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EXHIBIT 10(ix)
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CREDIT AGREEMENT
AMONG
KCS RESOURCES, INC.,
KCS PIPELINE SYSTEMS, INC.,
KCS MICHIGAN RESOURCES, INC. AND
KCS ENERGY MARKETING, INC.,
CANADIAN IMPERIAL BANK OF COMMERCE,
NEW YORK AGENCY, AS AGENT,
CIBC INC., AS COLLATERAL AGENT,
BANK ONE, TEXAS, NATIONAL ASSOCIATION, AS CO-AGENT,
NATIONSBANK OF TEXAS, N.A. AS CO-AGENT,
AND
THE LENDERS SIGNATORY HERETO
SEPTEMBER _____, 1996
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REVOLVING LINE OF CREDIT OF UP TO $150,000,000
WITH LETTER OF CREDIT SUBFACILITY
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TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS AND INTERPRETATION
1.1 Terms Defined Above......................................... 1
1.2 Additional Defined Terms.................................... 2
1.3 Undefined Financial Accounting Terms........................ 20
1.4 References.................................................. 21
1.5 Articles and Sections....................................... 21
1.6 Number and Gender........................................... 21
1.7 Incorporation of Exhibits................................... 21
1.8. Knowledge................................................... 21
ARTICLE II TERMS OF FACILITY
2.1 Revolving Line of Credit.................................... 21
2.2 Letter of Credit Facility................................... 22
2.3 Limitations on Interest Periods............................. 24
2.4 Limitation on Types of Loans................................ 24
2.5 Use of Loan Proceeds and Letters of Credit.................. 25
2.6 Interest.................................................... 25
2.7 Repayment of Loans and Interest............................. 26
2.8 General Terms............................................... 26
2.9 Time, Place, and Method of Payments......................... 27
2.10 Pro Rata Treatment; Adjustments............................. 27
2.11 Borrowing Base Determinations............................... 28
2.12 Mandatory Prepayments....................................... 29
2.13 Voluntary Prepayments and Conversions of Loans.............. 29
2.14 Commitment Fee.............................................. 29
2.15 Letter of Credit Fee........................................ 30
2.16 Other Fees.................................................. 30
2.17 Loans to Satisfy Obligations of Borrowers................... 30
2.18 Right of Offset............................................. 30
2.19 General Provisions Relating to Interest..................... 30
2.20 Obligations Absolute........................................ 31
2.21 Yield Protection............................................ 32
2.22 Illegality.................................................. 34
2.23 Taxes....................................................... 34
2.24 Replacement Lenders......................................... 35
2.25 Regulatory Change........................................... 36
ARTICLE III CONDITIONS
3.1 Conditions Precedent to Initial Loan and Letter of Credit... 37
3.2 Conditions Precedent to Each Loan........................... 40
3.3 Conditions Precedent to Issuance of Letters of Credit....... 41
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ARTICLE IV REPRESENTATIONS AND WARRANTIES
4.1 Due Authorization........................................... 41
4.2 Corporate Existence......................................... 42
4.3 Valid and Binding Obligations............................... 42
4.4 Existing Indebtedness; No Defenses.......................... 42
4.5 Security Instruments........................................ 42
4.6 Title to Assets............................................. 42
4.7 Scope and Accuracy of Financial Statements.................. 43
4.8 No Material Misstatements................................... 43
4.9 Liabilities, Litigation, and Restrictions................... 43
4.10 Authorizations; Consents.................................... 43
4.11 Compliance with Laws........................................ 44
4.12 Default..................................................... 44
4.13 ERISA....................................................... 44
4.14 Environmental Laws.......................................... 44
4.15 Compliance with Federal Reserve Regulations................. 45
4.16 Investment Company Act Compliance........................... 45
4.17 Public Utility Holding Company Act Compliance............... 45
4.18 Proper Filing of Tax Returns; Payment of Taxes Due.......... 45
4.19 Refunds..................................................... 45
4.20 Gas Contracts............................................... 46
4.21 Intellectual Property....................................... 46
4.22 Labor Matters............................................... 46
4.23 Casualties or Taking of Property............................ 46
4.24 Locations of Borrowers...................................... 46
4.25 Subsidiaries................................................ 46
ARTICLE V AFFIRMATIVE COVENANTS
5.1 Maintenance and Access to Records........................... 47
5.2 Quarterly Financial Statements; Compliance Certificates..... 47
5.3 Annual Financial Statements................................. 47
5.4 Oil and Gas Reserve Reports................................. 47
5.5 Title Opinions; Title Defects............................... 48
5.6 Notices of Certain Events................................... 48
5.7 Additional Information...................................... 49
5.8 Compliance with Laws........................................ 50
5.9 Payment of Assessments and Charges.......................... 50
5.10 Maintenance of Corporate Existence and Good Standing........ 50
5.11 Payment of Notes; Performance of Obligations................ 50
5.12 Further Assurances.......................................... 50
5.13 Fees and Expenses........................................... 51
5.14 Operation of Oil and Gas Properties......................... 51
5.15 Maintenance and Inspection of Properties.................... 51
5.16 Maintenance of Insurance.................................... 52
5.17 Indemnification............................................. 52
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ARTICLE VI NEGATIVE COVENANTS
6.1 Indebtedness................................................ 53
6.2 Contingent Obligations...................................... 54
6.3 Liens....................................................... 54
6.4 Negative Pledge Agreements.................................. 54
6.5 Sales of Assets............................................. 54
6.6 Leasebacks.................................................. 55
6.7 Loans; Advances; Investments................................ 55
6.8 Dividends and Distributions................................. 55
6.9 Environmental Matters....................................... 55
6.10 Issuance of Stock; Changes in Corporate Structure........... 55
6.11 Transactions with Affiliates................................ 56
6.12 Lines of Business........................................... 56
6.13 ERISA Compliance............................................ 56
6.14 Subordinated Debt........................................... 56
6.15 Use of Proceeds............................................. 56
6.16 Subsidiaries................................................ 56
ARTICLE VII EVENTS OF DEFAULT
7.1 Enumeration of Events of Default............................ 56
7.2 Remedies.................................................... 59
ARTICLE VIII THE AGENT
8.1 Appointment................................................. 60
8.2 Delegation of Duties........................................ 60
8.3 Exculpatory Provisions...................................... 60
8.4 Reliance by Agent........................................... 61
8.5 Notice of Default........................................... 61
8.6 Non-Reliance on Agent and Other Lenders..................... 62
8.7 Indemnification............................................. 62
8.8 Restitution................................................. 63
8.9 Agents in Individual Capacity............................... 63
8.10 Successor Agent............................................. 63
8.11 Applicable Parties.......................................... 64
8.12 Release by Borrowers........................................ 64
ARTICLE IX MISCELLANEOUS
9.1 Assignments; Participations................................. 64
9.2 Survival of Representations, Warranties, and Covenants...... 66
9.3 Notices and Other Communications............................ 66
9.4 Parties in Interest......................................... 66
9.5 Rights of Third Parties..................................... 66
9.6 No Waiver; Rights Cumulative................................ 67
9.7 Severability................................................ 67
9.8 Amendments; Waivers......................................... 67
9.9 Confidentiality............................................. 68
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9.10 Controlling Agreement....................................... 68
9.11 Governing Law............................................... 69
9.12 Jurisdiction and Venue...................................... 69
9.13 Appointment of Agent for Service of Process................. 69
9.14 Waiver of Rights to Jury Trial.............................. 69
9.15 Integration................................................. 70
9.16 Counterparts................................................ 70
LIST OF EXHIBITS
Exhibit I - Form of Notes
Exhibit II - Form of Assignment Agreement
Exhibit III - Form of Borrowing Request
Exhibit IV - Facility Amounts
Exhibit V - Form of Guaranty
Exhibit VI - Form of Compliance Certificate
Exhibit VII - Material Properties
Exhibit VIII - Form of Opinion of Counsel
Exhibit IX - Form of Opinion of Local Counsel
Exhibit X - Disclosures
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT is made and entered into effective as of the
day of September, 1996, by and among KCS RESOURCES, INC., a Delaware corporation
("KRI"); KCS PIPELINE SYSTEMS, INC., a Delaware corporation ("KCS Pipeline");
KCS MICHIGAN RESOURCES, INC., a Delaware corporation ("KCS Michigan"); and KCS
ENERGY MARKETING, INC., a New Jersey corporation ("KCS Marketing," and together
with KRI, KCS Pipeline and KCS Michigan, each individually, a "Borrower" and
collectively, the "Borrowers"), each lender that is a signatory hereto or
becomes a party hereto as provided in Sections 9.1 or 2.24 (individually,
together with its successors and such assigns, a "Lender" and, collectively,
together with their respective successors and such assigns, the "Lenders"),
CANADIAN IMPERIAL BANK OF COMMERCE, a Canadian chartered bank, acting through
its New York Agency (in its individual capacity, "CIBC"), as agent for the
Lenders (in such capacity, together with its successors in such capacity
pursuant to the terms hereof, the "Agent"), CIBC INC., a Delaware corporation
(in its individual capacity, "CIBC Inc.", as collateral agent for the Lenders
(in such capacity, together with its successors in such capacity pursuant to the
terms hereof, the "Collateral Agent"), BANK ONE, TEXAS, NATIONAL ASSOCIATION, a
national banking association, as co-agent for the Lenders, and NATIONSBANK OF
TEXAS, N.A., a national banking association, as co-agent for the Lenders.
W I T N E S S E T H:
In consideration of the mutual covenants and agreements herein
contained, the parties hereto hereby agree as follows, amending and restating in
their entirety (a) the Amended and Restated Credit Agreement dated as of March
15, 1994, by and among KRI, KCS Pipeline, Bank One, Texas, National Association
("Bank One") and the lenders signatory thereto, as heretofore amended, restated,
or supplemented (the "Existing Bank One Credit Agreement") and (b) the Amended
and Restated Credit Agreement dated as of November 28, 1995, by and among KCS
Michigan, KCS Marketing, Comerica Bank-Texas ("Comerica") and the lenders
signatory thereto, as heretofore amended, restated, or supplemented (the
"Existing Comerica Credit Agreement").
ARTICLE I
DEFINITIONS AND INTERPRETATION
1.1 Terms Defined Above. As used in this Agreement, the terms
"Agent," "Bank One," "Borrower," "Borrowers," "CIBC," "CIBC Inc.," "Collateral
Agent," "Comerica," "Existing Bank One Credit Agreement," "Existing Comerica
Credit Agreement," "KCS Marketing," "KCS Michigan," "KCS Pipeline," "KRI,"
"Lender," and "Lenders" shall have the meaning assigned to them hereinabove.
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1.2 Additional Defined Terms. As used in this Agreement, each of the
following terms shall have the meaning assigned thereto in this Section, unless
the context otherwise requires:
"Additional Costs" shall mean actual costs which any Lender
reasonably determines have been incurred and are attributable to its
obligation to make or its making or maintaining any LIBO Rate Loan or
issuing or participating in Letters of Credit, or any reduction in any
amount receivable by such Lender in respect of any such obligation or any
LIBO Rate Loan or Letter of Credit, in each case resulting from any
Regulatory Change which (a) changes the basis of taxation of any amounts
payable to such Lender under this Agreement or any Note in respect of any
LIBO Rate Loan or Letter of Credit (other than taxes imposed on or
calculated on the basis of the overall net income, capital or profit of
such Lender or its Applicable Lending Office for any such LIBO Rate Loan
or for issuing or participating in any Letter of Credit), (b) imposes or
modifies any reserve, special deposit, minimum capital, capital ratio, or
similar requirements (other than the Reserve Requirement utilized in the
determination of the Adjusted LIBO Rate for such Loan) relating to any
extensions of credit or other assets of, or any deposits with or other
liabilities of, such Lender (including LIBO Rate Loans and Dollar deposits
in the London interbank market in connection with LIBO Rate Loans), or the
Commitment of such Lender, or (c) imposes any other condition affecting
this Agreement or any Note or any of such extensions of credit,
liabilities, or Commitments.
"Adjusted Base Rate" shall mean, for any day and any Base Rate Loan,
an interest rate per annum equal to the sum of (a) greater of (i) the Base
Rate for such day, (ii) the Adjusted CD Rate for such day plus one-half of
one percent (1/2%), or (iii) the Federal Funds Rate for such day plus one
percent (1%) plus (b) the Applicable Margin for such Base Rate Loan, such
rate to be computed on the basis of a year of 365 or 366 days, as the case
may be, and actual days elapsed (including the first day but excluding the
last day) during the period for which payable, but in no event shall such
rate exceed the Highest Lawful Rate.
"Adjusted CD Rate" shall mean, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) determined by
the Agent to be equal to the sum of (a) the quotient of (i) the CD Rate
for such day divided by (ii) 1 minus the Reserve Requirement plus (b) the
Assessment Rate.
"Adjusted LIBO Rate" shall mean, for any Interest Period for any
LIBO Rate Loan, an interest rate per annum (rounded upwards, if necessary,
to the nearest 1/100 of 1%) determined by the Agent to be equal to the sum
of (a) the quotient of (i) the sum of the LIBO Rate for such Interest
Period for such LIBO Rate Loan divided by (ii) 1 minus the Reserve
Requirement for such Loan for such Interest Period plus (b) the Applicable
Margin for such LIBO Rate Loan, such rate to be computed on the basis of a
year of 360 days and actual days
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elapsed (including the first day but excluding the last day) during the
period for which payable, but in no event shall such rate exceed the
Highest Lawful Rate.
"Adjustment Date" shall mean the second Business Day following
receipt by the Agent of both (a) the Financial Statements required to be
delivered pursuant to Sections 5.2 or 5.3, as the case may be, for the
most recently completed fiscal period and (b) the Compliance Certificate
required to be delivered pursuant to such Sections with respect to such
fiscal period.
"Affiliate" shall mean any Person directly or indirectly controlled
by, controlling, or under common control with, the Guarantor or any of the
Borrowers and includes any Subsidiary of the Guarantor or any of the
Borrowers and any "affiliate" of any of the Guarantor or any of the
Borrowers within the meaning of Reg. ss.240.12b-2 of the Securities
Exchange Act of 1934, as amended, with "control," as used in this
definition, meaning possession, directly or indirectly, of the power to
direct or cause the direction of management, policies or action through
ownership of voting securities, contract, voting trust, or membership in
management or in the group appointing or electing management or otherwise
through formal or informal arrangements or business relationships.
"Agreement" shall mean this Credit Agreement, as amended, restated,
or supplemented from time to time.
"Applicable Lending Office" shall mean, for each Lender and type of
Loan, the lending office of such Lender (or an affiliate of such Lender)
designated for such type of Loan on the signature pages hereof or such
other office of such Lender (or an affiliate of such Lender) as such
Lender may from time to time specify to the Agent and the Borrowers as the
office by which its Loans of such type are to be made and maintained.
"Applicable Margin" shall mean, as to each Base Rate Loan and each
LIBO Rate Loan, an amount equal to the percentage set forth below for such
type of Loan and determined to be the applicable percentage pursuant to
the Debt to EBITDA ratio as reflected in the most recent Financial
Statements of the Guarantor and its Subsidiaries furnished to the Agent
pursuant to Section 5.2 or 5.3 and reported in the Compliance Certificate
delivered therewith, which Applicable Margin shall change as necessary
effective on each Adjustment Date:
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Debt/EBITDA Ratio LIBO Rate Loan Base Rate Loan
Applicable Margin Applicable Margin
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Less than or equal to 1.50 0.625% 0%
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Greater than or equal to 1.51 0.75% 0%
but less than 2.01
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Greater than or equal to 2.01 0.875% 0%
but less than 2.51
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Greater than or equal to 2.51 1.125% 0.125%
but less than 3.01
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Greater than 3.00 1.50% 0.50%
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provided, however, (a) if such Financial Statements and related Compliance
Certificate are not delivered when due, without giving effect to any
applicable cure period, and the Applicable Margin increases from that
previously in effect as a result of the delivery of such Financial
Statements and Compliance Certificate, then the Applicable Margin during
the period from the date upon which such Financial Statements and
Compliance Certificate were required to be delivered, without giving
effect to any applicable cure period, until the date upon which they
actually are delivered shall, except as otherwise provided in clause (c),
be the Applicable Margin as so increased; (b) if such Financial Statements
and Compliance Certificate are delivered after the date such Financial
Statements and Compliance Certificate were required to be delivered and
the Applicable Margin decreases from that previously in effect as a result
of the delivery of such Financial Statements and Compliance Certificate,
then such decrease in the Applicable Margin shall not become applicable
until the date upon which such Financial Statements and Compliance
Certificate actually are delivered; and (c) if such Financial Statements
and Compliance Certificate are not delivered prior to the date upon which
the resultant Default shall become an Event of Default, then, effective
upon such Default becoming an Event of Default, for the period from the
date upon which such Financial Statements and Compliance Certificate were
required to be delivered, after the expiration of the applicable cure
period, until two Business days following the date upon which they
actually are delivered, the Applicable Margin shall be .50%, in the case
of Base Rate Loans and 1.50%, in the case of LIBO Rate Loans.
"Assessment Rate" shall mean, at any time, the rate (rounded
upwards, if necessary, to the nearest 1/100 of 1%) then charged by the
Federal Deposit Insurance Corporation (or any successor) to the Agent for
deposit insurance for Dollar time deposits with the Agent at the Principal
Office as determined by the Agent. The Assessment Rate determined by the
Agent, in the absence of manifest error, shall be conclusive and binding.
"Assignment Agreement" shall mean an Assignment Agreement,
substantially in the form of Exhibit II, with appropriate insertions.
"Available Commitment" shall mean, at any time, an amount equal to
the remainder, if any, of (a) the lesser of the Maximum Facility Amount or
the Borrowing Base in effect at such time minus (b) the sum of the Loan
Balance at such time plus the L/C Exposure at such time.
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"Bank One Assignment" shall mean the Assignment of Notes, Liens,
Security Interests, and Other Rights, in form and substance satisfactory
to the Agent, executed by Bank One, CIBC Inc., and Den norske Bank AS,
assigning to the Lenders the Existing Bank One Notes, the indebtedness
evidenced thereby, the Liens securing the Existing Bank One Notes, and the
rights of the lenders signatory to the Existing Bank One Credit Agreement
under the Existing Bank One Loan Documents, and financing statement
changes constituent thereto.
"Base Rate" shall mean the interest rate announced or published by
the Agent from time to time as its general reference rate of interest,
which Base Rate shall change upon each change in such announced or
published general reference interest rate and which Base Rate may not be
the lowest interest rate charged by the Agent.
"Base Rate Loan" shall mean any Loan or any portion of the Loan
Balance which the Borrowers have requested, in the initial Borrowing
Request for such Loan or a subsequent Borrowing Request for such portion
of the Loan Balance, bear interest at the Adjusted Base Rate or which,
pursuant to the terms hereof, is otherwise required to bear interest at
the Adjusted Base Rate.
"Benefitted Lender" shall have the meaning assigned to such term in
Section 2.10(c).
"Borrowing Base" shall mean, at any time, the amount determined in
accordance with Section 2.11.
"Borrowing Request" shall mean each written request, in
substantially the form attached hereto as Exhibit III, by the Borrowers to
the Agent for a borrowing or conversion pursuant to Sections 2.1 or 2.13,
each of which shall:
(a) be signed by a Responsible Officer of each of the
Borrowers;
(b) specify the amount and type of Loan requested or to
be converted and the date of the borrowing or conversion (which
shall be a Business Day);
(c) when requesting a Base Rate Loan, be delivered to the
Agent no later than 11:30 a.m., Eastern Standard or Daylight Savings
Time, as the case may be, on the Business Day of the requested
borrowing or conversion; and
(d) when requesting a LIBO Rate Loan, be delivered to the
Agent no later than 12 noon, Eastern Standard or Daylight Savings
Time, as the case may be, the third Business Day
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preceding the requested borrowing or conversion and designate the
Interest Period requested with respect to such Loan.
"Business Day" shall mean a day other than a day when commercial
banks are authorized or required to close in the State of New York and,
with respect to all requests, notices, and determinations in connection
with, and payments of principal and interest on, LIBO Rate Loans, which is
also a day for trading by and between banks in Dollar deposits in the
London interbank market.
"CBRS" shall mean C.B.R.S. Inc., carrying on business as "Canadian
Bond Rating Service," and its successors.
"CD Rate" shall mean, for any day relative to any determination of
the Adjusted Base Rate for any Base Rate Loan, the rate of interest per
annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
determined by the Agent to be the average of the bid rates quoted to the
Agent in the New York City secondary market at approximately 10:00 a.m.
New York time (or as soon thereafter as practicable) initially, on the day
such Base Rate Loan is made, and thereafter, from time to time as the
Agent may select, by two (2) certificate of deposit dealers of recognized
standing selected by the Agent, for the purchase at face value of 30-day
certificates of deposit in an amount approximately equal or comparable to
the amount of such Base Rate Loan. Each determination by the Agent of the
CD Rate shall, in the absence of manifest error, be conclusive and
binding.
"Closing Date" shall mean the date of this Agreement.
"Code" shall mean the United States Internal Revenue Code of 1986,
as amended from time to time.
"Collateral" shall mean the Mortgaged Properties, the Properties
collaterally assigned to the Agent pursuant to the Security Instruments
referenced in Sections 3.1(g)(v) and 3.1(g)(vii), and any other Property
now or at any time subject to a Lien to secure the payment or performance
of all or any portion of the Obligations.
"Comerica Assignment" shall mean the Assignment of Notes, Liens,
Security Interests, and Other Rights, in form and substance satisfactory
to the Agent, executed by Comerica and Den norske Bank AS, assigning to
the Lenders the Existing Comerica Notes, the indebtedness evidenced
thereby, the Liens securing the Existing Comerica Notes, and the rights of
the lenders signatory to the Existing Comerica Credit Agreement under the
Existing Comerica Loan Documents, and financing statement changes
constituent thereto.
"Commitment Period" shall mean the period from and including the
Closing Date to but not including the Commitment Termination Date.
"Commitment Termination Date" shall mean September 30, 2000.
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"Commitments" shall mean the several obligations of the Lenders to
make Loans to or for the benefit of the Borrowers pursuant to Section 2.1
and the obligations of the Agent to issue and the Lenders to participate
in Letters of Credit pursuant to Section 2.2.
"Commonly Controlled Entity" shall mean any Person which is under
common control with the Borrowers or the Guarantor within the meaning of
Section 4001 of ERISA.
"Compliance Certificate" shall mean each certificate, substantially
in the form attached hereto as Exhibit VI, executed by a Responsible
Officer of each of the Borrowers and the Guarantor and furnished to the
Agent from time to time in accordance with the terms hereof.
"Contingent Obligation" shall mean, as to any Person, any obligation
of such Person guaranteeing or in effect guaranteeing any Indebtedness,
leases, dividends, or other obligations of any other Person (for purposes
of this definition, a "primary obligation") in any manner, whether
directly or indirectly, including any obligation of such Person,
regardless of whether such obligation is contingent, (a) to purchase any
primary obligation or any Property constituting direct or indirect
security therefor, (b) to advance or supply funds (i) for the purchase or
payment of any primary obligation, or (ii) to maintain working or equity
capital of any other Person in respect of any primary obligation, or
otherwise to maintain the net worth or solvency of any other Person, (c)
to purchase Property, securities or services primarily for the purpose of
assuring the owner of any primary obligation of the ability of the Person
primarily liable for such primary obligation to make payment thereof, or
(d) otherwise to assure or hold harmless the owner of any such primary
obligation against loss in respect thereof, with the amount of any
Contingent Obligation being deemed to be equal to the stated or
determinable amount of the primary obligation in respect of which such
Contingent Obligation is made or, if not stated or determinable, the
maximum reasonably anticipated liability in respect thereof as determined
by such Person in good faith.
"DBRS" shall mean Dominion Bond Rating Service Limited and its
successors.
"Debt" shall mean Indebtedness of the Guarantor and its Subsidiaries
on a consolidated basis for borrowed money.
"Default" shall mean any event or occurrence which with the lapse of
time or the giving of notice or both would become an Event of Default.
"Default Rate" shall mean a per annum interest rate equal to the
Base Rate from time to time in effect plus two percent (2)%, such rate to
be computed on the basis of a year of 365 or 366 days, as the case may be,
and actual days
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elapsed (including the first day but excluding the last day) during the
period for which payable, but in no event shall such rate exceed the
Highest Lawful Rate.
"Dollars" and "$" shall mean dollars in lawful currency of the
United States of America.
"EBITDA" shall mean, for any period, Net Income for such period plus
Interest Expense, federal and state income taxes, depreciation,
amortization, and other non-cash expenses for such period deducted in the
determination of Net Income for such period.
"Environmental Complaint" shall mean any written or oral complaint,
order, directive, claim, citation, notice of environmental report or
investigation by any Governmental Authority or any other Person with
respect to (a) air emissions from any Property at any time owned, leased
or operated by the Guarantor or any of the Borrowers, (b) spills,
releases, or discharges of Hazardous Substances to soils, any improvements
located thereon, surface water, groundwater, or the sewer, septic, waste
treatment, storage, or disposal systems servicing any Property at any time
owned, leased or operated by the Guarantor or any of the Borrowers, (c)
solid or liquid waste disposal of Hazardous Substances at any Property at
any time owned, leased or operated by the Guarantor or any of the
Borrowers or affecting any Property of any of the Borrowers or any real
Property of the Guarantor or the facilities located and the operations
conducted thereon, (d) the use, generation, storage, transportation, or
disposal of any Hazardous Substance by the Guarantor or any of the
Borrowers or affecting any Property of any of the Borrowers or any real
Property of the Guarantor or the facilities located and the operations
conducted thereon, or (e) other environmental, health, or safety matters
affecting any Property at any time owned, leased or operated by any of the
Borrowers or the business conducted thereon or any real Property at any
time owned, leased or operated by the Guarantor or the facilities located
and the operations conducted thereon.
"Environmental Laws" shall mean (a) the following federal laws as
they may be cited, referenced, and amended from time to time: the Clean
Air Act, the Clean Water Act, the Comprehensive Environmental Response,
Compensation and Liability Act, the Endangered Species Act, the Hazardous
Materials Transportation Act of 1986, the Occupational Safety and Health
Act, the Oil Pollution Act of 1990, the Resource Conservation and Recovery
Act of 1976, the Safe Drinking Water Act, the Superfund Amendments and
Reauthorization Act, and the Toxic Substances Control Act; (b) any and all
equivalent environmental statutes of any state in which Property at any
time owned, leased or operated by the Guarantor or any Borrower is
situated, as they may be cited, referenced and amended from time to time;
(c) any rules or regulations promulgated under or adopted pursuant to the
above federal and state laws; and (d) any other equivalent federal, state,
or local statute or any requirement, rule, regulation, code, ordinance, or
order adopted pursuant thereto, including those relating to the
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generation, transportation, treatment, storage, recycling, disposal,
handling, or release of Hazardous Substances.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations thereunder and
published interpretations thereof.
"Event of Default" shall mean any of the events specified in Section
7.1.
"Existing Bank One Loan Documents" shall mean the Loan Documents, as
such term is defined in the Existing Bank One Credit Agreement, in
existence on the Closing Date immediately prior to the Bank One
Assignment.
"Existing Bank One Notes" shall mean, collectively, the Bank One
Credit Note, the CIBC Credit Note, and the DNB Credit Note as each such
term is defined in the Existing Bank One Credit Agreement, in existence on
the Closing Date immediately prior to the Bank One Assignment.
"Existing Bank One Security Instruments" shall mean the Security
Documents, as such term is defined in the Existing Bank One Credit
Agreement, in existence on the Closing Date immediately prior to the Bank
One Assignment.
"Existing Comerica Loan Documents" shall mean the Loan Documents, as
such term is defined in the Existing Comerica Credit Agreement, in
existence on the Closing Date immediately prior to the Comerica
Assignment.
"Existing Comerica Notes" shall mean the Credit Notes, as such term
is defined in the Existing Comerica Credit Agreement, in existence on the
Closing Date immediately prior to the Comerica Assignment.
"Existing Comerica Security Instruments" shall mean the Security
Documents, as such term is defined in the Existing Comerica Credit
Agreement, in existence on the Closing Date immediately prior to the
Comerica Assignment.
"Facility Amount" shall mean, for each Lender, the amount set forth
opposite the name of such Lender on Exhibit IV under the caption "Facility
Amounts", as modified to reflect assignments permitted by Sections 9.1 and
2.24 or otherwise pursuant to the terms hereof.
"Federal Funds Rate" shall mean, for any day, a rate of interest per
annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to
the weighted average of the rates on overnight federal funds transactions
with members of the Federal Reserve System arranged by federal funds
brokers on such day, as published by the Federal Reserve Bank of New York,
on the Business Day next succeeding such day, provided that (a) if the day
for which such rate is to be determined is not a Business Day, the Federal
Funds Rate for
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such day shall be such rate on such transactions on the next preceding
Business Day as so published on the next succeeding Business Day, and (b)
if such rate is not so published for any day, the Federal Funds Rate for
such day shall be the average rate charged to the Agent on such day on
such transactions as determined by the Agent.
"Fee Letter" shall mean the letter agreement dated as of September ,
1996, from CIBC to the Borrowers concerning certain fees in connection
with the transactions contemplated hereby, and any agreements or
instruments executed in connection therewith, as amended, restated, or
supplemented from time to time.
"Final Maturity" shall mean September 30, 2000.
"Financial Statements" shall mean statements of the financial
condition as at the point in time and for the period indicated and
consisting in all cases of at least a balance sheet and related statements
of operations and cash flows, and in each year-end financial statement a
statement of common stock and other stockholders' or partners' equity,
and, when required by applicable provisions of this Agreement to be
audited, accompanied by the unqualified certification of a
nationally-recognized firm of independent certified public accountants or
other independent certified public accountants reasonably acceptable to
the Agent and footnotes to any of the foregoing, all of which, unless
otherwise indicated, shall be prepared in accordance with GAAP
consistently applied (subject to normal year-end audit adjustments with
respect to Financial Statements prepared as at a point in time other than
year-end) and in comparative form with respect to the corresponding period
of the preceding fiscal period.
"GAAP" shall mean generally accepted accounting principles
established by the Financial Accounting Standards Board or the American
Institute of Certified Public Accountants and in effect in the United
States from time to time.
"Governmental Authority" shall mean any nation, country,
commonwealth, territory, government, state, county, parish, municipality,
or other political subdivision and any entity exercising executive,
legislative, judicial, regulatory, or administrative functions of or
pertaining to government.
"Guarantor" shall mean KCS Energy, Inc., a Delaware corporation.
"Guaranty" shall mean the Guaranty dated the Closing Date executed
by the Guarantor, guaranteeing the payment and performance of the
Obligations, in the form attached hereto as Exhibit V, with appropriate
insertions, as ratified, amended, restated, or supplemented from time to
time.
