INTERCREDITOR AND COLLATERAL AGENCY AGREEMENT Among

Exhibit 10.11

EXECUTION

INTERCREDITOR
AND
COLLATERAL AGENCY AGREEMENT

Among

ROYAL BANK OF CANADA,
as First Lien Agent,

ROYAL BANK OF CANADA,
as Second Lien Agent,

ROYAL BANK OF CANADA ,
as Collateral Agent

and

POSTROCK KPC PIPELINE, LLC ,
as Obligor

Dated as of September 21, 2010

Intercreditor and Collateral
Agency Agreement

TABLE OF CONTENTS

Intercreditor and Collateral
Agency Agreement

Intercreditor and Collateral
Agency Agreement

Intercreditor and Collateral
Agency Agreement

INTERCREDITOR
AND COLLATERAL AGENCY AGREEMENT

     THIS INTERCREDITOR AND COLLATERAL AGENCY AGREEMENT dated as of September 21, 2010 (the “ Effective Date ”) is entered into by and among ROYAL BANK OF CANADA, in its capacity as administrative and collateral agent (in such capacities, with its successors and assigns, the “ First Lien Agent ”) for the First Lien Lenders (as defined below), in its capacity as administrative agent and collateral agent (in such capacities, with its successors and assigns, the “ Second Lien Agent ”) for the Second Lien Lenders (as defined below), and as collateral agent for Secured Parties (as defined below) (in such capacity, “ Collateral Agent ”) and POSTROCK KPC PIPELINE LLC, a Delaware limited liability company, formerly known as and successor by conversion to Quest Pipelines (KPC), a Kansas general partnership, and successor by merger to Quest Kansas Pipeline, L.L.C. and Quest Kansas General Partner L.L.C. (“ Obligor ”; and together with PostRock Energy Services Corporation, a Delaware corporation (“ PESC ”), collectively called the “ Borrowers ” and individually called a “ Borrower ”).

Recitals

     A. The Borrowers, the First Lien Agent and certain financial institutions (with their respective successors and assigns, the “ First Lien Lenders ”) are parties to a Second Amended and Restated Credit Agreement dated as of September 21, 2010 (as amended, supplemented, restated or otherwise modified from time to time, the “ First Lien Credit Agreement ”), pursuant to which the First Lien Lenders have agreed to make a $15,000,000 term loan to the Borrowers.

     B. PESC together with PostRock MidContinent Production, LLC, a Delaware limited liability company (“ MidContinent ”), the Second Lien Agent and certain lenders (with their respective successors and assigns, the “ Second Lien Lenders ”) are parties to a Second Amended and Restated Credit Agreement dated as of September 21, 2010 (as amended, supplemented, restated or otherwise modified from time to time, the “ Second Lien Credit Agreement ”), pursuant to which the Second Lien Lenders have make loans and issue letters of credit to or for PESC and MidContinent.

     C. Pursuant to the Security Documents (as defined below) the Obligor has granted liens and security interests in the Collateral (i) in favor of the First Lien Agent, on behalf of the First Lien Secured Parties, as security for the payment and performance of the First Lien Obligations and (ii) in favor of the Second Lien Agent, on behalf of the Second Lien Secured Parties, as security for the payment and performance of the Second Lien Obligations, which liens and security interests are junior, subject and subordinated to the liens and security interests in the Collateral in favor of the First Lien Agent.

     D. The First Lien Lenders have authorized the First Lien Agent and the Second Lien Lenders have authorized the Second Lien Agent, on their respective behalf, to enter into this Agreement to secure, inter alia, on a first lien basis the First Lien Obligations and to secure on a second lien basis the Second Lien Obligations.

     E. The Obligor, the First Lien Agent, on behalf of the First Lien Lenders, the Second Lien Agent, on behalf of the Second Lien Lenders, and Collateral Agent are entering into this Agreement to establish their relative rights with respect to payment of their respective Obligations owed by the Obligor, to agree as to the exercise of certain remedies and to appoint a collateral agent for the purposes of dealing with the Security Documents and apportioning payments among Secured Parties and for other purposes as set forth herein.

Intercreditor and Collateral
Agency Agreement

     NOW THEREFORE, in consideration of the foregoing and the mutual covenants herein contained and other good and valuable consideration, the existence and sufficiency of which is expressly recognized by all of the parties hereto, the parties agree as follows:

ARTICLE 1 — DEFINITIONS

      Section 1.01. Defined Terms . The terms defined in the recitals shall have the meanings assigned to those terms in such recitals, and the following terms shall have the meanings assigned as follows:

     “ Affiliate ” means, as to any Person, any other Person directly or indirectly controlling, controlled by, or under direct or indirect common control with, such Person. A Person shall be deemed to be controlled by any other Person if such other Person possesses, directly or indirectly, power to direct or cause the direction of the management and policies of such Person whether by contract or otherwise.

     “ Agreement ” means this Agreement, as it may be supplemented, modified or amended from time to time as permitted herein.

     “ Bankruptcy Code ” means the United States Bankruptcy Code (11 U.S.C. §101 et seq.), as amended from time to time.

     “ Borrower” and Borrowers ” have the meanings given those terms in the introductory paragraph.

     “ Business Day ” means any day other than a Saturday, Sunday, or other day on which commercial banks are authorized to close under the laws of New York, or are in fact closed.

     “ Cash Management Obligations ” means, with respect to the Obligor, any obligations of the Obligor owed to the First Lien Agent or any First Lien Lender (or any of their respective Affiliates) in respect of treasury management arrangements, depositary or other cash management services.

     “ Collateral ” means the Obligor’s properties and rights described in the Security Documents as security for any of the Obligations, and shall include any amounts on deposit in any deposit account or securities account which have been pledged to secure all or any portion of the Obligations.

     “ Collateral Agent ” has the meaning given that term in the introductory paragraph.

     “ Comparable Second Lien Security Document ” means, in relation to any Collateral subject to any First Lien Security Document, that Second Lien Security Document that creates a security interest in the same Collateral, granted by the Obligor.

     “ DIP Financing ” has the meaning given that term in Section 5.02.

     “ Effective Date ” has the meaning given that term in the introductory paragraph.

     “ Enforcement Action ” means, with respect to the Collateral, the exercise of any rights and remedies with respect to any Collateral securing the Obligations or the commencement or prosecution of enforcement of any of the rights and remedies under, as applicable, the First Lien Documents or the Second Lien Documents, or applicable law, including without limitation the exercise of any rights of set-off or recoupment, and the exercise of any rights or remedies of a secured creditor under the UCC of an applicable jurisdiction or under the Bankruptcy Code.

Intercreditor and Collateral
Agency Agreement

     “ First Lien Agent ” has the meaning given that term in the introductory paragraph and includes any successor agent under any First Lien Agreement if the First Lien Credit Agreement is replaced, refunded or refinanced.

      “First Lien Agreement ” means (i) the First Lien Credit Agreement and (ii) any other credit agreement, loan agreement, note agreement, promissory note, indenture or other agreement or instrument evidencing or governing the terms of any indebtedness or other financial accommodation that has been incurred to extend, replace, refinance or refund in whole or in part the indebtedness and other obligations outstanding under the First Lien Credit Agreement or any other agreement or instrument referred to in this clause (ii). Any reference to the First Lien Agreement hereunder shall be deemed a reference to any First Lien Agreement then extant.

