dated as of August 8,
2008,
QUICKSILVER RESOURCES INC.,
as the Borrower,
ITS SUBSIDIARIES PARTY
HERETO,
JPMORGAN CHASE BANK, N.A.
,
as the First Lien Collateral Agent
CREDIT SUISSE,
as the Second Lien Collateral Agent
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SECTION 1.01. Defined Terms
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2
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SECTION 1.02. Terms Generally
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10
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SECTION 1.03. Concerning Certain Secured
Parties
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11
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SECTION 2.01. Relative Priorities
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12
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SECTION 2.02. Prohibition on Contesting
Liens
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12
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SECTION 2.03. No New Liens
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12
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SECTION 2.04. Cooperation; Similar Liens and
Agreements
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13
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Enforcement of Rights; Matters Relating to
Collateral
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SECTION 3.01. Exercise of Rights and
Remedies
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14
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SECTION 3.02. No Interference
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16
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SECTION 3.03. Rights as Unsecured
Creditors
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18
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SECTION 3.04. Automatic Release of Second
Priority Liens
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18
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SECTION 3.05. Insurance and Condemnation
Awards
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19
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SECTION 4.01. Application of Proceeds
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19
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SECTION 4.02. Payment Over
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20
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SECTION 4.03. Certain Agreements with Respect to
Unenforceable Liens
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20
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Bailment for Perfection of Certain Security
Interests
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Insolvency or Liquidation Proceedings
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i
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SECTION 6.01. Finance and Sale
Matters
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22
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SECTION 6.02. Relief from the Automatic
Stay
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23
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SECTION 6.03. Reorganization
Securities
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24
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SECTION 6.04. Post-Petition Interest
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24
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SECTION 6.05. Certain Waivers by the Second Lien
Secured Parties
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24
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SECTION 6.06. Certain Voting Matters
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24
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SECTION 7.01. Matters Relating to Loan
Documents
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25
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SECTION 7.02. Effect of Refinancing of
Indebtedness under First Lien Loan Documents
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27
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SECTION 7.03. No Waiver by First Lien Secured
Parties
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28
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SECTION 7.04. Reinstatement
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28
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SECTION 7.05. Further Assurances
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28
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Representations and Warranties
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SECTION 8.01. Representations and Warranties of
Each Party
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28
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SECTION 8.02. Representations and Warranties of
Each Collateral Agent
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29
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No Reliance; No Liability; Obligations
Absolute
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SECTION 9.01. No Reliance;
Information
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29
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SECTION 9.02. No Warranties or
Liability
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30
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SECTION 9.03. Obligations Absolute
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31
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31
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SECTION 10.03. Effectiveness;
Survival
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SECTION 10.04. Severability
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33
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SECTION 10.05. Amendments; Waivers
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SECTION 10.06. Subrogation
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33
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SECTION 10.07. Applicable Law; Jurisdiction;
Consent to Service of Process
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34
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SECTION 10.08. Waiver of Jury Trial
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34
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SECTION 10.09. Parties in Interest
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34
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SECTION 10.10. Specific Performance
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35
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ii
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35
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SECTION 10.12. Counterparts
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35
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SECTION 10.13. Provisions Solely to Define
Relative Rights
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35
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SECTION 10.14. Additional US Grantors
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iii
INTERCREDITOR
AGREEMENT dated as of August 8, 2008, among QUICKSILVER
RESOURCES INC., a Delaware corporation (the “
Borrower ”), the SUBSIDIARIES of the Borrower
whose signatures appear below or who in the future become parties
hereto as provided in Section 10.14, JPMORGAN CHASE BANK,
N.A., in its capacity as global administrative agent for the First
Lien Secured Parties (in such capacity, together with its
successors and assigns in such capacity, the “ First
Lien Collateral Agent ”), and CREDIT SUISSE, Cayman
Islands branch, in its capacity as administrative agent for the
Term Lenders and as collateral agent for the Second Lien Secured
Parties (in such capacity, together with its successors and assigns
in such capacity, the “ Second Lien Collateral
Agent ”). Capitalized terms used in this Agreement
have the meanings assigned to them in Article I
below.
