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EXHIBIT 10.1
FORBEARANCE AGREEMENT
THIS FORBEARANCE AGREEMENT (this "Agreement") is made and entered into
on May ___, 1999 and effective as of April 1, 1999 (the "Effective Date") by and
among KCS MEDALLION RESOURCES, INC., a Delaware corporation ("KCS Medallion"),
KCS ENERGY, INC., a Delaware corporation ("KCS"), KCS ENERGY SERVICES, INC., a
Delaware corporation ("KCS Energy Services"), and MEDALLION GAS SERVICES, INC.,
an Oklahoma corporation ("Medallion Gas Services," together with KCS Medallion,
KCS, and KCS Energy Services, 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 of the Credit Agreement (hereafter
defined) (individually, together with its successors and 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"), and CIBC Inc., a Delaware
corporation as collateral agent for the Lenders (in such capacity pursuant to
the terms hereof, the "Collateral Agent").
W I T N E S S E T H:
WHEREAS, on December 22, 1998, the Borrowers, the Lenders, and the
Agent entered into a First Amended and Restated Credit Agreement (the "Credit
Agreement") whereby, upon the terms and conditions therein stated, the Lenders
agreed to make loans to the Borrowers up to the aggregate amount of
$160,000,000.00 to be used by the Borrowers for the purposes set forth in
Section 2.6 of the Credit Agreement; and
WHEREAS, the Annual Report of KCS on Form 10-K filed with the SEC on
March 31, 1999 (the "10-K Report") revealed the existence of certain events and
conditions (the "MAC Events") which are in violation of the terms and provisions
of the Credit Agreement and/or which constitute a Material Adverse Effect; and
WHEREAS, the Agent has advised the Borrowers in a letter dated April 7,
1999 (the "Default Letter") that the existence of such MAC Events constitutes a
Default which if uncured will, upon the giving of notice or passage of time, or
both, become an Event of Default pursuant to which the Agent, the Collateral
Agent and the Lenders will have the right to exercise the rights and remedies
available to them under such circumstances, all as set forth in the Credit
Agreement; and
WHEREAS, the Borrowers have requested that the Lenders forbear from
exercising such rights and remedies in consideration of the Borrowers'
compliance with the terms and provisions of this Agreement; and
WHEREAS, subject to (i) compliance by the Borrowers with the terms and
provisions of this Agreement, and (ii) the other terms and provisions of this
Agreement, the Lenders have agreed to
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forbear from exercising their rights and remedies as provided in the Credit
Agreement during the Forbearance Period.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree as follows:
ARTICLE 1
GENERAL TERMS
Section 1.1 Terms Defined in Agreement. As used in this Agreement,
except as may otherwise be provided in this Agreement, all capitalized terms
which are defined in the Credit Agreement shall have the same meaning herein as
therein, all of such terms and definitions being incorporated herein by
reference.
Section 1.2 Forbearance Period. Subject to (i) compliance by the
Borrowers with the terms and provisions of this Agreement, and (ii) the other
terms and provisions of this Agreement, the Lenders hereby agree to forbear form
exercising their rights and remedies provided in the Credit Agreement which are
available to them upon the occurrence and continuance of the Defaults described
in the Default Letter. This Agreement shall commence as of the Effective Date
and end on the first to occur of (i) any event or condition pursuant to which
the Forbearance Period automatically terminates, including without limitation
the provisions of Section 8.1 of this Agreement, or (ii) June 30, 1999 (the
"Forbearance Termination Date"). The term "Forbearance Period" means the period
of time commencing on the Effective Date and ending at 11:59 p.m. on the
Forbearance Termination Date. Except as expressly herein provided, upon
termination of the Forbearance Period (regardless of how such termination
occurs), this Agreement shall have no further force and effect whatsoever
(unless extended in writing by the Borrowers, the Lenders and the Agent) and
thereafter the terms and provisions of the Credit Agreement and the other Loan
Documents shall be effective as expressly therein provided without further
reference to the terms and provisions of this Agreement.