     “ First Lien Collateral ” means all assets, whether now owned or hereafter acquired by the Obligor, in which a Lien is granted or purported to be granted by the Obligor in favor of First Lien Secured Parties or in favor of Collateral Agent for the benefit of First Lien Secured Parties, as security for any First Lien Obligation.

     “ First Lien Credit Agreement ” has the meaning given that term in Recital A.

     “ First Lien Documents ” means the First Lien Agreement and each First Lien Security Document.

     “ First Lien Lenders ” has the meaning given that term in Recital A and includes any successor lenders under the First Lien Credit Agreement and any successor lenders under any First Lien Agreement if the First Lien Credit Agreement is replaced, refunded or refinanced.

     “ First Lien Obligation Triggering Event ” means (i) the occurrence and continuance of an Event of Default under the First Lien Agreement, or (ii) Collateral Agent shall have received from the First Lien Agent written notice (y) that an “Event of Default” under the First Lien Agreement has occurred and is continuing and (z) that the unpaid principal amount of the notes under the First Lien Agreement and all interest accrued and unpaid thereon have been declared to be then due and payable.

     “ First Lien Obligations ” means (i) all principal of and interest (including without limitation any Post-Petition Interest) and premium (if any) on all loans made pursuant to the First Lien Agreement, (ii) all reimbursement obligations (if any) and interest thereon (including without limitation any Post-Petition Interest) with respect to any letter of credit or similar instruments issued pursuant to the First Lien Agreement, (iii) all Hedging Obligations of the Obligor owed to a First Lien Secured Party, (iv) all Cash Management Obligations of the Obligor, and (v) all fees, expenses and other amounts payable from time to time pursuant to the First Lien Documents, in each of the foregoing cases whether or not allowed or allowable against the Obligor or its estate in an Insolvency Proceeding. To the extent any payment with respect to any First Lien Obligation (whether by or on behalf of the Obligor, as proceeds of security, enforcement of any right of setoff or otherwise) is declared to be a fraudulent conveyance or a preference in any respect, set aside or required to be paid to a debtor in possession, any Second Lien Secured Party, receiver or similar Person, then the obligation or part thereof originally intended to be satisfied shall, for the purposes of this Agreement and the rights and obligations of the First Lien Secured Parties and the Second Lien Secured Parties, be deemed to be reinstated and outstanding as if such payment had not occurred.

     “ First Lien Obligations Payment Date ” means the first date on which (i) the First Lien Obligations (other than those that constitute Unasserted Contingent Obligations) have been indefeasibly paid in cash in full (or cash collateralized or defeased in accordance with the terms of the First Lien

Intercreditor and Collateral
Agency Agreement

Documents), (ii) all commitments, if any, to extend credit under the First Lien Documents have been terminated, and (iii) there are no outstanding letters of credit or similar instruments issued under the First Lien Documents (other than such as have been cash collateralized or defeased in accordance with the terms of the First Lien Security Documents).

     “ First Lien Secured Parties ” means the First Lien Agent, the First Lien Lenders (or their Affiliates) and any other holders of First Lien Obligations, including replacement First Lien Lenders, and Collateral Agent, acting in its capacity as collateral agent for the benefit of First Lien Secured Parties under any Security Document.

     “ First Lien Security Documents ” means (i) each Security Document executed by Obligor granting a first priority Lien in favor of First Lien Agent for the benefit of First Lien Secured Parties, or in favor of Collateral Agent, for the benefit of First Lien Secured Parties, to secure First Lien Obligations and (ii) and any other documents executed by Obligor that are designated under the First Lien Agreement as “Collateral Documents” for purposes of this Agreement by which Obligor grants a Lien in favor of First Lien Agent for the benefit of First Lien Secured Parties, or in favor of Collateral Agent, for the benefit of First Lien Secured Parties, to secure First Lien Obligations. For the avoidance of doubt, First Lien Security Documents may also secure Second Lien Obligations.

     “ First Liens ” means (i) the first and prior liens and security interests granted in the Collateral by Obligor in favor of the First Lien Agent on behalf of the First Lien Secured Parties, as security for the payment and performance of the First Lien Obligations and (ii) the first and prior liens and security interests granted in the Collateral by Obligor in favor of the Collateral Agent on behalf of the First Lien Secured Parties, as security for the payment and performance of the First Lien Obligations.

     “ Hedging Obligations ” means, with respect to the Obligor, any obligations of the Obligor owed to any First Lien Lender (or any of its Affiliates) in respect of any Lender Hedging Agreement, including all unpaid amounts, settlement amounts, indemnities, costs, expenses (including reasonable attorneys’ fees), interest on past due amounts and other liabilities and obligations then due and unpaid by the Obligor under such Lender Hedging Agreement.

     “ Indemnitee ” has the meaning given that term in Section 9.09.

     “ Indemnified Liabilities ” has the meaning given that term in Section 9.09.

     “ Insolvency Proceeding ” means any proceeding in respect of bankruptcy, insolvency, winding up, receivership, dissolution or assignment for the benefit of creditors, in each of the foregoing events whether under the Bankruptcy Code or any similar federal, state or foreign bankruptcy, insolvency, reorganization, receivership or similar law.

     “ ISDA ” means the International Swaps and Derivatives Association, Inc.

     “ Lender Hedging Agreement ” means a Swap Contract between Obligor and a First Lien Lender or an Affiliate of a First Lien Lender.

     “ Lien ” means, with respect to any asset, (a) any mortgage, deed of trust, deed to secure debt, lien, pledge, hypothecation, assignment, encumbrance, charge or security interest in, on or of such asset, (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset, and (c) in the case of securities, any purchase option, call or similar right of a third party with respect to such securities.

Intercreditor and Collateral
Agency Agreement

      “MidContinent ” has the meaning given that term in Recital B.

     “ Obligations ” means the First Lien Obligations and the Second Lien Obligations.

     “ Obligor ” has the meaning given that term in the introductory paragraph.

     “ Person ” means, any person, individual, sole proprietorship, partnership, joint venture, corporation, limited liability company, unincorporated organization, association, institution, entity, party, including any government and any political subdivision, agency or instrumentality thereof.

     “ PESC ” has the meaning given that term in the introductory paragraph.

     “ Post-Petition Interest ” means any interest or entitlement to fees or expenses that accrues after the commencement of any Insolvency Proceeding, whether or not allowed or allowable in any such Insolvency Proceeding.

     “ Principal Agreements ” means collectively the Principal First Lien Agreements and the Principal Second Lien Agreements.

     “ Principal First Lien Agreements ” means the First Lien Agreement.

     “ Principal Second Lien Agreements ” means the Second Lien Credit Agreement.

     “ Recovery ” has the meaning given that term in Section 5.05.

     “ Required First Lien Lenders ” means “Required Lenders” as defined in the First Lien Credit Agreement and includes any comparable defined term under any First Lien Agreement if the First Lien Credit Agreement is replaced, refunded or refinanced.

     “ Required First Lien Secured Parties ” has the meaning given that term in Section 4.02(a).

     “ Second Lien Agent ” has the meaning given that term in the introductory paragraph and includes any successor agent under any Second Lien Agreement if the Second Lien Credit Agreement is replaced, refunded or refinanced.