"Xxxx-Xxxxxxx Production and Delivery Agreement" means the
Production and Delivery Agreement dated as of September 30, 1994, by and
between KCS Marketing and Xxxx-Xxxxxxx Oil Company, as such agreement has
been amended
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by amendments dated October 31, 1994, June 3 and June 15, 1995 and March
1, 1996.
"Xxxxxxx Oil Production and Delivery Agreement" means the Production
and Delivery Agreement dated as of November 30, 1995, by and between KCS
Marketing and Xxxxxxx Oil of Michigan, Inc.
"Hazardous Substances" shall mean flammables, explosives,
radioactive materials, hazardous wastes, asbestos or any material
containing asbestos, polychlorinated biphenyls (PCBs), petroleum,
petroleum products, associated oil or natural gas exploration, production,
and development wastes, or any substances defined as "hazardous
substances," "hazardous materials," "hazardous wastes," or "toxic
substances" under the Comprehensive Environmental Response, Compensation
and Liability Act, as amended, the Superfund Amendments and
Reauthorization Act, as amended, the Hazardous Materials Transportation
Act, as amended, the Resource Conservation and Recovery Act, as amended,
the Toxic Substances Control Act, as amended, or any other Requirement of
Law.
"Hedging Agreement" shall mean (a) any interest rate or currency
swap, rate cap, rate floor, rate collar, forward agreement, or other
exchange or rate protection agreement with the Agent, any Lender, or any
affiliate of the Agent, or any Lender or any option with respect to any
such transaction and (b) any swap agreement, cap, floor, collar, exchange
transaction, forward agreement, or other exchange or protection agreement
with the Agent, any Lender, or any affiliate of the Agent or any Lender
relating to hydrocarbons or any option with respect to any such
transaction.
"Highest Lawful Rate" shall mean, with respect to each Lender, the
maximum non-usurious interest rate, if any (or, if the context so
requires, an amount calculated at such rate), that at any time or from
time to time may be contracted for, taken, reserved, charged, or received
under laws applicable to such Lender, as such laws are presently in effect
or, to the extent allowed by applicable law, as such laws may hereafter be
in effect and which allow a higher maximum non-usurious interest rate than
such laws now allow.
"Indebtedness" shall mean, as to any Person, without duplication,
(a) all liabilities (excluding reserves for deferred income taxes,
deferred compensation liabilities, and other deferred liabilities and
credits) which in accordance with GAAP would be included in determining
total liabilities as shown on the liability side of a balance sheet, (b)
all obligations of such Person evidenced by bonds, debentures, promissory
notes, or similar evidences of indebtedness, (c) all other indebtedness of
such Person for borrowed money, and (d) all obligations of others, to the
extent any such obligation is secured by a Lien on the assets of such
Person (whether or not such Person has assumed or become liable for the
obligation secured by such Lien).
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"Insolvency Proceeding" shall mean application (whether voluntary or
instituted by another Person) for or the consent to the appointment of a
receiver, trustee, conservator, custodian, or liquidator of any Person or
of all or a substantial part of the Property of such Person, or the filing
of a petition (whether voluntary or instituted by another Person)
commencing a case under Title 11 of the United States Code, seeking
liquidation, reorganization, or rearrangement or taking advantage of any
bankruptcy, insolvency, debtor's relief, or other similar law of the
United States or any other jurisdiction.
"Insolvent" or "Insolvency" shall mean, with respect to any
Multiemployer Plan, that such Plan is insolvent within the meaning of such
term as used in Section 4245 of ERISA.
"Intellectual Property" shall mean patents, patent applications,
trademarks, tradenames, copyrights, technology, know-how, and processes.
"Interest Expense" shall mean, for any period, the total interest
expense (including interest expense attributable to capitalized leases) of
the Guarantor and its Subsidiaries for such period, determined on a
consolidated basis and in accordance with GAAP.
"Interest Period" shall mean, subject to the limitations set forth
in Section 2.3, with respect to any LIBO Rate Loan, a period commencing on
the date such Loan is made or converted from a Loan of another type
pursuant to this Agreement or the last day of the next preceding Interest
Period with respect to such Loan and ending on the numerically
corresponding day in the calendar month that is one, two, three, six, or,
subject to availability as determined by the Lenders, twelve months
thereafter, as the Borrowers may request in the Borrowing Request for such
Loan.
"Investment" shall mean, as to any Person, any stock, bond, note or
other evidence of Debt or any other security (other than current trade and
customer accounts) of, investment or partnership interest in or loan to,
such Person.
"L/C Exposure" shall mean, at any time, the aggregate maximum amount
available to be drawn under outstanding Letters of Credit at such time.
"Letter of Credit" shall mean any standby or documentary letter of
credit issued for the account of the Borrowers pursuant to Section 2.2.
"Letter of Credit Application" shall mean the standard letter of
credit application employed by the Agent, as the issuer of the Letters of
Credit, from time to time in connection with letters of credit.
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"Letter of Credit Payment" shall mean any payment made by the Agent
on behalf of the Lenders under a Letter of Credit, to the extent that such
payment has not been repaid by the Borrowers.
"LIBO Rate" shall mean, with respect to any Interest Period for any
LIBO Rate Loan, the rate per annum (rounded upwards, if necessary, to the
nearest 1/16 of 1%) equal to the average of the offered quotations
appearing on Telerate Page 3750 (or if such Telerate Page shall not be
available, any successor or similar service selected by the Agent and the
Borrowers) as of approximately 11:00 a.m., London time, on the day two
Business Days prior to the first day of such Interest Period for Dollar
deposits in an amount comparable to the principal amount of such LIBO Rate
Loan and having a term comparable to the Interest Period for such LIBO
Rate Loan. If neither such Telerate Page 3750 nor any successor or similar
service is available, the term "LIBO Rate" shall mean, with respect to any
Interest Period for any LIBO Rate Loan, the rate per annum (rounded
upwards if necessary, to the nearest 1/16 of 1%) quoted by the Agent at
approximately 11:00 a.m., London time (or as soon thereafter as
practicable) two Business Days prior to the first day of the Interest
Period for such LIBO Rate Loan for the offering by the Agent to leading
banks in the London interbank market of Dollar deposits in an amount
comparable to the principal amount of such LIBO Rate Loan and having a
term comparable to the Interest Period for such LIBO Rate Loan.
"LIBO Rate Loan" shall mean any Loan or any portion of the Loan
Balance which the Borrowers have requested, in the initial Borrowing
Request for such Loan or a subsequent Borrowing Request for such portion
of the Loan Balance, bear interest at the Adjusted LIBO Rate and which is
permitted by the terms hereof to bear interest at the Adjusted LIBO Rate.
"Lien" shall mean any interest in Property securing an obligation
owed to, or constituting a claim by, a Person other than the owner of such
Property, whether such interest is based on common law, statute, or
contract, and including the lien or security interest arising from a
mortgage, ship mortgage, encumbrance, pledge, security agreement,
conditional sale or trust receipt, or a lease, consignment, or bailment
for security purposes (other than true leases or true consignments), liens
of mechanics, materialmen, and artisans, maritime liens and reservations,
exceptions, encroachments, easements, rights of way, covenants,
conditions, restrictions, leases, and other title exceptions and
encumbrances affecting Property which secure an obligation owed to, or
constitute a claim by, a Person other than the owner of such Property (for
the purpose of this Agreement, a Borrower shall be deemed to be the owner
of any Property which it has acquired or holds subject to a conditional
sale agreement, financing lease, or other arrangement pursuant to which
title to the Property has been retained by or vested in some other Person
for security purposes), and the filing or recording of any financing
statement or other security instrument in any public office.
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"Limitation Period" shall mean, with respect to any Lender, any
period while any amount remains owing on the Note payable to such Lender
and interest on such amount, calculated at the applicable interest rate,
plus any fees or other sums payable to such Lender under any Loan Document
and deemed to be interest under applicable law, would exceed the amount of
interest which would accrue at the Highest Lawful Rate.
"Loan" shall mean any loan made by any Lender to or for the benefit
of the Borrowers pursuant to this Agreement and, without duplication, any
payment made by the Agent as the issuing bank under a Letter of Credit.
"Loan Balance" shall mean, at any time, the aggregate outstanding
principal balance of the Notes at such time.
"Loan Documents" shall mean this Agreement, the Notes, the Guaranty,
the Letter of Credit Applications, the Letters of Credit, the Fee Letter,
the Security Instruments, and all other documents and instruments now or
hereafter delivered by any of the Borrowers, the Guarantor or any of their
respective Affiliates in favor or for the benefit of the Agent or any
Lender pursuant to the terms of or in connection with this Agreement, the
Notes, the Guaranty, the Letter of Credit Applications, the Letters of
Credit, the Fee Letter, or the Security Instruments, and all renewals,
extensions, amendments, supplements, and restatements thereof.
"Material Properties" shall mean the Oil and Gas Properties listed
on Exhibit VII.
"Material Adverse Effect" shall mean any material adverse effect on
the business, operations, Properties, condition (financial or otherwise),
or prospects of the Borrowers and the Guarantor taken as a whole;
provided, however, that an adverse decision in any or all of the Tennessee
Gas Disputes shall under no circumstances be deemed to constitute a
Material Adverse Effect.
"Maximum Facility Amount" shall mean the sum of the Facility Amounts
of all Lenders.
"Mortgaged Properties" shall mean all Oil and Gas Properties of KRI,
KCS Michigan, and KCS Marketing subject to a Lien in favor of the Agent to
secure the Obligations.
"Multiemployer Plan" shall mean a Plan which is a multiemployer plan
as defined in Section 4001(a)(3) of ERISA.
"Net Income" shall mean, for any period, the net income (or loss) of
the Guarantor and its Subsidiaries for such period, determined on a
consolidated basis and in accordance with GAAP.
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"Notes" shall mean, collectively, each of the promissory notes of
the Borrowers payable to a Lender in the amount of the Facility Amount of
such Lender, in the form attached hereto as Exhibit I, with appropriate
insertions, together with all renewals, extensions for any period,
increases, and rearrangements thereof.
"Notice of Termination" shall have the meaning assigned to such term
in Section 2.24.
"Obligations" shall mean, without duplication, (a) all Indebtedness
evidenced by the Notes, (b) the obligation of the Borrowers to provide to
or reimburse the Agent, as the issuer of Letters of Credit, or the
Lenders, as the case may be, for, amounts payable, paid, or incurred with
respect to Letters of Credit, (c) the undrawn, unexpired amount of all
outstanding Letters of Credit, (d) the obligation of the Borrowers for the
payment of fees and expenses pursuant to the Loan Documents, (e) the
obligations of the Guarantor under the Guaranty, (f) all amounts owing or
to be owing by any of the Borrowers under any Hedging Agreement now or
hereafter arising, and (g) all other obligations and liabilities of the
Borrowers or the Guarantor to the Agent and the Lenders, now existing or
hereafter incurred, under, arising out of or in connection with any Loan
Document, and to the extent that any of the foregoing includes or refers
to the payment of amounts deemed or constituting interest, only so much
thereof as shall have accrued, been earned and which remains unpaid at
each relevant time of determination.
"Oil and Gas Properties" shall mean fee, leasehold, or other
interests in or under mineral estates or oil, gas, and other liquid or
gaseous hydrocarbon leases with respect to Properties situated in the
United States or offshore from any State of the United States, including
overriding royalty and royalty interests, leasehold estate interests, net
profits interests, production payment interests, and mineral fee
interests, together with contracts executed in connection therewith and
all tenements, hereditaments, appurtenances, and Properties appertaining,
belonging, affixed, or incidental thereto.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA or any entity
succeeding to any or all of its functions under ERISA.
"Percentage Share" shall mean, as to each Lender, the percentage
such Lender's Facility Amount constitutes of the Maximum Facility Amount.
"Permitted Liens" shall mean (a) Liens for taxes, assessments, or
other governmental charges or levies not yet due or which (if foreclosure,
distraint, sale, or other similar proceedings shall not have been
initiated) are being contested in good faith by appropriate proceedings,
and such reserve as may be required by GAAP shall have been made therefor,
(b) Liens in connection with
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workers' compensation, unemployment insurance or other social security
(other than Liens created by Section 4068 of ERISA), old-age pension, or
public liability obligations which are not yet due or which are being
contested in good faith by appropriate proceedings, if such reserve as may
be required by GAAP shall have been made therefor, (c) Liens in favor of
Governmental Authorities, vendors, carriers, warehousemen, repairmen,
mechanics, workmen, and materialmen, and construction or similar Liens
arising by operation of law (including Liens securing statutory or
regulatory obligations) in the ordinary course of business in respect of
obligations that are not past-due or which are being contested in good
faith by appropriate proceedings, if such reserve as may be required by
GAAP shall have been made therefor, (d) Liens in favor of operators and
non-operators under joint operating agreements or similar contractual
arrangements arising in the ordinary course of the business of the
Borrowers or the Guarantor to secure amounts owing, which amounts are not
yet due or are being contested in good faith by appropriate proceedings,
if such reserve as may be required by GAAP shall have been made therefor,
(e) Liens under production sales agreements, division orders, operating
agreements, unitization and pooling orders, and other agreements customary
in the oil and gas business for processing, producing, transporting,
marketing, and exchanging produced hydrocarbons securing obligations not
constituting Indebtedness and provided that such Liens do not secure
obligations to deliver hydrocarbons at some future date without receiving
full payment therefor within 90 days of delivery, (f) the terms of the
instruments evidencing the Oil and Gas Properties of the Borrowers and
easements, rights of way, restrictions, and other similar encumbrances,
and minor defects in the chain of title which are customarily accepted in
the oil and gas industry (including defects noted in the title opinions
and reports furnished to and not objected to by the Agent prior to the
Closing Date), none of which interfere with the ordinary conduct of the
business of the Borrower or the Guarantor or materially detract from the
value or use of the Property to which they apply, (g) Liens in favor of
the Agent and other Liens expressly permitted under the Security
Instruments, (h) Liens securing the Indebtedness permitted under clauses
(f) and (g) of Section 6.1, provided that no Lien securing Indebtedness
permitted under Section 6.1(f) encumbers any Collateral, and (i) judgment
Liens arising by operation of law or as the result of the abstracting of a
judgment or similar action under the laws of any jurisdiction and not
giving rise to an Event of Default, in respect of judgments that are not
final and non-appealable judgments, so long as any appropriate legal
proceedings which may have been duly initiated for the review of such
judgment shall not have been finally terminated or the period within which
such proceeding may be initiated shall not have expired.
"Person" shall mean an individual, corporation, partnership, trust,
unincorporated organization, government, any agency or political
subdivision of any government, or any other form of entity.
"Plan" shall mean, at any time, any employee benefit plan which is
covered by ERISA and in respect of which the Borrower, the Guarantor, or
any
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Commonly Controlled Entity is (or, if such plan were terminated at such
time, would under Section 4069 of ERISA be deemed to be) an "employer" as
defined in Section 3(5) of ERISA.
"Principal Office" shall mean the principal office of the Agent in
New York, New York, presently located at 000 Xxxxxxxxx Xxxxxx, 0xx Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000.
"Prohibited Transaction" shall have the meaning assigned to such
term in Section 406 of ERISA or Section 4975 of the Code.
"Property" shall mean any interest in any kind of property or asset,
whether real, personal or mixed, tangible or intangible.
"Prospectus" means the Offering Memorandum dated January 19, 1996
relating to the sale by the Guarantor of its 11% Senior Notes due 2003 in
the aggregate principal amount of $150,000,000.
"Qualified Swap Counterparty" shall mean (a) the Agent, any Lender
or an affiliate of the Agent or any Lender, (b) a commercial banking
institution that is a member of the Federal Reserve System and has a
combined capital and surplus and undivided profits of not less than
$500,000,000, (c) a corporation (other than an Affiliate of any Borrower)
or other entity organized under the laws of any state of the United States
or the District of Columbia and rated either (i) A-2 or better by S&P's or
P-2 or better by Xxxxx'x, in the case of short-term debt obligations or
(ii) A or better by S&P in the case of unsecured long-term debt
obligations, or (d) a corporation or other entity (other than an Affiliate
of any Borrower) (i) organized under the laws of Canada or any province
thereof and rated R-1 (middle/low) (or the then equivalent grade) or
higher by DBRS or, if not then rated by DBRS, which is rated A-1 or the
then equivalent grade or higher by CBRS, or (ii) which has furnished any
Borrower a letter of credit, cash prepayment or other form of credit
enhancement reasonably acceptable to such Borrower.
"Regulation D" shall mean Regulation D of the Board of Governors of
the Federal Reserve System (or any successor), as amended or supplemented
from time to time.
"Regulatory Change" shall mean, with respect to any Lender, the
passage, adoption, institution, or modification of any federal, state,
local, or foreign Requirement of Law (including Regulation D), or any
interpretation, directive, or request (whether or not having the force of
law) of any Governmental Authority or monetary authority charged with the
enforcement, interpretation, or administration thereof, occurring after
the Closing Date and applying to a class of lenders including such Lender
or its Applicable Lending Office.
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"Release of Hazardous Substances" shall mean any emission, spill,
release, disposal, or discharge, except in accordance with a valid permit,
license, certificate, or approval of the relevant Governmental Authority,
of any Hazardous Substance into or upon (a) the air, (b) soils or any
improvements located thereon, (c) surface water or groundwater, or (d) the
sewer or septic system, or the waste treatment, storage, or disposal
system servicing any Property at any time owned, leased or operated by the
Guarantor or any of the Borrowers.
"Reorganization" shall mean, with respect to any Multiemployer Plan,
that such Plan is in reorganization within the meaning of such term in
Section 4241 of ERISA.
"Replacement Lenders" shall have the meaning assigned to such term
in Section 2.24.
"Reportable Event" shall mean any of the events set forth in Section
4043(b) of ERISA, other than those events as to which the thirty-day
notice period is waived under subsections .13, .14, .16, .18, .19 or .20
of PBGC Reg. ss.2615.
"Required Lenders" shall mean, at any time when no Loans are
outstanding, Lenders whose Percentage Shares total at least sixty-six and
two-thirds percent (66-2/3%), and at any time when any Loans are
outstanding, Lenders holding at least sixty-six and two-thirds percent (66
2/3%) of the Loan Balance (without regard to any sale of a participation
in any Loan).
"Required Payment" shall have the meaning assigned to such term in
Section 2.8.
"Requirement of Law" shall mean, as to any Person, any applicable
law, treaty, ordinance, order, judgment, rule, decree, regulation, or
determination of an arbitrator, court, or other Governmental Authority,
including rules, regulations, orders, and requirements for permits,
licenses, registrations, approvals, or authorizations, in each case as
such now exist or may be hereafter amended and are applicable to or
binding upon such Person or any of its Property or to which such Person or
any of its Property is subject.
"Reserve Report" shall mean each report provided by the Borrowers
pursuant to Section 5.4.
"Reserve Requirement" shall mean, for any Interest Period for any
LIBO Rate Loan, or for any day in computing the Adjusted CD Rate, the
average maximum rate at which reserves (including any marginal,
supplemental, or emergency reserves) are required to be maintained during
such Interest Period under Regulation D by member banks of the Federal
Reserve System in New York, with deposits exceeding one billion Dollars
against (a) in the case of any
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LIBO Rate Loan, "Eurocurrency liabilities" (as such term is used in
Regulation D) or (b) in the case of computing the Adjusted CD Rate, 30-day
nonpersonal Dollar time deposits in an amount approximately equal or
comparable to the aggregate amount of Base Rate Loans then outstanding.
Each determination by the Agent of the applicable Reserve Requirement
shall, in the absence of manifest error, be conclusive and binding.
"Responsible Officer" shall mean, as to any Borrower or the
Guarantor, any of the following Persons: Xxxxx X. Christmas, Chief
Executive Officer; Xxxxx X. Xxxxxx, Vice President and Chief Financial
Officer; or Xxxxxxx X. Xxxxxxxx, Treasurer; and in any event, shall mean
no other Person or Persons except as modified pursuant to a certificate
sent to the Agent signed by a Responsible Officer of the Person with
respect to which the modification is to be effected, and in each such
event, only after the Agent has had a reasonable opportunity to act upon
such certification.
"Sales Period" shall mean each successive six-month period during
the term hereof, commencing with the six-month period beginning July 1,
1996.
"Security Instruments" shall mean the Existing Bank One Security
Instruments, the Existing Comerica Security Instruments, the security
instruments executed and delivered in satisfaction of the condition set
forth in Section 3.1(g), and all other documents and instruments at any
time executed as security for all or any portion of the Obligations, as
such instruments may be amended, restated, or supplemented from time to
time.
"Senior Note Indenture" shall mean the Indenture dated as of January
15, 1996, by and among the Guarantor, the Subsidiary Guarantors (as such
term is defined therein) named therein, and Fleet National Bank of
Connecticut, as Trustee, relating to the sale by the Guarantor of its 11%
Senior Notes due 2003 in the aggregate principal amount of
$150,000,000.00.
"Single Employer Plan" shall mean any Plan which is covered by Title
IV of ERISA, but which is not a Multiemployer Plan.
"Subordinated Debt" shall mean Indebtedness of any Borrower to the
Guarantor, or any Affiliate of the Guarantor which is not a borrower under
this Agreement, or any assignee of any such Person, which Indebtedness
shall be subordinated to the payment in full of the Obligations pursuant
to the terms of the Subordination Agreement.
"Subordination Agreement" shall mean the Subordination Agreement
dated the Closing Date executed by the Guarantor, as amended, restated, or
supplemented from time to time.
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"Subsidiary" shall mean, as to any Person, a corporation of which
shares of stock having ordinary voting power (other than stock having such
power only by reason of the happening of a contingency) to elect a
majority of the board of directors or other managers of such corporation
are at the time owned, directly or indirectly through one or more
intermediaries, or both, by such Person.
"Sufficient Copies" shall mean that number of copies as shall
reasonably be requested from time to time by the Agent.
"Superfund Site" shall mean those sites listed on the Environmental
Protection Agency National Priority List and eligible for remedial action
or any comparable state registries or list in any state of the United
States.
"Tangible Net Worth" shall mean (a) total assets, as would be
reflected on a balance sheet of the Guarantor and its Subsidiaries
prepared on a consolidated basis and in accordance with GAAP, exclusive of
Intellectual Property, experimental or organization expenses, franchises,
licenses, permits, and other intangible assets, treasury stock, and
goodwill minus (b) total liabilities, as would be reflected on a balance
sheet of the Guarantor and its Subsidiaries prepared on a consolidated
basis and in accordance with GAAP.
"Taxes" shall have the meaning assigned to such term in Section
2.23.
"Tennessee Gas Disputes" shall mean (i) the litigation among the
parties concerning the interpretation of that certain Gas Purchase and
Sales Agreement dated January 16, 1979, by and among Tennessee Gas
Pipeline Company, National Exploration Company, Eton Partnership, and Gulf
Energy and Development Corporation, as heretofore amended or supplemented;
(ii) the declaratory judgment action brought by Tennessee Gas Pipeline
Company as described on page 48 of the Prospectus; (iii) the litigation
regarding claims of artificially enriched natural gas described on pages
48 and 49 of the Prospectus; and (iv) the royalty holders litigation
described on page 49 of the Prospectus.
"Terminated Lender" shall have the meaning assigned to such term in
Section 2.24.
"Termination Date" shall have the meaning assigned to such term in
Section 2.24.
"UCC" shall mean the Uniform Commercial Code as from time to time in
effect in the State of New York.
1.3 Undefined Financial Accounting Terms. Undefined financial
accounting terms used in this Agreement shall be defined according to GAAP at
the time in effect.
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1.4 References. References in this Agreement to Exhibit, Article, or
Section numbers shall be to Exhibits, Articles, or Sections of this Agreement,
unless expressly stated to the contrary. References in this Agreement to
"hereby," "herein," "hereinafter," "hereinabove," "hereinbelow," "hereof,"
"hereunder" and words of similar import shall be to this Agreement in its
entirety and not only to the particular Exhibit, Article, or Section in which
such reference appears. References in this Agreement to "includes" or
"including" shall mean "includes, without limitation," or "including, without
limitation," as the case may be. References in this Agreement to statutes,
sections, or regulations are to be construed as including all statutory or
regulatory provisions consolidating, amending, replacing, succeeding or
supplementing such statutes sections, or regulations.
1.5 Articles and Sections. This Agreement, for convenience only, has
been divided into Articles and Sections; and it is understood that the rights
and other legal relations of the parties hereto shall be determined from this
instrument as an entirety and without regard to the aforesaid division into
Articles and Sections and without regard to headings prefixed to such Articles
or Sections.
1.6 Number and Gender. Whenever the context requires, reference
herein made to the single number shall be understood to include the plural; and
likewise, the plural shall be understood to include the singular. Definitions of
terms defined in the singular or plural shall be equally applicable to the
plural or singular, as the case may be, unless otherwise indicated. Words
denoting sex shall be construed to include the masculine, feminine and neuter,
when such construction is appropriate.
1.7 Incorporation of Exhibits. The Exhibits attached to this
Agreement are incorporated herein and shall be considered a part of this
Agreement for all purposes.
1.8. Knowledge. As used herein "knowledge" or "knowledge and belief"
of a Borrower or of the Borrowers shall mean the knowledge of any officer of a
Borrower; provided, however, that in the case of any matter covered by Sections
4.14 and 5.6 relating to an Oil and Gas Property of a Borrower, such "knowledge"
or "knowledge and belief" shall mean (a) in the case of an Oil and Gas Property
operated by a Borrower, the knowledge of the highest ranking field personnel of
a Borrower assigned to such Property and (b) in the case of an Oil and Gas
Property of a Borrower that is not operated by such Borrower, the knowledge of
an operations manager having responsibility for such Property.
ARTICLE II
TERMS OF FACILITY
2.1 Revolving Line of Credit. (a) Upon the terms and conditions and
relying on the representations and warranties contained in this Agreement and
the other Loan Documents, each Lender severally agrees to make Loans during the
Commitment Period to or for the benefit of the Borrowers, or any combination of
them, in an aggregate principal amount not to exceed at any time outstanding the
lesser of the Facility Amount of such Lender or the Percentage Share of such
Lender of the Borrowing Base then in effect; provided, however, that
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(i) the Loan Balance plus the L/C Exposure shall not exceed at any time the
lesser of the Maximum Facility Amount or the Borrowing Base then in effect, and
(ii) the sum of the outstanding principal balance of all Loans by any Lender
plus the Percentage Share of such Lender of the L/C Exposure shall not exceed at
any time an amount equal to the Percentage Share of such Lender multiplied by
the lesser of the Maximum Facility Amount or the Borrowing Base then in effect.
Loans shall be made from time to time on any Business Day designated by the
Borrowers in a Borrowing Request.
(b) Subject to the terms of this Agreement, during the Commitment
Period, the Borrowers may borrow, repay, and reborrow and convert Loans of one
type or with one Interest Period into Loans of another type or with a different
Interest Period. Except for prepayments made pursuant to Section 2.12, each
borrowing, conversion, and prepayment of principal, in the case of Base Rate
Loans, shall be in an amount at least equal to $100,000 and in multiples of
$100,000 thereafter and, in the case of LIBO Rate Loans, shall be in an amount
at least equal to $1,000,000 and in multiples of $100,000 thereafter. Each
borrowing, prepayment, or conversion of or into a Loan of a different type or,
in the case of a LIBO Rate Loan, having a different Interest Period, shall be
deemed a separate borrowing, conversion, and prepayment for purposes of the
foregoing, one for each type of Loan or Interest Period. Anything in this
Agreement to the contrary notwithstanding, the aggregate principal amount of
LIBO Rate Loans having the same Interest Period shall be at least equal to
$1,000,000; and if any LIBO Rate Loan would otherwise be in a lesser principal
amount for any period, such Loan shall be a Base Rate Loan during such period.
(c) Not later than noon, Eastern Standard or Daylight Savings Time,
as the case may be, on the date specified for each borrowing, each Lender shall
make available to the Agent an amount equal to the Percentage Share of such
Lender of the borrowing to be made on such date, at an account designated by the
Agent, for the account of the Borrowers. The amount so received by the Agent
shall, subject to the terms and conditions hereof, be made available to the
Borrowers in immediately available funds by no later than 1:00 p.m. Eastern
Standard or Daylight Savings Time, as the case may be, in an account designated
from time to time by the Borrowers. All Loans by each Lender shall be maintained
at the Applicable Lending Office of such Lender and shall be evidenced by the
Note of such Lender.
(d) The failure of any Lender to make any Loan required to be made
by it hereunder shall not relieve any other Lender of its obligation to make any
Loan required to be made by it, and no Lender shall be responsible for the
failure of any other Lender to make any Loan.
2.2 Letter of Credit Facility. (a) Upon the terms and conditions and
relying on the representations and warranties contained in this Agreement, the
Agent, as issuing bank for the Lenders, agrees, from the date of this Agreement
until the date which is 30 days prior to the Commitment Termination Date, to
issue, on behalf of the Lenders in their respective Percentage Shares, Letters
of Credit for the account of the Borrowers, or any combination of them, and to
renew and extend such Letters of Credit. Letters of Credit shall be issued,
renewed, or extended from time to time on any Business Day designated by the
Borrowers following the receipt in accordance with the terms hereof by the Agent
of the written (or oral,
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confirmed promptly in writing) request by a Responsible Officer of each of the
Borrowers therefor and a Letter of Credit Application. Letters of Credit shall
be issued in such amounts as the Borrowers may request; provided, however, that
(i) no Letter of Credit shall have an expiration date which is more than 365
days after the issuance thereof or subsequent to one Business Day prior to the
Commitment Termination Date, (ii) the Loan Balance plus the L/C Exposure shall
not exceed at any time the lesser of the Maximum Facility Amount or the
Borrowing Base, (iii) the L/C Exposure shall not exceed at any time $20,000,000,
and (iv) no Letter of Credit shall be issued in an amount less than $50,000.
(b) Prior to any Letter of Credit Payment in respect of any Letter
of Credit, each Lender shall be deemed to be a participant through the Agent
with respect to the relevant Letter of Credit in the obligation of the Agent, as
the issuer of such Letter of Credit, in an amount equal to the Percentage Share
of such Lender of the maximum amount which is or at any time may become
available to be drawn thereunder. Upon delivery by such Lender of funds
requested pursuant to Section 2.2(c), such Lender shall be treated as having
purchased a participating interest in an amount equal to such funds delivered by
such Lender to the Agent in the obligation of the Borrowers to reimburse the
Agent, as the issuer of such Letter of Credit, for any amounts payable, paid, or
incurred by the Agent, as the issuer of such Letter of Credit, with respect to
such Letter of Credit.
(c) Each Lender shall be unconditionally and irrevocably liable,
without regard to the occurrence of any Default or Event of Default, to the
extent of the Percentage Share of such Lender at the time of issuance of each
Letter of Credit, to reimburse, on demand, the Agent, as the issuer of such
Letter of Credit, for the amount of each Letter of Credit Payment under such
Letter of Credit. Each Letter of Credit Payment shall be deemed to be a Base
Rate Loan by each Lender to the extent of funds delivered by such Lender to the
Agent with respect to such Letter of Credit Payment and shall to such extent be
deemed a Base Rate Loan under and shall be evidenced by the Note of such Lender.