ARTICLE 2
DEFINITIONS
Section 2.1 Definitions. The following terms shall have the meaning as
follows:
"Applicable Margin" shall mean as to each Tranche A Base Rate
Loan and each Tranche A LIBO Rate Loan, an amount equal to the percentage set
forth in the grid below for such type of Loan:
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------------------------------------------------------
Applicable Margin
(Tranche A)
------------------------------------------------------
Type of Loans Base Rate LIBO Rate
------------- --------- ---------
Conforming Loans 1.5% 2.5%
Non-Conforming
Loans 2.0% 3.0%
-------------------------------------------------------
"Conforming Loans" shall mean all Tranche A Loans outstanding
as of the Effective Date, the aggregate amount of which is not in
excess of $60,000,000 minus the aggregate amount of all payments
applied to the principal of such Loans from the Effective Date through
the Forbearance Termination Date.
"Interest Period" shall mean, subject to the limitations set
forth in Section 2.4 of the Credit Agreement, 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 the Credit Agreement
or the last day of the next preceding Interest Period with respect to
such Loan and ending on or before the Forbearance Termination Date, as
the Borrowers may request in the Tranche A Borrowing Request or the
Tranche B Borrowing Request for such Loan.
"Non-Conforming Loans" means all Tranche A Loans outstanding
as of the Effective Date, the aggregate amount of which is in excess of
Conforming Loans minus the aggregate amount of all payments applied to
the principal of such Loans from the Effective Date through the
Forbearance Termination Date.
ARTICLE 3
TERMS AND FACILITIES
Section 3.1 Loans and Suspension of Commitments. Except with respect to
reborrowings of LIBO Rate Loans which occur at the end of an Interest Period,
and conversions of LIBO Rate Loans into Base Rate Loans or Base Rate Loans into
LIBO Rate Loans, during the Forbearance Period, the Commitments shall be
suspended and the Lenders shall not be obligated or have any commitment
whatsoever to make Loans. The Borrowers may not reborrow any portion of any Loan
after all or such portion of any such Loan shall have been repaid.
Section 3.2 Letters of Credit. Except for Letters of Credit which are
outstanding as of the Effective Date, the Agent shall not be obligated to issue,
on behalf of the Lenders, or otherwise, any Letters of Credit. The Agent shall
not be obligated to renew or extend on behalf of the Lenders, or otherwise, any
Letters of Credit which are outstanding as of the Effective Date. Nothing herein
shall modify, limit or reduce the obligations of the Lenders as provided in the
Agreement with respect to
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Letters of Credit which are outstanding as of the Effective Date provided such
Letters of Credit are not renewed or extended by the Agent after the Effective
Date.
Section 3.3 Repayment of Loans and Interest. (a) Accrued and unpaid
interest on each outstanding Base Rate Loan shall be due and payable on the date
of execution of this Agreement, May 31, 1999, and June 30, 1999, 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 for LIBO Rate
Loans outstanding as of the Effective Date which are in excess of one month, on
the last day of each calendar month following the commencement of such Interest
Period, the payment in each instance to be the amount of interest which has
accrued and remains unpaid in respect of the relevant Loan.
(b) The outstanding principal balance of all Tranche A Loans
shall be payable as follows: on the date of execution of this Agreement a
principal installment on the Tranche A Loans shall be due and payable in the
amount of $1,000,000. On May 31, 1999, a principal installment on the Tranche A
Loans shall be due and payable in the amount of the sum of (i) $1,000,000, plus
(ii) twenty-five percent (25%) of all Operating Cash Flow (if a positive number)
during the period commencing April 1, 1999 and ending April 30, 1999 (less the
$1,000,000 paid pursuant to the immediately preceding sentence). On June 30,
1999, a principal installment on the Tranche A Loans shall be due and payable in
the amount of the sum of (i) $1,000,000, plus (ii) twenty-five percent (25%) of
all Operating Cash Flow (if a positive number) during the period commencing May
1, 1999 and ending May 31, 1999 (less the $1,000,000 paid pursuant to the
immediately preceding sentence). The term "Operating Cash Flow" as used herein
means the net cash (exclusive of capital expenditures) provided by operating
activities as set forth on the statements of consolidated cash flow for KCS and
its Subsidiaries calculated in accordance with GAAP. The outstanding principal
balance of all Loans together with all accrued and unpaid interest thereon shall
be due and payable at Final Maturity. The Agent shall apply such payments first
to the Non-Conforming Loans until such NonConforming Loans are paid in full and
next to the Conforming Loans.