     “ Second Lien Agreement ” means (i) the Second Lien Credit Agreement and (ii) any other credit agreement, loan agreement, note agreement, promissory note, indenture, or other agreement or instrument evidencing or governing the terms of any indebtedness or other financial accommodation that has been incurred to extend, replace, refinance or refund in whole or in part the indebtedness and other obligations outstanding under the Second Lien Credit Agreement or other agreement or instrument referred to in this clause (ii). Any reference to the Second Lien Agreement hereunder shall be deemed a reference to any Second Lien Agreement then extant.

     “ Second Lien Collateral ” means all assets, whether now owned or hereafter acquired by the Obligor, in which a Lien is granted or purported to be granted by Obligor in favor of Second Lien Secured Parties, or in favor Collateral Agent for the benefit of Second Lien Secured Parties, as security for any Second Lien Obligation.

     “ Second Lien Credit Agreement ” has the meaning given that term in Recital B.

     “ Second Lien Documents ” means each Second Lien Agreement and each Second Lien Security Document

Intercreditor and Collateral
Agency Agreement

     “ Second Lien Lenders ” has the meaning given that term in Recital B and includes any successor lenders under the Second Lien Credit Agreement and any successor lenders under any Second Lien Agreement if the Second Lien Credit Agreement is replaced, refunded or refinanced.

     “ Second Lien Obligation Triggering Event ” means (i) the occurrence and continuance of an Event of Default under the Second Lien Agreement or (ii) Collateral Agent shall have received from the Second Lien Agent written notice (a) that an “Event of Default” under the Second Lien Agreement has occurred and is continuing and (b) that the unpaid principal amount of the notes under the Second Lien Agreement and all interest accrued and unpaid thereon have been declared to be then due and payable.

     “ Second Lien Obligations ” means (i) all principal of and interest (including without limitation any Post-Petition Interest) and premium (if any) on all indebtedness under the Second Lien Agreement, (ii) unpaid amounts, settlement amounts, indemnities, costs, expenses (including reasonable attorneys’ fees), interest due amounts and other similar liabilities and obligations of PESC and/or MidContinent owed to a Second Lien Lender (or its Affiliates, but not any non-Lender or any non-Lender Affiliate) in connection with a Swap Contract; and (iii) all fees, expenses and other amounts payable from time to time pursuant to the Second Lien Documents, in each case whether or not allowed or allowable against PESC and/or MidContinent or their estates in an Insolvency Proceeding. To the extent any payment with respect to any Second Lien Obligation (whether by or on behalf of PESC and/or MidContinent, as proceeds of security, enforcement of any right of setoff or otherwise) is declared to be a fraudulent conveyance or a preference in any respect, set aside or required to be paid to a debtor in possession, then the obligation or part thereof originally intended to be satisfied shall, for the purposes of this Agreement and the rights and obligations of the First Lien Secured Parties and the Second Lien Secured Parties, be deemed to be reinstated and outstanding as if such payment had not occurred.

     “ Second Lien Secured Parties ” means the Second Lien Agent, the Second Lien Lenders (or their Affiliates), and any other holders of Second Lien Obligations, including replacement Second Lien Lenders, and Collateral Agent, acting in its capacity as collateral agent for the benefit of Second Lien Secured Parties under any Security Document.

     “ Second Lien Security Documents ” means (i) each Security Document executed by Obligor granting a second priority Lien in favor of Second Lien Agent for the benefit of Second Lien Secured Parties, or in favor of Collateral Agent, for the benefit of Second Lien Secured Parties, to secure Second Lien Obligations and (ii) any other documents executed by Obligor that are designated under the Second Lien Agreement as “Collateral Documents” for purposes of this Agreement by which Obligor grants a Lien in favor of Second Lien Agent for the benefit of Second Lien Secured Parties, or in favor of Collateral Agent, for the benefit of Second Lien Secured Parties, to secure Second Lien Obligations. For the avoidance of doubt, Second Lien Security Documents may also secure First Lien Obligations.

     “ Second Liens ” means (i) the second and junior liens and security interests granted in the Collateral by Obligor in favor of the Second Lien Agent on behalf of the Second Lien Secured Parties, as security for the payment and performance of the Second Lien Obligations and (ii) the second and junior liens and security interests granted in the Collateral by Obligor in favor of the Collateral Agent on behalf of the Second Lien Secured Parties, as security for the payment and performance of the Second Lien Obligations.

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

     “ Security Documents ” means the guaranties, deeds of trust, mortgages, security agreements, pledge agreements, and related financing statements listed on Annex 1.

Intercreditor and Collateral
Agency Agreement

     “ Standstill Period ” has the meaning given that term in Section 3.02(a)(i).

     “ Swap Contract ” means (a) any and all interest rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the ISDA, any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “ Master Agreement ”), including any such obligations or liabilities under any Master Agreement.

     “ Transaction Documents ” means this Agreement, the Principal Agreements and the Security Documents.

     “ Triggering Event ” shall mean either a First Lien Obligation Triggering Event or a Second Lien Obligation Triggering Event.

     “ Unasserted Contingent Obligations ” shall mean, at any time, First Lien Obligations or Second Lien Obligations for taxes, costs, indemnifications, reimbursements, damages and other liabilities (excluding (i) the principal of, and interest and premium (if any) on, and fees and expenses relating to, any First Lien Obligation or Second Lien Obligation, as the case may be, and (ii) contingent reimbursement obligations in respect of amounts that may be drawn under outstanding letters of credit) in respect of which no assertion of liability (whether oral or written) and no claim or demand for payment (whether oral or written) has been made (and, in the case of First Lien Obligations for indemnification, no notice for indemnification has been issued by the indemnitee) at such time.

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

      Section 1.02. Headings . Article and section headings of this Agreement are for convenience of reference only, and shall not govern the interpretation of any of the provisions of this Agreement.

      Section 1.03. Terms Generally . The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The word “will” shall be construed to have the same meaning and effect as the word “shall”. Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented, renewed, replaced, increased, restated or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person’s successors and assigns; provided such successors and assigns are permitted by the Principal Agreement to which such Person is a party and such Person complies with Sections 9.05 and 9.13 hereof, (c) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, and (d) all references herein to Recitals, Articles, Sections, Exhibits and

Intercreditor and Collateral
Agency Agreement

Annexes shall be construed to refer to Recitals, Articles and Sections of, and Exhibits and Annexes to, this Agreement unless otherwise indicated.

ARTICLE 2 – LIEN PRIORITIES .

      Section 2.01. Subordination of Second Liens .

     (a) Any and all Liens granted by Obligor now existing or hereafter created or arising in favor of any Second Lien Secured Party, or in favor of Collateral Agent for the benefit of Second Lien Secured Parties, securing the Second Lien Obligations, regardless of how acquired, whether by grant, statute, operation of law, subrogation or otherwise, are expressly junior in priority, operation and effect to any and all Liens granted by Obligor now existing or hereafter created or arising in favor of the First Lien Secured Parties, or in favor of Collateral Agent for the benefit of First Lien Secured Parties, securing the First Lien Obligations, notwithstanding (i) anything to the contrary contained in any agreement or filing to which any Second Lien Secured Party may now or hereafter be a party, and regardless of the time, order or method of grant, attachment, recording or perfection of any financing statements or other Liens or any defect or deficiency or alleged defect or deficiency in any of the foregoing, (ii) any provision of the UCC or any applicable law or any First Lien Document or Second Lien Document or any other circumstance whatsoever and (iii) the fact that any such Liens in favor of any First Lien Secured Party or in favor of the Collateral Agent for the benefit of First Lien Secured Parties securing any of the First Lien Obligations are (x) subordinated to any Lien granted by Obligor securing any obligation of the Obligor other than the Second Lien Obligations or (y) otherwise subordinated, voided, avoided, invalidated or lapsed.