In the event that a Default has occurred and is continuing under Sections 7.1(f)
or (g), an amount equal to any Letter of Credit Payment made after the
occurrence of such Default shall be payable by the Borrowers upon demand by the
Agent. Notwithstanding anything contained herein or any other Loan Document
(including any Letter of Credit Application), but subject to the provisions of
Section 2.12, neither the Agent as the issuing bank nor any Lender shall have
any right to require any Borrower to prepay any amounts for which the Agent as
the issuing bank or any Lender might become liable under any Letter of Credit.
(d) EACH LENDER AGREES TO INDEMNIFY THE AGENT, AS THE ISSUER OF EACH
LETTER OF CREDIT, AND THE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS,
ATTORNEYS-IN-FACT AND AFFILIATES OF THE AGENT (TO THE EXTENT NOT REIMBURSED BY
THE BORROWERS AND WITHOUT LIMITING THE OBLIGATION OF THE BORROWERS TO DO SO),
RATABLY ACCORDING TO THE PERCENTAGE SHARE OF SUCH LENDER AT THE TIME OF ISSUANCE
OF SUCH LETTER OF CREDIT, FROM AND AGAINST ANY AND ALL LIABILITIES, CLAIMS,
OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS,
EXPENSES AND DISBURSEMENTS OF ANY KIND WHATSOEVER WHICH MAY AT ANY TIME
(INCLUDING ANY TIME FOLLOWING THE PAYMENT AND PERFORMANCE OF ALL OBLIGATIONS AND
THE TERMINATION OF THIS AGREEMENT) BE IMPOSED ON, INCURRED BY OR ASSERTED
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AGAINST THE AGENT AS THE ISSUER OF SUCH LETTER OF CREDIT OR ANY OF ITS OFFICERS,
DIRECTORS, EMPLOYEES, AGENTS, ATTORNEYS-IN-FACT OR AFFILIATES IN ANY WAY
RELATING TO OR ARISING OUT OF THIS AGREEMENT OR SUCH LETTER OF CREDIT OR ANY
ACTION TAKEN OR OMITTED BY THE AGENT AS THE ISSUER OF SUCH LETTER OF CREDIT OR
ANY OF ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, ATTORNEYS-IN-FACT OR
AFFILIATES UNDER OR IN CONNECTION WITH ANY OF THE FOREGOING, INCLUDING ANY
LIABILITIES, CLAIMS, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS,
JUDGMENTS, SUITS, COSTS, EXPENSES AND DISBURSEMENTS IMPOSED, INCURRED OR
ASSERTED AS A RESULT OF THE NEGLIGENCE, WHETHER SOLE OR CONCURRENT, OF THE AGENT
AS THE ISSUER OF SUCH LETTER OF CREDIT OR ANY OF ITS OFFICERS, DIRECTORS,
EMPLOYEES, AGENTS, ATTORNEYS-IN-FACT OR AFFILIATES; PROVIDED THAT NO LENDER
(OTHER THAN THE AGENT AS THE ISSUER OF A LETTER OF CREDIT) SHALL BE LIABLE FOR
THE PAYMENT OF ANY PORTION OF SUCH LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES,
PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES OR DISBURSEMENTS RESULTING
SOLELY FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE AGENT AS THE
ISSUER OF A LETTER OF CREDIT. THE AGREEMENTS IN THIS SECTION 2.2(d) SHALL
SURVIVE THE PAYMENT AND PERFORMANCE OF ALL OBLIGATIONS AND THE TERMINATION OF
THIS AGREEMENT.
2.3 Limitations on Interest Periods. Each Interest Period selected
by the Borrowers (a) which commences on the last Business Day of a calendar
month (or any day for which there is no numerically corresponding day in the
appropriate subsequent calendar month) shall end on the last Business Day of the
appropriate subsequent calendar month, (b) which would otherwise end on a day
which is not a Business Day shall end on the next succeeding Business Day (or,
if such next succeeding Business Day falls in the next succeeding calendar
month, on the next preceding Business Day), (c) which would otherwise end after
Final Maturity shall end on Final Maturity, and (d) shall have a duration of not
less than one month and, if any Interest Period would otherwise be a shorter
period, the relevant Loan shall be a Base Rate Loan during such period.
2.4 Limitation on Types of Loans. Anything herein to the contrary
notwithstanding, no more than ten separate Loans shall be outstanding at any one
time, with, for purposes of this Section, all Base Rate Loans constituting one
Loan, and all LIBO Rate Loans for the same Interest Period constituting one
Loan. Anything herein to the contrary notwithstanding, if, on or prior to the
determination of any interest rate for any LIBO Rate Loan for any Interest
Period therefor:
(a) the Agent determines (which determination shall be conclusive,
absent manifest error) that quotations of interest rates for the deposits
referred to in the definition of "LIBO Rate" in Section 1.2 are not being
provided in the relevant amounts or for the relevant maturities for
purposes of determining the rate of interest for such Loan as provided in
this Agreement; or
(b) the Agent or the Required Lenders determine (which determination
shall be conclusive, absent manifest error) that the rates of interest
referred to in the definition of "LIBO Rate" in Section 1.2 upon the basis
of which the rate of interest for such Loan for such Interest Period is to
be determined do not
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adequately cover the cost to the Lenders of making or maintaining such
Loan for such Interest Period,
then the Agent shall give the Borrowers and the Lenders prompt notice thereof;
and so long as such condition remains in effect, the Lenders shall be under no
obligation to make LIBO Rate Loans or to convert Base Rate Loans into LIBO Rate
Loans, and the Borrowers shall, on the last day of the then current Interest
Period for each outstanding LIBO Rate Loan, either prepay such LIBO Rate Loan or
convert such Loan into a Base Rate Loan in accordance with Section 2.13. During
the 30 days next succeeding the giving of such notice by the Agent to the
Borrowers, the Borrowers, the Agent and each of the Lenders shall negotiate in
good faith in order to arrive at a mutually satisfactory interest rate for the
rates of interest referred to in the definition "LIBO Rate" or "Adjusted LIBO
Rate" for proposed LIBO Rate Loans. If within such 30-day period the Borrowers,
the Agent and the Lenders shall agree in writing upon a substitute interest rate
and the effective date thereof, such substituted interest rate shall be
applicable to all requests by the Borrowers for proposed LIBO Rate Loans. During
any period when the borrowing of LIBO Rate Loans is suspended or when an
alternative interest rate is in force pursuant to this subsection, the Agent, in
consultation with the Lenders, shall periodically, at least once a month,
determine whether circumstances are such that the interest rates referred to in
the definitions of "LIBO Rate" or "Adjusted LIBO Rate" may again be determined.
If such a determination is made, the Agent shall forthwith give written notice
to the Borrowers and each Lender, whereupon the Agent, the Borrowers and the
Lenders shall begin redetermining the "LIBO Rate" and the "Adjusted LIBO Rate"
in accordance with the terms of the definitions thereof.
2.5 Use of Loan Proceeds and Letters of Credit. (a) As of the date
hereof, (i) principal indebtedness in the amount set forth in Exhibit X under
the heading "Existing Loan Balances" is outstanding under the Existing Bank One
Notes, and (ii) principal indebtedness in the amount set forth in Exhibit X
under the heading "Existing Loan Balances" is outstanding under the Existing
Comerica Notes. The Lenders shall purchase such indebtedness, together with all
accrued and unpaid interest thereon, such that the initial Loans hereunder shall
be in the aggregate amount of such purchased indebtedness. Such indebtedness
shall be renewed, extended, and rearranged pursuant to the terms of this
Agreement, the Notes, and the relevant Borrowing Request and shall for all
purposes be deemed a borrowing hereunder. Proceeds of all subsequent Loans shall
be used solely for general corporate purposes, working capital and acquisitions.
(b) Letters of Credit shall be used solely for general corporate
purposes; provided, however, no Letter of Credit may be used in lieu or in
support of stay or appeal bonds.
2.6 Interest. Subject to the terms of this Agreement (including
Section 2.19), interest on the Loans shall accrue and be payable at a rate per
annum equal to the Adjusted Base Rate for each Base Rate Loan and the Adjusted
LIBO Rate for each LIBO Rate Loan. Notwithstanding the foregoing, interest on
past-due principal and, to the extent permitted by applicable law, past-due
interest, shall accrue at the Default Rate and shall be payable upon demand by
the Agent at any time as to all or any portion of such interest. In the event
that the Borrower fails to select the duration of any Interest Period for any
LIBO Rate Loan within the
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time period and otherwise as provided herein, such Loan (if outstanding as a
LIBO Rate Loan) will be automatically converted into a Base Rate Loan on the
last day of the then current Interest Period for such Loan or (if outstanding as
a Base Rate Loan) will remain as, or (if not then outstanding) will be made as,
a Base Rate Loan. Interest provided for herein shall be calculated on unpaid
sums actually advanced and outstanding pursuant to the terms of this Agreement
and only for the period from the date or dates of such advances until repayment.
2.7 Repayment of Loans and Interest. Accrued and unpaid interest on
each outstanding Base Rate Loan shall be due and payable quarterly commencing on
the 31st day of December, 1996, and continuing on the last day of each third
calendar month thereafter while any Base Rate Loan remains outstanding, the
payment in each instance to be the amount of interest which has accrued and
remains unpaid in respect of the relevant Loan. Accrued and unpaid interest on
each outstanding LIBO Rate Loan shall be due and payable on the last day of the
Interest Period for such LIBO Rate Loan and, in the case of any Interest Period
in excess of three months, on the day of the third calendar month following the
commencement of such Interest Period corresponding to the day of the calendar
month on which such Interest Period commenced, the payment in each instance to
be the amount of interest which has accrued and remains unpaid in respect of the
relevant Loan. The Loan Balance, together with all accrued and unpaid interest
thereon, shall be due and payable at Final Maturity. At the time of making each
payment hereunder or under the Notes, the Borrowers shall specify to the Agent
the Loans or other amounts payable by the Borrowers hereunder to which such
payment is to be applied. In the event the Borrowers fail to so specify, or if
an Event of Default has occurred and is continuing, the Agent may apply such
payment as it may elect in its discretion and in accordance with the terms
hereof.
2.8 General Terms. (a) The outstanding principal balance of the Note
of each Lender reflected in the records of such Lender shall be deemed
rebuttably presumptive evidence of the principal amount owing on such Note. The
liability for payment of principal and interest evidenced by each Note shall be
limited to principal amounts actually advanced and outstanding pursuant to this
Agreement and interest on such amounts calculated in accordance with this
Agreement.
(b) Unless the Agent shall have been notified by a Lender or the
Borrowers prior to the date on which any of them is scheduled to make payment to
the Agent of (in the case of a Lender) the proceeds of a Loan to be made by such
Lender hereunder or (in the case of the Borrowers) a payment to the Agent for
the account of one or more of the Lenders hereunder (such payment, in either
case, being herein called the "Required Payment"), which notice shall be
effective upon receipt, that it does not intend to make the Required Payment to
the Agent, the Agent may assume that the Required Payment has been made and, in
reliance upon such assumption, may (but shall not be required to) make the
amount thereof available to the intended recipient on such date. If such Lender
or the Borrowers, as the case may be, have not in fact made the Required Payment
to the Agent, the recipient of such payment shall, on demand, repay to the Agent
for its account the amount so made available together with interest thereon in
respect of each day during the period commencing on the date such amount was so
made available by the Agent until the date the Agent recovers such amount at a
rate per annum
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equal to, in the case of a Lender as recipient, the Federal Funds Rate or, in
the case of the Borrowers as recipient, the Adjusted Base Rate.
2.9 Time, Place, and Method of Payments. All payments required
pursuant to this Agreement or the Notes shall be made without set-off or
counterclaim in Dollars and in immediately available funds. All payments by the
Borrowers shall be deemed received on the next Business Day following receipt if
such receipt is after 3:00 p.m., Eastern Standard or Daylight Savings Time, as
the case may be, on any Business Day, and shall be made to the Agent at the
Principal Office. Except as provided to the contrary herein, if the due date of
any payment hereunder or under any Note would otherwise fall on a day which is
not a Business Day, such date shall be extended to the next succeeding Business
Day, and interest shall be payable for any principal so extended for the period
of such extension.
2.10 Pro Rata Treatment; Adjustments. (a) Except to the extent
otherwise expressly provided herein, (i) each borrowing pursuant to this
Agreement shall be made from the Lenders pro rata in accordance with their
respective Percentage Shares, (ii) each payment by the Borrowers of fees shall
be made for the account of the Lenders pro rata in accordance with their
respective Percentage Shares, (iii) each payment of principal of Loans shall be
made for the account of the Lenders pro rata in accordance with their respective
shares of the Loan Balance, and (iv) each payment of interest on Loans shall be
made for the account of the Lenders pro rata in accordance with their respective
shares of the aggregate amount of interest due and payable to the Lenders.
(b) The Agent shall distribute all payments with respect to the
Obligations to the Lenders promptly upon receipt in like funds as received. In
the event that any payments made hereunder by the Borrowers at any particular
time are insufficient to satisfy in full the Obligations due and payable at such
time, such payments shall be applied (i) first, to fees and expenses due
pursuant to the terms of this Agreement or any other Loan Document, (ii) second,
to accrued interest, (iii) third, to the Loan Balance, and (iv) last, to any
other Obligations.
(c) If any Lender (for purposes of this Section, a "Benefitted
Lender") shall at any time receive any payment of all or part of its portion of
the Obligations, or receive any Collateral in respect thereof (whether
voluntarily or involuntarily, by set-off, pursuant to events or proceedings of
the nature referred to in Sections 7.1(f) or 7.1(g), or otherwise) in an amount
greater than such Lender was entitled to receive pursuant to the terms hereof,
such Benefitted Lender shall purchase for cash from the other Lenders such
portion of the Obligations of such other Lenders, or shall provide such other
Lenders with the benefits of any such Collateral or the proceeds thereof, as
shall be necessary to cause such Benefitted Lender to share the excess payment
or benefits of such Collateral or proceeds with each of the Lenders according to
the terms hereof. If all or any portion of such excess payment or benefits is
thereafter recovered from such Benefitted Lender, such purchase shall be
rescinded and the purchase price and benefits returned by such Lender, to the
extent of such recovery, but without interest. The Borrower agrees that each
such Lender so purchasing a portion of the Obligations of another Lender may
exercise all rights of payment (including rights of set-off) with respect to
such portion as fully as if such Lender were the direct holder of such portion.
If any Lender ever receives, by voluntary payment, exercise of rights of set-off
or banker's lien, counterclaim,
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cross-action or otherwise, any funds of the Borrower to be applied to the
Obligations, or receives any proceeds by realization on or with respect to any
Collateral, all such funds and proceeds shall be forwarded immediately to the
Agent for distribution in accordance with the terms of this Agreement.
2.11 Borrowing Base Determinations. (a) The Borrowing Base as of the
Closing Date is agreed by the Borrowers and the Lenders to be $75,000,000.
(b) The Borrowing Base shall be redetermined by the Agent, with the
consent of the Lenders, semi-annually on the basis of information supplied by
the Borrowers in compliance with the provisions of this Agreement, including
Reserve Reports, and all other information available to the Agent and the
Lenders. In addition, the Agent, with the consent of the Lenders, shall, in the
normal course of business following a request of the Borrowers, redetermine the
Borrowing Base; provided, however, the Agent and the Lenders shall not be
obligated to respond to more than two (2) such requests during any calendar year
in addition to each scheduled semi-annual redetermination provided for above.
Notwithstanding the foregoing, the Agent, with the consent of the Lenders, may
at its discretion redetermine the Borrowing Base at any time and from time to
time.
(c) Each determination of the Borrowing Base shall be made within
forty-five (45) days of the Agent's receiving all of the information required
under this Agreement in connection therewith. Upon each determination of the
Borrowing Base, the Agent shall promptly, and in all events within such 45 days,
notify the Borrowers orally (confirming such notice promptly in writing) of such
determination and the Borrowing Base so communicated to the Borrowers shall
become effective upon such oral notification and shall remain in effect until
the next subsequent determination of the Borrowing Base.
(d) In connection with any redetermination of the Borrowing Base,
the Agent and each Lender shall evaluate the Mortgaged Properties in accordance
with their then existing customary lending procedures for evaluating oil and gas
reserves and related assets for loans of this type and borrowers similarly
situated. The Borrowing Base shall represent the determination by the Agent
based upon such evaluation by the Agent, with the consent of the Lenders, of the
value for loan purposes of the Mortgaged Properties, subject, in the case of any
increase in the Borrowing Base, to the credit approval processes of the Lenders
then in effect for loans of this type and borrowers similarly situated. In the
event that a group of Lenders constituting at least the Required Lenders are in
agreement as to the amount of any Borrowing Base redetermination but such amount
is not approved unanimously by all of the Lenders, then the Borrowing Base shall
be the amount as determined by such Required Lenders for a period of 60 days
from the date of notification of such Borrowing Base to the Borrowers pursuant
to Section 2.11(c). During such 60 day period or at any time thereafter, the
Borrowers may, at their election, terminate the Commitments of such dissenting
Lenders pursuant to the procedures set forth in Section 2.24. At the end of such
60 day period, the Borrowing Base shall be an amount agreed to by the Agent and
all of the Lenders. Furthermore, subject to the customary lending procedures and
credit approval processes referred to in the preceding sentence, each Borrower
acknowledges that the Agent and the Lenders have no obligation to increase the
Borrowing Base and may reduce the Borrowing Base, in either case, at any time or
as a result
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of any circumstance, and further acknowledges that the determination of the
Borrowing Base contains an equity cushion (market value in excess of loan
value), which is acknowledged by each Borrower to be essential for the adequate
protection of the Lenders.
2.12 Mandatory Prepayments. If at any time the sum of the Loan
Balance and the L/C Exposure exceeds the lesser of the Maximum Facility Amount
or the Borrowing Base then in effect, the Borrowers shall, within 30 days of
notice from the Agent of such occurrence, (a) prepay, or make arrangements
acceptable to the Required Lenders for the prepayment of, the amount of such
excess for application on the Loan Balance, (b) provide additional collateral,
of character and value satisfactory to the Required Lenders in their sole
discretion, to secure the Obligations by the execution and delivery to the Agent
of security instruments in form and substance satisfactory to the Agent, or (c)
effect any combination of the alternatives described in clauses (a) and (b) of
this Section and acceptable to the Required Lenders in their discretion. In the
event that a mandatory prepayment is required under this Section and the Loan
Balance is less than the amount required to be prepaid, the Borrowers shall
repay the entire Loan Balance and, in accordance with the provisions of the
relevant Letter of Credit Applications executed by the Borrowers or otherwise to
the satisfaction of the Agent, deposit with the Agent, as additional collateral
securing the Obligations, an amount of cash, in immediately available funds,
equal to the L/C Exposure minus the lesser of the Maximum Facility Amount or the
Borrowing Base. The cash deposited with the Agent in satisfaction of the
requirement provided in this Section may be invested at the express direction of
the Borrowers as to investment vehicle and maturity (which shall be no later
than the latest expiry date of any then outstanding Letter of Credit), for the
account of the Borrowers in cash or cash equivalent investments offered by or
through the Agent.
2.13 Voluntary Prepayments and Conversions of Loans. Subject to
applicable provisions of this Agreement, the Borrowers shall have the right at
any time or from time to time to prepay Loans and to convert Loans of one type
or with one Interest Period into Loans of another type or with a different
Interest Period; provided, however, that (a) the Borrowers shall give the Agent
notice of each such conversion of all or any portion of a LIBO Rate Loan no less
than three Business Days prior to conversion, (b) any LIBO Rate Loan may be
prepaid or converted only on the last day of an Interest Period for such Loan,
unless the Borrowers pay, within the time period set forth therefor in Section
2.21(e), the amount, if any, required to be paid under Section 2.21(e), (c) each
prepayment, in the case of Base Rate Loans, shall be in an amount not less than
$100,000 or incremental amounts of $100,000 in excess thereof or the Loan
Balance and, in the case of LIBO Rate Loans, shall be in an amount not less than
$1,000,000 or incremental amounts of $100,000 in excess thereof or the Loan
Balance, (d) the Borrower shall pay all accrued and unpaid interest on the
amounts prepaid or converted, and (e) no such prepayment or conversion shall
serve to postpone the repayment when due of any Obligation.
2.14 Commitment Fee. To compensate the Lenders for maintaining funds
available, the Borrowers shall pay to the Agent for the account of the Lenders a
fee in the amount of three-eighths of one percent (.375%) per annum, calculated
on the basis of a year of 365 or 366 days, as the case may be, and actual days
elapsed (including the first day but excluding the last day), on the average
daily amount of the Available Commitment. Such accrued commitment fees shall be
payable on the 31st day of December, 1996, the last day of
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each third calendar month thereafter during the Commitment Period, and on the
Commitment Termination Date.
2.15 Letter of Credit Fee. The Borrower shall pay to the Agent for
the account of the Lenders a letter of credit fee in the amount of the
Applicable Margin for LIBO Rate Loans in effect at such time per annum,
calculated on the basis of a year of 360 days and actual days elapsed (including
the first day but excluding the last day), on the average daily amount of the
L/C Exposure. Accrued letter of credit fees shall be payable quarterly in
arrears on the 31st day of December, 1996, the last day of each third calendar
month thereafter during the Commitment Period, and at Final Maturity. The
Borrower shall pay to the Agent for its own account as the issuer of each Letter
of Credit, on the date of issuance or renewal of each Letter of Credit, an
issuing fee equal to one-eighth of one percent (.125%) per annum, calculated on
the basis of a year of 365 or 366 days, as the case may be, and actual days
elapsed (including the first day but excluding the last day), on the face amount
of such Letter of Credit during the period for which such Letter of Credit is
issued or renewed. The Borrower also agrees to pay on demand to the Agent for
its own account as the issuer of the Letters of Credit its customary letter of
credit transactional fees and expenses, including amendment fees, payable with
respect to each Letter of Credit.
2.16 Other Fees. The Borrowers shall pay to the Agent for its own
account all fees owing or which may become owing under the Fee Letter as
provided therein; provided, however, the Agent shall pay to each Lender who is a
signatory to this Agreement as of the Closing Date a portion of the arrangement
fee payable under the Fee Letter in an amount equal to .05% of the Facility
Amount of such Lender.
2.17 Loans to Satisfy Obligations of Borrowers. The Lenders may,
with the consent of the Agent, but shall not be obligated to, make Loans for the
benefit of the Borrowers and apply proceeds thereof to the satisfaction of any
condition, warranty, representation, or covenant of the Borrowers or the
Guarantor contained in this Agreement or any other Loan Document. Such Loans
shall be evidenced by the Notes, shall bear interest at the Default Rate, and
shall be payable upon demand.
2.18 Right of Offset. Each Borrower hereby grants to the Agent and
each Lender (for the pro rata benefit of all Lenders) the right, exercisable at
such time as any Event of Default shall occur, of offset or banker's lien
against all funds of each Borrower now or hereafter or from time to time on
deposit with the Agent or such Lender, regardless of whether the exercise of any
such remedy would result in any penalty or loss of interest or profit with
respect to any withdrawal of funds deposited in a time deposit account prior to
the maturity thereof.
2.19 General Provisions Relating to Interest. (a) It is the
intention of the parties hereto to comply strictly with all applicable usury
laws. In this connection, there shall never be collected, charged, or received
on the sums advanced hereunder interest in excess of that which would accrue at
the Highest Lawful Rate.
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(b) Notwithstanding anything herein or in the Notes to the contrary,
during any Limitation Period, the interest rate to be charged on amounts
evidenced by the Notes shall be the Highest Lawful Rate, and the obligation, if
any, of each Borrower for the payment of fees or other charges deemed to be
interest under applicable law shall be suspended. During any period or periods
of time following a Limitation Period, to the extent permitted by applicable
law, the interest rate to be charged hereunder shall remain at the Highest
Lawful Rate until such time as there has been paid to the Agent and each Lender
(i) the amount of interest in excess of that accruing at the Highest Lawful Rate
that such Lender would have received during the Limitation Period had the
interest rate remained at the otherwise applicable rate, and (ii) all interest
and fees otherwise payable to the Agent and such Lender but for the effect of
such Limitation Period.
(c) If, under any circumstances, the aggregate amounts paid on the
Notes or under this Agreement or any other Loan Document include amounts which
by applicable law are deemed interest and which would exceed the amount
permitted if the Highest Lawful Rate were in effect, each Borrower stipulates
that such payment and collection will have been and will be deemed to have been,
to the extent permitted by applicable law, the result of mathematical error on
the part of such Borrower, the Agent, and the Lenders; and the party receiving
such excess shall promptly refund the amount of such excess (to the extent only
of such interest payments in excess of that which would have accrued and been
payable on the basis of the Highest Lawful Rate) upon discovery of such error by
such party or notice thereof from such Borrower. In the event that the maturity
of any Obligation is accelerated, by reason of an election by the Lenders or
otherwise, or in the event of any required or permitted prepayment, then the
consideration constituting interest under applicable law may never exceed the
Highest Lawful Rate, and excess amounts paid which by applicable law are deemed
interest, if any, shall be credited by the Agent and the Lenders on the
principal amount of the Obligations, or if the principal amount of the
Obligations shall have been paid in full, refunded to such Borrower.
(d) All sums paid, or agreed to be paid, to the Agent and the
Lenders for the use, forbearance and detention of the proceeds of any advance
hereunder shall, to the extent permitted by applicable law, be amortized,
prorated, allocated, and spread throughout the full term hereof until paid in
full so that the actual rate of interest is uniform but does not exceed the
Highest Lawful Rate throughout the full term hereof.
2.20 Obligations Absolute. Subject to the further provisions of this
Section, the Obligations of the Borrowers under this Article shall be absolute
and unconditional under any and all circumstances and irrespective of any
set-off, counterclaim, or defense to payment or performance which the Borrowers
may have or have had against the Agent, any Lender, or any beneficiary of any
Letter of Credit. Each Borrower agrees that none of the Agent or the Lenders
shall be responsible for, nor shall the Obligations be affected by, among other
things, (a) the validity or genuineness of documents or any endorsements thereon
presented in connection with any Letter of Credit, even if such documents shall
in fact prove to be in any and all respects invalid, fraudulent or forged, AND
EVEN IF DUE TO THE NEGLIGENCE, WHETHER SOLE OR CONCURRENT, OF THE AGENT OR ANY
LENDER, so long as the Agent, as the issuer of such Letter of Credit, has no
actual knowledge of any such invalidity, lack of genuineness, fraud, or forgery
prior to the presentment for payment of a corresponding Letter of Credit or
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any draft thereunder, or (b) any dispute between or among the Borrowers and any
beneficiary of any Letter of Credit or any other party to which any Letter of
Credit may be transferred, or any claims whatsoever of the Borrowers against any
beneficiary of any Letter of Credit or any such transferee, EVEN IF DUE TO THE
NEGLIGENCE, WHETHER SOLE OR CONCURRENT, OF THE AGENT OR ANY LENDER; provided, in
all respects, that the Agent, as the issuer of Letters of Credit, shall be
liable to the Borrowers to the extent, but only to the extent, of any damages
(other than punitive damages) suffered by the Borrowers as a result of the
willful misconduct or gross negligence of the Agent as the issuer of Letters of
Credit in determining whether documents presented under a Letter of Credit
complied with the terms of such Letter of Credit that resulted in either a
wrongful payment under such Letter of Credit or a wrongful dishonor of a claim
or draft properly presented under such Letter of Credit. In the absence of gross
negligence or willful misconduct by the Agent as the issuer of Letters of
Credit, the Agent shall not be liable for any error, omission, interruption or
delay, EVEN IF DUE TO THE NEGLIGENCE, WHETHER SOLE OR CONCURRENT, OF THE AGENT,
in transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit. The Agent, the Lenders,
and the Borrowers agree that any action taken or omitted by the Agent, as issuer
of any Letter of Credit, under or in connection with any Letter of Credit or the
related drafts or documents, EVEN IF DUE TO THE NEGLIGENCE, WHETHER SOLE OR
CONCURRENT, OF THE AGENT OR ANY LENDER, if done in the absence of gross
negligence or willful misconduct, shall be binding as among the Agent, as issuer
of such Letter of Credit or otherwise, the Lenders, and the Borrowers and shall
not put the Agent, as issuer of such Letter of Credit or otherwise, or any
Lender under any liability to the Borrowers; provided, however, that no such
action taken or omitted to be taken by the Agent shall be binding upon the
Borrowers as against any Person other than the Agent and the Lenders.
Notwithstanding any provision to the contrary in this Section 2.20 or elsewhere
in this Agreement, the Agent, as the issuer of the Letters of Credit, agrees to
exercise ordinary care in examining each document required to be presented
pursuant to each Letter of Credit to ascertain that each such document appears
on its face to comply with the terms thereof.
2.21 Yield Protection. (a) Without limiting the effect of the other
provisions of this Section (but without duplication), the Borrowers shall pay to
the Agent and each Lender from time to time, within five (5) Business Days of
receipt of the certificate provided for in Section 2.21(e), such amounts as the
Agent or such Lender may reasonably determine are necessary to compensate it for
any Additional Costs incurred by the Agent or such Lender.
(b) Without limiting the effect of the other provisions of this
Section (but without duplication), the Borrowers shall pay to each Lender from
time to time, within five Business Days of receipt of the certificate provided
for in Section 2.21(e), such amounts as such Lender may determine are necessary
to compensate such Lender for any actual costs incurred by such Lender
attributable to the maintenance by such Lender (or any Applicable Lending
Office), pursuant to any Regulatory Change, of capital (other than the Reserve
Requirement utilized in the determination of any Adjusted LIBO Rate or the
Adjusted CD Rate) in respect of its Commitment, such compensation to include an
amount equal to any reduction of the rate of return on assets or equity of such
Lender (or any Applicable Lending Office) to a level below that which such
Lender (or any Applicable Lending Office) could have achieved but for such
Regulatory Change.
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(c) Without limiting the effect of the other provisions of this
Section (but without duplication), in the event that any Regulatory Change or
the compliance by the Agent or any Lender therewith shall (i) impose, modify, or
hold applicable any reserve, special deposit, or similar requirement against any
Letter of Credit or obligation to issue Letters of Credit, or (ii) impose upon
the Agent or such Lender any other condition regarding any Letter of Credit or
obligation to issue Letters of Credit, and the result of any such event shall be
to increase the cost to the Agent or such Lender of issuing or maintaining any
Letter of Credit or obligation to issue Letters of Credit or any liability with
respect to Letter of Credit Payments, or to reduce any amount receivable in
connection therewith, then, within five Business Days of receipt of the
certificate provided for in Section 2.21(e), the Borrowers shall pay to the
Agent or such Lender, as the case may be, from time to time as specified by the
Agent or such Lender, the additional amounts indicated in such certificate as
sufficient to compensate the Agent or such Lender for such increased cost or
reduced amount receivable.