On
the date hereof, the Borrower, the Term Lenders and Credit Suisse,
Cayman Islands branch, as administrative agent, are entering into
the Term Credit Agreement. Prior to the date hereof, the Borrower,
Quicksilver Canada, the First Lien Consenting Lenders, the First
Lien Global Administrative Agent and the First Lien Canadian
Administrative Agent entered into the First Lien Fifth Amendment,
which shall become effective on the date hereof.
The
First Lien Fifth Amendment provides that the Second Priority Liens
may be granted to the Second Lien Collateral Agent only if such
Liens are subject to the terms of an intercreditor agreement in the
form of this Agreement.
The
Existing Senior Notes Indenture provides that the US Grantors may
not create, incur or suffer to exist Liens on the Collateral
created under the Term Security Documents unless such Liens are
“Permitted Liens” under and as defined in the Existing
Senior Notes Indenture or, contemporaneously with the incurrence of
such Liens, effective provision is made to secure the Existing
Senior Notes Obligations equally and ratably with the indebtedness
secured by such Liens for so long as such indebtedness is so
secured.
The
Term Security Documents create, in favor of the Second Lien
Collateral Agent, for the benefit of the Term Secured Parties and
the Existing Senior Notes Secured Parties, Liens on the Second Lien
Collateral described therein as security for the indefeasible
payment in full in cash and performance of the Term Obligations and
the Existing Senior Notes Obligations.
In
consideration of the foregoing and the mutual covenants and
obligations herein set forth and for other good and valuable
consideration, the sufficiency and receipt of which are hereby
acknowledged, the parties hereto, intending to be legally bound,
hereby agree as follows:
2
SECTION
1.01. Defined Terms . As used in the Agreement, the
following terms shall have the meanings specified below:
“
Affiliate ” of any person shall mean any person
directly or indirectly Controlled by, Controlling or under common
Control with such first Person. For purposes of this definition,
the term “ Control ” shall means the
possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of a person, whether
through the ability to exercise voting power, by contract or
otherwise, but not solely by being an officer or director of such
person, and the terms “ Controlling ” and
“ Controlled ” shall have meanings
correlative thereto.
“
Agreement ” shall mean this Intercreditor
Agreement.
“
Amend ” shall mean, in respect of any
agreement, to amend, restate, supplement, waive or otherwise modify
such agreement, in whole or in part. The terms “
Amended ” and “ Amendment
” shall have correlative meanings.
“
Bankruptcy Code ” shall mean Title 11 of
the United States Code entitled “Bankruptcy,” as now
and hereinafter in effect, or any successor statute.
“
Bankruptcy Law ” shall mean the Bankruptcy Code
and any other Federal, state or foreign bankruptcy, insolvency,
receivership or similar law.
“
Borrower ” shall have the meaning assigned to
such term in the preamble.
“
Business Day ” shall mean any day that is not a
Saturday, Sunday or a United States federal holiday or any other
day on which commercial banks in New York City are authorized or
required by law to remain closed.
“
Canadian Borrower ” shall mean Quicksilver
Resources Canada Inc., an Alberta, Canada corporation.
“
Cash Collateral ” shall have the meaning
assigned to such term in Section 6.01(a)(i).
“
Collateral ” shall mean, collectively, the
First Lien US Collateral and the Second Lien Collateral.
“
Collateral Agents ” shall mean the First Lien
Collateral Agent and the Second Lien Collateral Agent.
“
Comparable Second Lien Security Document ”
shall mean, in relation to any Collateral subject to any Lien
created under any First Lien Security Document, the
3
Second Lien
Security Document that creates a Lien on the same Collateral,
granted by the same US Grantor.
“
DIP Financing ” shall have the meaning assigned
to such term in Section 6.01(a)(ii).
“
DIP Financing Liens ” shall have the meaning
assigned to such term in Section 6.01(a)(ii).
“
Discharge of First Lien Obligations ” shall
mean, subject to Sections 7.02 and 7.04, (a) payment
in full in cash of the principal of and interest on (including
interest accruing during the pendency of any Insolvency or
Liquidation Proceeding, regardless of whether allowed or allowable
in such Insolvency or Liquidation Proceeding), and premium, if any,
on, all Indebtedness outstanding under the First Lien Loan
Documents, (b) payment in full of all other First Lien
Obligations that are due and payable or otherwise accrued and owing
at or prior to the time such principal and interest are paid,
(c) cancellation of or the entry into arrangements
satisfactory to the First Lien Global Administrative Agent and each
applicable issuing bank with respect to all letters of credit
issued and outstanding under the First Lien Credit Agreements (any
such arrangement in the form of cash collateralization to be in an
amount not greater than 105% of the aggregate undrawn face amount
of such letters of credit), (d) cancellation of or the entry
into arrangements satisfactory to the First Lien Global
Administrative Agent and each applicable hedging counterparty with
respect to all obligations under Hedging Agreements that constitute
First Lien Obligations and (e) termination or expiration of
all commitments to lend under the First Lien Credit
Agreements.
