hereby, the Intercreditor Agreement shall remain in full force and
effect.

4.    Governing Law and Miscellaneous Provisions. The provisions of Article IX
of the Intercreditor Agreement will apply with like effect to this Priority
Confirmation Joinder.

5.    Expenses. The Company agrees to reimburse each Secured Debt Representative
for its reasonable out of pocket expenses in connection with this Priority
Confirmation Joinder, including the reasonable fees, other charges and
disbursements of counsel.

 

Exhibit A - 1

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the parties hereto have caused this Priority Confirmation
Joinder to be executed by their respective officers or representatives as of
[            , 20    ].

 

[insert name of New Representative] By:  

 

Name:   Title:   The Second Lien Agent hereby acknowledges receipt of this
Priority Confirmation Joinder:

 

as Second Lien Agent By:  

 

Name:   Title:   Acknowledged and Agreed to by: GASTAR EXPLORATION, INC., as the
Company By:  

 

Name:   Title:  

 

Exhibit A - 2

--------------------------------------------------------------------------------

EXHIBIT B

to Intercreditor Agreement

Part A

Third Amended and Restated Pledge and Security Agreement, dated as of March 3,
2017, by and among Gastar Exploration Inc., certain of its subsidiaries party
thereto and Wilmington Trust, National Association, as collateral agent.

Amended and Restated First Lien Mortgage, Security Agreement, Fixture Filing,
Financing Statement and Assignment of Production, dated as of March 3, 2017,
executed and delivered by Gastar Exploration Inc., as mortgagor, to Wilmington
Trust, National Association, as mortgagee.

Amended and Restated First Lien Wellbore Mortgage, Security Agreement, Fixture
Filing, Financing Statement and Assignment of Production, dated as of March 3,
2017, executed and delivered by Gastar Exploration Inc., as mortgagor, to
Wilmington Trust, National Association, as mortgagee.

Master Reaffirmation and Assignment and Assumption of Liens and Security
Interests, dated as of March 3, 2017, by and among Gastar Exploration Inc.,
Wells Fargo Bank National Association, as resigning agent, Wilmington Trust,
National Association, as successor administrative agent, and Ares Management,
LLC.

Assignment and Assumption of Deposit Account and Sweep Investment Control
Agreement, dated as of March 3, 2017, by and among Wells Fargo Bank, National
Association, as resigning first lien agent, Wilmington Trust, National
Association, as resigning second lien trustee and collateral agent, Wilmington
Trust, National Association, as successor first lien agent and successor second
lien agent.

Assignment and Assumption of Securities Account Control Agreement, dated as of
March 3, 2017, by and among Wells Fargo Bank, National Association, as resigning
first lien agent, Wilmington Trust, National Association, as resigning second
lien trustee and collateral agent, Wilmington Trust, National Association, as
successor first lien agent and successor second lien trustee and collateral
agent.

Part B

Pledge and Security Agreement, dated as of March 3, 2017, by and among Gastar
Exploration Inc., certain of its subsidiaries party thereto and Wilmington
Trust, National Association, as collateral trustee.

Second Lien Mortgage, Security Agreement, Fixture Filing, Financing Statement
and Assignment of Production, dated as of March 3, 2017, executed and delivered
by Gastar Exploration Inc., as mortgagor, to Wilmington Trust, National
Association, as mortgagee.

 

Exhibit B - 1

--------------------------------------------------------------------------------

Second Lien Wellbore Mortgage, Security Agreement, Fixture Filing, Financing
Statement and Assignment of Production, dated as of March 3, 2017, executed and
delivered by Gastar Exploration Inc., as mortgagor, to Wilmington Trust,
National Association, as mortgagee.

Assignment and Assumption of Deposit Account and Sweep Investment Control
Agreement, dated as of March 3, 2017, by and among Wells Fargo Bank, National
Association, as resigning first lien agent, Wilmington Trust, National
Association, as resigning second lien trustee and collateral agent, Wilmington
Trust, National Association, as successor first lien agent and successor second
lien agent.

Assignment and Assumption of Securities Account Control Agreement, dated as of
March 3, 2017, by and among Wells Fargo Bank, National Association, as resigning
first lien agent, Wilmington Trust, National Association, as resigning second
lien trustee and collateral agent, Wilmington Trust, National Association, as
successor first lien agent and successor second lien trustee and collateral
agent.

 

Exhibit B - 2