(d) Without limiting the effect of the other provisions of this
Section (but without duplication), the Borrowers shall pay to the Agent and each
Lender such amounts as shall be indicated in such certificate as sufficient to
compensate them for any loss, cost, or expense incurred by and as a result of:
(i) any payment, prepayment, or conversion by the Borrowers of a
LIBO Rate Loan on a date other than the last day of an
Interest Period for such Loan; or
(ii) any failure by the Borrowers to borrow a LIBO Rate Loan or to
convert a Base Rate Loan into a LIBO Rate Loan on the date for
such borrowing or conversion specified in the relevant
Borrowing Request;
such compensation to include with respect to any LIBO Rate Loan, an amount equal
to the excess, if any, of (A) the amount of interest which would have accrued on
the principal amount so paid, prepaid, converted, or not borrowed or converted
for the period from the date of such payment, prepayment, conversion, or failure
to borrow or convert to the last day of the then current Interest Period for
such Loan (or, in the case of a failure to borrow or convert, the Interest
Period for such Loan which would have commenced on the date of such failure to
borrow or convert) at the applicable rate of interest for such Loan provided for
herein over (B) the interest component of the amount the Agent or such Lender
bid in the London interbank market in respect of such Loan for Dollar deposits
of amounts comparable to such principal amount and maturities comparable to such
period, as reasonably determined by the Agent or such Lender.
(e) Determinations by the Agent or any Lender for purposes of this
Section of the effect of any Regulatory Change on capital maintained, its costs
or rate of return, maintaining Loans, issuing Letters of Credit, its obligation
to make Loans and issue Letters of Credit, or on amounts receivable by it in
respect of Loans, Letters of Credit, or such obligations, and the additional
amounts required to compensate the Agent and such Lender under this Section
shall be conclusive, absent manifest error, provided that such determinations
are
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made on a reasonable basis. The Agent or the relevant Lender shall furnish the
Borrowers with a certificate setting forth in reasonable detail the basis and
amount of increased costs incurred or reduced amounts receivable as a result of
any such event, and the statements set forth therein shall be conclusive, absent
manifest error. The Agent or the relevant Lender shall (i) notify the Borrowers,
as promptly as practicable after the Agent or such Lender obtains knowledge of
any Additional Costs or other sums payable pursuant to this Section and
determines to request compensation therefor, in respect of any event occurring
after the Closing Date which will entitle the Agent or such Lender to
compensation pursuant to this Section; provided that the Borrowers shall not be
obligated for the payment of any Additional Costs or other sums payable pursuant
to this Section to the extent such Additional Costs or other sums accrued more
than 90 days prior to the date upon which the Borrowers were given such notice;
and (ii) designate a different Applicable Lending Office for the Loans affected
by such event if such designation will avoid the need for or reduce the amount
of such compensation and will not, in the sole opinion of the Agent or such
Lender, be disadvantageous to the Agent or such Lender. Any compensation
requested by the Agent or any Lender pursuant to this Section shall be due and
payable within five Business Days of delivery of any such notice to the
Borrowers.
2.22 Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Lender or its
Applicable Lending Office to (a) honor its obligation to make LIBO Rate Loans,
or (b) maintain LIBO Rate Loans, then such Lender shall promptly notify the
Agent and the Borrowers thereof. The obligation of such Lender to make LIBO Rate
Loans and convert Base Rate Loans into LIBO Rate Loans shall then be suspended
until such time as such Lender may again make and maintain LIBO Rate Loans, and
the outstanding LIBO Rate Loans of such Lender shall be converted into Base Rate
Loans in accordance with Section 2.13; provided, however, each Lender shall use
reasonable efforts to designate a different Applicable Lending Office with
respect to any LIBO Rate Loan affected by the matters or circumstances described
in this Section to avoid the results provided in this Section if possible, so
long as such designation is not disadvantageous to the Lenders as determined by
them in their sole discretion.
2.23 Taxes. (a) All payments made by the Borrowers under this
Agreement shall be made free and clear of, and without reduction or withholding
for or on account of, present or future income, stamp or other taxes, levies,
imposts, duties, charges, fees, deductions or withholdings, hereafter imposed,
levied, collected, withheld or assessed by any Governmental Authority on the
basis of any change after the date hereof in any applicable treaty, law, rule,
guideline or regulations or in the interpretation or administration thereof,
excluding, in the case of the Agent and each Lender, income and franchise taxes
(whether based upon net income, capital or profits) imposed on the Agent or such
Lender (all such non-excluded taxes, levies, imposts, deductions, charges or
withholdings being hereinafter called "Taxes"). If any Taxes are required to be
withheld from any amounts payable to the Agent or any Lender hereunder or under
any other Loan Document, the amounts so payable to the Agent or such Lender
shall be increased to the extent necessary to yield to the Agent or such Lender
(after payment of all Taxes) interest or any such other amounts payable
hereunder at the rates or in the amounts specified in this Agreement and the
other Loan Documents. Whenever any Taxes are payable by the Borrowers, promptly
thereafter the Borrowers shall send to the Agent for its own account or for the
account of such Lender, as the case may be, a certified copy of an original
official
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receipt received by the Borrowers showing payment thereof. If any Borrower fails
to pay any Taxes when due to the appropriate taxing authority or fails to remit
to the Agent the required receipts or other required documentary evidence, such
Borrower shall indemnify the Agent and the Lenders for any incremental taxes,
interest or penalties that may become payable by the Agent or any Lender as a
result of any such failure. The agreements in this Section shall survive the
termination of this Agreement and the payment of all Obligations.
(b) Each Lender that is not incorporated under the laws of the
United States of America or a state thereof agrees that, on the date hereof or,
if it becomes a Lender in accordance with Section 9.1, on the date of the
applicable Assignment Agreement, it will, to the extent it may lawfully do so,
deliver to the Borrowers and the Agent two duly completed copies of United
States Internal Revenue Service Form W-8, 1001 or 4224 or any other applicable
form, as the case may be, certifying in each case that such Lender is entitled
to receive payments under any Loan Document, without deduction or withholding of
any United States federal income taxes. At the written request of the Borrowers,
each Lender which delivers to the Borrowers and the Agent a form pursuant to the
preceding sentence further undertakes to deliver to the Borrowers and the Agent
two further copies of such form, or successor applicable forms, or other manner
of certification, as the case may be, on or before the date that any such letter
or form expires or becomes obsolete or after the occurrence of any event
requiring a change in the most recent form previously delivered by it to the
Borrowers, and such extensions or renewals thereof as may reasonably be
requested by the Borrowers, certifying in the case of each such form that such
Lender is entitled to receive payments under any Loan Document without deduction
or withholding of any United States federal income taxes, unless in any such
case, an event (including any change in treaty, law or regulation) has occurred
prior to the date on which any such delivery would otherwise be required which
renders all such forms inapplicable or which would prevent such Lender from duly
completing and delivering any such form with respect to it and such Lender
advises the Borrowers that it is not capable of receiving payments without any
deduction or withholding of United States federal income tax.
2.24 Replacement Lenders. (a) If any Lender (i) has notified the
Borrowers of its incurring additional costs under Section 2.21 or the illegality
of LIBO Rate Loans under Section 2.22, (ii) has required the Borrowers to make
payments for Taxes under Section 2.23, (iii) has informed any Borrower of a
Regulatory Change in accordance with Section 2.25, or (iv) is not in agreement
with the amount of any Borrowing Base redetermination which a group of Lenders
constituting at least the Required Lenders has approved, then in any such event
the Borrowers may, unless such Lender has notified the Borrowers that the
circumstances giving rise to such notice no longer apply, terminate, in whole
but not in part, the Commitment of such Lender (other than the Agent) (the
"Terminated Lender") at any time upon five Business Days' prior written notice
to the Terminated Lender and the Agent (such notice referred to herein as a
"Notice of Termination").
(b) In order to effect the termination of the Commitment of the
Terminated Lender, the Borrowers shall (i) obtain an agreement with one or more
Lenders to increase their Commitments and/or (ii) request any one or more other
banking institutions to become a "Lender" in place and instead of such
Terminated Lender and agree to accept a Commitment; provided, however, that such
one or more other banking institutions are reasonably acceptable
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to the Agent and become parties by executing an Assignment Agreement (the
Lenders or other banking institutions that agree to accept in whole or in part
the Commitment of the Terminated Lender being referred to herein as the
"Replacement Lenders"), such that the aggregate increased and/or accepted
Facility Amounts of the Replacement Lenders under clauses (i) and (ii) above
equal the Facility Amount of the Terminated Lender.
(c) The Notice of Termination shall include the name of the
Terminated Lender, the date the termination will occur (the "Termination Date"),
the Replacement Lender or Replacement Lenders to which the Terminated Lender
will assign its Commitment, and, if there will be more than one Replacement
Lender, the portion of the Terminated Lender's Commitment to be assigned to each
Replacement Lender.
(d) On the Termination Date, (i) the Terminated Lender shall by
execution and delivery of an Assignment Agreement assign its Commitment to the
Replacement Lender or Replacement Lenders (pro rata, if there is more than one
Replacement Lender, in proportion to the portion of the Terminated Lender's
Commitment to be assigned to each Replacement Lender) indicated in the Notice of
Termination and shall assign to the Replacement Lender or Replacement Lenders
its Loan (if any) then outstanding pro rata as aforesaid), (ii) the Terminated
Lender shall endorse its Note, payable without recourse, representation or
warranty to the order of the Replacement Lender or Replacement Lenders (pro rata
as aforesaid), (iii) the Replacement Lender or Replacement Lenders shall
purchase the Note held by the Terminated Lender (pro rata as aforesaid) at a
price equal to the unpaid principal amount thereof plus interest and fees
accrued and unpaid to the Termination Date, (iv) the Borrowers shall, upon
request, execute and deliver, at their own expense, new Notes to the Replacement
Lenders in accordance with their respective interests, (v) the Borrowers shall,
upon request, pay any compensation due to the Terminated Lender pursuant to
Section 2.21, of which the Borrowers have received notice pursuant to Section
2.21(e) from the Terminated Lender within three (3) Business Days of receipt by
such Terminated Lender of a Notice of Termination, and (vi) the Replacement
Lender or Replacement Lenders will thereupon (pro rata as aforesaid) succeed to
and be substituted in all respects for the Terminated Lender from and after such
date with like effect as if becoming a Lender pursuant to the terms of Section
9.1(b), and the Terminated Lender will have the rights and benefits of an
assignor under Section 9.1(b). To the extent not in conflict, the terms of
Section 9.1(b) shall supplement the provisions of this Section.
2.25 Regulatory Change. In the event that by reason of any
Regulatory Change, any Lender (a) incurs Additional Costs based on or measured
by the excess above a specified level of the amount of a category of deposits or
other liabilities of such Lender which includes deposits by reference to which
the interest rate on any LIBO Rate Loan is determined as provided in this
Agreement or a category of extensions of credit or other assets of such Lender
which includes any LIBO Rate Loan, or (b) becomes subject to restrictions on the
amount of such a category of liabilities or assets which it may hold, then, at
the election of such Lender with notice to the Agent and the Borrowers setting
forth in reasonable detail a calculation of such Additional Costs or a
description of such restrictions, the obligation of such Lender to make LIBO
Rate Loans and to convert Base Rate Loans into LIBO Rate Loans shall be
suspended until such time as such Regulatory Change or other circumstance ceases
to be in effect, and all such
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outstanding LIBO Rate Loans shall be converted into Base Rate Loans in
accordance with Section 2.13.
ARTICLE III
CONDITIONS
3.1 Conditions Precedent to Initial Loan and Letter of Credit. The
Lenders shall have no obligation to make the initial Loan or issue the initial
Letter of Credit unless and until all matters incident to the consummation of
the transactions contemplated herein, including the review by the Agent or its
counsel of the title of the Borrowers to the Material Properties, shall be
satisfactory to the Agent and each Lender, and the Agent shall have received,
reviewed, and approved the following documents and other items, appropriately
executed when necessary and, where applicable, acknowledged by one or more
authorized officers of the Borrowers or the Guarantor, as the case may be, all
in form and substance satisfactory to the Agent and dated, where applicable, of
even date herewith or a date prior thereto and acceptable to the Agent:
(a) multiple counterparts of this Agreement, the Guaranty, the Bank
One Assignment, the Comerica Assignment, and the Subordination Agreement
as requested by the Agent;
(b) the Existing Bank One Notes and the Existing Comerica Notes,
endorsed payable to the Lenders;
(c) the Notes;
(d) copies of the Articles of Incorporation or Certificate of
Incorporation and all amendments thereto and the bylaws and all amendments
thereto of each Borrower and the Guarantor, accompanied by a certificate
issued by the secretary or an assistant secretary of each Borrower or the
Guarantor, as the case may be, to the effect that each such copy is
correct and complete;
(e) certificates of incumbency and signatures of all officers of
each Borrower and the Guarantor who are authorized to execute Loan
Documents on behalf of such entities, each such certificate being executed
by the secretary or an assistant secretary of each Borrower or the
Guarantor, as the case may be;
(f) copies of corporate resolutions approving the Loan Documents and
authorizing the transactions contemplated herein and therein, duly adopted
by the boards of directors of each Borrower and the Guarantor, accompanied
by certificates of the secretary or an assistant secretary of each
Borrower or the Guarantor, as the case may be, to the effect that such
copies are true and correct copies of resolutions duly adopted at a
meeting or by unanimous consent of the board of directors of each Borrower
or the Guarantor, as the case may be, and that such resolutions constitute
all the resolutions adopted with respect to such
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transactions, have not been amended, modified, or revoked in any respect,
and are in full force and effect as of the date of such certificate;
(g) multiple counterparts, as requested by the Agent, of the
following documents ratifying, amending, and restating the Existing Bank
One Security Instruments and the Existing Comerica Security Instruments
and creating, evidencing, perfecting, and otherwise establishing Liens in
favor of the Collateral Agent in and to the Collateral:
(i) Mortgage, Collateral Real Estate Mortgage, Deed of Trust,
Indenture, Security Agreement, Financing Statement and
Assignment of Production from KRI, KCS Michigan, and KCS
Marketing covering all Oil and Gas Properties of such
Borrowers in the States of Louisiana, Michigan, Mississippi,
Montana, North Dakota, Texas and Wyoming and all improvements,
personal property, and fixtures related thereto;
(ii) Financing Statements from KRI, KCS Michigan, and KCS Marketing
as debtors, constituent to the instrument described in clause
(i) above;
(iii) Mortgage, Indenture, Security Agreement, Financing Statement
and Assignment of Production from KRI covering all Oil and Gas
Properties of such Borrower in the State of Colorado and all
improvements, personal property, and fixtures related thereto;
(iv) Financing Statement from KRI, as debtor, constituent to the
instrument described clause (iii) above;
(v) Collateral Assignment of Documents, Liens, and Security
Interests (Security Agreement) from KCS Marketing covering the
Xxxxxxx Oil Production and Delivery Agreement and all liens
and security interests securing the obligations of Xxxxxxx Oil
of Michigan, Inc. to KCS Marketing thereunder;
(vi) Financing Statements from KCS Marketing as debtor, constituent
to the instrument described in clause (v) above;
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(vii) Collateral Assignment of Documents, Liens, and Security
Interests (Security Agreement) from KCS Marketing covering the
Xxxx-Xxxxxxx Production and Delivery Agreement and all liens
and security interests securing the obligations of
Xxxx-Xxxxxxx Oil Company to KCS Marketing thereunder;
(viii) Financing Statements from KCS Marketing as debtor,
constituent to the instrument described in clause (vii) above;
and
(ix) Financing Statement Changes from certain of the Borrowers, as
applicable, to amend the address of such Borrower, where
necessary, on financing statements assigned to the Agent by
Bank One pursuant to the Bank One Assignment and by Comerica
pursuant to the Comerica Assignment.
(h) certificates dated as of a recent date from the Secretary of
State or other appropriate Governmental Authority evidencing the existence
or qualification and good standing of the Borrowers and the Guarantor in
their respective jurisdictions of incorporation and in any other
jurisdictions where any of them is qualified to do business, except for
the States of Mississippi, North Dakota and Oklahoma;
(i) results of searches of the UCC Records of the Secretary of State
of the States of Alabama, Colorado, Delaware, Louisiana, Michigan,
Mississippi, Montana, New Jersey, New Mexico, North Dakota, Texas and
Wyoming from a source acceptable to the Agent and reflecting no Liens
against any of the Collateral as to which perfection of a Lien is
accomplished by the filing of a financing statement other than Liens in
favor of the Agent and other Permitted Liens;
(j) confirmation, acceptable to the Agent, of the title of KRI, KCS
Michigan, and KCS Marketing to the Material Properties, free and clear of
Liens other than Permitted Liens;
(k) results satisfactory to the Agent in its discretion of an
environmental questionnaire promulgated by the Agent and completed by the
Borrowers;
(l) all operating, lease, sublease, royalty, sales, exchange,
processing, farmout, bidding, pooling, unitization, communitization, and
other agreements relating to the Mortgaged Properties requested by the
Agent or any Lender;
(m) engineering reports covering the Mortgaged Properties;
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(n) the opinion of Orloff, Lowenbach, Xxxxxxxxx & Xxxxxx, P.A.,
counsel to the Borrowers and the Guarantor, in the form attached hereto as
Exhibit VIII, with such changes thereto as may be approved by the Agent;
(o) the opinion of special counsel in each of the States of
Colorado, Michigan, Montana, and Wyoming, in the form attached hereto as
Exhibit IX, with such changes thereto as may be approved by the Agent;
(p) certificates evidencing the insurance coverage required pursuant
to Section 5.16; and
(q) such other agreements, documents, instruments, opinions,
certificates, waivers, consents, and evidence as the Agent or any Lender
may reasonably request.
3.2 Conditions Precedent to Each Loan. The obligations of the
Lenders to make each Loan are subject to the satisfaction of the following
additional conditions precedent:
(a) the Borrowers shall have delivered to the Agent a Borrowing
Request at least the requisite time prior to the requested date or time
for the relevant Loan; and each statement or certification made in such
Borrowing Request shall be true and correct in all material respects on
the requested date for such Loan;
(b) no Default or Event of Default shall exist or will occur as a
result of the making of the requested Loan;
(c) no Material Adverse Effect shall have occurred;
(d) each of the representations and warranties contained in this
Agreement and the other Loan Documents shall be true and correct and shall
be deemed to be repeated by the Borrowers as if made on the requested date
for such Loan, except for any such representations and warranties as are
expressly stated to be made as of a particular date which shall remain
true and correct as of the date made;
(e) the Guaranty and all of the Security Instruments shall be in
full force and effect and provide to the Lenders the security intended
thereby;
(f) neither the consummation of the transactions contemplated hereby
nor the making of such Loan shall contravene, violate, or conflict with
any Requirement of Law; and
(g) the Agent and each Lender shall have received the payment of all
fees payable by the Borrowers hereunder and the Agent shall have received
reimbursement from the Borrowers, or special legal counsel for the Agent
shall
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have received payment from the Borrowers, for (i) all reasonable fees and
expenses of counsel to the Agent for which each Borrower is responsible
pursuant to applicable provisions of this Agreement and for which invoices
have been presented as of or prior to the date of the relevant Loan, and
(ii) estimated fees charged by filing officers and other public officials
incurred or to be incurred in connection with the filing and recordation
of any Security Instruments, for which invoices have been presented as of
or prior to the date of the requested Loan.
3.3 Conditions Precedent to Issuance of Letters of Credit. The
obligation of the Agent, as the issuer of the Letters of Credit, to issue,
renew, or extend any Letter of Credit is subject to the satisfaction of the
following additional conditions precedent:
(a) the Borrowers shall have delivered to the Agent a written (or
oral, confirmed promptly in writing) request for the issuance, renewal, or
extension of a Letter of Credit at least three Business Days prior to the
requested issuance, renewal, or extension date and a Letter of Credit
Application at least one Business Day prior to the requested issuance
date; and each statement or certification made in such Letter of Credit
Application shall be true and correct in all material respects on the
requested date for the issuance of such Letter of Credit;
(b) no Default or Event of Default shall exist or will occur as a
result of the issuance, renewal, or extension of such Letter of Credit;
and
(c) the terms and provisions of the Letter of Credit or such renewal
or extension shall be reasonably satisfactory to the Agent, as the issuer
of the Letters of Credit.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
To induce the Agent and the Lenders to enter into this Agreement and
to extend credit to the Borrowers, each Borrower represents and warrants to the
Agent and each Lender (which representations and warranties shall survive the
delivery of the Notes) that:
4.1 Due Authorization. The execution and delivery by the Borrowers of
this Agreement and the borrowings hereunder, the execution and delivery by the
Borrowers of the Notes and the other Loan Documents, the repayment of the Notes
and interest and fees provided for in the Notes and this Agreement, and the
performance of all obligations of the Borrowers under the Loan Documents are
within the power of the Borrowers, have been duly authorized by all necessary
corporate action by the Borrowers, and do not and will not (a) require the
consent of any Governmental Authority to be obtained by any Borrower, (b)
contravene or conflict with any Requirement of Law applicable to any Borrower or
the articles or certificate of incorporation, bylaws, or other organizational or
governing documents of the Borrowers, (c) contravene or conflict with any
material indenture, instrument, or other agreement, or any
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indenture, instrument, or other agreement that, when aggregated with other such
agreements, is material, to which any Borrower is a party or by which any
Property of any Borrower may be presently bound or encumbered, except as could
not reasonably be expected to have a Material Adverse Effect, (d) contravene or
conflict with any indenture, instrument, or other agreement by which any item of
Collateral is bound or to which any such item of Collateral is subject, except
as could not reasonably be expected to have a Material Adverse Effect, or (e)
result in or require the creation or imposition of any Lien in, upon or of any
Property of any Borrower under any such indenture, instrument, or other
agreement, other than the Loan Documents.
4.2 Corporate Existence. Each Borrower is a corporation duly
organized, legally existing, and in good standing under the laws of its state of
incorporation and is duly qualified as a foreign corporation and is in good
standing in all jurisdictions wherein the ownership of Property or the operation
of its business necessitates same, other than those jurisdictions wherein the
failure to so qualify will not have a Material Adverse Effect.
4.3 Valid and Binding Obligations. All Loan Documents to which each
Borrower is a party, when duly executed and delivered by such Borrower, will be
the legal, valid, and binding obligations of such Borrower, enforceable against
such Borrower in accordance with its respective terms except as limited by
bankruptcy, insolvency or similar laws affecting generally the rights of
creditors and general principles of equity, whether applied by a court of law or
equity.
4.4 Existing Indebtedness; No Defenses. As of the date hereof, (a)
the Borrowers are indebted under the Existing Bank One Notes and the Existing
Comerica Notes in the respective aggregate principal amounts set forth in
Exhibit X under the heading "Existing Loan Balances", and (b) the Borrowers have
no defenses to, rights of setoff against, claims or counterclaims with respect
to, and no default exists under or with respect to, any of the Existing Bank One
Loan Documents, Existing Comerica Loan Documents, or any Indebtedness or
obligation of the Borrowers evidenced thereby.
4.5 Security Instruments. The provisions of each Security Instrument
executed by KRI, KCS Michigan, or KCS Marketing are effective to create in favor
of the Agent, a legal, valid, and enforceable Lien in all right, title, and
interest of such Borrowers in the Collateral described therein, which Liens,
assuming the accomplishment of recording and filing in accordance with
applicable laws prior to the intervention of rights of other Persons, shall
constitute fully perfected first-priority Liens on all right, title, and
interest of KRI, KCS Michigan, and KCS Marketing in its Collateral described
therein except for Permitted Liens.
4.6 Title to Assets. Except as heretofore disclosed to the Agent in
writing, insofar as such Property constitutes real property or interests in real
property, each of the Borrowers has good and indefeasible title to all of its
Mortgaged Properties and all of its other Properties which are material, free
and clean of Liens, except Permitted Liens. With respect to Property which does
not constitute real property or an interest in real property, each of the
Borrowers owns all such other Properties which are material, free and clear of
all Liens, except Permitted Liens and Liens otherwise permitted under Section
6.3.
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4.7 Scope and Accuracy of Financial Statements. The Financial
Statements of the Guarantor and its Subsidiaries as of December 31, 1995 and
June 30, 1996 (subject, in the case of the Financial Statements as of June 30,
1996, to normal year-end audit adjustments), present fairly the financial
position and results of operations and cash flows of the Guarantor and its
Subsidiaries in accordance with GAAP as at the relevant point in time or for the
period indicated, as applicable. No event or circumstance has occurred since
December 31, 1995 or June 30, 1996, which could reasonably be expected to have a
Material Adverse Effect.
4.8 No Material Misstatements. All written estimates, projections and
forecasts furnished by or on behalf of the Borrowers or the Guarantor to the
Agent or any of the Lenders for purposes of or in connection with this
Agreement, or in connection with any extension of credit hereunder, were and
will be prepared on the basis of the good faith estimate of the Borrowers'
senior management concerning probable financial condition and performance based
on assumptions, data, tests or conditions believed to be reasonable or to
represent industry conditions existing at the time such estimates, projections
or forecasts were made. No other information, exhibit, statement, or report
furnished to the Agent or any Lender by or at the direction of the Borrowers or
the Guarantor in connection with this Agreement contains any material
misstatement of fact or omits to state a material fact or any fact necessary to
make the statements contained therein, in light of the circumstances in which
they were made, not misleading as of the date made or deemed made.
4.9 Liabilities, Litigation, and Restrictions. Other than as listed
under the heading "Liabilities" on Exhibit X, none of the Borrowers or the
Guarantor has any liabilities, direct, or contingent, which could reasonably be
expected to have a Material Adverse Effect. Except as set forth under the
heading "Litigation" on Exhibit X, no litigation or other action of any nature
is pending before any Governmental Authority or, to the best knowledge of such
Borrower, threatened, against or affecting (a) any Collateral, or, in the case
of Environmental Laws, any Property of any Borrower or any real Property of the
Guarantor, or the facilities located and the operations conducted thereon,
which, if determined adversely to such Borrower or the Guarantor, could
reasonably be expected to have a Material Adverse Effect, (b) any Borrower's or
the Guarantor's ability to enter into, execute, deliver or perform in any
material respect its obligations under the Loan Documents, (c) any Borrower or
the Guarantor which, if determined adversely to such Borrower or the Guarantor,
could reasonably be expected to result in any judgment or liability,
individually or when aggregated with all other such judgments or liabilities,
which could reasonably be expected to have a Material Adverse Effect and which
is not fully covered by insurance (exclusive of any deductible amount related to
such insurance, which deductible amount is customary for Persons engaged in
similar businesses), or (d) any Borrower or the Guarantor, which if determined
adversely to such Borrower or the Guarantor, could reasonably be expected to
result in any other Material Adverse Effect.
4.10 Authorizations; Consents. Except as expressly contemplated by
this Agreement, no authorization, consent, approval, exemption, franchise,
permit, or license of, or filing with, any Governmental Authority or any other
Person is required to be obtained by any Borrower to authorize, or is otherwise
required in connection with, the valid execution and delivery by the Borrowers
of the Loan Documents or any instrument contemplated hereby, the
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repayment by the Borrowers of the Notes and interest and fees provided in the
Notes and this Agreement, or the performance by the Borrowers of the
Obligations.
4.11 Compliance with Laws. Each Borrower and its Property, are in
compliance with all applicable Requirements of Law, including Environmental
Laws, the Natural Gas Policy Act of 1978, as amended, and ERISA, other than any
Requirements of Laws the failure with which to comply, individually or in the
aggregate, could reasonably be expected not to cause a Material Adverse Effect.
4.12 Default. Neither any Borrower nor the Guarantor is in default
of, and no event has occurred which, with the lapse of time or giving of notice,
or both, could result in such a default of, (i) any charter document or bylaws
of any Borrower or the Guarantor, or (ii) any agreement or obligation other than
an agreement or obligation evidencing or relating to Debt to which any Borrower
or the Guarantor is a party or by which any Property of any Borrower or the
Guarantor may be bound, pursuant to which the obligations of the Borrowers and
the Guarantor in the aggregate under any such agreement or obligation, or the
obligations secured thereby, exceed $2,500,000, except such as are being
contested in good faith and as to which such reserve as may be required by GAAP
shall have been made therefore.
4.13 ERISA. No Reportable Event has occurred with respect to any
Single Employer Plan, and each Single Employer Plan has complied with and been
administered in all material respects in accordance with applicable provisions
of ERISA and the Code. To the best knowledge of the Borrowers, (a) no Reportable
Event has occurred with respect to any Multiemployer Plan, and (b) each
Multiemployer Plan has complied with and been administered in all material
respects with applicable provisions of ERISA and the Code. Each Plan satisfied
the minimum funding requirements under ERISA and the Code as of the last annual
valuation date applicable thereto. Neither the Borrowers nor any Commonly
Controlled Entity has had a complete or partial withdrawal from any
Multiemployer Plan for which there is any withdrawal liability. As of the most
recent valuation date applicable to any Multiemployer Plan, neither the
Borrowers nor any Commonly Controlled Entity would become subject to any
liability under ERISA if the Borrower or such Commonly Controlled Entity were to
withdraw completely from such Multiemployer Plan. Neither any Borrower nor any
Commonly Controlled Entity has received notice that any Multiemployer Plan is
Insolvent or in Reorganization. To the best knowledge of the Borrowers, no such
Insolvency or Reorganization which could reasonably be expected to have a
Material Adverse Effect is likely to occur. Based upon GAAP existing as of the
date of this Agreement and current factual circumstances, the Borrowers have no
reason to believe that the annual cost during the term of this Agreement to the
Borrowers and all Commonly Controlled Entities for post-retirement benefits to
be provided to the current and former employees of the Borrowers and all
Commonly Controlled Entities under Plans which are welfare benefit plans (as
defined in Section 3(1) of ERISA) will, in the aggregate, have a Material
Adverse Effect.
4.14 Environmental Laws. To the best knowledge and belief of the
Borrowers, except for matters listed below in this Section 4.14 which could not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect, and except as described on Exhibit X under the heading
"Environmental Matters:"
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(a) no Property of any Borrower or real Property of the Guarantor is
currently on or has ever been on, any federal or state list of Superfund
Sites;
(b) no Hazardous Substances have been generated, transported, and/or
disposed of by any Borrower or the Guarantor at a site which was, at the
time of such generation, transportation, and/or disposal, or has since
become, a Superfund Site;
(c) except in accordance with applicable Requirements of Law or the
terms of a valid permit, license, certificate, or approval of the relevant
Governmental Authority, no Release of Hazardous Substances has occurred by
any Borrower or the Guarantor or from, affecting, or related to any
Property of any Borrower or any real Property of the Guarantor or the
facilities located and the operations conducted thereon; and
(d) no Environmental Complaint has been received by any Borrower or
the Guarantor.