     (b) No First Lien Secured Party or Second Lien Secured Party shall object to or contest, or support any other Person in contesting or objecting to, in any proceeding (including without limitation, any Insolvency Proceeding), the validity, extent, perfection, priority or enforceability of any security interest in the Collateral granted to the other or to the Collateral Agent. Notwithstanding any failure by any First Lien Secured Party or Second Lien Secured Party or by Collateral Agent on their behalf to perfect its security interests in the Collateral or any avoidance, invalidation or subordination by any third party or court of competent jurisdiction of the security interests in the Collateral granted to the First Lien Secured Parties or the Second Lien Secured Parties, or to the Collateral Agent for their benefit, the priority and rights as between the First Lien Secured Parties and the Second Lien Secured Parties with respect to the Collateral and proceeds thereof shall be as set forth herein.

      Section 2.02. Nature of First Lien Obligations .

The Second Lien Agent on behalf of itself and the other Second Lien Secured Parties acknowledges that, subject to Section 6.02, the terms of the First Lien Obligations may be modified, extended or amended from time to time, and that the aggregate amount of the First Lien Obligations may be increased, replaced or refinanced, in each event, without notice to or consent by the Second Lien Secured Parties and without affecting the provisions hereof. The Lien priorities provided in Section 2.01 shall not be altered or otherwise affected by any such amendment, modification, supplement, extension, repayment, reborrowing, increase, replacement, renewal, restatement or refinancing of either the First Lien Obligations or the Second Lien Obligations, or any part thereof.

      Section 2.03 Status of Liens: Collateral .

     (a) The First Lien Agent, for itself and on behalf of the First Lien Lenders, and the Second Lien Agent, for itself and on behalf of the Second Lien Lenders, agrees that, subject to Section 4.03 and notwithstanding anything to the contrary contained in any First Lien Document or Second Lien

Intercreditor and Collateral
Agency Agreement

Document, (i) all First Lien Secured Parties shall rank pari passu in priority with respect to any First Lien on any Collateral securing the First Lien Obligations, and (ii) all First Liens on any Collateral securing any First Lien Obligations shall rank pari passu with one another.

     (b) The First Lien Agent, for itself and on behalf of the First Lien Lenders, agrees (i) that if any such Person takes any additional Collateral in respect of any First Lien Obligations, such Person shall take any and all action necessary to create and perfect First Liens on any such Collateral in favor of the other First Lien Lenders for the equal and ratable benefit of all First Lien Lenders (subject to Section 4.03), including, without limitation, executing and delivering mortgages, security agreements, financing statements, amendments to financing statements, and any other agreements, documents, certificates or instruments necessary to accomplish the foregoing and (ii) to take any and all action necessary to create and perfect Second Liens on any such Collateral in favor of the Second Lien Lenders for the equal and ratable benefit of all Second Lien Lenders (subject to Section 4.03) .

     (c) The First Lien Agent, for itself and on behalf of the First Lien Lenders, and the Second Lien Agent, for itself and on behalf of the Second Lien Lenders, agrees to take any and all action necessary to cause Collateral Agent to be designated as the sole secured party for the benefit of the First Lien Agent, First Lien Lenders, Second Lien Agent and Second Lien Lenders, in respect of any Lien on any Collateral securing the First Lien Obligations or the Second Lien Obligations, including, without limitation, executing and delivering mortgages, security agreements, financing statements, amendments to financing statements, and any other agreements, documents, certificates or instruments evidencing or required or permitted to be filed to create or perfect a Lien on Collateral.

     (d) The First Lien Agent, for itself and on behalf of the First Lien Lenders, the Second Lien Agent, for itself and on behalf of the Second Lien Lenders and the Obligor will from time to time sign, execute, deliver and file, alone or with Collateral Agent or any other Secured Party, and hereby authorizes Collateral Agent to file, any financing statements or security agreements pertaining to the Collateral, or any part thereof; and take all further action that may be necessary or desirable, or that Collateral Agent may reasonably request, to confirm, perfect, preserve and protect the security interests intended to be granted under the Security Documents, and in addition, each of the Secured Parties and the Obligor hereby authorizes Collateral Agent to execute and deliver on behalf of such Person and to file such other financing statements or security agreements without the signature of such Person either in Collateral Agent’s name or in the name of such Person and as agent and attorney-in-fact for such Person. Each Secured Party and the Obligor shall do all such additional and further acts or things, give such assurances and execute such agreements, documents, certificates or instruments as Collateral Agent requires to vest more completely in and assure to Collateral Agent and Secured Parties their rights under this Agreement (including this Section 2.03), including, without limiting the generality of the foregoing, marking conspicuously each note or other instrument evidencing the First Lien Obligations and Second Lien Obligations with the legend described in Section 2.05(b) and, at the request of Collateral Agent, each of its records pertaining to the Collateral with such legend.

      Section 2.04. Agreements Regarding Actions to Perfect Liens .

     (a) The Second Lien Agent on behalf of itself and the other Second Lien Secured Parties agrees that UCC-1 financing statements, mortgages, patent, trademark or copyright filings or other filings or recordings filed or recorded by or on behalf of the Second Lien Agent shall be in form satisfactory to the First Lien Agent.

     (b) The Collateral Agent hereby acknowledges that, to the extent that it holds, or a third party holds on its behalf, physical possession of or “control” (as defined in the UCC) over Collateral pursuant to the First Lien Security Documents, such possession or control is also for the benefit of the Second Lien

Intercreditor and Collateral
Agency Agreement

Agent and the other Second Lien Secured Parties for purposes of perfecting their security interest in such Collateral. Nothing in the preceding sentence shall be construed to impose any duty on the Collateral Agent (or any third party acting on its behalf) with respect to such Collateral or provide the Second Lien Agent or any other Second Lien Secured Party with any rights with respect to such Collateral beyond those specified in this Agreement and the Second Lien Security Documents; provided that subsequent to the occurrence of the First Lien Obligations Payment Date, the Collateral Agent shall promptly deliver written notice of the occurrence of same to Second Lien Agent and shall (x) deliver to the Second Lien Agent, at the Borrowers’ sole cost and expense, the Collateral in its possession or control together with any necessary endorsements to the extent required by the Second Lien Documents, and shall deliver to Borrowers written notice of such action, or (y) direct and deliver such Collateral as a court of competent jurisdiction otherwise directs, and provided further that the provisions of this Agreement are intended solely to govern the respective Lien priorities as between the First Lien Secured Parties and the Second Lien Secured Parties, and shall not impose on the Collateral Agent or the First Lien Secured Parties any obligations in respect of the disposition of any Collateral (or any proceeds thereof) that would conflict with prior perfected Liens or any claims thereon in favor of any other Person that is not a Secured Party.

      Section 2.05. Legends .