Section 3.4 Borrowing Base. (a) The Borrowing Base and the Tranche B
Borrowing Base in effect prior to the Effective Date shall remain in effect
throughout the Forbearance Period. The next Borrowing Base redetermination and
Tranche B Borrowing Base redetermination shall not occur until the next Business
Day (the "Redetermination Date") which is on or after the Forbearance
Termination Date and notwithstanding the provisions of Section 2.12 of the
Agreement, the Borrowing Base determined on the Redetermination Date shall be
the amount agreed to by the Agent and all the Tranche A Lenders, and the Tranche
B Borrowing Base determined on the Redetermination Date shall be an amount
agreed to by the Agent and the Tranche B Lenders.
(b) The Borrowing Base and the Tranche B Borrowing Base shall
be reduced in the amount of the Specified Value of each of the Oil and Gas
Properties of any of the Borrowers sold in accordance with Section 3.6 hereof.
Section 3.5 Mandatory Prepayments. (a) On the Redetermination Date,
if the Tranche A Obligations exceed the Borrowing Base then in effect, (i) the
Borrowers shall, within five (5) days
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of notice from the Agent of such occurrence, prepay the amount of such excess
for application first, to the Non-Conforming Loans portion of the Tranche A Loan
Balance, and next to the Conforming Loans portion of the Tranche A Loan Balance;
(ii) in the event that the Tranche A Loan Balance is less than the amount
required to be prepaid, the Borrowers shall immediately prepay the entire
Tranche A Loan Balance together with accrued interest, and (iii) in accordance
with the provisions of the relevant Letter of Credit Applications executed by
the Borrowers or otherwise to the satisfaction of the Agent, the Borrowers shall
immediately 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 Borrowing Base and such cash 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.
(b) On the Redetermination Date, if the Tranche B Obligations
exceed the difference between the Tranche B Borrowing Base then in effect minus
the Borrowing Base then in effect, (i) the Borrowers shall, within five (5) days
of notice from the Agent of such occurrence, prepay the amount of such excess
for application on the Tranche B Loan Balance and (ii) in the event that the
Tranche B Loan Balance is less than the amount required to be prepaid, the
Borrowers shall prepay the entire Tranche B Loan Balance together with accrued
interest.
Section 3.6 Sales of Oil and Gas Properties. At any time during the
Forbearance Period that (i) any of the Oil and Gas Properties which are
described in Exhibit "A" hereto, or any other Oil and Gas Properties which are
added to Exhibit "A" pursuant to the agreement of the Agent, the Required
Lenders and KCS with respect to a Specified Value (collectively, the "Scheduled
Properties"), or (ii) any other Oil and Gas Properties owned by any of the
Borrowers (the "Unscheduled Properties") are sold other than Oil and Gas
Properties described in Section 7.1(iii) of this Agreement, the Borrowers shall,
substantially concurrent with the sale thereof, prepay the Conforming Loans in
an amount equal to the value attributable to the Scheduled Properties as
specified in Exhibit "A" as amended from time to time or with respect to the
Unscheduled Properties, the value specified by the Agent with the consent of the
Required Lenders (collectively, the "Specified Value") until such Conforming
Loans are paid in full and next to the Non-Conforming Loans. In addition, upon
the sale of any such Oil and Gas Properties (whether Scheduled Properties or
Unscheduled Properties), if the Net Cash Proceeds are greater than the Specified
Value, the Borrowers shall prepay the Non-Conforming Loans in an amount equal to
twenty percent (20%) of the portion of the Net Cash Proceeds in excess of the
Specified Value until such Non-Conforming Loans are paid in full and next to the
Conforming Loans. The Agent shall have the necessary authority to release Liens
on the Scheduled Properties and the Unscheduled Properties so long as the Net
Cash Proceeds equal or exceed the Specified Value.