4.15 Compliance with Federal Reserve Regulations. No transaction
contemplated by the Loan Documents is in violation of any regulations
promulgated by the Board of Governors of the Federal Reserve System, including
Regulations G, T, U, or X.
4.16 Investment Company Act Compliance. None of the Borrowers is, nor
is any Borrower directly or indirectly controlled by or acting on behalf of any
Person which is, an "investment company" or an "affiliated person" of an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
4.17 Public Utility Holding Company Act Compliance. No Borrower is a
"holding company," or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company," within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
4.18 Proper Filing of Tax Returns; Payment of Taxes Due. Each
Borrower has duly and properly filed its United States income tax returns and
all other tax returns which are required to be filed and has paid all taxes
shown to be due thereon, except such as are being contested in good faith and as
to which adequate provisions and disclosures have been made and except such
returns of which the failure to file has not had or would not have a Material
Adverse Effect. The respective charges and reserves on the books of each
Borrower with respect to taxes and other governmental charges are adequate.
4.19 Refunds. Except as described on Exhibit X under the heading
"Refunds," to the best knowledge and belief of the Borrowers, no orders of,
proceedings pending before, or other requirements of, the Federal Energy
Regulatory Commission or any other Governmental Authority exist which could
reasonably be expected to result in the Borrowers being required to refund any
material portion of the proceeds received or to be received from the sale of
hydrocarbons constituting part of the Mortgaged Property.
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4.20 Gas Contracts. Except as described on Exhibit X under the
heading "Gas Contracts," as of the Closing Date, no Borrower (a) is obligated in
any material respect by virtue of any prepayment made under any contract
containing a "take-or-pay" or "prepayment" provision or under any similar
agreement to deliver hydrocarbons produced from or allocated to any of the
Mortgaged Property at some future date without receiving full payment therefor
within 90 days of delivery, and (b) has produced gas, in any material amount,
subject to, and neither any Borrower nor any of the Mortgaged Properties is
subject to, balancing rights of third parties or subject to balancing duties
under governmental requirements, except as to such matters for which such
Borrower has established monetary reserves adequate in amount to satisfy such
obligations.
4.21 Intellectual Property. Each Borrower owns or is licensed to use
all Intellectual Property necessary to conduct all business material to its
condition (financial or otherwise), business, or operations as such business is
currently conducted. No claim has been asserted or is pending by any Person with
respect to the use of any such Intellectual Property or challenging or
questioning the validity or effectiveness of any such Intellectual Property; and
each Borrower knows of no valid basis for any such claim. The use of such
Intellectual Property by each Borrower does not infringe on the rights of any
Person, except for such claims and infringements as are not, in the aggregate,
likely to have a Material Adverse Effect.
4.22 Labor Matters. Except as disclosed on Exhibit X under the
heading "Labor Matters," as of the Closing Date there are no collective
bargaining agreements covering the employees of any of the Borrowers or any
Affiliates of any of the Borrowers. None of such Persons has suffered any
strikes, walkouts, work stoppages or other material labor difficulty within the
last five years, other than those which could not reasonably be expected to have
a Material Adverse Effect.
4.23 Casualties or Taking of Property. Except as disclosed on Exhibit
X under the heading "Casualties," since June 30, 1996, no Material Adverse
Effect has occurred with respect to the business nor any Property of any
Borrower as a result of any fire, explosion, earthquake, flood, drought,
windstorm, accident, strike or other labor disturbance, embargo, requisition or
taking of Property, or cancellation of contracts, permits, or concessions by any
Governmental Authority, riot, activities of armed forces, or acts of God.
4.24 Locations of Borrowers. The principal place of business and
chief executive office of each Borrower is located at the address of such
Borrower set forth on the signature pages hereof or at such other location as
such Borrower may have, by proper written notice hereunder, advised the Agent,
provided that such other location is within a state in which appropriate
financing statements from such Borrower in favor of the Agent have been filed.
4.25 Subsidiaries. The Borrowers have no Subsidiaries other than
those described on Exhibit X under the heading "Subsidiaries." None of the
Borrowers is a general partner or joint venturer or has partnership or joint
venture interests in any Person.
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ARTICLE V
AFFIRMATIVE COVENANTS
So long as any Obligation remains outstanding or unpaid or any
Commitment exists, each Borrower shall:
5.1 Maintenance and Access to Records. Keep adequate records, in
accordance with GAAP, of all its transactions so that at any time, and from time
to time, its true and complete financial condition may be readily determined,
and promptly following the reasonable request of the Agent or any Lender, make
such records available at the Borrowers' places of business upon reasonable
prior notice, during normal business hours, for inspection by the Agent or any
Lender and, at the expense of such Borrower, allow the Agent or any Lender to
make and take away copies thereof.
5.2 Quarterly Financial Statements; Compliance Certificates. Deliver
to the Agent, to the extent not previously delivered by the Guarantor, on or
before the 45th day after the close of each of the first three quarterly periods
of each fiscal year of the Guarantor, Sufficient Copies of the unaudited
consolidated and consolidating Financial Statements of the Guarantor and its
Subsidiaries as at the close of such quarterly period and from the beginning of
such fiscal year to the end of such period, such Financial Statements to be
certified by a Responsible Officer of the Guarantor as having been prepared in
accordance with GAAP consistently applied and as a fair presentation of the
condition of the Guarantor and its Subsidiaries, subject to changes resulting
from normal year-end audit adjustments, and a Compliance Certificate.
5.3 Annual Financial Statements. Deliver to the Agent, to the extent
not previously delivered by the Guarantor, on or before the 90th day after the
close of each fiscal year of the Guarantor, Sufficient Copies of the annual
audited consolidated and consolidating Financial Statements of the Guarantor and
its Subsidiaries, and a Compliance Certificate.
5.4 Oil and Gas Reserve Reports. (a) Deliver to the Agent no later
than forty-five (45) days after the end of each fiscal year during the term of
this Agreement, Sufficient Copies of engineering reports in form and substance
reasonably satisfactory to the Agent, certified by any of the Persons listed
under the heading "Approved Petroleum Engineers" on Exhibit X or any other
nationally- or regionally-recognized independent consulting petroleum engineers
reasonably acceptable to the Agent as fairly and accurately setting forth, in
accordance with the principles set forth in the Standards Pertaining to the
Estimating and Auditing of Oil and Gas Reserves Information as at the time are
promulgated by the Society of Petroleum Engineers, (i) the proven and producing,
shut-in, behind-pipe, and undeveloped oil and gas reserves (separately
classified as such) attributable to the Mortgaged Properties as of December 31
of the year for which such reserve reports are furnished, (ii) the aggregate
present value of the future net income with respect to such Mortgaged
Properties, discounted at a stated per annum discount rate of proven and
producing reserves, (iii) projections of the annual rate of production, gross
income, and net income with respect to such proven and producing reserves,
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and (iv) information with respect to the "take-or-pay," "prepayment," and
material gas-balancing liabilities of the Borrowers.
(b) Deliver to the Agent no later than forty-five (45) days after
the end of each second quarterly period of each fiscal year during the term of
this Agreement, Sufficient Copies of engineering reports in form and substance
reasonably satisfactory to the Agent prepared by or under the supervision of the
chief petroleum engineer of the Borrowers evaluating the Mortgaged Properties as
of June 30 of the year for which such reserve reports are furnished and updating
the information provided in the reports pursuant to Section 5.4(a).
(c) Each of the reports provided pursuant to this Section shall be
submitted to the Agent together with such additional data concerning pricing,
quantities of production from the Mortgaged Properties, volumes of production
sold, purchasers of production, gross revenues, expenses, and such other
information and engineering and geological data with respect thereto as the
Agent may reasonably request.
5.5 Title Opinions; Title Defects. Promptly upon the written request
of the Agent made no more than once in any calendar year commencing with 1997,
furnish to the Agent at the election of the Borrowers either (a) clean xxxxxxx
runsheets with respect to the Material Properties, (b) title opinions with
respect to any or all other Mortgaged Properties, in form and substance and by
counsel reasonably satisfactory to the Agent, or (c) other confirmation of title
reasonably acceptable to the Agent, covering Oil and Gas Properties constituting
not less than 75% of the then present value of the Mortgaged Properties,
determined in accordance with the most recent Reserve Reports provided to the
Agent in accordance with Section 5.4; and promptly, but in any event within 60
days after notice by the Agent of any defect which is material (in the
reasonable opinion of the Agent) in value, in the title of the Borrowers to any
of such Oil and Gas Properties, clear such title defects, and, in the event any
such title defects are not cured in a timely manner, the value of the affected
Oil and Gas Properties shall be excluded from the Borrowing Base, or at the
Borrowers' election, the Borrowers shall pay all related costs and fees incurred
by the Agent to cure such title defects.
5.6 Notices of Certain Events. Deliver to the Agent, to the extent
not previously delivered by the Guarantor, promptly upon having knowledge of the
occurrence of any of the following events or circumstances, a written statement
with respect thereto, signed by a Responsible Officer of each Borrower and
setting forth the relevant event or circumstance and the steps being taken by
such Borrower or the Guarantor with respect to such event or circumstance:
(a) any Default or Event of Default;
(b) any default or event of default under any contractual obligation
of any Borrower or the Guarantor, or any litigation, investigation, or
proceeding between any Borrower or the Guarantor and any Governmental
Authority which, in either case, if not cured or if adversely determined,
as the case may be, could reasonably be expected to have a Material
Adverse Effect;
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(c) any litigation or proceeding involving any Borrower or the
Guarantor as a defendant or in which any Property of any Borrower or the
Guarantor is subject to a claim and in which the amount of the claim
against any Borrower or the Guarantor is $1,000,000 or more and which is
not covered by insurance or in which injunctive or similar relief is
sought;
(d) the receipt by any Borrower or the Guarantor of any
Environmental Complaint which individually, or in the aggregate with any
other Environmental Complaints then outstanding relating to any matter,
relates to a matter which could reasonably be expected to have a Material
Adverse Effect;
(e) any actual, proposed, or threatened testing or other
investigation by any Governmental Authority or other Person concerning the
environmental condition of, or relating to, any Property of any Borrower
or any real Property of the Guarantor, or the facilities located and the
operations conducted thereon, following any allegation of a violation of
any Requirement of Law regarding any condition in each case which could
reasonably be expected to have a Material Adverse Effect;
(f) any of the following which could reasonably be expected to have
a Material Adverse Effect: any Release of Hazardous Substances by any
Borrower or the Guarantor or from, affecting, or related to any Property
of any Borrower or any real Property of the Guarantor, or the facilities
located and the operations conducted thereon, except in accordance with
applicable Requirements of Law or the terms of a valid permit, license,
certificate, or approval of the relevant Governmental Authority, or the
violation of any Environmental Law, or the revocation, suspension, or
forfeiture of or failure to renew, any permit, license, registration,
approval, or authorization;
(g) any Reportable Event or imminently expected Reportable Event
with respect to any Plan; any withdrawal from, or the termination,
Reorganization or Insolvency of, any Multiemployer Plan; the institution
of proceedings or the taking of any other action by the PBGC, any
Borrower, the Guarantor or any Commonly Controlled Entity or Multiemployer
Plan with respect to the withdrawal from, or the termination,
Reorganization or Insolvency of, any Single Employer Plan or Multiemployer
Plan; or any Prohibited Transaction in connection with any Plan or any
trust created thereunder and the action being taken by the Internal
Revenue Service with respect thereto; and
(h) any other event or condition which could reasonably be expected
to have a Material Adverse Effect.
5.7 Additional Information. Furnish to the Agent, to the extent not
previously furnished by the Guarantor, within five Business Days after any
material report (other than financial statements) or other communication is sent
by the Guarantor to its stockholders or filed by the Guarantor with the
Securities and Exchange Commission or any successor or analogous
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Governmental Authority, Sufficient Copies of such report or communication and,
promptly upon the request of the Agent, such additional financial or other
information concerning the assets, liabilities, operations, and transactions of
the Borrowers as the Agent may from time to time reasonably request; and notify
the Agent not less than ten Business Days prior to the occurrence of any
condition or event that may change the proper location for the filing of any
financing statement or other public notice or recording for the purpose of
perfecting a Lien in any Collateral, including any change in its name or the
location of its principal place of business or chief executive office; and upon
the request of the Agent, execute such additional Security Instruments as may be
necessary or appropriate in connection therewith.
5.8 Compliance with Laws. Except to the extent the failure to comply
or cause compliance would not have a Material Adverse Effect, (a) comply with
all Requirements of Law applicable to the Borrowers, including (i) the Natural
Gas Policy Act of 1978, as amended, (ii) ERISA, (iii) Environmental Laws, and
(iv) all permits, licenses, registrations, approvals, and authorizations (A)
related to any natural or environmental resource or media located on, above,
within, in the vicinity of, related to or affected by any Property of any
Borrower, (B) required for the performance of the operations of any Borrower, or
(C) applicable to the use, generation, handling, storage, treatment, transport,
or disposal of any Hazardous Substances; and (b) cause all employees, crew
members, agents, contractors, subcontractors, and future lessees (pursuant to
appropriate lease and other contractual provisions) of any Borrower, while such
Persons are acting within the scope of their relationship with such Borrower, to
comply with all such Requirements of Law as may be necessary or appropriate to
enable such Borrower to so comply.
5.9 Payment of Assessments and Charges. Pay all taxes, assessments,
governmental charges, rent, and other Indebtedness which, if unpaid, might
become a Lien against the Property of any Borrower, except any of the foregoing
being contested in good faith and as to which adequate reserve in accordance
with GAAP has been established or unless failure to pay would not have a
Material Adverse Effect.
5.10 Maintenance of Corporate Existence and Good Standing. (a)
Maintain its corporate existence and good standing in its jurisdiction of
incorporation and (b) maintain its corporate qualification and good standing in
all jurisdictions wherein the Property now owned or hereafter acquired or
business now or hereafter conducted by such Borrower necessitates same, unless
the failure to do so would not have a Material Adverse Effect.
5.11 Payment of Notes; Performance of Obligations. Pay the Notes
according to the reading, tenor, and effect thereof, as modified hereby, and do
and perform every act and discharge all of its other Obligations.
5.12 Further Assurances. Promptly after discovery thereof cure any
defects, errors, or omissions in the execution and delivery of any of the Loan
Documents and execute, acknowledge, and deliver to the Agent such other
assurances and instruments as shall, in the reasonable opinion of the Agent, be
necessary to fulfill the terms of the Loan Documents.
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5.13 Fees and Expenses. (a) Upon request by the Agent, promptly pay
to or reimburse the Agent or the Collateral Agent, as applicable, for all
reasonable third-party fees, out-of-pocket costs and expenses of the Agent and
the Collateral Agent in connection with the preparation, negotiation, execution,
delivery and enforcement of this Agreement and the other Loan Documents, and any
and all amendments, restatements and supplements thereof and thereto, the filing
and recordation of the Security Instruments, and the consummation of the
transactions contemplated by the Loan Documents, including reasonable fees and
expenses of legal counsel and auditors and accountants for the Agent and the
Collateral Agent, provided however, that no fees or expenses of petroleum
engineers and environmental, insurance and other consultants for the Agent or
the Collateral Agent shall be payable under this Section 5.13(a).
(b) Upon request by the Agent (which shall be made promptly after
any request by the Collateral Agent or any Lender), promptly pay (to the fullest
extent permitted by law) for all amounts reasonably expended, advanced, or
incurred during the continuance of an Event of Default by or on behalf of the
Agent, the Collateral Agent or any Lender: (i) to satisfy any obligation of the
Borrowers under any of the Loan Documents; (ii) to collect the Obligations;
(iii) to enforce the rights of the Agent, the Collateral Agent, and the Lenders
under any of the Loan Documents; (iv) to protect the Properties or business of
the Borrowers and the Guarantor, including the Collateral, which amounts shall
be deemed compensatory in nature and liquidated as to amount upon notice to the
Borrowers by the Agent and which amounts shall include all court costs and
reasonable fees and expenses of legal counsel, auditors and accountants,
petroleum engineers, and environmental and insurance consultants; (v) in
connection with the participation by the Agent and the Lenders as members of the
creditors' committee in a case commenced under any Insolvency Proceeding; (vi)
in connection with lifting the automatic stay prescribed in ss.362 Title 11 of
the United States Code; and (vii) in connection with any action pursuant to
ss.1129 Title 11 of the United States Code, all as shall be reasonably incurred
by the Agent, the Collateral Agent, and the Lenders during the continuance of an
Event of Default in connection with the collection of any sums due under the
Loan Documents, together with interest at the per annum interest rate equal to
the Default Rate on each such amount from the date of notification that the same
was expended, advanced, or incurred by the Agent, the Collateral Agent, or any
Lender until the date it is repaid to the Agent, the Collateral Agent, or such
Lender, with the obligations under this Section surviving the non-assumption of
this Agreement in a case commenced under any Insolvency Proceeding and being
binding upon each Borrower and/or a trustee, receiver, custodian, or liquidator
of such Borrower appointed in any such case.
5.14 Operation of Oil and Gas Properties. Develop, maintain, and
operate its Oil and Gas Properties in a prudent and workmanlike manner in
accordance with industry standards or make reasonable and customary efforts to
cause such Properties to be so operated.
5.15 Maintenance and Inspection of Properties. Use reasonable and
customary efforts to maintain or cause to be maintained all of its material
tangible Properties in good repair and condition, ordinary wear and tear
excepted; make all reasonably necessary replacements thereof and permit any
authorized representative of the Agent or any Lender to visit and inspect at any
reasonable time and upon reasonable notice any tangible Property of the
Borrowers;
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provided, however, that any expenses incurred in connection with any such visit
or inspection shall be reimbursed by the Borrowers if required under Section
5.13.
5.16 Maintenance of Insurance. Maintain insurance with respect to
its Properties and businesses against such liabilities, casualties, risks, and
contingencies as is customary in the relevant industry and sufficient to prevent
a Material Adverse Effect, all such insurance to be in amounts and from insurers
reasonably acceptable to the Agent and, within 30 days of the Closing Date for
property damage insurance covering Collateral maintained by the Borrowers,
naming the Agent as a loss payee as its interest may appear, and, upon any
renewal of any such insurance and at other times upon reasonable request by the
Agent, furnish to the Agent evidence, reasonably satisfactory to the Agent, of
the maintenance of such insurance. The Agent shall have the right to collect,
and the Borrower hereby assigns to the Agent, any and all monies that may become
payable under any policies of insurance by reason of damage, loss, or
destruction of any of the Collateral. In the event of any damage, loss, or
destruction for which insurance proceeds relating to Collateral exceed $500,000
or are $500,000 or less and a Default or an Event of Default has occurred and is
continuing, the Agent may, at its option, apply all such sums or any part
thereof received by it toward the payment of the Obligations, whether matured or
unmatured, application to be made first to interest and then to principal, and
shall deliver to the Borrower the balance, if any, after such application has
been made. The prepayment of any LIBO Rate Loan by the application of such
insurance proceeds shall not require the Borrowers to pay any penalty or
premium, including any yield protection amounts which otherwise would be payable
upon such prepayment under Section 2.21. In the event of any such damage, loss,
or destruction for which insurance proceeds are $500,000 or less, provided that
no Default or Event of Default has occurred and is continuing, the Agent shall
deliver any such proceeds received by it to the Borrower. In the event the Agent
receives insurance proceeds not attributable to Collateral or business
interruption, the Agent shall deliver any such proceeds to the Borrower.
5.17 Indemnification. Indemnify and hold the Agent, the Collateral
Agent and each of the Lenders and their respective shareholders, officers,
directors, employees, agents, attorneys-in-fact, and affiliates and each trustee
for the benefit of the Agent, the Collateral Agent, or the Lenders under any
Security Instrument harmless from and against any and all claims, losses,
damages, liabilities, fines, penalties, charges, administrative and judicial
proceedings and orders, judgments, remedial actions, requirements and
enforcement actions of any kind, and all costs and expenses incurred in
connection therewith (including reasonable attorneys' fees and expenses),
arising directly or indirectly, in whole or in part, from (a) the presence of
any Hazardous Substances on, under, or from any Property of each Borrower,
whether prior to or during the term hereof, (b) any activity carried on or
undertaken on or off any Property of such Borrower, whether prior to or during
the term hereof, and whether by such Borrower or any predecessor in title,
employee, agent, contractor, or subcontractor of such Borrower or any other
Person at any time occupying or present on such Property, in connection with the
handling, treatment, removal, storage, decontamination, cleanup, transportation,
or disposal of any Hazardous Substances at any time located or present on or
under such Property, (c) any residual contamination of any Hazardous Substance
on or under any Property of such Borrower, (d) any contamination of any Property
or natural resources arising in connection with the
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generation, use, handling, storage, transportation or disposal of any Hazardous
Substances by such Borrower or any employee, agent, contractor, or subcontractor
of such Borrower while such persons are acting within the scope of their
relationship with such Borrower, irrespective of whether any of such activities
were or will be undertaken in accordance with applicable Requirements of Law, or
(e) the performance and enforcement of any Loan Document, any allegation by any
beneficiary of a letter of credit of a wrongful dishonor by the Agent of a claim
or draft presented thereunder, or any other act or omission in connection with
or related to any Loan Document or the transactions contemplated thereby,
including any of the foregoing in this Section arising from negligence, whether
sole or concurrent, on the part of the Agent, the Collateral Agent, or any
Lender or any of their respective shareholders, officers, directors, employees,
agents, attorneys-in-fact, or affiliates or any trustee for the benefit of the
Agent, the Collateral Agent, or the Lenders under any Security Instrument;
provided, however, the foregoing clauses (a) through (e) shall not apply to any
claim, loss, damage, liability, fine, penalty, charge, proceeding, order,
judgment, action or requirement attributable to (i) the gross negligence or
willful misconduct of any Person to be indemnified or (ii) any action or
inaction of any Person to be indemnified subsequent to the exercise of ownership
rights or the taking of any foreclosure action with respect to any of the
Collateral and with respect to such Collateral such claim, loss, damage,
liability, fine, penalty, charge, proceeding, order, judgment, action or
requirement arises subsequent to the exercise of ownership rights or the taking
of any foreclosure action with respect to such Collateral, to the extent such
Person is a "person in control" under any Environmental Law. The foregoing
indemnity shall survive satisfaction of all Obligations and the termination of
this Agreement, unless all such Obligations have been satisfied wholly in cash
from the Borrowers and not by way of realization against any Collateral or the
conveyance of any Property in lieu thereof.
ARTICLE VI
NEGATIVE COVENANTS
So long as any Obligation remains outstanding or unpaid or any
Commitment exists, no Borrower will:
6.1 Indebtedness. Create, incur, assume, or suffer to exist any
Indebtedness, whether by way of loan or otherwise; provided, however, the
foregoing restriction shall not apply to (a) the Obligations, (b) unsecured
accounts payable incurred in the ordinary course of business, which are not
unpaid in excess of 60 days beyond invoice date or are being contested in good
faith and as to which such reserve as is required by GAAP has been made, (c) the
Subordinated Debt, (d) crude oil, natural gas, or other hydrocarbon floor,
collar, cap, price protection, or swap agreements, with a Qualified Swap
Counterparty, provided that such agreements shall not be entered into with
respect to Mortgaged Properties constituting more than 80% of the present value
of estimated future net revenues, computed using a discount factor of 10%, of
all proved developed producing Mortgaged Properties, (e) financial hedging
agreements (including interest rate swaps) entered into with a Qualified Swap
Counterparty, (f) Debt of the Borrowers not otherwise permitted under this
Section 6.1 which does not exceed at any one time
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the aggregate principal amount of $1,000,000, (g) Debt of all of the Borrowers
for purchase money indebtedness and equipment leases, which does not exceed at
any one time the aggregate outstanding principal amount of $1,000,000, and (h)
Debt in the original principal amount of $300,000 owing by KRI on its Worland,
Wyoming office building, and all replacements thereof, but not any renewals,
extensions or increases thereof.
6.2 Contingent Obligations. Create, incur, assume, or suffer to
exist any Contingent Obligation; provided, however, the foregoing restriction
shall not apply to (a) performance guarantees and performance, surety or other
bonds provided in the ordinary course of business, including guaranties and
letters of credit supporting such performance obligations, (b) trade credit
incurred or operating leases entered into in the ordinary course of business,
(c) guaranties and contribution obligations under the Senior Note Indenture, and
(d) endorsements of instruments for deposit or collection in the ordinary course
of business.
6.3 Liens. Create, incur, assume, or suffer to exist any Lien on any
of its Oil and Gas Properties or any other Property, whether now owned or
hereafter acquired; provided, however, the foregoing restrictions shall not
apply to (a) Permitted Liens, (b) landlord's Liens in any Property which is not
Collateral, (c) Liens existing on cash deposits in connection with Indebtedness
permitted in Section 6.1(d), (d) Liens securing the Indebtedness permitted in
Section 6.1(h), (e) Liens incurred in the ordinary course of business covering
deposit accounts in favor of the depository institution holding such accounts
and arising in connection with obligations of any Borrower arising from any such
accounts, and (f) Liens securing the payment or performance of tenders,
statutory or regulatory obligations, surety and appeal bonds, bids, government
contracts and leases, performance and return of money bonds and similar
obligations (other than for payment of Debt) and covering Property which is not
Collateral.
6.4 Negative Pledge Agreements. Create, enter into, execute, incur,
assume or permit to exist, or will permit any of its Subsidiaries to create,
enter into, execute, incur, assume or permit to exist, any contract, agreement
or understanding (other than the Loan Documents) which in any manner grants,
conveys, creates or imposes, or which in any way prohibits or restricts the
granting, conveying, creation or imposition of, any Lien on any Property of the
Borrowers, or which requires the consent of, or notice to, other Persons in
connection therewith; provided, however, the foregoing restrictions shall not
apply to (a) any of the foregoing as may be required under the Senior Note
Indenture, and (b) any of the foregoing with respect to any Liens permitted
pursuant to Section 6.3.
6.5 Sales of Assets. During each Sales Period, sell, transfer, or
otherwise dispose of, in one or any series of transactions, assets, whether now
owned or hereafter acquired, the aggregate value of all of which exceeds
$5,000,000 or enter into any agreement to do so; provided, however, the
foregoing restriction shall not apply to (a) the sale of hydrocarbons or
inventory in the ordinary course of business other than the sale of a production
payment and provided that no contract for the sale of hydrocarbons shall
obligate the Borrowers to deliver hydrocarbons produced from any of the
Mortgaged Property at some future date without receiving full payment therefor
within 90 days of delivery, or (b) the sale or other disposition of Property
destroyed, lost, worn out, damaged, or having only salvage value or no longer
used or useful in the business of such Borrower. For purposes of this Section
6.5, the
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value of any Oil and Gas Property shall be the discounted present value of such
Property as shown on the most recent Reserve Report delivered to the Agent
pursuant to this Agreement.
6.6 Leasebacks. Enter into any agreement to sell or transfer any
Property and thereafter rent or lease as lessee such Property or other Property
intended for the same use or purpose as the Property sold or transferred.
6.7 Loans; Advances; Investments. Except as permitted by Section
6.1, make or agree to make or allow to remain outstanding any loans or advances
to or acquire Investments in, or purchase or otherwise acquire all or
substantially all of the assets of any Person; provided, however, the foregoing
restrictions shall not apply to (a) advances or extensions of credit in the form
of accounts receivable incurred in the ordinary course of business and upon
terms common in the industry for such accounts receivable, (b) advances to
employees of the Borrower for the payment of expenses in the ordinary course of
business, (c) the purchase or acquisition of Oil and Gas Properties, (d)
Investments in the form of (i) debt securities issued or directly and fully
guaranteed or insured by the United States Government or any agency or
instrumentality thereof, with maturities of no more than one year from the date
of acquisition, (ii) commercial paper of a domestic issuer rated at the date of
acquisition at least P-2 by Xxxxx'x Investor Service, Inc. or A-2 by Standard &
Poor's Corporation and with maturities of no more than one year from the date of
acquisition, (iii) repurchase agreements covering debt securities or commercial
paper of the type permitted in this Section, certificates of deposit, demand
deposits, eurodollar time deposits, overnight bank deposits and bankers'
acceptances, with maturities of no more than one year from the date of
acquisition, issued by or acquired from or through the Agent, any Lender, or any
bank or trust company organized under the laws of the United States or any state
thereof and having capital surplus and undivided profits aggregating at least
$500,000,000, and (iv) currency exchange contracts entered into in the ordinary
course of business, (e) other short-term Investments similar in nature and
degree of risk to those described in clause (d) of this Section, or (f) loans or
advances to the Guarantor.
6.8 Dividends and Distributions. Declare, pay, or make, whether in
cash or Property of the Borrowers, any dividend or distribution on, or purchase,
redeem, or otherwise acquire for value, any share of any class of its capital
stock at any time that an Event of Default exists or will occur as the result of
the payment of such dividend or distribution; provided, however, the foregoing
restriction shall not apply to dividends paid in capital stock of the Borrowers.
6.9 Environmental Matters. Cause or permit any of its Property to be
in violation of any Environmental Law or do anything or permit anything to be
done that would subject any of its Property to be subject to any remedial
obligations under any Environmental Law, assuming disclosure to applicable
Governmental Authorities of all relevant facts, conditions, and circumstances,
except where the foregoing would not have a Material Adverse Effect.
6.10 Issuance of Stock; Changes in Corporate Structure. (a) Issue or
agree to issue additional shares of capital stock, in one or any series of
transactions, to any Person other than the Guarantor, or, in the case of KCS
Marketing, Proliq, Inc.; enter into any transaction
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of consolidation, merger, or amalgamation except with another Borrower or the
Guarantor; liquidate, wind up, or dissolve (or suffer any liquidation or
dissolution); (b) No Borrower will, or will permit any of its Subsidiaries to,
amend or otherwise modify its corporate charter or its corporate structure,
activities or nature, as applicable, in any manner that could reasonably be
expected to have a Material Adverse Effect on it.
6.11 Transactions with Affiliates. Directly or indirectly, enter
into any transaction (including the sale, lease, or exchange of Property or the
rendering of service) not otherwise permitted by this Agreement with any of its
Affiliates, other than upon fair and reasonable terms no less favorable than
could be obtained in an arm's length transaction with a Person which was not an
Affiliate.
6.12 Lines of Business. Expand, on its own or through any
Subsidiary, into any line of business other than those in which such Borrower is
engaged as of the date hereof.
6.13 ERISA Compliance. Permit any Plan maintained by it or any
Commonly Controlled Entity to (a) engage in any Prohibited Transaction, (b)
incur any "accumulated funding deficiency," as such term is defined in Section
302 of ERISA, or (c) terminate in a manner which could result in the imposition
of a Lien on any Property of the Borrower pursuant to Section 4068 of ERISA; or
assume an obligation to contribute to any Multiemployer Plan; or acquire any
Person or all or substantially all of the assets of any Person which has now or
has had at any time an obligation to contribute to any Multiemployer Plan.