     (a) The Collateral Agent, First Lien Agent (on behalf of itself and the other First Lien Secured Parties) and Second Lien Agent (on behalf of itself and the other Second Lien Secured Parties) agree that all mortgages, deeds of trust, deeds and similar instruments not concurrently granting a Lien to the Collateral Agent for the benefit of the First Lien Secured Parties now or hereafter filed against real property in favor of Second Lien Agent or Collateral Agent for the benefit solely of the Second Lien Secured Parties, shall be in form satisfactory to the First Lien Agent and shall contain the following notation: “ALL LIENS GRANTED BY THIS INSTRUMENT SHALL, TO THE EXTENT SET FORTH IN THE INTERCREDITOR AND COLLATERAL AGENCY AGREEMENT DATED SEPTEMBER 21, 2010 BY AND AMONG POSTROCK ENERGY SERVICES CORPORATION, POSTROCK KPC PIPELINE, LLC, ROYAL BANK OF CANADA, AS FIRST LIEN AGENT, ROYAL BANK OF CANADA, AS SECOND LIEN AGENT, ROYAL BANK OF CANADA, AS COLLATERAL AGENT, AND PARTIES THERETO, BE SUBORDINATE AND JUNIOR TO ALL LIENS GRANTED BY GRANTOR TO SECURE THE FIRST LIEN OBLIGATIONS REGARDLESS OF THE RELATIVE PRIORITY OF SUCH LIENS, SUCH INTERCREDITOR AND COLLATERAL AGENCY AGREEMENT BEING INCORPORATED HEREIN AND BY THIS REFERENCE BEING MADE A PART HEREOF.”

     (b) Upon written request from the Collateral Agent, each Secured Party shall mark, or cause to be marked, at all times on each note or other instrument evidencing the Obligations to which it is a holder a legend, in form and substance satisfactory to Collateral Agent, indicating that with respect to Obligations of the Obligor, the rights, remedies and obligations of the Obligor and the holders of such note or other instrument shall be limited by and subject to the terms of this Agreement.

      Section 2.06 No New Second Liens . So long as the First Lien Obligations Payment Date has not occurred, the parties hereto agree that no Second Lien Secured Party shall acquire or hold any Lien on any assets of the Obligor securing any Second Lien Obligation which assets are not also subject to a First Lien in favor of the First Lien Secured Parties under the First Lien Documents or under Security Documents. If any Second Lien Secured Party shall (nonetheless and in breach hereof) acquire or hold any Lien on any assets of the Obligor securing any Second Lien Obligation which assets are not also subject to a First Lien in favor of the First Lien Secured Parties under the First Lien Documents, then the Second Lien Agent (or the relevant Second Lien Secured Party) shall, and shall be deemed to have, without the need for any further consent of any other Second Lien Secured Party and notwithstanding anything to the contrary in any other Second Lien Document be deemed to hold and have held such Lien

Intercreditor and Collateral
Agency Agreement

for the benefit of the First Lien Agent as security for the First Lien Obligations and shall assign such Lien to the Collateral Agent or the First Lien Agent (in which case the Second Lien Agent may retain a junior second priority lien on such assets subject to the terms hereof).

      Section 2.07. Similar Liens and Agreements . The parties hereto agree that it is their intention that the First Lien Collateral and the Second Lien Collateral be identical. To the extent that, notwithstanding this Section 2.07, the First Lien Collateral and Second Lien Collateral are not identical, the Second Lien Agent, on behalf of Second Lien Secured Parties, agrees that any amounts received by or distributed to any of them pursuant to or as a result of Liens on Second Lien Collateral that is not First Lien Collateral, shall be subject to Section 4.03. In furtherance of the foregoing, the parties hereto agree, subject to the other provisions of this Agreement:

     (a) upon reasonable request by the First Lien Agent or the Second Lien Agent, to cooperate in good faith (and to direct their counsel to cooperate in good faith) from time to time in order to determine the specific items included in the First Lien Collateral and the Second Lien Collateral and the steps taken to perfect their respective Liens thereon and the identity of the respective parties obligated under the First Lien Documents and the Second Lien Documents;

     (b) that the documents and agreements creating or evidencing the First Lien Collateral and the Second Lien Collateral and guarantees for the First Lien Obligations and the Second Lien Obligations shall be Security Documents or otherwise in all material respects the same forms of documents other than with respect to the First Lien and Second Lien nature of the obligations and Collateral thereunder; and

     (c) that in the event either First Lien Agent shall obtain or record any First Lien Documents in favor of First Lien Agent granting Liens on Collateral to secure First Lien Obligations, or Second Lien Agent shall obtain or record any Second Lien Documents in favor of Second Lien Agent granting Liens on Collateral to secure Second Lien Obligations, and such First Lien Documents or Second Lien Documents are not Security Documents, then First Lien Agent or Second Lien Agent, as the case may be, shall notify the other of such documentation and provide a copy thereof.

ARTICLE 3 ENFORCEMENT RIGHTS

      Section 3.01. Separate Debts . The amounts payable by the Obligor to each Secured Party at any time under any of the Principal Agreements to which such Secured Party is a party shall be separate and independent debts, and each Secured Party shall be entitled to enforce any right arising out of the applicable Principal Agreement to which it is a party, subject to the terms thereof and of this Agreement. First Lien Agent, for itself and on behalf of the First Lien Lenders, and Second Lien Agent, for itself and on behalf of the Second Lien Lenders each hereby agrees that no Secured Party other than Collateral Agent (in its capacity as such) shall have any right individually to realize upon any Liens granted under the Security Documents, it being understood and agreed that such remedies may be exercised only by Collateral Agent for the benefit of Secured Parties.

      Section 3.02. Limits of Enforcement of Second Lien . Until the First Lien Obligations Payment Date has occurred, whether or not a Insolvency Proceeding has been commenced by or against the Obligor:

     (a) The Second Lien Agent and the Second Lien Secured Parties (and Collateral Agent, on behalf of Second Lien Agent or Second Lien Secured Parties, under any Security Document):

     (i) will not exercise or seek to exercise any rights or remedies (including setoff) with respect to the Collateral (including, without limitation, the exercise of any right under any

Intercreditor and Collateral
Agency Agreement

lockbox agreement, account control agreement, landlord waiver or bailee’s letter or similar agreement or arrangement to which the Second Lien Agent or any Second Lien Secured Party is a party), or institute any action or proceeding with respect to such rights or remedies (including any action of foreclosure); provided , however , that the Second Lien Agent may exercise (and direct Collateral Agent to exercise, pursuant to any Security Document) any or all such rights and remedies of Second Lien Secured Parties under any Second Lien Security Document after the passage of a period of 179 days from the date of delivery of a notice in writing to the First Lien Agent that an Event of Default (as defined in the Second Lien Agreement) has occurred under the Second Lien Documents and the Second Lien Obligations have been accelerated (with respect to each individual Event of Default, each a “ Standstill Period ”) which notice may only be delivered following the occurrence of and during the continuation of an Event of Default (as defined in the Second Lien Agreement) under the Second Lien Documents and the Second Lien Obligations have been accelerated; provided , further , however, notwithstanding anything herein to the contrary, in no event shall the Second Lien Agent or any Second Lien Secured Party exercise or continue to exercise any rights or remedies with respect to the Collateral if, notwithstanding the expiration of any outstanding Standstill Period, the First Lien Agent or First Lien Lenders (or the Collateral Agent on their behalf) shall have commenced and are diligently pursuing the exercise of any of their rights or remedies with respect the Collateral (prompt notice of such exercise to be given to the Second Lien Agent),

     (ii) will not contest, protest or object to any foreclosure proceeding or action brought by the Collateral Agent, the First Lien Agent or any First Lien Secured Party or any other exercise by the Collateral Agent, the First Lien Agent or any First Lien Secured Party, of any rights and remedies relating to the Collateral under the First Lien Documents or otherwise, and

     (iii) subject to its rights under clause (a)(i) above, will not object to the forbearance by the Collateral Agent, the First Lien Agent or any First Lien Secured Party from bringing or pursuing any foreclosure proceeding or action or any other exercise of any rights or remedies relating to the Collateral.