Section 3.7 Fees. The Borrowers shall pay to the Agent on the date of
execution of this Agreement a forbearance documentation fee (the "Forbearance
Documentation Fee") in the amount of $30,000.
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ARTICLE 4
CONDITIONS
Section 4.1 Conditions Precedent to Initial Effectiveness of Agreement.
The Lenders shall have no obligation to forbear from exercising their rights and
remedies under and pursuant to the Credit Agreement unless and until:
(a) the Agent shall have received the Forbearance
Documentation Fee;
(b) the Agent shall have received the following documents and
other items, appropriately executed when necessary and, where applicable,
acknowledged by one or more authorized officers of the Borrowers and dated,
where applicable, of even date herewith or a date prior thereto:
(i) multiple counterparts of this Agreement as
requested by the Agent;
(ii) [INTENTIONALLY LEFT BLANK]
(iii) certificates of incumbency and copies of
corporate resolutions in the form attached hereto as Exhibit
"B" approving and authorizing the transactions contemplated
herein duly adopted by the boards of directors of each
Borrower accompanied by certificates of the secretary or an
assistant secretary of each Borrower, 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, as the case may
be, and that such resolutions constitute all the resolutions
adopted with respect to such 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; and
(iv) the opinion of counsel to the Borrowers in the
form attached hereto as Exhibit "C".
(c) The Agent shall have received, for the benefit of the
Tranche A Lenders, accrued interest through April 30, 1999 and the payment of
principal required to be paid on the date of execution of this Agreement by the
Borrowers as provided in Section 3.3(a) and 3.3(b) of this Agreement.
Section 4.2 Additional Conditions Precedent to Initial Effectiveness of
Agreement. The obligations of the Agent, the Collateral Agent, and the Lenders
to forbear from exercising their rights and remedies under and pursuant to the
Credit Agreement are subject to the satisfaction of the following additional
conditions precedent that, as of the date of execution of this Agreement:
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(a) no Default shall exist except for the Defaults referred to
in the Default Letter and the defaults existing in connection with the Affiliate
Credit Agreement and no Event of Default shall have occurred and be continuing;
(b) no Material Adverse Effect shall have occurred and be
continuing except for the MAC Events disclosed in the 10-K Report;
(c) each of the representations and warranties contained in
the Credit Agreement and the other Loan Documents shall be true and correct,
except for (i) such representations and warranties which were contained in the
Credit Agreement and the other Loan Documents which are modified and/or
supplemented as provided in Sections 5.2 and 5.3 of this Agreement or (ii) those
which are expressly stated to be made as of a particular date;
(d) the Security Instruments shall be in full force and effect
and provide to the Lenders the security intended thereby;
(e) the consummation of the transactions contemplated hereby
shall not contravene, violate, or conflict with any Requirement of Law; and
(f) legal counsel for the Agent shall have received payment
(to the extent invoiced) from the Borrowers for all reasonable fees and expenses
which the Borrowers are required to pay.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
Each Borrower hereby represent and warrant to the Agent and each Lender
that:
Section 5.1 Representations Repeated. The representations and
warranties of the Borrowers contained in the Credit Agreement and the other Loan
Documents and otherwise made in writing by or on behalf of the Borrowers
pursuant to the Credit Agreement and the other Loan Documents were true and
correct when made, and are true and correct in all material respects at and as
of the Effective Date except for such representations and warranties (i) which
were contained in the Credit Agreement and the other Loan Documents which are
modified or supplemented as provided in Section 5.2 and 5.3 of this Agreement,
and (ii) which are expressly stated to be made as of a particular date which
shall remain true and correct as of the date made.