6.14 Subordinated Debt. Materially amend or modify any of the terms
or provisions of any documents, notes, or agreements governing or evidencing the
Subordinated Debt, including any term or provision which accelerates, increases,
renews, or extends the Subordinated Debt, or, at any time following the
occurrence and during the continuance of any Event of Default, make any
prepayments or payments, whether in cash or other Property, on or with respect
to the Subordinated Debt.
6.15 Use of Proceeds. Permit the proceeds of any Loan or any Letter
of Credit to be used for any purpose other than as expressly permitted in
Section 2.5.
6.16 Subsidiaries. Create, organize or acquire any Subsidiary or
become a general partner, joint venturer or venturer in any Person or become or
assume any similar capacity in any Person which gives rise to such similar
general liability.
ARTICLE VII
EVENTS OF DEFAULT
7.1 Enumeration of Events of Default. Any of the following events
shall constitute an Event of Default:
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(a) (i) default shall be made in any payment of principal when due
under this Agreement or the Notes at Final Maturity or pursuant to Section
2.12, or (ii) in the event of a default in the payment when due of any
other sums payable under any Loan Document other than as set forth under
clause (i) hereof, such failure shall continue unremedied for a period of
five (5) days;
(b) default shall be made in the due observance or performance of
any obligation under Sections 5.4 or 5.5 of the Guaranty;
(c) default shall be made by any Borrower or the Guarantor in the
due observance or performance of any of their respective obligations under
the Loan Documents other than as described in Section 7.1(a) or 7.1(b) and
such default shall not have been remedied within 30 days after the earlier
of (i) receipt of written notice thereof by the Borrowers from the Agent,
or (ii) any Borrower or the Guarantor having or obtaining knowledge
thereof;
(d) any representation or warranty made by any Borrower or the
Guarantor in any of the Loan Documents proves to have been untrue in any
material respect as of the date the facts therein set forth were stated or
certified or deemed stated or certified;
(e) default(s) shall be made by any Borrower or the Guarantor (as
principal or guarantor or other surety) in the payment or performance of
any bond, debenture, note, or other Debt or under any credit agreement,
loan agreement, indenture, promissory note, or similar agreement or
instrument executed in connection with any of the foregoing in an
aggregate amount equal to or exceeding $2,500,000, and such default(s)
shall remain unremedied for in excess of the period of grace, if any, with
respect thereto, if the effect of such failure is that such Debt shall
have become immediately due and payable in full or is subject to becoming
immediately due and payable in full;
(f) any Borrower or the Guarantor shall (i) apply for or consent to
the appointment of a receiver, trustee, or liquidator of it or all or a
substantial part of its assets, (ii) file a voluntary petition commencing
an Insolvency Proceeding, (iii) make a general assignment for the benefit
of creditors, (iv) admit in writing its inability to pay, or generally not
be paying, its debts as they become due, or (v) file an answer admitting
the material allegations of a petition filed against it in any Insolvency
Proceeding;
(g) an order, judgment, or decree shall be entered against any
Borrower or the Guarantor by any court of competent jurisdiction or by any
other duly authorized authority, on the petition of a creditor or
otherwise, granting relief in any Insolvency Proceeding or approving a
petition seeking reorganization or an arrangement of its debts or
appointing a receiver, trustee, conservator, custodian, or liquidator of
it or all or any substantial part of its assets, and such order, judgment,
or decree shall not be dismissed or stayed within 60 days;
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(h) the levy against any significant portion of the Property of any
Borrower or the Guarantor, or any execution, garnishment, attachment,
sequestration, or other writ or similar proceeding involving an amount
which, if paid, would have a Material Adverse Effect and which is not
permanently dismissed, discharged or bonded within 30 days after the levy;
(i) a final and non-appealable order, judgment, or decree shall be
entered against any Borrower or the Guarantor for money damages and/or
Indebtedness due in an aggregate amount in excess of $2,500,000 and which
is not covered by independent third-party insurance as to which the
insurer does not dispute coverage, and such order, judgment, or decree
shall not be paid, dismissed or stayed within 30 days;
(j) any charges are filed or any other action or proceeding is
instituted by any Governmental Authority against any Borrower or the
Guarantor under the Racketeering Influence and Corrupt Organizations
Statute (18 U.S.C. ss.1961 et seq.), the result of which could reasonably
be expected to be the forfeiture or transfer of any material Property of
such Borrower or the Guarantor subject to a Lien in favor of the Agent
without (i) satisfaction or provision for satisfaction of such Lien, or
(ii) such forfeiture or transfer of such Property being expressly made
subject to such Lien;
(k) any Borrower or the Guarantor shall have concealed, removed, or
diverted, or permitted to be concealed, removed, or diverted, any part of
its Property, with intent to hinder, delay, or defraud its creditors or
any of them;
(l) any Person shall engage in any Prohibited Transaction involving
any Plan; any "accumulated funding deficiency" (as defined in Section 302
of ERISA), whether or not waived, shall exist with respect to any Plan for
which an excise tax is due or would be due in the absence of a waiver; a
Reportable Event shall occur with respect to, or proceedings shall
commence to have a trustee appointed, or a trustee shall be appointed, to
administer or to terminate, any Single Employer Plan, which Reportable
Event or commencement of proceedings or appointment of a trustee is, in
the reasonable opinion of the Agent, likely to result in the termination
of such Plan for purposes of Title IV of ERISA; any Single Employer Plan
shall terminate for purposes of Title IV of ERISA; the Borrower, the
Guarantor or any Commonly Controlled Entity shall incur, or in the
reasonable opinion of the Agent, be likely to incur any liability in
connection with a withdrawal from, or the Insolvency or Reorganization of,
a Multiemployer Plan; or any other event or condition shall occur or exist
with respect to a Plan and the result of such events or conditions
referred to in this Section 7.1(l) could reasonably be expected to subject
the Borrower, the Guarantor or any Commonly Controlled Entity to any tax
(other than an excise tax under Section 4980 of the Code), penalty or
other liabilities which taken in the aggregate would have a Material
Adverse Effect and any such circumstance shall exist for in excess of 30
days;
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(m) any Security Instrument shall for any reason not, or cease to,
create valid and perfected first-priority Liens against the Collateral
purportedly covered thereby, subject to Permitted Liens, and which
Collateral has a value greater than $100,000, unless the Borrowers have
provided the Agent, within 30 days following written notice to the
Borrowers from the Agent, with additional Collateral having at least an
equivalent value and otherwise reasonably satisfactory to the Required
Lenders; and
(n) the Guarantor shall cease to own all of the outstanding capital
stock of any class issued by KRI, KCS Pipeline and KCS Michigan; or
Proliq, Inc. shall cease to own all of the outstanding capital stock of
any class issued by KCS Marketing.
7.2 Remedies. (a) Upon the occurrence of an Event of Default
specified in Sections 7.1(f) or 7.1(g), immediately and without notice, (i) all
Obligations shall automatically become immediately due and payable, without
presentment, demand, protest, notice of protest, default, or dishonor, notice of
intent to accelerate maturity, notice of acceleration of maturity, or other
notice of any kind, except as may be provided to the contrary elsewhere herein,
all of which are hereby expressly waived by each Borrower; (ii) the Commitments
shall immediately cease and terminate unless and until reinstated by the Agent
and the Lenders in writing; and (iii) with the oral consent of the Required
Lenders (confirmed promptly in writing), the Agent and each Lender are hereby
authorized at any time and from time to time, without notice to the Borrowers
(any such notice being expressly waived by each Borrower), to set-off and apply
any and all deposits (general or special, time or demand, provisional or final)
held by the Agent or such Lender and any and all other indebtedness at any time
owing by the Agent or such Lender to or for the credit or account of the
Borrowers against any and all of the Obligations.
(b) Upon the occurrence of any Event of Default other than those
specified in Sections 7.1(f) or 7.1(g), (i) the Agent may and, upon the request
of the Required Lenders, shall, by notice to the Borrowers, declare all
Obligations immediately due and payable, without presentment, demand, protest,
notice of protest, default, or dishonor, notice of intent to accelerate
maturity, notice of acceleration of maturity, or other notice of any kind,
except as may be provided to the contrary elsewhere herein, all of which are
hereby expressly waived by each Borrower; (ii) the Agent may and, upon the
request of the Required Lenders, shall, declare the Commitments terminated,
whereupon the Commitments shall immediately cease and terminate unless and until
reinstated by the Agent and the Lenders in writing; and (iii) with the oral
consent of the Required Lenders (confirmed promptly in writing), the Agent and
each Lender are hereby authorized at any time and from time to time, without
notice to the Borrowers (any such notice being expressly waived by each
Borrower), to set-off and apply any and all deposits (general or special, time
or demand, provisional or final) held by the Agent or such Lender and any and
all other indebtedness at any time owing by the Agent or such Lender to or for
the credit or account of the Borrowers against any and all of the Obligations.
(c) Upon the occurrence of any Event of Default, the Lenders, with
the oral consent of the Required Lenders (confirmed promptly in writing), and
the Agent, in accordance
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with the terms hereof, may, in addition to the foregoing in this Section,
exercise any or all of their rights and remedies provided by law or pursuant to
the Loan Documents.
ARTICLE VIII
THE AGENT
8.1 Appointment. Each Lender hereby designates and appoints CIBC as
the Agent and CIBC Inc. as the Collateral Agent under this Agreement and the
other Loan Documents. Each Lender authorizes the Agent and the Collateral Agent
to take such action on behalf of such Lender under the provisions of this
Agreement and the other Loan Documents and to exercise such powers and perform
such duties as are expressly delegated to the Agent and the Collateral Agent by
the terms of this Agreement and the other Loan Documents, together with such
other powers as are reasonably incidental thereto. Notwithstanding any provision
to the contrary elsewhere in this Agreement or in any other Loan Document,
neither the Agent nor the Collateral Agent shall have any duties or
responsibilities except those expressly set forth herein or in any other Loan
Document or any fiduciary relationship with any Lender; and no implied
covenants, functions, responsibilities, duties, obligations, or liabilities on
the part of the Agent or the Collateral Agent shall be read into this Agreement
or any other Loan Document or otherwise exist against the Agent or the
Collateral Agent.
8.2 Delegation of Duties. Each of the Agent and the Collateral Agent
may execute any of its duties under this Agreement and the other Loan Documents
by or through agents or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties. Neither the Agent nor
the Collateral Agent shall be responsible for the negligence or misconduct of
any agents or attorneys-in-fact selected by it with reasonable care.
8.3 Exculpatory Provisions. Neither the Agent, the Collateral Agent,
nor any of their respective officers, directors, employees, agents,
attorneys-in-fact or affiliates shall be (a) required to initiate or conduct any
litigation or collection proceedings hereunder, except with the concurrence of
the Required Lenders and contribution by each Lender of its Percentage Share of
costs reasonably expected by the Agent or the Collateral Agent to be incurred in
connection therewith, (b) liable for any action lawfully taken or omitted to be
taken by it or such Person under or in connection with this Agreement or any
other Loan Document (except for gross negligence or willful misconduct of the
Agent, the Collateral Agent, or such Person), or (c) responsible in any manner
to any Lender for any recitals, statements, representations or warranties made
by the Borrowers or any officer thereof contained in this Agreement or any other
Loan Document or in any certificate, report, statement or other document
referred to or provided for in, or received by the Agent or the Collateral Agent
under or in connection with, this Agreement or any other Loan Document, or for
the value, validity, effectiveness, genuineness, enforceability or sufficiency
of this Agreement or any other Loan Document or for any failure of any Borrower
to perform its obligations hereunder or thereunder. Neither the Agent nor the
Collateral Agent shall be under any obligation to any Lender to ascertain or to
inquire as to the observance or performance of any of the agreements contained
in, or conditions
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of, this Agreement or any other Loan Document, or to inspect the properties,
books or records of the Borrowers.
8.4 Reliance by Agent. Each of the Agent and the Collateral Agent
shall be entitled to rely, and shall be fully protected in relying, upon any
Note, writing, resolution, notice, consent, certificate, affidavit, letter,
cablegram, telegram, telecopy, telex or teletype message, statement, order or
other document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons and upon advice
and statements of legal counsel (including counsel to the Borrowers),
independent accountants and other experts selected by the Agent or the
Collateral Agent. Each of the Agent and the Collateral Agent may deem and treat
the payee of any Note as the owner thereof for all purposes unless and until a
written notice of assignment, negotiation, or transfer thereof shall have been
received by the Agent. Each of the Agent and the Collateral Agent shall be fully
justified in failing or refusing to take any action under this Agreement or any
other Loan Document unless it shall first receive such advice or concurrence of
the Required Lenders as it deems appropriate or of all of the Lenders if
required by any provision of this Agreement and contribution by each Lender of
its Percentage Share of costs reasonably expected by the Agent or the Collateral
Agent, as the case may be, to be incurred in connection therewith. Each of the
Agent and the Collateral Agent shall in all cases be fully protected in acting,
or in refraining from acting, under this Agreement and the other Loan Documents
in accordance with a request of the Required Lenders. Such request and any
action taken or failure to act pursuant thereto shall be binding upon the
Lenders and all future holders of the Notes. In no event shall either the Agent
or the Collateral Agent be required to take any action that exposes such agent
to personal liability or that is contrary to any Loan Document or applicable
Requirement of Law.
8.5 Notice of Default. Neither the Agent nor the Collateral Agent
shall be deemed to have knowledge or notice of the occurrence of any Default or
Event of Default unless such agent has received notice from a Lender or the
Borrowers referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default." In the event that
such agent receives such a notice, such agent shall promptly give notice thereof
to the Lenders. The Agent and the Collateral Agent shall take such action with
respect to such Default or Event of Default as shall be reasonably directed by
the Required Lenders; provided that unless and until the Agent and the
Collateral Agent shall have received such directions, subject to the provisions
of Section 7.2, each of the Agent and the Collateral Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable in the best
interests of the Lenders. In the event that the officer of the Agent or the
Collateral Agent primarily responsible for the lending relationship with the
Borrowers or the officer of any Lender primarily responsible for the lending
relationship with the Borrowers becomes aware that a Default or Event of Default
has occurred and is continuing, such agent or such Lender, as the case may be,
shall use its good faith efforts to inform the other Lenders and/or the other
agents, as the case may be, promptly of such occurrence. Notwithstanding the
preceding sentence, failure to comply with the preceding sentence shall not
result in any liability to the Agent, the Collateral Agent, or any Lender.
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8.6 Non-Reliance on Agent and Other Lenders. Each Lender expressly
acknowledges that neither the Agent, the Collateral Agent, any other Lender nor
any of their respective officers, directors, employees, agents,
attorneys-in-fact or affiliates has made any representation or warranty to such
Lender and that no act by the Agent, the Collateral Agent, or any other Lender
hereafter taken, including any review of the affairs of the Borrowers, shall be
deemed to constitute any representation or warranty by the Agent, the Collateral
Agent, or any Lender to any other Lender. Each Lender represents to the Agent
and the Collateral Agent that it has, independently and without reliance upon
the Agent, the Collateral Agent, or any other Lender, and based on such
documents and information as it has deemed appropriate, made its own appraisal
of and investigation into the business, operations, property, condition
(financial and otherwise) and creditworthiness of the Borrowers and the value of
the Collateral and other Properties of the Borrowers and has made its own
decision to enter into this Agreement. Each Lender also represents that it will,
independently and without reliance upon the Agent or the Collateral Agent or any
other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit analysis, appraisals
and decisions in taking or not taking action under this Agreement and the other
Loan Documents, and to make such investigation as it deems necessary to inform
itself as to the business, operations, property, condition (financial and
otherwise) and creditworthiness of the Borrowers and the value of the Collateral
and other Properties of the Borrowers. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the Agent or the
Collateral Agent hereunder, neither the Agent nor the Collateral Agent shall
have any duty or responsibility to provide any Lender with any credit or other
information concerning the business, operations, property, condition (financial
and otherwise), or creditworthiness of the Borrowers or the value of the
Collateral or other Properties of the Borrowers which may come into the
possession of the Agent, the Collateral Agent or any of their respective
officers, directors, employees, agents, attorneys-in-fact or affiliates.
8.7 Indemnification. EACH LENDER AGREES TO INDEMNIFY THE AGENT AND
THE COLLATERAL AGENT AND EACH OF THEIR OFFICERS, DIRECTORS, EMPLOYEES, AGENTS,
ATTORNEYS-IN-FACT AND AFFILIATES (TO THE EXTENT NOT REIMBURSED BY THE BORROWERS
AND WITHOUT LIMITING THE OBLIGATION OF THE BORROWERS TO DO SO), RATABLY
ACCORDING TO THE PERCENTAGE SHARE OF SUCH LENDER, FROM AND AGAINST ANY AND ALL
LIABILITIES, CLAIMS, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS,
JUDGMENTS, SUITS, COSTS, EXPENSES AND DISBURSEMENTS OF ANY KIND WHATSOEVER WHICH
MAY AT ANY TIME (INCLUDING ANY TIME FOLLOWING THE PAYMENT AND PERFORMANCE OF ALL
OBLIGATIONS AND THE TERMINATION OF THIS AGREEMENT) BE IMPOSED ON, INCURRED BY OR
ASSERTED AGAINST THE AGENT, THE COLLATERAL AGENT OR ANY OF THEIR RESPECTIVE
OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, ATTORNEYS-IN-FACT OR AFFILIATES IN ANY
WAY RELATING TO OR ARISING OUT OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR
ANY OTHER DOCUMENT CONTEMPLATED OR REFERRED TO HEREIN OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR ANY ACTION TAKEN OR OMITTED BY THE AGENT, THE COLLATERAL
AGENT OR ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS,
ATTORNEYS-IN-FACT OR AFFILIATES UNDER OR IN CONNECTION WITH ANY OF THE
FOREGOING, INCLUDING ANY LIABILITIES, CLAIMS, OBLIGATIONS, LOSSES, DAMAGES,
PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES AND DISBURSEMENTS IMPOSED,
INCURRED OR ASSERTED AS A RESULT OF THE NEGLIGENCE,
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WHETHER SOLE OR CONCURRENT, OF THE AGENT, THE COLLATERAL AGENT OR ANY OF THEIR
RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, ATTORNEYS-IN-FACT OR
AFFILIATES; PROVIDED THAT NO LENDER SHALL BE LIABLE FOR THE PAYMENT OF ANY
PORTION OF SUCH LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS,
JUDGMENTS, SUITS, COSTS, EXPENSES OR DISBURSEMENTS RESULTING SOLELY FROM THE
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE AGENT, THE COLLATERAL AGENT OR ANY
OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, ATTORNEYS-IN-FACT OR
AFFILIATES. THE AGREEMENTS IN THIS SECTION SHALL SURVIVE THE PAYMENT AND
PERFORMANCE OF ALL OBLIGATIONS AND THE TERMINATION OF THIS AGREEMENT.
8.8 Restitution. Should the right of the Agent, the Collateral Agent
or any Lender to realize funds with respect to the Obligations be challenged and
any application of such funds to the Obligations be reversed, whether by
Governmental Authority or otherwise, or should the Borrowers otherwise be
entitled to a refund or return of funds distributed to the Lenders in connection
with the Obligations, the Agent, the Collateral Agent or such Lender, as the
case may be, shall promptly notify the Lenders of such fact. Not later than
Noon, Eastern Standard or Daylight Savings Time, as the case may be, of the
Business Day following such notice, each Lender shall pay to the Agent an amount
equal to the ratable share of such Lender of the funds required to be returned
to the Borrowers. The ratable share of each Lender shall be determined on the
basis of the percentage of the payment all or a portion of which is required to
be refunded originally distributed to such Lender, if such percentage can be
determined, or, if such percentage cannot be determined, on the basis of the
Percentage Share of such Lender. The Agent shall forward such funds to the
Borrowers or to the Lender required to return such funds. If any such amount due
to the Agent is made available by any Lender after Noon, Eastern Standard or
Daylight Savings Time, as the case may be, of the Business Day following such
notice, such Lender shall pay to the Agent (or the Lender required to return
funds to the Borrowers, as the case may be) for its own account interest on such
amount at a rate equal to the Federal Funds Rate for the period from and
including the date on which restitution to the Borrowers is made by the Agent
(or the Lender required to return funds to the Borrowers, as the case may be) to
but not including the date on which such Lender failing to timely forward its
share of funds required to be returned to the Borrowers shall have made its
ratable share of such funds available.
8.9 Agents in Individual Capacity. Each of the Agent and the
Collateral Agent and their affiliates may make loans to, accept deposits from
and generally engage in any kind of business with the Borrowers as though the
Agent and the Collateral Agent were not agents hereunder. With respect to any
Note issued to the Lender serving as the Collateral Agent, the Collateral Agent
shall have the same rights and powers under this Agreement as a Lender and may
exercise such rights and powers as though it were not the Collateral Agent. The
terms "Lender" and "Lenders" shall include the Collateral Agent in its
individual capacity.
8.10 Successor Agent. Provided that a successor agent has been
appointed and has accepted such appointment as provided below, the Agent or the
Collateral Agent may resign upon 30 days' notice to the Lenders and the
Borrowers. If the Agent or the Collateral Agent shall resign as an agent under
this Agreement and the other Loan Documents, Lenders for which the Percentage
Shares aggregate at least sixty-six and two-thirds percent (66-2/3%) shall
appoint
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from among the Lenders a successor agent or collateral agent, as the case may
be, for the Lenders, whereupon such successor agent shall succeed to the rights,
powers and duties of such agent. The term "Agent" or "Collateral Agent" shall
mean such successor agent effective upon its appointment. Upon written
acceptance by such successor agent (a copy of which shall be furnished to the
Borrowers), the rights, powers, and duties of the former agent as Agent or
Collateral Agent shall be terminated, without any other or further act or deed
on the part of such former agent or any of the parties to this Agreement or any
holders of the Notes. After the resignation of the Agent or the Collateral Agent
hereunder as an agent, the provisions of this Article VIII and Sections 2.2(d),
5.13, and 5.17 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was an agent under this Agreement and the other Loan
Documents.
8.11 Applicable Parties. The provisions of this Article are solely
for the benefit of the Agent, the Collateral Agent and the Lenders, and the
Borrowers shall not have any rights as a third party beneficiary or otherwise or
any obligations under any of the provisions of this Article. In performing
functions and duties hereunder and under the other Loan Documents, the Agent and
the Collateral Agent shall act solely as the agent of the Lenders and do not
assume, nor shall either be deemed to have assumed, any obligation or
relationship of trust or agency with or for the Borrowers or any legal
representative, successor, and assign of the Borrowers.
8.12 Release by Borrowers. Notwithstanding the assignment made and
evidenced by the Bank One Assignment and the Comerica Assignment and the
assumption by the Lenders of certain obligations and liabilities pursuant
thereto, each of the Borrowers hereby releases and discharges the Agent, the
Collateral Agent and the Lenders from all obligations, claims, losses, causes of
action, and liabilities, of whatsoever kind or nature heretofore accruing,
whether now known or unknown, arising under or in connection with any Existing
Bank One Loan Document and/or any Existing Comerica Loan Document or any act or
omission by any existing lender under or in connection with any Existing Bank
One Loan Document and/or Existing Comerica Loan Document; provided, however,
nothing set forth in this Section shall relieve the Agent, the Collateral Agent
or the Lenders from their respective obligations and liabilities under the Loan
Documents (other than such Assignments) to which each is a party.
ARTICLE IX
MISCELLANEOUS
9.1 Assignments; Participations. (a) The Borrowers may not assign
any of their rights or obligations under any Loan Document without the prior
consent of the Agent and the Lenders.
(b) With the consent of the Agent and the Borrowers (which consents
shall not be unreasonably withheld), any Lender may assign to one or more
assignees all or a portion of its rights and obligations under this Agreement
pursuant to an Assignment Agreement. Any such assignment shall be in the amount
of at least $10,000,000 (or any whole multiple of $1,000,000 in excess thereof),
and the assignee shall pay to the Agent a transfer fee in the amount of $3,500
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for each such assignment. Any such assignment shall become effective upon the
execution and delivery to the Agent of the Assignment Agreement and the consent
of the Agent and the Borrowers. Promptly following receipt of an executed
Assignment Agreement, the Agent shall send to the Borrowers a copy of such
executed Assignment Agreement. Promptly following receipt of such executed
Assignment Agreement, the Borrowers shall execute and deliver, at their own
expense, new Notes to the assignee and, if applicable, the assignor, in
accordance with their respective interests, whereupon the prior Notes of the
assignor and, if applicable, the assignee, shall be cancelled and returned to
the Borrowers. Upon the effectiveness of any assignment pursuant to this Section
9.1(b), the assignee shall become a "Lender," if not already a "Lender," for all
purposes of the Loan Documents, and the assignor shall be relieved of its
obligations hereunder from and after the date of such assignment to the extent
of such assignment. If the assignor no longer holds any rights or obligations
under this Agreement, such assignor shall cease to be a "Lender" hereunder,
except that its rights under Sections 2.20 and 5.18 shall not be affected. On
the last Business Day of each calendar quarter during which an assignment has
become effective pursuant to this Section 9.1(b), the Agent shall prepare a new
Exhibit IV giving effect to all such assignments effected during such month and
will promptly provide a copy thereof to the Borrowers and each Lender.
(c) Each Lender may transfer, grant, or assign participations in all
or any portion of its interests hereunder to any Person pursuant to this Section
9.1(c), provided that such Lender shall remain a "Lender" for all purposes of
this Agreement and the transferee of such participation shall not constitute a
"Lender" hereunder. In the case of any such participation, the participant shall
not have any rights under any Loan Document, the rights of the participant in
respect of such participation to be against the granting Lender as set forth in
the agreement with such Lender creating such participation, and all amounts
payable by the Borrower hereunder shall be determined as if such Lender had not
sold such participation. Each participation agreement shall provide that the
Lender that has sold or granted the participation shall retain the sole right to
take or refrain from taking any action under the Loan Documents, except that
such participation agreement may provide that such Lender shall not, without the
consent of the participant, agree to any amendment or waiver that would have the
effect, to the extent such participant would be affected thereby, of (i)
increasing the Commitment of such Lender, (ii) extending the Commitment
Termination Date, (iii) reducing the principal on the Loans, (iv) reducing the
rate of interest on the Loans or the Notes, (v) reducing the amount of such
Lender's participation in any fees payable pursuant to Sections 2.14 and 2.15,
(vi) extending the time of scheduled payment of any Obligation, or (vii)
releasing the Guaranty. All amounts payable to any Lender under Article 2 shall
be determined as if such Lender had not sold any participations. Each agreement
creating a participation must include an agreement by the participant to be
bound by the provisions of Section 9.9.
(d) The Lenders may furnish any information concerning the Borrowers
in the possession of the Lenders from time to time to assignees and participants
and prospective assignees and participants, provided that such Persons agree to
be bound by the provisions of Section 9.9.
(e) Notwithstanding anything in this Section to the contrary, any
Lender may assign and pledge all or any of its Notes or any interest therein to
any Federal Reserve Bank or
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the United States Treasury as collateral security pursuant to Regulation A of
the Board of Governors of the Federal Reserve System and any operating circular
issued by such Federal Reserve System and/or such Federal Reserve Bank. No such
assignment or pledge shall release the assigning or pledging Lender from its
obligations hereunder.
(f) Each Lender party to this Agreement on the Closing Date hereby
represents, and each Person that becomes a lender pursuant to an Assignment
Agreement will represent, and shall be deemed to have represented on becoming a
party to this Agreement, that it is a bank or other financial institution
regularly engaged in making or purchasing loans, that it will make or acquire
Loans hereunder for its own account in the ordinary course of its business, and
that it has capital surplus and undivided profits aggregating at least
$500,000,000.
(g) Notwithstanding any other provisions of this Section, no
transfer or assignment of the interests or obligations of any Lender or grant of
participations therein shall be permitted if such transfer, assignment, or grant
would require the Borrower to file a registration statement with the Securities
and Exchange Commission or any successor Governmental Authority or qualify the
Loans under the "Blue Sky" laws of any state.
9.2 Survival of Representations, Warranties, and Covenants. All
representations and warranties of the Borrowers and all covenants and agreements
herein made shall survive the execution and delivery of the Notes and the
Security Instruments and shall remain in force and effect so long as any
Obligation is outstanding or any Commitment exists.
9.3 Notices and Other Communications. Except as to oral notices
expressly authorized herein, which oral notices shall be confirmed in writing,
all notices, requests, and communications hereunder or in connection herewith or
with any other Loan Document shall be in writing (including by telecopy). Unless
otherwise expressly provided herein, any such notice, request, demand, or other
communication shall be deemed to have been duly given or made when delivered by
hand, or, in the case of delivery by mail, two Business Days after deposited in
the mail, certified mail, return receipt requested, postage prepaid, or, in the
case of telecopy notice, when receipt thereof is acknowledged orally or by
written confirmation report, addressed to each party at the "Address for
Notices" specified below its name on the signature pages hereof or at such other
address within the United States as shall be designated by such party in a
notice given to the Agent and the Borrowers.
9.4 Parties in Interest. Subject to the restrictions on changes in
corporate structure set forth in Section 6.10 and other applicable restrictions
contained herein, all covenants and agreements herein contained by or on behalf
of the Borrowers, the Agent, the Collateral Agent or the Lenders shall be
binding upon and inure to the benefit of the Borrowers, the Agent, the
Collateral Agent or the Lenders, as the case may be, and their respective legal
representatives, successors, and permitted assigns.
9.5 Rights of Third Parties. All provisions herein are imposed solely
and exclusively for the benefit of the Agent, the Collateral Agent the Lenders
and the Borrowers and their successors and permitted assigns. No other Person
shall have any right, benefit, priority,
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or interest hereunder or as a result hereof or have standing to require
satisfaction of provisions hereof in accordance with their terms.
9.6 No Waiver; Rights Cumulative. No course of dealing on the part
of the Agent, the Collateral Agent or the Lenders or their officers or
employees, nor any failure or delay by the Agent, the Collateral Agent or the
Lenders with respect to exercising any of their rights under any Loan Document
shall operate as a waiver thereof. The rights of the Agent, the Collateral Agent
and the Lenders under the Loan Documents shall be cumulative and the exercise or
partial exercise of any such right shall not preclude the exercise of any other
right. Neither the making of any Loan nor the issuance of a Letter of Credit
shall constitute a waiver of any of the covenants, warranties, or conditions of
the Borrowers contained herein. In the event any Borrower is unable to satisfy
any such covenant, warranty, or condition, neither the making of any Loan nor
the issuance of a Letter of Credit shall have the effect of precluding the Agent
or the Lenders from thereafter declaring such inability to be an Event of
Default as hereinabove provided.
9.7 Severability. In the event any one or more of the provisions
contained in any of the Loan Documents shall, for any reason, be held to be
invalid, illegal, or unenforceable in any respect, such invalidity, illegality,
or unenforceability shall not affect any other provision of any Loan Document.