      Section 3.03. Election to Pursue Remedies . Except as provided in Section 3.02(a)(i) hereof following the expiration of a Standstill Period, the First Lien Secured Parties shall have the exclusive right (and under any Security Document shall have the exclusive right to instruct the Collateral Agent) to take and continue any Enforcement Action with respect to the Collateral, without any consultation with or consent of any Second Lien Secured Party, but subject to the proviso set forth in Section 5.01. Upon the occurrence and during the continuance of a First Lien Obligation Triggering Event, subject to the provisions of this Agreement, the First Lien Agent and the other First Lien Secured Parties may (and under any Security Document may instruct the Collateral Agent on their behalf to) take and continue any Enforcement Action in such order and manner as they may determine in their sole discretion.

      Section 3.04. Duty of Collateral Agent .

     (a) Collateral Agent shall not be obligated to follow any instructions of Second Lien Secured Parties if such instructions conflict with the provisions of this Agreement, any Security Document or any applicable law or Collateral Agent determines, in its sole and absolute discretion, that such instructions are ambiguous, inconsistent, in conflict with previously received instructions or otherwise insufficient to direct the actions of Collateral Agent provided that Collateral Agent explains the grounds for a refusal based on a deficiency of instructions. On and after the First Lien Obligations Payment Date, and at any time prior thereto following the expiration of any applicable Standstill Period pursuant to Section 3.02(a)(i) above, and subject to the last proviso of Section 3.02(a)(i), the first sentence of this Section

Intercreditor and Collateral
Agency Agreement

3.04(a) and Article 10 hereof, Collateral Agent agrees that it shall follow instructions of Second Lien Secured Parties with respect to the Collateral and Security Documents.

     (b) Collateral Agent shall not be obligated to follow any instructions of Required First Lien Secured Parties if: (i) such instructions conflict with the provisions of this Agreement, any Principal Agreement, any Security Document or any applicable law, (ii) Collateral Agent determines, in its sole and absolute discretion, that such instructions are ambiguous, inconsistent, in conflict with previously received instructions or otherwise insufficient to direct the actions of Collateral Agent; provided that Collateral Agent explains the grounds for a refusal based on a deficiency of instructions, or (iii) Collateral Agent has not been adequately indemnified to its satisfaction. Nothing in this Agreement shall impair the right of Collateral Agent in its discretion to take any action authorized under this Agreement or any Security Document, to the extent that the consent of any party hereto is not required or to the extent such action is not prohibited by the terms hereof or thereof, which it deems proper and consistent with the instructions given by First Lien Secured Parties as provided for herein or otherwise in the best interest of First Lien Secured Parties. In the absence of written instructions from any party hereto for any particular matter, Collateral Agent shall have no duty to take or refrain from taking any action unless such action or inaction is explicitly required by the terms of this Agreement, the Security Documents or applicable law. Collateral Agent shall have no duty with respect to (i) a Triggering Event unless it first receives notice that a Triggering Event has occurred or (ii) the expiration of any Standstill Period unless it first receives notice that such Standstill Period has expired.

     (c) Beyond its duties expressly provided herein or in the Security Documents and its duties to account to Secured Parties and/or the Obligor for monies and other property received by it hereunder or under any Security Document, Collateral Agent shall have no implied duty to Secured Parties or the Obligor as to any property belonging to the Obligor (whether or not the same constitutes Collateral) in its possession or control or in the possession or control of any of its agents or nominees, or any income thereon or as to the preservation of rights against prior parties or any other rights pertaining thereto or available at law or otherwise.

     (d) Nothing in this Section 3.04 shall impair the right of any Secured Party to exercise its rights of netting or set-off, if any.

      Section 3.05 Standstill and Waivers . The Second Lien Agent, on behalf of itself and the other Second Lien Secured Parties, agrees that, until the First Lien Obligations Payment Date has occurred, subject to the proviso set forth in Section 5.01 and except as permitted by Section 3.02(a):

     (a) they will not take or cause to be taken any action, the purpose or effect of which is to make any Lien in respect of any Second Lien Obligation pari passu with or senior to, or to give any Second Lien Secured Party any preference or priority relative to, the Liens with respect to the First Lien Obligations or the First Lien Secured Parties with respect to any of the Collateral;

     (b) they will not oppose, object to, interfere with, hinder or delay, in any manner, whether by judicial proceedings (including without limitation the filing of an Insolvency Proceeding) or otherwise, any foreclosure, sale, lease, exchange, transfer or other disposition of the Collateral by the Collateral Agent, the First Lien Agent or any other First Lien Secured Party or any other Enforcement Action taken by or on behalf of the Collateral Agent, the First Lien Agent or any other First Lien Secured Party;

     (c) they have no right to (x) direct either the Collateral Agent, the First Lien Agent or any other First Lien Secured Party to exercise any right, remedy or power with respect to the Collateral or pursuant to the First Lien Security Documents or (y) consent or object to the exercise by the Collateral Agent, the First Lien Agent or any other First Lien Secured Party of any right, remedy or power with

Intercreditor and Collateral
Agency Agreement

respect to the Collateral or pursuant to the First Lien Security Documents or to the timing or manner in which any such right is exercised or not exercised (or, to the extent they may have any such right described in this clause (c), whether as a junior Lien creditor or otherwise, they hereby irrevocably waive such right), except to the extent such exercise was in violation of this Agreement;

     (d) without waiving any rights to take action as unsecured creditors, they will not institute any suit or other proceeding or assert in any suit, Insolvency Proceeding or other proceeding any claim against either Collateral Agent, First Lien Agent or any other First Lien Secured Party seeking damages from or other relief by way of specific performance, instructions or otherwise, with respect to, and none of the Collateral Agent, First Lien Agent nor any other First Lien Secured Party shall be liable for, any action taken or omitted to be taken by the Collateral Agent, the First Lien Agent or any other First Lien Secured Party with respect to the Collateral or pursuant to the First Lien Documents, so long as such actions or omissions were not taken in violation of this Agreement;

     (e) without waiving any rights to take action as unsecured creditors, they will not make any judicial or nonjudicial claim or demand or commence any judicial or non-judicial proceedings against the Obligor under or with respect to any Second Lien Security Document seeking payment or damages from or other relief by way of specific performance, instructions or otherwise under or with respect to any Second Lien Security Document (other than filing a proof of claim) or exercise any right, remedy or power under or with respect to, or otherwise take any action to enforce, other than filing a proof of claim, any Second Lien Security Document;

     (f) they will not commence judicial or nonjudicial foreclosure proceedings with respect to, seek to have a trustee, receiver, liquidator or similar official appointed for or over, attempt any action to take possession of, exercise any right, remedy or power with respect to, or otherwise take any action to enforce their interest in or realize upon, the Collateral or pursuant to the Second Lien Security Documents; or

     (g) they will not seek, and hereby waive any right, to have the Collateral or any part thereof marshaled upon any foreclosure or other disposition of the Collateral.