“
Disposition ” shall mean any sale, lease,
exchange, transfer or other disposition. “
Dispose ” shall have a correlative
meaning.
“
Domestic Subsidiary ” shall mean any Subsidiary
other than a Foreign Subsidiary.
“
Equity Interests ” shall mean, with respect to
any person, shares of the capital stock, partnership interests,
membership interests in a limited liability company, beneficial
interests in a trust or other equity interests in such person, or
any warrants, options or other rights to acquire any of the
foregoing.
“
Exercise of a Buy-Out Right ” shall have the
meaning assigned to such term in Section 3.01(d).
“
Existing Senior Notes ” shall mean the 8
1 / 4
% Senior Notes due 2015 of the
Borrower issued under the Existing Senior Notes
Indenture.
“
Existing Senior Notes Fifth Supplemental Indenture
” shall mean the Fifth Supplemental Indenture dated as of
June 27, 2008, by and among the Borrower, the Subsidiary
Guarantors party thereto and The Bank of New York Mellon Trust
Company, N.A., as trustee.
4
“
Existing Senior Notes Indenture ” shall mean
the Indenture dated as of December 22, 2005, between the
Borrower and The Bank of New York Mellon Trust Company, N.A. (as
successor in interest to JPMorgan Chase Bank, National
Association), as trustee, as supplemented by the Existing Senior
Notes Fifth Supplemental Indenture and the Existing Senior Notes
Sixth Supplemental Indenture.
“
Existing Senior Notes Obligations ” means
Indebtedness (as defined in the Existing Senior Notes Indenture as
in effect on the date hereof) due with respect to (a) the
Existing Senior Notes and (b) the Subsidiary Guarantee (as
defined in the Existing Senior Notes Indenture as in effect on the
date hereof) of any US Grantor.
“
Existing Senior Notes Secured Parties ” shall
mean “Holders”, as defined in the Existing Senior Notes
Indenture.
“
Existing Senior Notes Sixth Supplemental Indenture
” shall mean the Sixth Supplemental Indenture dated as of
July 10, 2008, by and among the Borrower, the Subsidiary
Guarantors party thereto and The Bank of New York Mellon Trust
Company, N.A., as trustee.
“
First Lien Canadian Administrative Agent ”
shall mean JPMorgan Chase Bank, N.A., Toronto Branch, in its
capacity as the Canadian administrative agent under the First Lien
Canadian Credit Agreement, together with its successors and assigns
in such capacity.
“
First Lien Canadian Credit Agreement ” shall
mean the Amended and Restated Credit Agreement dated as of
February 9, 2007, among the Canadian Borrower, the lenders
party thereto, BNP Paribas and Bank of America, N.A., as co-global
syndication agents, Fortis Capital Corp., The Bank of Nova Scotia
and Deutsche Bank Trust Company Americas, as co-global
documentation agents, JPMorgan Chase Bank, N.A., Toronto Branch, as
Canadian administrative agent, and JPMorgan Chase Bank, N.A., as
global administrative agent.
“
First Lien Canadian Lenders ” shall mean, at
any time, persons that are at such time “Lenders” under
and as defined in the First Lien Canadian Credit
Agreement.
“
First Lien Collateral Agent ” shall have the
meaning assigned to such term in the preamble.
“
First Lien Consenting Lenders ” shall mean,
collectively, (a) each First Lien Lender that is a party to
the First Lien Fifth Amendment and (b) each person that
becomes a First Lien Lender (including pursuant to the provisions
of Section 7.02) after the date of the First Lien Fifth
Amendment (other than any such person that (i) is (A) a
Lender Affiliate (as defined in the First Lien US Credit Agreement
as of the date hereof) of a First Lien Non-Consenting Lender or
(B) an Approved Fund (as defined in the First Lien US Credit
Agreement as of the date hereof) that is administered or managed by
a
5
First Lien
Non-Consenting Lender, a Lender Affiliate of a First Lien
Non-Consenting Lender or a person or Affiliate of a person that
administers or manages a First Lien Non-Consenting Lender and
(ii) becomes a First Lien Lender as an assignee of a First
Lien Non-Consenting Lender), together with their respective
successors and assigns.