Section 5.2 Scope and Accuracy of Financial Statements. The Financial
Statements of KCS and its Subsidiaries as at December 31, 1998 present fairly
the financial position and results of operations and cash flows of KCS and its
Subsidiaries in accordance with GAAP as at the relevant point in time or for the
period indicated. No event or circumstance has occurred since December 31, 1998
except for the MAC Events disclosed in the 10-K Report which could reasonably be
expected to have a Material Adverse Effect on KCS or KCS Medallion.
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Section 5.3 Default. None of the Borrowers 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 (ii) any agreement, obligation or Debt to which any Borrower is a
party or by which any Property of any Borrower may be bound, pursuant to which
the obligations of the Borrowers in the aggregate under any such agreement,
obligation or Debt, 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, and except for the
Defaults referred to and described in the Default Letter and the defaults
existing in connection with the Affiliate Credit Agreement, which Defaults the
Borrowers hereby acknowledge to be existing as of the Effective Date.
Section 5.4 Defenses. As of the Effective Date, the outstanding
principal amount of the Conforming Loans is $60,000,000 and the outstanding
principal amount of the Non-Conforming Loans is $20,000,000 and neither KCS nor
any Borrower has any defenses, offsets or counterclaims which would limit,
reduce or impair in any manner the obligations and indebtedness of KCS or any
Borrower to pay the full amount of the Obligations when due. .
ARTICLE 6
AFFIRMATIVE COVENANTS
Section 6.1 Monthly Reconciliation Reports. During the Forbearance
Period the Borrowers shall deliver to the Agent, on or before the last day of
each calendar month, commencing May 31, 1999, Sufficient Copies of a
Reconciliation Report as at the close of the immediately preceding calendar
month, such Reconciliation Report to be certified by a Responsible Officer of
KCS as true and correct subject to changes resulting from normal year-end audit
adjustments. The term "Reconciliation Report" means a report prepared by a
Responsible Officer of KCS as at the point in time and for the period indicated
and consisting of reports of KCS and its Subsidiaries on a consolidated basis
with respect to (i) sources and uses of Operating Cash Flow for such period,
(ii) Net Cash Proceeds from sales of Oil and Gas Properties for such period, and
(iii) such other financial information as the Agent or any Lender reasonably
requests.
Section 6.2 Fees and Expenses. In addition to the covenants in the
Credit Agreement, during the Forbearance Period, the Borrowers shall:
(a) 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,
the Credit 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.
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(b) upon request by the Agent promptly pay for all amounts
reasonably expended, advanced, or incurred by or on behalf of the Agent and the
Collateral Agent (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; and, (iv) to protect the Properties or business of the Borrowers,
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.
ARTICLE 7
NEGATIVE COVENANTS
Section 7.1 Sales of Assets. Notwithstanding the provisions of Section
6.5 of the Credit Agreement, KCS and the Borrowers shall not, and shall not
permit any of their respective Subsidiaries to sell, transfer, or otherwise
dispose of any Oil and Gas Properties, in one or any series of transactions,
whether now owned or hereafter acquired, or enter into any agreement to do so
unless the proceeds of such sales (i) are of the type described in clauses (a)
and (b) of the first sentence of Section 6.5 of the Credit Agreement and are
included in Operating Cash Flow, or (ii) are made subject to and in accordance
with the provisions of Section 3.6 of this Agreement concerning prepayments upon
the sale of certain Oil and Gas Properties, or (iii) have an aggregate value for
all such sales of less than $250,000 (excluding sales of Oil and Gas Properties,
the proceeds of which are applied to the Loans in accordance with other
provisions of this Agreement).
Section 7.2 Restricted Payments. During the Forbearance Period (i) the
Borrowers shall not make any payment of principal or interest on the Public Debt
other than scheduled payments of interest and principal and (ii) KCS shall not
pay or make any dividend or distribution or purchase, redeem or otherwise
acquire for value, any share of any class of its capital stock.