      Section 3.06. Judgment Secured Parties . In the event that any Second Lien Secured Party becomes a judgment Lien creditor in respect of Collateral as a result of its enforcement of its rights as an unsecured creditor, such judgment Lien shall be subject to the terms of this Agreement for all purposes (including in relation to the First Liens and the First Lien Obligations) to the same extent as all other Liens, securing the Second Lien Obligations (created pursuant to the Second Lien Security Documents) subject to this Agreement.

      Section 3.07. Cooperation . The Second Lien Agent, on behalf of itself and the other Second Lien Secured Parties, agrees that each of them shall take such actions as the Collateral Agent or the First Lien Agent shall reasonably request in connection with the exercise by the Collateral Agent or the First Lien Secured Parties of their rights set forth herein.

      Section 3.08. No Additional Rights For the Borrowers Hereunder . Except as provided in Section 3.09, if any First Lien Secured Party or Second Lien Secured Party shall enforce its rights or remedies in violation of the terms of this Agreement, the Borrowers shall not be entitled to use such violation as a defense to any action by any First Lien Secured Party or Second Lien Secured Party, nor to assert such violation as a counterclaim or basis for set off or recoupment against any First Lien Secured Party or Second Lien Secured Party.

Intercreditor and Collateral
Agency Agreement

      Section 3.09. Actions Upon Breach .

     (a) If any Second Lien Secured Party, contrary to this Agreement, commences or participates in any action or proceeding against the Borrowers or the Collateral, the Borrowers, with the prior written consent of the First Lien Agent, may interpose as a defense or dilatory plea the making of this Agreement, and any First Lien Secured Party may intervene and interpose such defense or plea in its or their name or in the name of either Borrower or both Borrowers, as applicable.

     (b) Should any Second Lien Secured Party, contrary to this Agreement, in any way take, attempt to or threaten to take any action with respect to the Collateral (including, without limitation, any attempt to realize upon or enforce any remedy with respect to this Agreement), or fail to take any action required by this Agreement, any First Lien Secured Party (in its or their own name or in the name of either Borrower or both Borrowers, as applicable) or the Borrowers, as applicable, may obtain relief against such Second Lien Secured Party by injunction, specific performance and/or other appropriate equitable relief, it being understood and agreed by the Second Lien Agent on behalf of each Second Lien Secured Party that (i) the First Lien Secured Parties’ damages from its actions may at that time be difficult to ascertain and may be irreparable, and (ii) each Second Lien Secured Party waives any defense that the Borrowers and/or the First Lien Secured Parties cannot demonstrate damage and/or be made whole by the awarding of damages.

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

      Section 4.01. Notices under Related Documents .

     (a) Each Secured Party agrees: (i) to deliver to Collateral Agent, at the same time it makes delivery to the Obligor, a copy of any notice of default, notice of intent to accelerate or notice of acceleration with respect to any of the Obligations subject to this Agreement; and (ii) to deliver to Collateral Agent, at the same time it makes delivery to any other Person, a copy of any notice of the commencement of any judicial proceeding and a copy of any other notice with respect to the exercise of remedies with respect to the Obligations subject to this Agreement.

     (b) Collateral Agent shall deliver to each Secured Party (or their designated representative if a group) promptly upon receipt thereof (and in any event within two Business Days), duplicates or copies of any notice received by it under Section 4.01(a) and all notices, requests and other instruments received by Collateral Agent under or pursuant to this Agreement or any Security Document, to the extent that the same shall not have been previously furnished to such Secured Party pursuant hereto or thereto.

      Section 4.02. Voting Procedure .

     (a) When this Agreement requires or permits a vote prior to the First Lien Obligations Payment Date, the Collateral Agent shall poll each First Lien Secured Party in order to determine the vote of First Lien Secured Parties holding more than 66 ² / ₃ % of the total dollar value of First Lien Obligations owing at the time of such poll (“ Required First Lien Secured Parties ”). Such majority vote shall be binding upon all First Lien Secured Parties, whether they voted with the majority or not. The Obligor and First Lien Secured Parties may rely on Collateral Agent with regard to any such vote without any duty of further inquiry.

     (b) After the occurrence of the First Lien Obligations Payment Date, the Collateral Agent shall poll each Second Lien Secured Party in order to determine the vote of Second Lien Secured Parties holding at least 51% of the total dollar value of Second Lien Obligations owing at the time of such poll.

Intercreditor and Collateral
Agency Agreement

Such majority vote shall be binding upon all Second Lien Secured Parties, whether they voted with the majority or not. The Obligor and Second Lien Secured Parties may rely on Collateral Agent with regard to any such vote without any duty of further inquiry.

     (c) For purposes of this Section 4.02, in determining the total dollar value of First Lien Obligations or the total dollar value of Second Lien Obligations with respect to any Lender Hedging Agreement, the methodology specified in Clause “THIRD” of Section 4.03(a) shall be used to calculate the total dollar value of any Lender Hedging Agreement.

      Section 4.03. Application of Proceeds; Turnover Provisions . Upon the occurrence and during the continuance of a Triggering Event and following any Enforcement Action, all proceeds of Collateral (including without limitation any interest earned thereon but net of any taxes, assessments or prior Liens) resulting from the sale, collection or other disposition of Collateral in connection with or resulting from any Enforcement Action, and whether or not pursuant to an Insolvency Proceeding, shall be promptly distributed by the Collateral Agent in the following order of priority:

     (a) first, with respect to the First Lien Obligations, to the First Lien Agent for application to the First Lien Obligations, until the First Lien Obligations Payment Date has occurred, in the following order of priority:

     (1) FIRST: to the payment of enforcement expenses incurred by the Collateral Agent;

     (2) SECOND: to the ratable payment of all fees, expenses and indemnities for which the First Lien Agent or First Lien Lenders have not been paid or reimbursed in accordance with the First Lien Documents (as used in this subsection, a “ ratable payment ” for any First Lien Lender or the First Lien Agent shall be, on any date of determination, that proportion which the portion of the total fees, expenses and indemnities owed to such First Lien Lender or the First Lien Agent bears to the total aggregate fees, expenses and indemnities owed to all First Lien Lenders and the First Lien Agent on such date of determination);

     (3) THIRD: to the ratable payment of accrued and unpaid letter of credit fees, the outstanding amount of unreimbursed drawings under letters of credit, accrued and unpaid interest on, and principal of, the outstanding amount of loans and the outstanding amount of obligations under Lender Hedging Agreements (it being understood that for purposes of this clause (3) the “outstanding amount of obligations under Lender Hedging Agreements” refers to payments owing in connection with an Early Termination Date as defined in the 2002 Master Agreement form promulgated by the ISDA (or equivalent type payment obligation if some other form of Swap Contract is in effect)(as used in this subsection, “ ratable payment ” means for any First Lien Lender (or First Lien Lender Affiliate, in the case of Lender Hedging Agreements), on any date of determination, that proportion which the outstanding amount of accrued and unpaid letter of credit fees, unreimbursed drawings under letters of credit, accrued and unpaid interest on, and principal of, the outstanding amount of loans and the outstanding amount of obligations under Lender Hedging Agreements owed to such First Lien Lender (or First Lien Lender Affiliate, in the case of Lender Hedging Agreements) bears to the outstanding amount of accrued and unpaid letter of credit fees, unreimbursed drawings under letters of credit, accrued and unpaid interest on, and principal of, the outstanding amount of loans and the outstanding amount of obligations under Lender Hedging Agreements owed to all First Lien Lenders)(and First Lien Lender Affiliates, in the case of Lender Hedging Agreements);

     (4) FOURTH: to cash collateralize the letters of credit; and

Intercreditor and Collateral
Agency Agreement

     (5) FIFTH: to the payment of the remaining First Lien Obligations, if any, in the order and manner the Required First Lien Secured Parties deem appropriate; and

     (b) after the First Lien Obligations Payment Date has occurred and the First Lien Obligations have been repaid in full, to the Second Lien Agent for application to the Second Lien Obligations in accordance with the terms of the Second Lien Documents.