“
First Lien Credit Agreements ” shall mean the
First Lien US Credit Agreement and the First Lien Canadian Credit
Agreement.
“
First Lien Fifth Amendment ” shall mean the
Fifth Amendment to Combined Credit Agreements, dated as of
August 4, 2008, among the Borrower, Quicksilver Canada, the
First Lien Lenders party thereto, the First Lien Global
Administrative Agent and the First Lien Canadian Administrative
Agent.
“
First Lien Global Administrative Agent ” shall
mean JPMorgan Chase Bank, N.A., in its capacity as the global
administrative agent under the First Lien Credit Agreements,
together with its successors and assigns in such
capacity.
“
First Lien Global Borrowing Base ” shall mean
“Global Borrowing Base”, as defined in the First Lien
Credit Agreements (or, in respect of any New First Lien Loan
Documents, a term connoting a meaning substantially similar to that
connoted by the term “Global Borrowing Base” under the
First Lien Credit Agreements as of the date hereof).
“
First Lien Intercreditor Agreement ” shall mean
the Amended and Restated Intercreditor Agreement dated as of
February 9, 2007, among the First Lien Lenders, the First Lien
Global Administrative Agent, the First Lien Canadian Administrative
Agent and certain other persons party thereto.
“
First Lien Lenders ” shall mean (a) the
First Lien US Lenders and (b) the First Lien Canadian
Lenders.
“
First Lien Loan Documents ” shall mean the
“Loan Documents”, as defined in any First Lien Credit
Agreement.
“
First Lien Obligations ” shall mean the
“Combined Obligations”, as defined in the First Lien US
Credit Agreement.
“
First Lien Non-Consenting Lender ” shall mean
(a) for purposes of the definition of the term “First
Lien Consenting Lender”, each person that is a First Lien
Lender as of the date of the First Lien Fifth Amendment but is not
a party to the First Lien Fifth Amendment, and (b) for all
other purposes of this Agreement, each First Lien Lender that is
not a First Lien Consenting Lender.
“
First Lien Required Lenders ” shall mean the
“Majority Lenders”, as defined in the First Lien US
Credit Agreement as of the date hereof.
6
“
First Lien Secured Parties ” shall mean
(a) the First Lien Lenders, (b) the First Lien Global
Administrative Agent, (c) the First Lien Canadian
Administrative Agent, (d) the First Lien Collateral Agent,
(e) each other person to whom any of the First Lien
Obligations (including First Lien Obligations under Hedging
Agreements and indemnification obligations) is owed and
(f) the successors and assigns of each of the
foregoing.
“
First Lien Security Documents ” shall mean any
and all agreements, documents or instruments now existing or
entered into after the date hereof that grant a Lien on any assets
of any US Grantor to secure any First Lien Obligations or under
which rights or remedies with respect to any such Lien are
governed.
“
First Lien Subsidiary Guarantee ” shall mean,
in respect of any US Grantor, the Guarantee by such US Grantor of
the First Lien Obligations pursuant to the First Lien Loan
Documents.
“
First Lien US Collateral ” shall mean any
assets of any US Grantor that constitute “Collateral”
or “Mortgaged Property” as defined in the First Lien
Security Documents, and any other assets of any US Grantor now or
at any time hereafter subject to a Lien securing any First Lien
Obligation.
“
First Lien US Credit Agreement ” shall mean the
Amended and Restated Credit Agreement dated as of February 9,
2007, among the Borrower, the lenders party thereto, BNP Paribas
and Bank of America, N.A., as co-global syndication agents, Fortis
Capital Corp., The Bank of Nova Scotia and Deutsche Bank Trust
Company Americas, as co-global documentation agents, and JPMorgan
Chase Bank, N.A., as global administrative agent.
“
First Lien US Lenders ” shall mean, at any
time, persons that are at such time “Lenders” under and
as defined in the First Lien US Credit Agreement.