9.8 Amendments; Waivers. Neither this Agreement nor any of the other
Loan Documents nor any terms hereof or thereof may be amended, supplemented,
modified, or waived except in writing and in accordance with the provisions of
this Section. The Agent and the Borrowers may, from time to time with the
written consent of the Required Lenders, enter into written amendments,
supplements, or modifications to the Loan Documents for the purpose of adding
any provisions to this Agreement or the other Loan Documents or changing in any
manner the rights of the Lenders or the Borrowers hereunder or thereunder or
waiving, on such terms and conditions as the Agent may specify in such
instrument, any of the requirements of this Agreement or the other Loan
Documents or any Default or Event of Default and its consequences; provided,
however, that no such amendment, supplement, modification, or waiver shall (a)
extend the time of scheduled payment of any Obligation, change the rate of
interest thereon, extend the Commitment Termination Date or Final Maturity,
reduce any fee payable for the account of the Lenders hereunder, release any
Collateral, release the Guaranty, reduce the amount of any Obligation, increase
the Maximum Facility Amount, change the Borrowing Base except in accordance with
Section 2.11 or change any other provision applicable to the determination of
the Borrowing Base, amend, modify, or waive any provision of this Section or
Sections 2.11, 5.13, 5.17 or 8.10, change the percentage specified in the
definition of Required Lenders, or consent to the assignment or transfer by the
Borrowers of any of their rights or obligations under this Agreement or the
other Loan Documents, in any such case without the written consent of all
Lenders, (b) amend, modify, or waive any provision of Article VIII or the rights
or obligations of the Agent (including its rights and obligations as issuer of
the Letters of Credit) or the Collateral Agent without the written consent of
such agent, or (c) amend, modify, or waive any provision relating to any Hedging
Agreement without the written consent of the Lender party thereto or whose
affiliate is a party thereto. Any such amendment, supplement, modification, or
waiver shall apply equally to each of the Lenders and shall be binding upon the
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Borrowers, the Lenders, the Agent, and the Collateral Agent and all future
holders of the Notes. Notwithstanding the foregoing, during each Sales Period,
the Collateral Agent may, provided that no Default or Event of Default exists,
release items of Collateral sold by the Borrowers in accordance with Section
6.5. In the event of any waiver, the Borrowers, the Lenders, the Agent, and the
Collateral Agent shall be restored to their respective former positions and
rights hereunder and under the other Loan Documents, and any Default or Event of
Default waived shall be deemed to be cured and not continuing; but no such
waiver shall extend to any subsequent or other Default or Event of Default or
impair any right with respect thereto.
9.9 Confidentiality. In the event that any Borrower or the Guarantor
provides to the Agent, the Collateral Agent or the Lenders information belonging
to any Borrower or any Affiliate of the Borrowers, the Agent, the Collateral
Agent and the Lenders shall thereafter maintain such information in confidence.
This obligation of confidence shall not apply to such portions of the
information which (i) are in the public domain, (ii) hereafter become part of
the public domain without the Agent, the Collateral Agent or the Lenders
breaching their obligation of confidence herein or in any other Loan Document,
(iii) are previously known by the Agent, the Collateral Agent or the Lenders
from some source other than the Borrowers or any Affiliate of the Borrowers,
(iv) are hereafter developed by the Agent, the Collateral Agent or the Lenders
without using the information thus provided, (v) are hereafter obtained by or
available to the Agent, the Collateral Agent or the Lenders from a third party
who owes no obligation of confidence to the Borrowers or any Affiliate of the
Borrowers with respect to such information or through any other means other than
through disclosure by the Borrowers or any Affiliate of the Borrowers to the
Agent, the Collateral Agent or the Lenders, (vi) are disclosed with the
Borrower's consent, (vii) must be disclosed pursuant to any Requirement of Law,
(viii) as may be required by law or regulation or order of any Governmental
Authority in any judicial, arbitration or governmental proceeding or (ix) as may
be requested by any Governmental Authority pursuant to any bank examination or
audit; provided, however, that to the extent practicable and unless otherwise
prohibited by any Requirement of Law, any Person disclosing any non-public
information pursuant to clauses (vii) or (viii) shall endeavor in good faith to
give the Borrowers at least 5 days' prior written notice of such disclosure.
Further, the Agent, the Collateral Agent or a Lender may disclose any such
information to any other Lender or successor agent, any independent petroleum
engineers or consultants, any independent certified public accountants, any
legal counsel employed by such Person in connection with this Agreement or any
other Loan Document, including the enforcement or exercise of all rights and
remedies hereunder or thereunder, or any assignee or participant (including
prospective assignees and participants) in the Loans; provided, however, that
the Agent, the Collateral Agent or the Lenders impose on the Person to whom such
information is disclosed the same obligation to maintain the confidentiality of
such information as is imposed upon it hereunder and such Person agrees to be
bound by the terms hereof. Notwithstanding anything to the contrary provided
herein, this obligation of confidence shall cease three (3) years from the later
of (a) Final Maturity or (b) the date that all Obligations are paid or satisfied
in full or otherwise performed or discharged or deemed performed or discharged.
9.10 Controlling Agreement. In the event of a conflict between the
provisions of this Agreement and those of any other Loan Document, the
provisions of this Agreement shall control. Without limiting the generality of
the foregoing, no provision of any Letter of Credit
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Application, Security Instrument or other agreement or document executed in
connection herewith shall give the Agent or any Lender any rights that are
greater than the rights such Persons have under this Agreement with respect to
the same subject matter.
9.11 Governing Law. THIS AGREEMENT, THE NOTES AND THE GUARANTY SHALL
BE DEEMED TO BE CONTRACTS MADE UNDER AND SHALL BE CONSTRUED IN ACCORDANCE WITH
AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO
PRINCIPLES THEREOF RELATING TO CONFLICTS OF LAW.
9.12 Jurisdiction and Venue. ALL ACTIONS OR PROCEEDINGS WITH RESPECT
TO, ARISING DIRECTLY OR INDIRECTLY IN CONNECTION WITH, OUT OF, RELATED TO, OR
FROM THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE LITIGATED, AT THE SOLE
DISCRETION AND ELECTION OF THE AGENT OR THE COLLATERAL AGENT, IN THE COURTS OF
THE STATE OF NEW YORK OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN
DISTRICT OF NEW YORK. EACH BORROWER HEREBY SUBMITS TO THE NON-EXCLUSIVE
JURISDICTION OF THE AFORESAID COURTS AND HEREBY WAIVES ANY RIGHTS IT MAY HAVE TO
TRANSFER OR CHANGE THE JURISDICTION OR VENUE OF ANY LITIGATION BROUGHT AGAINST
IT BY THE AGENT, THE COLLATERAL AGENT OR ANY LENDER IN ACCORDANCE WITH THIS
SECTION.
9.13 Appointment of Agent for Service of Process. Each Borrower
hereby irrevocably designates CT Corporation System, or such other corporate
process agent as is acceptable to the Agent, as the designee, appointee and
agent of such Borrower to receive, for and on behalf of such Borrower, service
of process out of any of the afore-mentioned courts in any legal action or
proceeding with respect to this Agreement, any other Loan Document or any
document related thereto. It is understood that a copy of such process served on
such agent will be promptly forwarded by mail to such Borrower at its address
specified below its name on the signature pages hereof, but the failure of such
Borrower to receive such copy shall not affect in any way the service of such
process. Each Borrower further irrevocably consents to the service of process of
any of the courts mentioned in Section 9.12 in any such action or proceeding by
the mailing of copies thereof by registered or certified mail, postage prepaid,
to such Borrower at such address, such service to become effective four days
after mailing. Nothing herein shall affect the right of the Agent or any Lender
to serve process in any other manner permitted by law.
9.14 Waiver of Rights to Jury Trial. THE BORROWERS, THE AGENT, THE
COLLATERAL AGENT, AND EACH LENDER HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY,
IRREVOCABLY, AND UNCONDITIONALLY WAIVE ALL RIGHTS TO TRIAL BY JURY IN ANY
ACTION, SUIT, PROCEEDING, COUNTERCLAIM, OR OTHER LITIGATION THAT RELATES TO OR
ARISES OUT OF ANY OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE ACTS OR
OMISSIONS OF THE AGENT, THE COLLATERAL AGENT OR ANY LENDER IN THE ENFORCEMENT OF
ANY OF THE TERMS OR PROVISIONS OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR
OTHERWISE WITH RESPECT THERETO. THE PROVISIONS OF THIS SECTION ARE A MATERIAL
INDUCEMENT FOR THE AGENT, THE COLLATERAL AGENT AND THE LENDERS ENTERING INTO
THIS AGREEMENT.
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75
9.15 Integration. THIS AGREEMENT AMENDS, RESTATES, AND REPLACES THE
EXISTING BANK ONE CREDIT AGREEMENT AND THE EXISTING COMERICA CREDIT AGREEMENT
AND CONSTITUTES THE ENTIRE AGREEMENT AMONG THE PARTIES HERETO WITH RESPECT TO
THE SUBJECT HEREOF AND SHALL SUPERSEDE ANY PRIOR AGREEMENT BETWEEN OR AMONG THE
PARTIES, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT HEREOF, INCLUDING THE
EXISTING BANK ONE CREDIT AGREEMENT AND THE EXISTING COMERICA CREDIT AGREEMENT.
FURTHERMORE, IN THIS REGARD, THIS AGREEMENT AND THE OTHER WRITTEN LOAN DOCUMENTS
REPRESENT, COLLECTIVELY, THE FINAL AGREEMENT AMONG THE PARTIES THERETO AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF SUCH PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG SUCH
PARTIES.
9.16 Counterparts. For the convenience of the parties, this Agreement
may be executed in multiple counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which together shall constitute one and the same agreement.
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IN WITNESS WHEREOF, this Agreement is executed effective as of the
date first above written.
BORROWERS:
KCS RESOURCES, INC.
By: __________________________________
Xxxxx X. Xxxxxx
Vice President
Address for Notices:
0000 Xxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxx
Telecopy: (000) 000-0000
KCS PIPELINE SYSTEMS, INC.
By: __________________________________
Xxxxx X. Xxxxxx
Vice President
Address for Notices:
0000 Xxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxx
Telecopy: (000) 000-0000
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KCS MICHIGAN RESOURCES, INC.
By: __________________________________
Xxxxx X. Xxxxxx
Vice President
Address for Notices:
0000 Xxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxx
Telecopy: (000) 000-0000
KCS ENERGY MARKETING, INC.
By: __________________________________
Xxxxx X. Xxxxxx
Vice President
Address for Notices:
0000 Xxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxx
Telecopy: (000) 000-0000
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AGENT:
CANADIAN IMPERIAL BANK OF
COMMERCE, NEW YORK AGENCY
By: __________________________________
Xxxxxxxx Xxxx
Authorized Signatory
Address for Notices:
000 Xxxxxxxxx Xxxxxx
0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx Xxxx
Syndications Group
Telecopy: (000) 000-0000
with copies to:
CANADIAN IMPERIAL BANK OF COMMERCE
000 Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxx Xxxxxxxxxx
Telecopy: (000) 000-0000
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COLLATERAL AGENT AND A LENDER:
CIBC INC.
By: __________________________________
Xxxxxxxx Xxxx
Authorized Signatory
Applicable Lending Office
for Base Rate Loans and
LIBO Rate Loans:
000 Xxxxxxxxx Xxxxxx
0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Address for Notices:
000 Xxxxxxxxx Xxxxxx
0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx Xxxx
Telecopy: (000) 000-0000
with copies to:
CIBC INC.
000 Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxx Xxxxxxxxxx
Telecopy: (000) 000-0000
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80
CO-AGENT AND A LENDER:
BANK ONE, TEXAS, NATIONAL
ASSOCIATION
By: __________________________________
Xxxxxxx X. Xxxxxx
Vice President
Applicable Lending Office
for Base Rate Loans and
LIBO Rate Loans:
000 Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx Xxxxx
Telecopy: (000) 000-0000
Address for Notices:
000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Telecopy: (000) 000-0000
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CO-AGENT AND A LENDER:
NATIONSBANK OF TEXAS, N.A.
By: ___________________________________
Xxxx X. Xxxxxxx
Senior Vice President
Applicable Lending Office
for Base Rate Loans and
LIBO Rate Loans:
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxx 00000
Attention: Corporate Credit Services
Address for Notices:
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxxxx Xxxxx
Telecopy: (000) 000-0000
with copies to:
NATIONSBANK OF TEXAS, N.A.
000 Xxxxxxxxx
0xx Xxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxxxxx
Telecopy: (000) 000-0000
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LENDER:
COMERICA BANK-TEXAS
By: __________________________________
Xxxxxx X. Xxxxxx
Senior Vice President
Applicable Lending Office
for Base Rate Loans and
LIBO Rate Loans:
0000 Xxxx Xxxxxxxxxxx
Xxxxxx, Xxxxx 00000
Address for Notices:
0000 Xxx Xxxxxx
Xxxxxx Xxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxx Xxxxx
Telecopy: (000) 000-0000
with copies to:
COMERICA BANK-TEXAS
One Shell Plaza
000 Xxxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxxx
Telecopy: (000) 000-0000
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LENDER:
DEN NORSKE BANK ASA
By: __________________________________
Xxxxxxx X. Xxxxx
Vice President
By: __________________________________
Printed Name: ________________________
Title: _______________________________
Applicable Lending Office
for Base Rate Loans and
LIBO Rate Loans:
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Address for Notices:
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxx Xxxxxxx
Telecopy: (000) 000-0000
with copies to:
DEN NORSKE BANK ASA
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxx
Telecopy: (000) 000-0000
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EXHIBIT I
[FORM OF NOTE]
PROMISSORY NOTE
$[______________] [____________], 1996
FOR VALUE RECEIVED and WITHOUT GRACE, the undersigned ("Maker,"
whether one or more) promises to pay to the order of [______________] ("Payee"),
at the banking quarters of Canadian Imperial Bank of Commerce, New York Agency
(in its capacity as Agent for Payee and others under the Credit Agreement
referred to hereinafter, the "Agent"), the sum of [______________] DOLLARS
($[_________]), or so much thereof as may be advanced against this Note pursuant
to the Credit Agreement dated of even date herewith by and among Maker, Payee,
the Agent, the Collateral Agent, and the lenders signatory thereto from time to
time (as amended, restated, or supplemented from time to time, the "Credit
Agreement," defined terms from which are used herein with the meaning assigned
thereto in the Credit Agreement, unless expressly provided to the contrary
herein) and remains unpaid, together with interest at the rates and calculated
as provided in the Credit Agreement. If there is more than one party
constituting Maker hereunder, the liability of all such parties for full
performance under this Note shall be joint and several.
Reference is hereby made to the Credit Agreement for matters
governed thereby, including, without limitation, certain events which will
entitle the holder hereof to accelerate the maturity of all amounts due
hereunder.
This Note is issued pursuant to, is a "Note" under, and is payable
as provided in the Credit Agreement. Subject to compliance with applicable
provisions of the Credit Agreement, Maker may at any time pay the full amount or
any part of this Note without the payment of any premium or fee, but such
payment shall not, until this Note is fully paid and satisfied, excuse the
payment as it becomes due of any payment on this Note provided for in the Credit
Agreement.
This Note is issued, in whole or in part, in renewal and extension
of and substitution for, but not in novation or discharge of, the remaining
principal balance of the Existing Bank One Notes and the Existing Comerica
Notes.
Without being limited thereto or thereby, this Note is secured by
the Security Instruments.
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THIS NOTE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER, AND SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK,
WITHOUT GIVING EFFECT TO PRINCIPLES THEREOF RELATING TO CONFLICT OF LAWS.
KCS RESOURCES, INC.
By: __________________________________
Printed Name: ________________________
Title: _______________________________
KCS PIPELINE SYSTEMS, INC.
By: __________________________________
Printed Name: ________________________
Title: _______________________________
KCS MICHIGAN RESOURCES, INC.
By: __________________________________
Printed Name: ________________________
Title: _______________________________
KCS ENERGY MARKETING, INC.
By: __________________________________
Printed Name: ________________________
Title: _______________________________
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EXHIBIT II
FORM OF
ASSIGNMENT AGREEMENT
THIS ASSIGNMENT AGREEMENT (this "Agreement") is dated as of _______,
199__, by and between ______________________________ (the "Assignor") and
_________________________________ (the "Assignee").
RECITALS
A. The Assignor is a party to the Credit Agreement dated as of
____________, 1996 (as amended, restated or supplemented from time to time, the
"Credit Agreement") by and among KCS RESOURCES, INC., a Delaware corporation;
KCS PIPELINE SYSTEMS, INC., a Delaware corporation; KCS MICHIGAN RESOURCES,
INC., a Delaware corporation and KCS ENERGY MARKETING, INC., a New Jersey
corporation (collectively, the "Borrowers"), each of the lenders that is or
becomes a party thereto as provided in Section 9.1(b) or Section 2.24 of the
Credit Agreement (individually, together with its successors and such assigns, a
"Lender", and collectively, together with their successors and such assigns, the
"Lenders"), and CANADIAN IMPERIAL BANK OF COMMERCE, acting through its New York
agency (in its individual capacity, "CIBC") and as agent for the Lenders (in
such capacity, together with its successors in such capacity, the "Agent") and
CIBC INC., a Delaware corporation, as collateral agent for the Lenders.
B. The Assignor proposes to sell, assign and transfer to the Assignee,
and the Assignee proposes to purchase and assume from the Assignor, [all][a
portion] of the Assignor's Facility Amount, its outstanding Loans and its
Percentage Share of the outstanding LC Exposure, all on the terms and conditions
of this Agreement.
C. In consideration of the foregoing and the mutual agreements contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. All capitalized terms used but not defined herein have
the respective meanings given to such terms in the Credit Agreement.
1.2 Other Definitions. As used herein, the following terms have the
following respective meanings:
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"Assigned Interest" shall mean all of Assignor's (in its capacity
as a "Lender") rights and obligations (i) under the Credit Agreement and
the other Loan Documents in respect of [all of] the [portion of the]
Facility Amount of the Assignor in the principal amount equal to $ ,
including, without limitation, any obligation to participate pro rata in
any L/C Exposure and (ii) to make Loans under its Commitment up to the
lesser of the Facility Amount referenced above or the Borrowing Base in
effect from time to time and any right to receive payments for the Loans
currently outstanding under its Commitment in the principal amount of $
(the "Loan Balance"), plus the interest and fees which will accrue from
and after the Assignment Date.
"Assignment Date" shall mean ______________, 199__.
ARTICLE II
SALE AND ASSIGNMENT
2.1 Sale and Assignment. On the terms and conditions set forth herein,
effective on and as of the Assignment Date, the Assignor hereby sells, assigns
and transfers to the Assignee, and the Assignee hereby purchases and assumes
from the Assignor, all of the right, title and interest of the Assignor in and
to, and all of the obligations of the Assignor in respect of, the Assigned
Interest. Such sale, assignment and transfer is without recourse and, except as
expressly provided in this Agreement, without representation or warranty.
2.2 Assumption of Obligations. The Assignee agrees with the Assignor (for
the express benefit of the Assignor and the Borrowers) that the Assignee will,
from and after the Assignment Date, assume and perform all of the obligations of
the Assignor in respect of the Assigned Interest. From and after the Assignment
Date for matters accruing or arising from and after the Assignment Date: (a) the
Assignor shall be released from the Assignor's obligations in respect of the
Assigned Interest, and (b) the Assignee shall be entitled to all of the
Assignor's rights, powers and privileges under the Credit Agreement and the
other Loan Documents in respect of the Assigned Interest.
2.3 Consent to Assignment. By executing this Agreement as provided below,
in accordance with Section 9.1(b) of the Credit Agreement, the Agent and each of
the Borrowers hereby acknowledges notice of the transactions contemplated by
this Agreement and consents to such transactions.
ARTICLE III
PAYMENTS
3.1 Payments. As consideration for the sale, assignment and transfer
contemplated by Section 2.1 hereof, the Assignee shall, on the Assignment Date,
assume Assignor's obligations in respect of the Assigned Interest and pay to the
Assignor an amount equal to the
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Loan Balance, if any. An amount equal to all accrued and unpaid interest and
fees shall be paid to the Assignor as provided in Section 3.2 (iii) below.
Except as otherwise provided in this Agreement, all payments hereunder shall be
made in Dollars and in immediately available funds, without setoff, deduction or
counterclaim.
3.2 Allocation of Payments. The Assignor and the Assignee agree that (i)
the Assignor shall be entitled to any payments of principal with respect to the
Assigned Interest made prior to the Assignment Date, together with any interest
and fees with respect to the Assigned Interest accrued prior to the Assignment
Date, (ii) the Assignee shall be entitled to any payments of principal with
respect to the Assigned Interest made from and after the Assignment Date,
together with any and all interest and fees with respect to the Assigned
Interest accruing from and after the Assignment Date, and (iii) the Agent is
authorized and instructed to allocate payments received by it for account of the
Assignor and the Assignee as provided in the foregoing clauses. Each party
hereto agrees that it will hold any interest, fees or other amounts that it may
receive to which the other party hereto shall be entitled pursuant to the
preceding sentence for account of such other party and pay, in like money and
funds, any such amounts that it may receive to such other party promptly upon
receipt.
3.3 Delivery of Notes. Promptly following the receipt by the Assignor of
the consideration required to be paid under Section 3.1 hereof, the Assignor
shall, in the manner contemplated by Section 9.1(b) of the Credit Agreement, (i)
deliver to the Agent (or its counsel) the Note held by the Assignor and (ii)
notify the Agent to request that the Borrowers execute and deliver new Notes to
the Assignor, if the Assignor continues to be a Lender, and the Assignee, dated
the date of this Agreement in respective principal amounts equal to the
respective Facility Amounts of the Assignor (if appropriate) and the Assignee
after giving effect to the sale, assignment and transfer contemplated hereby.
3.4 Further Assurances. The Assignor and the Assignee hereby agree to
execute and deliver such other instruments, and take such other actions, as
either party may reasonably request in connection with the transactions
contemplated by this Agreement.
ARTICLE IV
CONDITIONS PRECEDENT
4.1 Conditions Precedent. The effectiveness of the sale, assignment and
transfer contemplated hereby is subject to the satisfaction of each of the
following conditions precedent:
(a) the execution and delivery of this Agreement by the Assignor and
the Assignee;
(b) the receipt by the Assignor of the payments required to be made
under Section 3.1 hereof; and
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(c) the acknowledgment and consent by the Agent and the Borrowers
contemplated by Section 2.3 hereof.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1 Representations and Warranties of Assignor. The Assignor represents
and warrants to the Assignee as follows:
(a) it has all requisite power and authority, and has taken all
action necessary to execute and deliver this Agreement and to fulfill its
obligations under, and consummate the transactions contemplated by, this
Agreement;
(b) the execution, delivery and compliance with the terms hereof by
Assignor and the delivery of all instruments required to be delivered by
it hereunder do not and will not violate any Requirement of Law
applicable to it;
(c) this Agreement has been duly executed and delivered by it and
constitutes the legal, valid and binding obligation of the Assignor,
enforceable against it in accordance with its terms;
(d) all approvals and authorizations of, all filings with and all
actions by any Governmental Authority necessary for the validity or
enforceability of its obligations under this Agreement have been
obtained;
(e) the Assignor has good title to, and is the sole legal and
beneficial owner of, the Assigned Interest, free and clear of all Liens,
claims, participations or other charges of any nature whatsoever; and
(f) the transactions contemplated by this Agreement are commercial
banking transactions entered into in the ordinary course of the banking
business of the Assignor.
5.2 Disclaimer. Except as expressly provided in Section 5.1 hereof, the
Assignor does not make any representation or warranty, nor shall it have any
responsibility to the Assignee, with respect to the accuracy of any recitals,
statements, representations or warranties contained in the Credit Agreement or
in any other Loan Document or for the value, validity, effectiveness,
genuineness, execution, legality, enforceability or sufficiency of the Credit
Agreement, the Notes or any other Loan Document or for any failure by any
Borrower, the Guarantor or any other Person (other than Assignor) to perform any
of its obligations thereunder or for the existence, value, perfection or
priority of any collateral security or the financial or other condition of any
Borrower, the Guarantor or any other Person, or any other matter relating to the
Credit Agreement or any other Loan Document or any extension of credit
thereunder.
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5.3 Representations and Warranties of Assignee. The Assignee represents
and warrants to the Assignor as follows:
(a) it has all requisite power and authority, and has taken all
action necessary to execute and deliver this Agreement and to fulfill its
obligations under, and consummate the transactions contemplated by, this
Agreement;
(b) the execution, delivery and compliance with the terms hereof by
Assignee and the delivery of all instruments required to be delivered by
it hereunder do not and will not violate any Requirement of Law
applicable to it;
(c) this Agreement has been duly executed and delivered by it and
constitutes the legal, valid and binding obligation of the Assignee,
enforceable against it in accordance with its terms;
(d) all approvals and authorizations of, all filings with and all
actions by any Governmental Authority necessary for the validity or
enforceability of its obligations under this Agreement have been
obtained;
(e) the Assignee has fully reviewed the terms of the Credit
Agreement and the other Loan Documents and has independently and without
reliance upon the Assignor, and based on such information as the Assignee
has deemed appropriate, made its own credit analysis and decision to
enter into this Agreement;
(f) if the Assignee is not incorporated under the laws of the
United Sates of America or a state thereof, the Assignee has
contemporaneously herewith delivered to the Agent and the Borrowers such
documents as are required by Section 2.23(b) of the Credit Agreement; and
(g) the transactions contemplated by this Agreement are commercial
banking transactions entered into in the ordinary course of the banking
business of the Assignee.
ARTICLE VI
MISCELLANEOUS
6.1 Notices. All notices and other communications provided for herein
(including, without limitation, any modifications of, or waivers, requests or
consents under, this Agreement) shall be given or made in writing (including,
without limitation, by telex or telecopy) to the intended recipient at its
"Address for Notices" specified below its name on the signature pages hereof or,
as to either party, at such other address as shall be designated by such party
in a notice to the other party.
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6.2 Amendment, Modification or Waiver. No provision of this Agreement may
be amended, modified or waived except by an instrument in writing signed by the
Assignor and the Assignee, and consented to by the Agent and the Borrowers.
6.3 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns. The representations and warranties made herein by the
Assignee are also made for the benefit of the Agent, and the Assignee agrees
that the Agent is entitled to rely upon such representations and warranties.
6.4 Assignments. Neither party hereto may assign any of its rights or
obligations hereunder except in accordance with the terms of the Credit
Agreement.
6.5 Captions. The captions and section headings appearing herein are
included solely for convenience of reference and are not intended to affect the
interpretation of any provision of this Agreement.
6.6 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be identical and all of which, taken together,
shall constitute one and the same instrument, and each of the parties hereto may
execute this Agreement by signing any such counterpart.
6.7 Governing Law. THIS AGREEMENT (INCLUDING, BUT NOT LIMITED TO, THE
VALIDITY AND ENFORCEABILITY HEREOF) SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, OTHER THAN THE CONFLICT OF
LAWS RULES THEREOF.
6.8 Expenses. To the extent not paid by the Borrowers pursuant to the
terms of the Credit Agreement, each party hereto shall bear its own expenses in
connection with the execution, delivery and performance of this Agreement.
6.9 Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO TRIAL BY
JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment
Agreement to be executed and delivered as of the date first above written.
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ASSIGNOR
________________________________________
By: ____________________________________
Name: __________________________________
Title: _________________________________
Address for Notices:
________________________________________
________________________________________
________________________________________
Telecopier No.: ________________________
Telephone No.: _________________________
Attention: _____________________________
ASSIGNEE
________________________________________
By: ____________________________________
Name: __________________________________
Title: _________________________________
Address for Notices:
________________________________________
________________________________________
________________________________________
Telecopier No.: ________________________
Telephone No.: _________________________
Attention: _____________________________
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00
ACKNOWLEDGED AND CONSENTED TO:
Canadian Imperial Bank of Commerce,
acting through its New York Agency,
as Agent
By: __________________________________
Name: ________________________________
Title: _______________________________
KCS RESOURCES, INC.
By: __________________________________
Name: ________________________________
Title: _______________________________
KCS PIPELINE SYSTEMS, INC.
By: __________________________________
Name: ________________________________
Title: _______________________________
KCS MICHIGAN RESOURCES, INC.
By: __________________________________
Name: ________________________________
Title: _______________________________
KCS ENERGY MARKETING, INC.
By: __________________________________
Name: ________________________________
Title: _______________________________
XX-xxxx
00
XXXXXXX XXX
[FORM OF BORROWING REQUEST]
Canadian Imperial Bank of Commerce,
acting through its New York agency,
as Agent
000 Xxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx Xxxx
Syndications Group
Telecopy: (000) 000-0000
Re: Credit Agreement dated as of ______________, 1996, by and among KCS
Resources, Inc., KCS Pipeline Systems, Inc., KCS Michigan Resources,
Inc., KCS Energy Marketing, Inc. (collectively, the "Borrowers"),
Canadian Imperial Bank of Commerce, acting through its New York
agency, as Agent, and the lenders signatory thereto from time to
time (as amended, restated, or supplemented from time to time, the
"Credit Agreement")
Ladies and Gentlemen:
Pursuant to the Credit Agreement, the Borrowers hereby make the
requests indicated below:
|_| 1. Loans
(a) Amount of new Loan: $_____________
(b) Requested funding date: ____________, 19
(c) $________________ of such Loan is to be a Base Rate Loan; and
$________________ of such Loan is to be a LIBO Rate Loan.
(d) Requested Interest Period for LIBO Rate Loan: ____ months.
|_| 2. Continuation or conversion of LIBO Rate Loan maturing on :
(a) Amount to be continued as a LIBO Rate Loan is
$______________________, with an Interest Period of _____ months;
and
(b) Amount to be converted to a Base Rate Loan is $________________.
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|_| 3. Conversion of Base Rate Loan:
(a) Requested conversion date: __________, 19__.
(b) Amount to be converted to a LIBO Rate Loan is $________, with an
Interest Period of _____ months.
Each of the undersigned certifies that [s]he is an authorized
officer of such Borrower and as such [s]he is authorized to execute this request
on behalf of such Borrower. The undersigned further represents, and warrants on
behalf of such Borrower that such Borrower is entitled to receive the requested
borrowing, continuation, or conversion under the terms and conditions of the
Credit Agreement and that no Default or Event of Default shall exist or will
occur as a result of the making of such requested borrowing, continuation, or
conversion.
Each capitalized term used but not defined herein shall have the
meaning assigned to such term in the Credit Agreement.
Very truly yours,
KCS RESOURCES, INC.
By: ___________________________________
Printed Name: _________________________
Title: ________________________________
KCS PIPELINE SYSTEMS, INC.
By: ___________________________________
Printed Name: _________________________
Title: ________________________________
KCS MICHIGAN RESOURCES, INC.
By: ___________________________________
Printed Name: _________________________
Title: ________________________________
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KCS ENERGY MARKETING, INC.