      Section 4.04. Payments by Collateral Agent . All payments hereunder by Collateral Agent to First Lien Agent, for the benefit of First Lien Lenders, and Second Lien Agent, for the benefit of Second Lien Lenders, shall be for distribution in the manner set forth in the First Lien Agreement or Second Lien Agreement, respectively. In the event any other payment is due to a group of Secured Parties under a Principal Agreement to which they are a party, Collateral Agent shall make such payment to their representative for distribution by it in accordance with the terms of such Principal Agreement.

      Section 4.05. Notice of Amount of Obligations . Upon receipt of any proceeds of Collateral to be distributed pursuant to Section 4.03, Collateral Agent shall give Secured Parties notice thereof, and each Secured Party (or its representative) shall within five (5) Business Days notify Collateral Agent of the amount of Obligations owing to it or its group. Such notification shall state the amount of its (or their) Obligations and how much is then due and owing. If requested by Collateral Agent, each Secured Party (or its representative) shall demonstrate that the amounts set forth in its notice are actually owing to such Secured Party to the satisfaction of Collateral Agent. Notwithstanding the foregoing, Collateral Agent may conclusively rely on information in such notices without investigation.

      Section 4.06. Pro Rata Treatment; Participations . It is agreed that (a) prior to the occurrence and continuance of a Triggering Event, each Secured Party shall be entitled to receive and retain for its own account, and shall never be required to disgorge to Collateral Agent or any other Secured Party hereunder or acquire direct or participating interests in such Secured Party’s Obligations, scheduled payments or voluntary prepayments, payments for the redemption or purchase of principal, interest, fees and premium, if any, settlement payments and any other payments in respect of the First Lien Documents or Second Lien Documents, all in compliance with the terms thereof (subject to any provision otherwise in the First Lien Agreement or Second Lien Agreement dealing with sharing among First Lien Lenders and Second Lien Lenders, respectively), and (b) after the occurrence and during the continuance of a Triggering Event, all proceeds shall be applied by Collateral Agent and shared first, by the First Lien Secured Parties ratably as set forth in Section 4.03 and after the First Lien Obligations Payment Date, then shared by the Second Lien Secured Parties to be shared ratably by them. In the event that any First Lien Secured Party shall obtain payment after the occurrence and during the continuance of a Triggering Event, whether in whole or in part, from proceeds (other than payments made by Collateral Agent in accordance with Section 4.03 in respect of its portion of the First Lien Obligations, such First Lien Secured Party shall (i) promptly notify Collateral Agent (which may conclusively rely on such notice) and (ii) purchase for cash from such other First Lien Secured Party(ies) holding a First Lien Obligation a participation in such Obligations held by such other First Lien Secured Party(ies) holding a First Lien Obligation in the priority set forth in Section 4.03. Each Obligor expressly consents to the foregoing arrangements and agrees that any Secured Party holding such a participation may exercise any and all rights of banker’s lien, setoff or counterclaim with respect to any and all moneys owing by the Obligor to such Secured Party as fully as if such Secured Party had made a loan directly to the Obligor in the amount of such participation.

      Section 4.07. Release of Collateral .

     (a) Collateral Agent may not release any Collateral under any of the First Lien Security Documents, except (i) Collateral destroyed, lost, worn out, damaged or having only salvage value or no

Intercreditor and Collateral
Agency Agreement

longer used or useful in the business in which it is used, (ii) to the extent that the Obligor has provided replacement Collateral and (iii) releases of Collateral permitted by Section 7.07 of the First Lien Credit Agreement.

     (b) The release of any Collateral from the terms of the Security Documents shall not be deemed to impair the security under the Security Documents in contravention of the provisions thereof if and to the extent the Collateral is released pursuant to Section 4.07 and the Security Documents.

      Section 4.08. Releases of Second Lien .

     (a) Upon any release, sale or disposition of Collateral permitted pursuant to the terms of Section 4.07 that results in the release of the First Lien on any Collateral (including without limitation any sale or other disposition pursuant to any Enforcement Action), the Second Lien on such Collateral (but not on any proceeds of such Collateral not required to be paid to the First Lien Secured Parties) shall be automatically and unconditionally released with no further consent or action of any Person; provided , however , that the Second Lien shall not be released without the consent of the Second Lien Agent in the case of an Enforcement Action, as to any Collateral the net proceeds of the disposition of which will not be applied to repay (and, to the extent applicable, to reduce permanently commitments with respect to) the First Lien Obligations. The First Lien Agent hereby appoints the Collateral Agent and any officer or duly authorized person of the Collateral Agent, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power of attorney in the place and stead of the First Lien Agent and in the name of the First Lien Agent or in the Collateral Agent’s own name, from time to time, in the Collateral Agent’s sole discretion, for the purposes of carrying out the terms of this Section, to take any and all appropriate action and to execute and deliver any and all documents and instruments as may be necessary or desirable to accomplish the purpose of this Section, including, without limitation, any financing statements, endorsements, assignments, releases or other documents or instruments of transfer (which appointment, being coupled with an interest, is irrevocable).

     (b) The Second Lien Agent shall promptly execute and deliver such release documents and instruments and shall take such further actions as the First Lien Agent shall reasonably request to evidence any release of the Second Lien described in Section 4.08(a). The Second Lien Agent hereby appoints the Collateral Agent and the First Lien Agent and any officer or duly authorized person of the Collateral Agent or the First Lien Agent, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power of attorney in the place and stead of the Second Lien Agent and in the name of the Second Lien Agent or in the Collateral Agent’s or the First Lien Agent’s own name, from time to time, in the Collateral Agent’s or the First Lien Agent’s sole discretion, for the purposes of carrying out the terms of this Section, to take any and all appropriate action and to execute and deliver any and all documents and instruments as may be necessary or desirable to accomplish the purpose of this Section, including, without limitation, any financing statements, endorsements, assignments, releases or other documents or instruments of transfer (which appointment, being coupled with an interest, is irrevocable).

Intercreditor and Collateral
Agency Agreement

      Section 4.09. Form and Sufficiency of Release . In the event that (a) the Obligor has sold, exchanged, or otherwise disposed of or proposes to sell, exchange or otherwise dispose of any portion of the Collateral in compliance with the Principal Agreements, and (b) the Obligor requests, pursuant to the Security Documents or the Principal Agreements, Collateral Agent to furnish a written disclaimer, release or quit-claim of any interest in such property under the Security Documents, then Collateral Agent, in its capacity as such under the Security Documents, shall execute, acknowledge and deliver to the Obligor (in proper form) such an instrument promptly after satisfaction of the conditions set forth in Section 4.07 hereof for delivery of any such release.

      Section 4.10. Inspection Rights and Insurance .

     (a) In connection with any Enforcement Action with respect to the First Lien Obligations, the First Lien Security Documents and the other First Lien Documents, any First Lien Secured Party and its representatives and invitees may at