ARTICLE 8
TERMINATION
Section 8.1 Termination of Agreement. (a) Upon the occurrence of an
Event of Default specified in Sections 7.1(e) or 7.1(f) of the Credit Agreement,
immediately and without notice, (i) the Forbearance Period shall automatically
terminate and 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, all of which are hereby expressly waived
by each Borrower.
(b) The Forbearance Period shall automatically terminate upon
the occurrence of (i) any Event of Default other than (A) those specified in
Sections 7.1(e) or 7.1(f) of the Credit Agreement, and (B) those occurring as a
result of the giving of notice or the passage of time in connection with the
Defaults described in the Default Letter, or (ii) the termination of any
forbearance
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by Lenders arising under or in connection with the Affiliate Credit Agreement,
or (iii) any default in the payment when due of any sums payable hereunder or in
the due observance or performance of any obligation of the Borrowers hereunder
or (iv) any representation or warranty made in this Agreement by any Borrower
proving to have been untrue in any material respect as of the date the facts
therein set forth were stated or certified.
(c) Except as herein expressly provided, upon the termination
of the Forbearance Period, this Agreement shall terminate and be of no further
force and effect and the rights and remedies of the Agent, the Collateral Agent
and the Lenders shall be such as are provided in the Credit Agreement and the
other Loan Documents.
ARTICLE 9
MISCELLANEOUS
Section 9.1 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 forbearance, failure or delay by the Agent, the Collateral
Agent or the Lenders with respect to exercising any of their rights under the
Credit Agreement or any other Loan Document shall operate as a waiver thereof
including, without limitation, (i) any forbearance by the Agent, the Collateral
Agent and the Lenders with respect to the Defaults described in the Default
Letter, (ii) any forbearance by the Agent, the Collateral Agent and the Lenders
from constituting such Defaults as Events of Default and (iii) any and all other
actions of the Agent, the Collateral Agent and the Lenders. The rights of the
Agent, the Collateral Agent and the Lenders under this Agreement, the Credit
Agreement and the other 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 in this Agreement, the Credit Agreement or any other
Loan Documents. 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 nor the forbearance from exercising their rights
and remedies as provided in the Credit Agreement shall have the effect of
precluding the Agent or the Lenders from thereafter declaring such inability to
be a Default or an Event of Default or from exercising their rights and remedies
as provided in the Credit Agreement.
Section 9.2 Release. The Borrowers hereby release the Agent, the
Collateral Agent and the Lenders from any and all claims and causes of action
arising out of or relating in any way to the actions or omissions of such
Persons in connection with the Loans, the Commitments or any of the Loan
Documents.
Section 9.3 Severability. In the event any one or more of the
provisions contained in this Agreement 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 this Agreement.
Section 9.4 No Cure of Default. This Agreement shall not have the
effect of curing or otherwise eliminating the Defaults described in the Default
Letter. Unless such Defaults are waived
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in writing by the Lenders, such Defaults shall continue to exist throughout the
Forbearance Period. Upon the termination of this Agreement, such Defaults shall
automatically become Events of Default and the Commitments shall continue to be
suspended and the Lenders shall not be obligated or have any commitment
whatsoever to make any Loans.
Section 9.5 Extent of Agreement. Except as otherwise expressly provided
herein, the Credit Agreement and the other Loan Documents and the rights and
remedies of the parties thereto, are not amended, modified, altered, or affected
by this Agreement. Except as expressly set forth herein, all of the terms,
conditions, covenants, representations, warranties and all other provisions of
the Credit Agreement and the other Loan Documents are herein ratified and
confirmed and shall remain in full force and effect. This Agreement does not
constitute an amendment to the Credit Agreement or the other Loan Documents, but
rather, constitutes a temporary supplement thereto. The terms and provisions of
the Credit Agreement and the other Loan Documents are expressly incorporated
herein except to the extent such terms and provisions conflict with the terms
and provisions of this Agreement, in which case, during the Forbearance Period,
but not otherwise, the terms and provisions of this Agreement shall control.