By: ___________________________________
Printed Name: _________________________
Title: ________________________________
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EXHIBIT IV
FACILITY AMOUNTS
Facility
Name of Lender Percentage Share Amount
-------------- ---------------- ------
CIBC INC. 25.3333334% $38,000,000
Bank One, Texas, National Association 21.3333333% $32,000,000
NationsBank of Texas, N.A. 21.3333333% $32,000,000
Comerica Bank-Texas 16.0000000% $24,000,000
Den norske Bank ASA 16.0000000% $24,000,000
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EXHIBIT V
[FORM OF GUARANTY]
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EXHIBIT VI
[FORM OF COMPLIANCE CERTIFICATE]
____________, 19__
Canadian Imperial Bank of Commerce,
acting through its New York agency,
as Agent
000 Xxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx Xxxx
Syndications Group
Telecopy: (000) 000-0000
Re: Credit Agreement dated as of _______, 1996, by and among KCS
Resources, Inc., KCS Pipeline Systems, Inc., KCS Michigan Resources,
Inc., KCS Energy Marketing, Inc. (collectively, the "Borrowers"),
Canadian Imperial Bank of Commerce, acting through its New York
agency, as Agent, and the lenders signatory thereto from time to
time (as amended, restated, or supplemented from time to time, the
"Credit Agreement")
Ladies and Gentlemen:
1. Pursuant to applicable requirements of the Credit Agreement, the
undersigned, each a Responsible Officer of a Borrower, hereby certify to you on
behalf of such Borrower the following information as true and correct as of the
date hereof or for the period indicated, as the case may be:
[(a) No Default or Event of Default exists as of the date hereof or has
occurred since the date of our previous certification to you, if any.]
[(a) The following Defaults or Events of Default exist as of the date
hereof or have occurred since the date of our previous certification to
you, if any, and the actions set forth below are being taken to remedy
such circumstances:]
2. Pursuant to applicable requirements of the Credit Agreement and
the Guaranty, the undersigned, a Responsible Officer of the Guarantor, hereby
certifies to you on behalf of the Guarantor that:
(a) As of the close of business on ________, no default exists under
Sections 5.4 or 5.5 of the Guaranty, as evidenced by the following:
VI-i
100
(i) Section 5.4: Tangible Net Worth
Required Actual
-------- ------
Not less than $75,000,000 plus
50% of positive Net Income and
75% of net proceeds of equity offerings $__________
(ii) Section 5.5: Interest Coverage Ratio
Required Actual
-------- ------
Not less than 2.0 to 1.0 ______ to 1.0
(b) The Debt/EBITDA ratio, as of the close of business on
_________________________, is ____________ to 1.0.
Each capitalized term used but not defined herein shall have the
meaning assigned to such term in the Credit Agreement.
Very truly yours,
KCS RESOURCES, INC.
By: ___________________________________
Printed Name: _________________________
Title: ________________________________
KCS PIPELINE SYSTEMS, INC.
By: ___________________________________
Printed Name: _________________________
Title: ________________________________
VI-ii
101
KCS MICHIGAN RESOURCES, INC.
By: ___________________________________
Printed Name: _________________________
Title: ________________________________
KCS ENERGY MARKETING, INC.
By: ___________________________________
Printed Name: _________________________
Title: ________________________________
KCS ENERGY, INC.
By: ___________________________________
Printed Name: _________________________
Title: ________________________________
VI-iii
102
EXHIBIT VII
MATERIAL PROPERTIES
--------------------------------------------------------------------------------
County\Basin Field\Area Lease\Well
--------------------------------------------------------------------------------
BIG HORN XXXXXXXXX XXXXXXXXX-UNIT NE SE 43F
--------------------------------------------------------------------------------
BIG HORN GOLDEN EAGLE GOLDEN EAGLE 2 REENTRIES
--------------------------------------------------------------------------------
BIG HORN GOLDEN EAGLE GOLDEN EAGLE XXXX 00 XX XX
00 TENS
--------------------------------------------------------------------------------
BIG HORN GOLDEN EAGLE GOLDEN EAGLE UNIT NE SW 2
TENS
--------------------------------------------------------------------------------
BIG HORN GOLDEN EAGLE GOLDEN EAGLE UNIT NW NW 7
PHOS
--------------------------------------------------------------------------------
BIG HORN GRASS CREEK GRASS CREEK (XXXXXX) UNIT
--------------------------------------------------------------------------------
BIG HORN LITTLE GRASS CREEK LGC 1 15 NE NE
--------------------------------------------------------------------------------
BIG HORN LITTLE GRASS CREEK LITTLE GRASS CR UNIT SW NW
--------------------------------------------------------------------------------
BIG HORN LITTLE GRASS CREEK LITTLE GRASS CREEK 3 NE SE
--------------------------------------------------------------------------------
BIG HORN MANDERSON MANDERSON 34-12
--------------------------------------------------------------------------------
BIG HORN MANDERSON MANDERSON DEVELOPMENT
--------------------------------------------------------------------------------
COLORADO, TX XXXXXXXXX XXXXXXXXX NO. 3 (PRAIRIE)
--------------------------------------------------------------------------------
COLORADO, TX XXXXXXXXX XXXXXXXXX NO. 5
--------------------------------------------------------------------------------
GOLIAD BEGO (XXXXXX) BEGO GAS UNIT NO. 2
--------------------------------------------------------------------------------
XXXXXX, TX CYPRESS\XXXXXXX XXXXX RANCH NO. 10
CR.(XXXXXX)
--------------------------------------------------------------------------------
XXXXXX, TX CYPRESS\XXXXXXX XXXXX RANCH NO. 3
CR.(XXXXXX)
--------------------------------------------------------------------------------
XXXXXX, TX CYPRESS\XXXXXXX XXXXX RANCH NO. 5
CR.(XXXXXX)
--------------------------------------------------------------------------------
XXXXXX, TX CYPRESS\XXXXXXX XXXXX RANCH NO. 8
CR.(XXXXXX)
--------------------------------------------------------------------------------
XXXXXX, TX XXXXXXX\XXXXXXX XXXXX XXXXX XX. 0
CR.(XXXXXX)
--------------------------------------------------------------------------------
VII-i
103
--------------------------------------------------------------------------------
XXXXXX, TX CYPRESS\XXXXXXX XXXXXXX NO. 2
CR.(XXXXXX)
--------------------------------------------------------------------------------
IBERVILLE, LA XXXXXX XXXXX CLAIBORNE PLANTATION NO. 2
--------------------------------------------------------------------------------
LIMESTONE, TX XXXXXX XXXXX NO. 2
--------------------------------------------------------------------------------
LIMESTONE, TX XXXXXX XXXXX NO. 3
--------------------------------------------------------------------------------
GRAND XXXXXXXX 28/21 XXXXXXX 0-00 & 0-00X
XXXXXXXX, XX
--------------------------------------------------------------------------------
STARR XXX XXXX (XXXXXX) XXXXXX GAS UNIT A NO. 1
--------------------------------------------------------------------------------
STARR XXX XXXX (XXXXXX) XXXXXX GAS UNIT A NO. 10
--------------------------------------------------------------------------------
STARR XXX XXXX (XXXXXX) XXXXXX GAS UNIT A NO. 13
--------------------------------------------------------------------------------
STARR XXX XXXX (XXXXXX) XXXXXX GAS UNIT A NO. 14
--------------------------------------------------------------------------------
STARR XXX XXXX (XXXXXX) XXXXXX GAS UNIT A NO. 15
--------------------------------------------------------------------------------
STARR XXX XXXX (XXXXXX) XXXXXX GAS UNIT A NO. 19
--------------------------------------------------------------------------------
STARR XXX XXXX (XXXXXX) XXXXXX GAS UNIT A NO. 2
--------------------------------------------------------------------------------
STARR XXX XXXX (XXXXXX) XXXXXX GAS UNIT A NO. 24
--------------------------------------------------------------------------------
STARR XXX XXXX (XXXXXX) XXXXXX GAS UNIT A NO. 3
--------------------------------------------------------------------------------
STARR XXX XXXX (XXXXXX) XXXXXX GAS UNIT A NO. 6
--------------------------------------------------------------------------------
STARR XXX XXXX (XXXXXX) XXXXXX GAS UNIT A NO. 7
--------------------------------------------------------------------------------
STARR XXX XXXX (XXXXXX) XXXXXX GAS UNIT A NO. 8
--------------------------------------------------------------------------------
STARR XXX XXXX (XXXXXX) XXXXXX GAS UNIT A NO. 9
--------------------------------------------------------------------------------
STARR XXX XXXX (XXXXXX) XXXXXX GAS UNIT B NO. 10
--------------------------------------------------------------------------------
STARR XXX XXXX (XXXXXX) XXXXXX GAS UNIT B NO. 11
--------------------------------------------------------------------------------
STARR XXX XXXX (XXXXXX) XXXXXX GAS UNIT B NO. 13
--------------------------------------------------------------------------------
STARR XXX XXXX (XXXXXX) XXXXXX GAS UNIT B NO. 2
--------------------------------------------------------------------------------
STARR XXX XXXX (XXXXXX) XXXXXX GAS UNIT B NO. 4
--------------------------------------------------------------------------------
TENSAS, LA XXXXXX XXXXXXX NO. 1
--------------------------------------------------------------------------------
TENSAS, LA WILSONIA (LWR XXXXXXX NO. 3
TUSCALOOSA)
VII-ii
104
--------------------------------------------------------------------------------
TENSAS, LA WILSONIA (LWR XXXXXXXX NO. 1
TUSCALOOSA)
--------------------------------------------------------------------------------
ZAPATA, TX FALCON / XXX XXXX -A- XXXXXXX-XXXXXXXXX UNIT
NO. 1
--------------------------------------------------------------------------------
ZAPATA, TX FALCON / XXX XXXX -A- XXXXXXX-XXXXXXXXX UNIT
NO. 2
--------------------------------------------------------------------------------
ZAPATA, TX FALCON / XXX XXXX -B- XXXXXXXXX, J. NO. 10
--------------------------------------------------------------------------------
ZAPATA, TX FALCON / XXX XXXX -B- XXXXXXXXX, J. NO. 11
--------------------------------------------------------------------------------
ZAPATA, TX FALCON / XXX XXXX -B- XXXXXXXXX, J. NO. 2
--------------------------------------------------------------------------------
ZAPATA, TX FALCON / XXX XXXX -B- XXXXXXXXX, J. NO. 3
--------------------------------------------------------------------------------
ZAPATA, TX FALCON / XXX XXXX -B- XXXXXXXXX, J. NO. 4
--------------------------------------------------------------------------------
ZAPATA, TX FALCON / XXX XXXX -B- XXXXXXXXX, J. NO. 5
--------------------------------------------------------------------------------
ZAPATA, TX FALCON / XXX XXXX -B- XXXXXXXXX, J. NO. 6
--------------------------------------------------------------------------------
ZAPATA, TX FALCON / XXX XXXX -B- XXXXXXXXX, J. NO. 7
--------------------------------------------------------------------------------
ZAPATA, TX FALCON / XXX XXXX -B- XXXXXXXXX, J. NO. 8
--------------------------------------------------------------------------------
ZAPATA, TX FALCON / XXX XXXX -B- XXXXXXXXX, J. NO. 9-ST
--------------------------------------------------------------------------------
ZAPATA, TX FALCON / XXX XXXX -B- XXXXXXXXX, J. NO. R-2
--------------------------------------------------------------------------------
VII-iii
105
EXHIBIT VIII
[FORM OF OPINION OF COUNSEL]
[Closing Date]
To each Lender party
to the Credit Agreement
referenced below and
Canadian Imperial Bank
of Commerce, as Agent
Re: Credit Agreement dated as of ____________, 1996, by and among KCS
Resources, Inc., KCS Pipeline Systems, Inc., KCS Michigan Resources,
Inc., KCS Energy Marketing, Inc. (collectively, the "Borrowers"),
Canadian Imperial Bank of Commerce, as Agent, CIBC Inc., and the
lenders party thereto from time to time (the "Credit Agreement")
Ladies and Gentlemen:
We have acted as counsel to the Borrowers and KCS Energy, Inc. (the
"Guarantor") in connection with the transactions contemplated in the Credit
Agreement. This Opinion is delivered pursuant to Section 3.1(n) of the Credit
Agreement, and the Agent and the Lenders are hereby authorized to rely upon this
Opinion in connection with the transactions contemplated in the Credit
Agreement. Each capitalized term used but not defined herein shall have the
meaning assigned to such term in the Credit Agreement.
In our representation of the Borrowers and the Guarantor, we have
examined an executed counterpart of each of the following (the "Loan
Documents"):
(1) the Credit Agreement;
(2) the Notes;
(3) the Guaranty;
(4) Mortgage, Deed of Trust, Indenture, Security Agreement,
Assignment of Production, and Financing Statement dated of even date
herewith from KCS Resources, Inc., KCS Michigan Resources, Inc. and KCS
Energy Marketing, Inc. in favor of the Agent (the "Mortgage"); and
(5) Non-Standard Financing Statements constituent to the Mortgage.
VIII-i
106
We have also examined the originals, or copies certified to our
satisfaction, of such other records of the Borrowers and the Guarantor,
certificates of public officials and officers of the Borrowers and the
Guarantor, agreements, instruments, and documents as we have deemed necessary as
a basis for the opinions hereinafter expressed.
In making such examinations, we have, with your permission, assumed:
a) the genuineness of all signatures to the Loan Documents other
than those of the Borrowers and the Guarantor;
b) the authenticity of all documents submitted to us as originals
and the conformity with the originals of all documents submitted to us as
copies;
c) the Agent and each Lender is authorized and has the power to
enter into and perform its obligations under the Credit Agreement;
d) the due authorization, execution, and delivery of all Loan
Documents by each party thereto other than the Borrowers and the
Guarantor; and
e) Each Borrower has title to all of its Property covered or
affected by the Mortgage.
Based upon the foregoing and subject to the qualifications set forth
herein, we are of the opinion that:
A. Each of the Borrowers and the Guarantor is a corporation duly
organized, legally existing, and in good standing under the laws of its
state of incorporation and is duly qualified as a foreign corporation and
is in good standing in all jurisdictions wherein the ownership of Property
or the operation of its business necessitates same.
B. The execution and delivery by the Borrowers of the Credit
Agreement and the borrowings thereunder, the execution and delivery by the
Borrowers of the other Loan Documents to which each Borrower is a party,
and the payment and performance of all obligations of the Borrowers
thereunder are within the power of each Borrower, have been duly
authorized by all necessary corporate action, and do not (a) require the
consent of any Governmental Authority, (b) contravene or conflict with any
Requirement of Law or the articles or certificate of incorporation,
bylaws, or other organizational or governing documents of the Borrowers,
(c) to our knowledge after due inquiry, contravene or conflict with any
indenture, instrument, or other agreement to which any Borrower is a party
or by which any Property of any Borrower may be presently bound or
encumbered, or (d) result in or require the creation or imposition of any
Lien upon any Property of the Borrowers other than as contemplated by the
Loan Documents.
VIII-ii
107
C. The execution and delivery of the Guaranty and the other Loan
Documents executed by the Guarantor and the performance of all Obligations
of the Guarantor thereunder are within the power of the Guarantor, have
been duly authorized by all necessary corporate action, and do not (a)
require the consent of any Governmental Authority, (b) contravene or
conflict with any Requirement of Law or the articles or certificate of
incorporation, bylaws, or other organizational or governing documents of
the Guarantor, (c) to our knowledge after due inquiry, contravene or
conflict with any indenture, instrument, or other agreement to which the
Guarantor is a party or by which any Property of the Guarantor may be
presently bound or encumbered, or (d) result in or require the creation or
imposition of any Lien upon any Property of the Guarantor other than as
contemplated by the Loan Documents.
D. The Loan Documents to which each Borrower is a party constitute
legal, valid, and binding obligations of such Borrower, enforceable
against such Borrower in accordance with their respective terms.
E. The Loan Documents to which the Guarantor is a party constitute
legal, valid, and binding obligations of the Guarantor, enforceable
against the Guarantor in accordance with their respective terms.
F. To our knowledge after due inquiry, except as disclosed in
Exhibit IX to the Credit Agreement, no litigation or other action of any
nature affecting the Borrowers or the Guarantor is pending before any
Governmental Authority or threatened against the Borrowers or the
Guarantor. To our knowledge after due inquiry, no unusual or unduly
burdensome restriction, restraint, or hazard exists by contract,
Requirement of Law, or otherwise relative to the business or operations of
the Borrowers or the Guarantor or the ownership and operation of any
Properties of the Borrowers or the Guarantor other than such as relate
generally to Persons engaged in business activities similar to those
conducted by the Borrowers or the Guarantor, as the case may be.
G. No authorization, consent, approval, exemption, franchise, permit
or license of, or filing (other than filing of Security Instruments in
appropriate filing offices) with, any Governmental Authority or any other
Person is required to authorize or is otherwise required in connection
with the valid execution and delivery by the Borrowers and the Guarantor
of the Loan Documents or any instrument contemplated thereby, or the
payment or performance by the Borrowers and the Guarantor of the
Obligations.
H. No transaction contemplated by the Loan Documents is in violation
of any regulations promulgated by the Board of Governors of the Federal
Reserve System, including, without limitation, Regulations G, T, U, or X.
I. No Borrower is, nor is any Borrower directly or indirectly
controlled by or acting on behalf of any Person which is, an "investment
VIII-iii
108
company" or an "affiliated person" of an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
J. No Borrower is a "holding company," or an "affiliate" of a
"holding company" or of a "subsidiary company" of a "holding company,"
within the meaning of the Public Utility Holding Company Act of 1935, as
amended.
The opinions expressed herein are subject to the following qualifications
and limitations:
We are licensed to practice law only in the State of New Jersey and
other jurisdictions whose laws are not applicable to the opinions
expressed herein; accordingly, the foregoing opinions are limited solely
to the laws of the State of New Jersey, applicable United States federal
law, and the corporation laws of the State of Delaware.
The validity, binding effect, and enforceability of the Loan
Documents may be limited or affected by bankruptcy, insolvency,
moratorium, reorganization, or other similar laws affecting rights of
creditors generally, including, without limitation, statutes or rules of
law which limit the effect of waivers of rights by a debtor or grantor;
provided, however, that the limitations and other effects of such statutes
or rules of law upon the validity and binding effect of the Loan Documents
should not differ materially from the limitations and other effects of
such statutes or rules of law upon the validity and binding effect of
credit agreements, promissory notes, guaranties, and security instruments
generally.
The enforceability of the respective obligations of the Borrowers
and the Guarantor under the Loan Documents is subject to general
principles of equity (whether such enforceability is considered in a suit
in equity or at law).
This Opinion is furnished by us solely for the benefit of the Agent
and the Lenders in connection with the transactions contemplated by the Loan
Documents and is not to be quoted in whole or in part or otherwise referred to
or disclosed in any other transaction.
Very truly yours,
VIII-iv
109
EXHIBIT IX
[FORM OF OPINION OF LOCAL COUNSEL]
[Closing Date]
To each Lender party
to the Credit Agreement
referenced below and
Canadian Imperial Bank
of Commerce, as Agent
Re: Credit Agreement dated as of ______________, 1996, by and among KCS
Resources, Inc., KCS Pipeline Systems, Inc., KCS Michigan Resources,
Inc., KCS Energy Marketing, Inc. (collectively, the "Borrowers"),
Canadian Imperial Bank of Commerce, as Agent, CIBC Inc., as
Collateral Agent, and the lenders party thereto from time to time
(the "Credit Agreement")
Ladies and Gentlemen:
We have acted as special counsel in the State of [________________]
(the "State") to each of the lenders from time to time party to the Credit
Agreement (the "Lenders"), Canadian Imperial Bank of Commerce, as Agent for the
Lenders (the "Agent"), and CIBC Inc., as Collateral Agent for the Lenders (the
"Collateral Agent") in connection with the transactions contemplated in the Loan
Documents described below which were executed pursuant to the Credit Agreement.
In such capacity, we furnish this Opinion with the intention and understanding
that it is to be relied upon by the Agent, the Collateral Agent and the Lenders
in the closing of the transactions contemplated in the Credit Agreement.
In our representation of the Borrowers, we have examined an executed
counterpart of each of the following (the "Loan Documents"):
(1) Assignment of Notes, Liens, Security Interests and Other Rights
dated of even date herewith from Bank One, Texas, National Association
("Bank One"), CIBC Inc. and Den norske Bank AS to the Lenders (the "Bank
One Assignment");
(2) Non-Standard Assignment of Financing Statements constituent to
the Bank One Assignment (the "Bank One Financing Statement Assignments");
IX-i
110
(3) Assignment of Notes, Liens, Security Interests and Other Rights
dated of even date herewith from Comerica Bank-Texas ("Comerica"), and Den
norske Bank AS to the Lenders (the "Comerica Assignment");
(4) Non-Standard Assignment of Financing Statements constituent to
the Comerica Assignment (the "Comerica Financing Statement Assignments");
(5) Mortgage, Deed of Trust, Indenture, Security Agreement,
Financing Statement, and Assignment of Production dated of even date
herewith from KCS Resources, Inc., KCS Michigan Resources, Inc. and KCS
Energy Marketing, Inc. in favor of the Collateral Agent (the "Mortgage");
and
(6) Non-Standard Financing Statements constituent to the Mortgage
(the "Financing Statements").
In making such examination, we have, with your permission, assumed:
a) the genuineness of all signatures to the Loan Documents;
b) the authenticity of all documents submitted to us as originals
and the conformity with the originals of all documents submitted to us as
copies;
c) each party to any Loan Document is authorized and has the power
to enter into and perform its obligations under such Loan Document;
d) the due authorization, execution, and delivery of all Loan
Documents by each party thereto;
e) each of the mortgagors under the Mortgage is a duly organized and
validly existing corporation under the laws of its state of incorporation;
f) the mortgagors under the Mortgage have title to all Mortgaged
Property (as such term is defined in the Mortgage and so used herein)
situated in the State.
Based upon the foregoing and subject to the qualifications set forth
herein, we are of the opinion that:
1. No consent, approval, or other authorization of, or filing or
registration (other than as described in paragraphs 11 and 12 hereof)
with, any court, governmental agency, commission, or other authority of
the State or any subdivision thereof is required for the due execution and
delivery of the Loan Documents or for the enforceability, performance, or
observance of the terms thereof.
IX-ii
111
2. The execution and delivery by the Borrowers of each Loan Document
to which it is a party, compliance with the provisions thereof, and the
consummation of the transactions contemplated thereby will not conflict
with or result in a violation of any law or governmental rule or
regulation of the State or any subdivision thereof.
3. The execution and delivery by Bank One and Comerica and the other
assignors thereunder of each Loan Document to which it is a party,
compliance with the provisions thereof, and the consummation of the
transactions contemplated thereby will not conflict with or result in a
violation of any law or governmental rule or regulation of the State or
any subdivision thereof.
4. The Loan Documents to which each Borrower is a party constitute
legal, valid, and binding obligations of such Borrower, enforceable
against such Borrower in accordance with their respective terms.
5. The Bank One Assignment and the Bank One Financing Statement
Assignments constitute legal, valid, and binding obligations of Bank One
and the other assignors thereunder, enforceable against such Person in
accordance with their respective terms.
6. The Comerica Assignment and the Comerica Financing Statement
Assignments constitute legal, valid, and binding obligations of Comerica
and the other assignors thereunder, enforceable against such Person in
accordance with their respective terms.
7. The forms of the Bank One Assignment, the Bank One Financing
Statement Assignments, the Comerica Assignment and the Comerica Financing
Statement Assignments satisfy all applicable requirements of the State and
are legally sufficient under the laws of the State to enable the
Collateral Agent to realize the practical benefits purported to be
afforded by such Loan Documents.
8. The forms of the Mortgage and the Financing Statements and the
description of the Mortgaged Property situated in the State satisfy all
applicable laws of the State and are legally sufficient under the laws of
the State to enable the Collateral Agent to realize the practical benefits
purported to be afforded by such Loan Documents.
9. The Mortgage (a) creates a lien upon and a security interest in
all Mortgaged Property situated in the State to secure the Indebtedness
(as such term is defined in the Mortgage and so used herein), and (b)
provides for nonjudicial foreclosure remedies customarily used in the
State.
10. The Loan Documents are in satisfactory form for filing and
recording in the offices described below.
IX-iii
112
11. The filing and/or recording, as the case may be, of (a) the Bank
One Assignment in each office in the State in which the Existing Bank One
Security Instruments were filed, (b) the Bank One Financing Statement
Assignments in each office in the State in which the original financing
statements described therein were filed, (c) the Comerica Assignment in
each office in the State in which the Existing Comerica Security
Instruments were filed, (d) the Comerica Financing Statement Assignments
in each office in the State in which the original financing statements
described therein were filed, are the only recordings of filings in the
State necessary in connection with the transfer of the liens, security
interests, and other rights transferred by the Bank One Assignment and the
Comerica Assignment. No other documents or instruments need be recorded,
registered, or filed in any public office in the State in connection with
the transfer made by the Bank One Assignment and the Comerica Assignment,
for the validity and enforceability of the Bank One Assignment and the
Comerica Assignment, or to permit the Collateral Agent to enforce in the
State its rights under the Bank One Assignment, the Existing Bank One
Security Instruments, the Comerica Assignment or the Existing Comerica
Security Instruments.
12. The filing and/or recording, as the case may be, of (a) the
Mortgage in the office of the county clerk of each county in the State in
which any portion of the Mortgaged Property is located and as a financing
statement in the office of the Secretary of State of the State, and (b)
the Financing Statements in the Uniform Commercial Code records in each
county in the State in which any portion of the Mortgaged Property is
located are the only recordings or filings in the State necessary to
perfect the liens and security interests in the Mortgaged Property created
by the Mortgage or to permit the Collateral Agent to enforce in the State
its rights under the Mortgage. No subsequent filing, refiling, recording,
or re-recording will be required in the State in order to continue the
perfection of the liens and security interests created by the Mortgage
except that (a) a continuation statement must be filed with respect to the
Mortgage filed as a financing statement in the office of the Secretary of
State of the State and with respect to the Financing Statements in the
Uniform Commercial Code records in each county in the State in which any
portion of the Mortgaged Property is located, each within six months prior
to the expiration of five years from the date of the relevant initial
financing statement filing, (b) a subsequent continuation statement must
be filed within six months prior to the expiration of each subsequent
five-year period from the date of each initial financing statement filing,
and (c) amendments or supplements to the Mortgage filed as a financing
statement and the Financing Statements and/or additional financing
statements may be required to be filed in the event of a change in the
name, identity, or structure of any Borrower or in the event the financing
statement filing otherwise becomes inaccurate or incomplete.
13. No state or local mortgage recording tax, stamp tax, or other
similar fee, tax, or governmental charge (other than statutory filing and
recording fees to be paid upon filing) is required to be paid to the State
or any subdivision
IX-iv
113
thereof in connection with the execution, delivery, filing, or recording
of any of the Loan Documents or the consummation of the transactions
contemplated therein.
14. It is not necessary for the Agent, the Collateral Agent, or any
Lender to qualify to do business in the State or file in the State any
designation for service of process or reports solely by reason of the
interests conveyed or assigned to it or for its benefit under the
Mortgage, nor will such conveyances or assignments alone result in the
imposition upon the Agent, the Collateral Agent, or any Lender of any
taxes by the State or by any subdivision thereof, including, without
limitation, franchise, license, tax on interest received or income taxes,
other than recording and filing fees in connection with the filings
referred to in paragraphs 11 and 12 above and taxes which the Agent, the
Collateral Agent, or a Lender may owe in the event it becomes the actual
and record owner of any Mortgaged Property situated in the State.
15. The foreclosure of, or exercise of the power of sale under, the
Mortgage will not in any manner restrict, affect or impair the liability
of the Borrowers with respect to the Indebtedness or the rights and
remedies of the Collateral Agent with respect to the foreclosure or
enforcement of any other security interests or liens securing the
Indebtedness to the extent any deficiency remains unpaid after application
to the Indebtedness of the proceeds of such foreclosure or the exercise of
such power of sale.
16. The priority of the liens and security interests created by the
Mortgage with respect to Indebtedness incurred by the Borrowers on or
before the date on which the Mortgage is filed in the appropriate
recording offices referred to hereinabove will be determined by the date
of such filings. The priority of the lien created by the Mortgage with
respect to Indebtedness incurred by the Borrowers after the date the
Mortgage is recorded will be determined by the dates the Mortgage is
filed.
17. The priority of the lien created by the Mortgage will not be
affected by any prepayment of a portion, but less than all, of the
Indebtedness, or any reduction or increase of the outstanding amount of
the Indebtedness from time to time.
18. The limitations period for enforcement of the Mortgage in the
State is __________.
The opinions expressed herein are subject to the following qualifications
and limitations:
We are licensed to practice law only in the State and other
jurisdictions whose laws are not applicable to the opinions expressed
herein; accordingly, the foregoing opinions are limited solely to the laws
of the State and applicable United States federal law.
IX-v
114
The validity, binding effect, and enforceability of the Loan
Documents may be limited or affected by bankruptcy, insolvency,
moratorium, reorganization, or other similar laws affecting rights of
creditors generally, including, without limitation, statutes or rules of
law which limit the effect of waivers of rights by a debtor or grantor;
provided, however, that the limitations and other effects of such statutes
or rules of law upon the validity and binding effect of the Loan Documents
should not differ materially from the limitations and other effects of
such statutes or rules of law upon the validity and binding effect of
assignments and security instruments generally.
The enforceability of the respective obligations of the Borrowers
under the Loan Documents to which they are a party is subject to general
principles of equity (whether such enforceability is considered in a suit
in equity or at law).
This Opinion is furnished by us solely for the benefit of the Agent,
the Collateral Agent, and the Lenders in connection with the transactions
contemplated by the Loan Documents and is not to be quoted in whole or in part
or otherwise referred to or disclosed in any other transaction.
Very truly yours,
IX-vi
115
EXHIBIT X
DISCLOSURES
Section 2.5 Existing Loan Balances
Existing Bank One Notes Existing Comerica Notes
----------------------- -----------------------
$4,500,000 $18,000,000
Section 4.9 Liabilities
None
Litigation
None
Section 4.14 Environmental Matters
None
Section 4.19 Refunds
None
Section 4.20 Gas Contracts
None
Section 4.22 Labor Matters
None
Section 4.23 Casualties
None
X-i
116
Section 4.25 Subsidiaries of Borrowers
Enercorp Gas Marketing, Inc., a subsidiary of KCS
Pipeline
Subsidiaries of Guarantor
KCS Resources
KCS Pipeline
KCS Michigan
KCS Energy Risk Management, Inc.
KCS Power Marketing, Inc.
Proliq, Inc.
National Enerdrill Corporation
Section 5.4 Approved Petroleum Engineers
X.X. Xxxx & Associates, Inc.
X.X. Xxxxxx and Associates, Inc.
Netherland, Xxxxxx & Associates, Inc.
Xxxxx Xxxxx Company
X-ii