“
First Priority Liens ” shall mean all Liens on
the Collateral securing the First Lien Obligations, whether created
under the First Lien Security Documents or acquired by possession,
statute (including any judgment lien), operation of law,
subrogation, pursuant to the terms of this Agreement or
otherwise.
“
Foreign Subsidiary ” shall mean any Subsidiary
that is organized under the laws of a jurisdiction other than the
United States of America, any State thereof or the District of
Columbia.
“
GAAP ” shall mean generally accepted accounting
principles in the United States of America, as in effect from time
to time.
“
Governmental Authority ” shall mean the
government of the United States of America, Canada, any other
nation or any political subdivision thereof, whether state,
provincial, territorial or local, and any agency, authority,
instrumentality, regulatory
7
body, court,
central bank or other entity exercising executive, legislative,
judicial, taxing, regulatory or administrative powers or functions
of or pertaining to government.
“
Guarantee ” shall mean “Guarantee”,
as defined in the First Lien US Credit Agreement as of the date
hereof.
“
Hedging Agreement ” shall mean any agreement,
instrument, arrangement or schedule or supplement thereto
evidencing any Hedging Transaction.
“
Hedging Transaction ” shall mean any financial
derivative transaction, including any commodity, interest rate,
currency or other derivative, swap, option, collar, futures
contract or other contract pursuant to which a person hedges risks
related to commodity prices, interest rates, currency exchange
rates, securities prices or financial market conditions.
“
Indebtedness ” shall mean
“Indebtedness”, as defined in the First Lien US Credit
Agreement as of the date hereof.
“
Insolvency or Liquidation Proceeding ” shall
mean (a) any voluntary or involuntary proceeding under the
Bankruptcy Code or any other Bankruptcy Law with respect to any US
Grantor, (b) any voluntary or involuntary appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar
official for any US Grantor or for a substantial part of the
property or assets of any US Grantor, (c) any voluntary or
involuntary winding-up or liquidation of any US Grantor or
(d) any general assignment for the benefit of creditors by any
US Grantor.
“
Lien ” shall mean, with respect to any asset,
any lien, charge or security interest arising from a mortgage,
encumbrance, pledge, security agreement, conditional sale or trust
receipt or a lease, consignment, bailment or margin account for
security purposes.
“
Loan Documents ” shall mean the First Lien Loan
Documents and the Second Lien Loan Documents.
“
New First Lien Collateral Agent ” shall have
the meaning assigned to such term in Section 7.02.
“
New First Lien Loan Documents ” shall have the
meaning assigned to such term in Section 7.02.
“
New First Lien Obligations ” shall have the
meaning assigned to such term in Section 7.02.
“
Obligations ” shall mean the First Lien
Obligations and the Second Lien Obligations.
8
“
person ” shall mean any natural person,
corporation, limited liability company, trust, joint venture,
association, company, partnership, Governmental Authority or other
entity.
“
Quicksilver Canada ” shall mean Quicksilver
Resources Canada Inc., an Alberta, Canada corporation.
“
Pledged or Controlled Collateral ” shall have
the meaning assigned to such term in Article V.
“Refinance ” shall mean, in respect of
any Indebtedness, to refinance, extend, renew, restructure or
replace, or to issue other Indebtedness in exchange or replacement
for, such Indebtedness, in whole or in part. “
Refinanced ” and “
Refinancing ” shall have correlative
meanings.
“
Refinancing Notice ” shall have the meaning
assigned to such term in Section 7.02.
“
Release ” shall have the meaning assigned to
such term in Section 3.04(a).
“
Second Lien Collateral ” shall mean any assets
of any US Grantor that constitute “Collateral” or
“Mortgaged Property” as defined in the Second Lien
Security Documents, and any other assets of any US Grantor now or
at any time hereafter subject to a Lien securing any Term
Obligations.
“
Second Lien Collateral Agent ” shall have the
meaning assigned to such term in the preamble.
“
Second Lien Loan Documents ” shall mean the
Term Loan Documents and the Existing Senior Notes
Indenture.
“
Second Lien Obligations ” shall mean the Term
Obligations and the Existing Senior Notes Obligations.
“
Second Lien Permitted Actions ” shall have the
meaning assigned to such term in Section 3.01(a).
“
Second Lien Secured Parties ” shall mean the
Term Secured Parties and the Existing Senior Notes Secured
Parties.