Section 9.6 Counterparts. This Agreement may be executed in two or more
counterparts, and it shall not be necessary that the signatures of all parties
hereto be contained on any one counterpart hereof; each counterpart shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
Section 9.7 Indemnification. The Borrowers jointly and severally agree
to indemnify the Agent, the Collateral Agent, the Lenders and each of their
officers, directors, employees, agents, attorneys-in-fact and affiliates (the
"Indemnified Persons") from and against any and all liabilities, claims,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses and disbursements of any kind whatsoever (individually or collectively,
the "Liabilities") which may at any time be imposed on, incurred by or asserted
against the Indemnified Persons in any way relating to or arising out of this
Agreement, the Credit Agreement or any other Loan Document, or any other
document contemplated or referred to herein or the transactions contemplated
hereby or thereby or any action taken or omitted by any of the Indemnified
Persons under or in connection with any of the foregoing, including any
Liabilities incurred or asserted as a result of the negligence, whether sole or
concurrent, of any of the Indemnified Persons; provided that no Borrower shall
be liable to any Indemnified Person for the payment of any portion of such
Liabilities resulting solely from the gross negligence or willful misconduct of
any such Indemnified Person.
Section 9.8 Survival. Notwithstanding any other provision of this
Agreement, all representations and warranties of the Borrowers and the
provisions of Sections 2.1, 3.4, 3.5, 9.2, 9.4, 9.7 and this Section 9.8 of this
Agreement shall survive the termination of the Forbearance Period and the
termination of this Agreement and shall remain in force and effect so long as
any Obligation is outstanding or any Commitment exists.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on this _____, day of May, 1999; provided that this Agreement
shall for all purposes be effective as of the 1st day of April, 1999, as if
originally signed on that date.
11
12
[SIGNATURE PAGES TO FOLLOW]
13
BORROWERS:
KCS MEDALLION RESOURCES, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
KCS ENERGY, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
KCS ENERGY SERVICES, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
MEDALLION GAS SERVICES, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Address for Notices:
0000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx
Telecopy: (000) 000-0000
Principal Place of Business
and Chief Executive Office:
0000 Xxxxx Xxxxx Xxxxxx
Xxxxx 000
Xxxxx, Xxxxxxxx 00000
Attention:
Telecopy:
14
LENDERS:
BANK ONE, TEXAS
NATIONAL ASSOCIATION
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Address for Notices:
000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention:
-----------
15
COMERICA BANK-TEXAS
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Address for Notices:
000 Xxxxxxxxx, 0xx Xxxxx
Xxxxxxx, Xxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxx
16
SOCIETE GENERALE, SOUTHWEST AGENCY
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Address for Notices:
0000 Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxx Xxx
17
DEN NORSKE BANK ASA
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Address for Notices:
Three Xxxxx Center
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxx
18
PARIBAS
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Address for Notices:
0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
19
GENERAL ELECTRIC
CAPITAL CORPORATION
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Address for Notices:
SFG Global Asset Management
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, XX 00000
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: Xxxxx Xxxxxxxx
20
CIBC INC.
By:
----------------------------------
Xxxxxxxx Xxxx
Authorized Signatory
Address for Notices:
000 Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxx Xxxx
Telecopy: (000) 000-0000
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 Xxxx
Telecopy: (000) 000-0000
21
000 Xxxxxxxxx Xxxxxx
0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx Xxxx
Syndications Group
Telecopy: (000) 000-0000
COLLATERAL AGENT:
CIBC INC.
By:
----------------------------------
Xxxxxxxx Xxxx
Authorized Signatory
Address for Notices:
000 Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxx Xxxx
Telecopy: (000) 000-0000
with copies to:
CIBC INC.
000 Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxx Xxxx
Telecopy: (000) 000-0000