“
Second Lien Security Documents ” shall mean
(a) the Term Security Documents and (b) any and all
agreements, documents or instruments now existing or entered into
after the date hereof that grant in favor of the Second Lien
Collateral Agent, for the benefit of the Second Lien Secured
Parties, or directly in favor of any Term Secured Party, a Lien on
any assets of any US Grantor to secure any Second Lien Obligations
or under which rights or remedies with respect to any such Lien are
governed.
9
“
Second Priority Liens ” shall mean (a) all
Liens on the Collateral securing the Second Lien Obligations
created under the Second Lien Security Documents and (b) all
other Liens on the Collateral securing the Term Obligations,
whether acquired by possession, statute (including any judgment
lien), operation of law, subrogation or otherwise.
“
Security Documents ” shall mean the First Lien
Security Documents and the Second Lien Security
Documents.
“
Standstill Period ” shall have the meaning
assigned to such term in Section 3.02(a).
“
Subsidiary ” shall mean, with respect to any
person (the “ parent ”) at any date, any
corporation, limited liability company, partnership (limited or
general), association or other entity the accounts of which would
be consolidated with those of the parent in the parent’s
consolidated financial statements if such financial statements were
prepared in accordance with GAAP as of such date. Unless otherwise
indicated herein, each reference to the term
“Subsidiary” shall mean a Subsidiary of the
Borrower.
“
Term Administrative Agent ” shall mean Credit
Suisse, Cayman Islands branch, in its capacity as the
administrative agent under the Term Credit Agreement, together with
its successors and assigns in such capacity.
“
Term Credit Agreement ” shall mean the Credit
Agreement dated as of August 8, 2008, among the Borrower, the
lenders party thereto and Credit Suisse, Cayman Islands branch, as
administrative agent.
“
Term Lenders ” shall mean, at any time, persons
that are at such time “Lenders” under and as defined in
the Term Credit Agreement.
“
Term Loan Documents ” shall mean the
“Loan Documents”, as defined in the Term Credit
Agreement.
“
Term Obligations ” shall mean
“Obligations”, as defined in the Term Credit
Agreement.
“
Term Required Lenders ” shall mean the
“Required Lenders”, as defined in the Term Credit
Agreement as of the date hereof.
“
Term Secured Parties ” shall mean (a) the
Term Lenders, (b) the Term Administrative Agent, (c) the
Second Lien Collateral Agent, (d) each other person to whom
any of the Term Obligations (including indemnification obligations)
is owed and (e) the successors and assigns of each of the
foregoing.
“
Term Security Documents ” shall mean any and
all agreements, documents or instruments now existing or entered
into after the date hereof that grant a
10
Lien on any
assets of any US Grantor to secure any Term Obligations or under
which rights or remedies with respect to any such Lien are
governed.
“
Term Subsidiary Guarantee ” shall mean, in
respect of any US Grantor, the Guarantee by such US Grantor of the
Term Obligations pursuant to the Term Loan Documents.
“
Uniform Commercial Code ” or “
UCC ” shall mean the Uniform Commercial Code
(or any similar or equivalent legislation) as in effect from time
to time in any applicable jurisdiction.
“
US Grantors ” means, at any time, the Borrower
and each Domestic Subsidiary that, at such time, (a) pursuant
to any First Lien Security Document has granted a Lien to secure
any First Lien Obligations and (b) pursuant to any Second Lien
Security Document has granted a Lien to secure any Second Lien
Obligations; provided , however , that solely for
purposes of Section 2.03, a Domestic Subsidiary shall be
deemed to be a “US Grantor” so long as it satisfies
either clause (a) or (b) above (even if it does not satisfy
both clauses (a) and (b) above) so long as such Domestic
Subsidiary is required pursuant to the terms of the First Lien Loan
Documents and the Term Loan Documents to grant a Lien on assets
owned by it to secure the First Lien Obligations and the Term
Obligations, respectively.
SECTION
1.02. Terms Generally . The definitions of terms
herein shall apply equally to the singular and plural forms of the
terms defined. Whenever the context may require, any pronoun shall
include the corresponding masculine, feminine and neuter forms. The
words “include”, “includes” and
“including” shall be deemed to be followed by the
phrase “without limitation”. The word
“will” shall be construed to have the same meaning and
effect as the word “sh

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